EXECUTION VERSION

 

Exhibit 10.39

LC PROCUREMENT AGREEMENT

among

ENDEAVOUR INTERNATIONAL CORPORATION,
as Holdings

 

ENDEAVOUR ENERGY UK LIMITED,
as the Payer,

 

LC FINCO S.à.r.l.,
as the Payee

and

CREDIT SUISSE AG,

as Collateral Agent

______________________________

Dated as of January 24, 2014

______________________________

 

 

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TABLE OF CONTENTS

 

 

 

 

 

Page

Article I.  Definitions and Accounting Terms.

1 

 

Section 1.01

Defined Terms

1 

 

Section 1.02

Terms Generally

51 

Article II.  LC Issuance Procurement; Reimbursement by the Payer

52 

 

Section 2.01

LC Issuance Documents, Procurement and Cancellation of Letters of Credit

52 

 

Section 2.02

Reimbursement by the Payer

52 

 

Section 2.03

LC Fees

53 

 

Section 2.04

Other Fees

55 

Article III.  Maximum LC Amount; Release of Payee Deposit

56 

 

Section 3.01

Voluntary Reduction of Maximum LC Amount

56 

 

Section 3.02

Mandatory Posting of Payer Deposit

56 

 

Section 3.03

Increase of Maximum LC Amount

58 

 

Section 3.04

Release of Payee Deposit

58 

 

Section 3.05

FX True Up

58 

Article IV.  Payments

59 

 

Section 4.01

Method and Place of Payment

59 

 

Section 4.02

Tax Gross-Up and Indemnities

59 

Article V.  Conditions Precedent

62 

 

Section 5.01

Conditions Precedent to the Closing Date

62 

 

Section 5.02

Additional Conditions

66 

Article VI.  Representations and Warranties

66 

 

Section 6.01

Company Status

66 

 

Section 6.02

Power and Authority

66 

 

Section 6.03

No Violation

67 

 

Section 6.04

Approvals

67 

 

Section 6.05

Financial Statements; Financial Condition; Undisclosed Liabilities

67 

 

Section 6.06

Litigation

68 

 

Section 6.07

True and Complete Disclosure

68 

 

Section 6.08

Tax Returns and Payments; Tax Residency

69 

 

Section 6.09

Compliance with ERISA

69 

 

Section 6.10

Security Documents

71 

 

Section 6.11

Properties

71 

 

Section 6.12

Reserved

73 

 

Section 6.13

Subsidiaries

73 

 

Section 6.14

Compliance with Statutes, etc

73 

 

Section 6.15

Investment Company Act

74 

 

Section 6.16

Environmental Matters

74 

 

Section 6.17

Employment and Labor Relations

74 

 

 

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Section 6.18

Intellectual Property, etc

75 

 

Section 6.19

Indebtedness

76 

 

Section 6.20

Insurance

76 

 

Section 6.21

Holding Company

76 

 

Section 6.22

Immaterial Subsidiaries

76 

 

Section 6.23

Liens

76 

Article VII.  Affirmative Covenants

76 

 

Section 7.01

Information Covenants

77 

 

Section 7.02

Books, Records and Inspections; Annual Meetings

80 

 

Section 7.03

Maintenance of Property; Insurance

80 

 

Section 7.04

Existence; Franchises; Oil and Gas Properties

81 

 

Section 7.05

Compliance with Statutes, etc

81 

 

Section 7.06

Compliance with Environmental Laws

82 

 

Section 7.07

ERISA

83 

 

Section 7.08

End of Fiscal Years; Fiscal Quarters

84 

 

Section 7.09

Performance of Obligations

84 

 

Section 7.10

Payment of Taxes, etc

85 

 

Section 7.11

Additional Security; Further Assurances; etc

85 

 

Section 7.12

Maintenance of Company Separateness

87 

 

Section 7.13

Oil and Gas Properties

87 

 

Section 7.14

Post-Closing Obligations

87 

Article VIII.  Negative Covenants

88 

 

Section 8.01

Restricted Payments

88 

 

Section 8.02

Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries

94 

 

Section 8.03

Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock

96 

 

Section 8.04

Limitation on Asset Sales

101 

 

Section 8.05

Limitation on Transactions with Affiliates

101 

 

Section 8.06

Limitation on Liens

104 

 

Section 8.07

Business Activities

104 

 

Section 8.08

Designation of Restricted and Unrestricted Subsidiaries

104 

 

Section 8.09

Merger, Consolidation, or Sale of Assets

104 

 

Section 8.10

Minimum Interest Coverage Ratio

106 

 

Section 8.11

Maximum Leverage Ratio

106 

 

Section 8.12

Minimum Asset Coverage Ratios

106 

 

Section 8.13

Elections

107 

 

Section 8.14

Amendments to Certain Documents

107 

Article IX.  Events of Default.

107 

 

Section 9.01

Payments

107 

 

Section 9.02

Representations, etc

107 

 

 

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Section 9.03

Covenants

107 

 

Section 9.04

Default Under Other Agreements

108 

 

Section 9.05

Bankruptcy, etc

108 

 

Section 9.06

Dutch Insolvency Event

108 

 

Section 9.07

ERISA

108 

 

Section 9.08

Security Documents

109 

 

Section 9.09

Guaranties

109 

 

Section 9.10

Judgments

109 

 

Section 9.11

Nationalization

110 

 

Section 9.12

Cross-Default

110 

 

Section 9.13

Change of Control

110 

Article X.  The Collateral Agent

111 

 

Section 10.01

Appointment and Authority

111 

 

Section 10.02

Exculpatory Provisions

111 

 

Section 10.03

Reliance by Collateral Agent

112 

 

Section 10.04

Delegation of Duties

112 

 

Section 10.05

Resignation of Collateral Agent

113 

 

Section 10.06

Non-Reliance on Collateral Agent

113 

Article XI.  Miscellaneous

113 

 

Section 11.01

Notices; Electronic Communications

113 

 

Section 11.02

Survival of Agreement

115 

 

Section 11.03

Binding Effect

115 

 

Section 11.04

Successors and Assigns

115 

 

Section 11.05

Expenses; Indemnity

115 

 

Section 11.06

Right of Setoff

116 

 

Section 11.07

Applicable Law

117 

 

Section 11.08

Waivers; Amendment

117 

 

Section 11.09

Interest Rate Limitation

117 

 

Section 11.10

Entire Agreement

118 

 

Section 11.11

WAIVER OF JURY TRIAL

118 

 

Section 11.12

Severability

118 

 

Section 11.13

Counterparts

118 

 

Section 11.14

Headings

119 

 

Section 11.15

Jurisdiction; Consent to Service of Process

119 

 

Section 11.16

Confidentiality

119 

 

Section 11.17

USA PATRIOT Act Notice

120 

 

Section 11.18

Process Agent

120 

 

Section 11.19

Judgment Currency

121 

 

Section 11.20

Disregarded Entity

122 

 

 

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SCHEDULES

SCHEDULE 1.01(b)

 

 

Subsidiary Guarantors

SCHEDULE 6.09

Plans

SCHEDULE 6.11(a)

Leased Real Property

SCHEDULE 6.11(b)

Oil and Gas Properties

SCHEDULE 6.11(c)

Interests in Oil and Gas Properties

SCHEDULE 6.13

Subsidiaries

SCHEDULE 6.19

Existing Indebtedness

SCHEDULE 6.20

Insurance

SCHEDULE 6.23

 

EXHIBITS

Existing Liens

 

 

 

 

EXHIBIT A

Form of Solvency Certificate

EXHIBIT B

Form of Compliance Certificate

EXHIBIT C

Form of LC Issuance Agreement

EXHIBIT D

Form of Payer Party Guaranty

EXHIBIT E

Form of U.S. Security Agreement

EXHIBIT F

Form of English Debenture

EXHIBIT G

Form of English Charge Over Shares

EXHIBIT H-1

Form of Opinion of Vinson & Elkins LLP

EXHIBIT H-2

EXHIBIT H-3

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

Form of Opinion of  Woodburn and Wedge

EXHIBIT H-4

Form of Opinion  of Allen & Overy 

EXHIBIT I

EXHIBIT J

Form of Collateral Assignment

Form of Subordination Agreement

 

 

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This LC PROCUREMENT AGREEMENT, dated as of January 24, 2014 (as amended,
modified, restated and/or supplemented from time to time, this “Agreement”), is
by and among Endeavour International Corporation, a Nevada corporation
(“Holdings”), Endeavour Energy UK Limited, a private limited company registered
in England and Wales (the “Payer”), LC Finco S.à.r.l., a private limited
liability company (société à responsabilité limitée) incorporated under the laws
of the Grand Duchy of Luxembourg, with its registered office at 40, avenue
Monterey, L-2163 Luxembourg,  in the process of being registered with the
Luxembourg Register of Commerce and Companies and having a share capital of
$20,000 (the “Payee”), and Credit Suisse AG, acting through one or more of its
branches or affiliates, as collateral agent (in such capacity, including any
successor thereto, the “Collateral Agent”).

W I T N E S S E T H:

WHEREAS, subject to and upon the terms and conditions set forth herein and the
other LC Procurement Documents, the Payee shall, on the date hereof, enter into
an agreement with Credit Suisse AG, London Branch (the “LC Bank”) pursuant to
which the Payee (in its capacity as the “Company” thereunder, the “LC Party”)
will instruct the LC Bank to issue Letters of Credit from time to time in an
amount up to the Maximum LC Amount.  The Letters of Credit are to be issued to
support the decommissioning liabilities of the Payer and to secure payment bonds
or other surety arrangements issued by third parties in support of such
decommissioning liabilities, including, without limitation, to replace those
letters of credit previously issued in connection with the Existing LC
Procurement Agreements, and shall be fully released on or prior to the LC
Release Date.

WHEREAS, in consideration of the Payee instructing the LC Bank to issue Letters
of Credit, the Payer and Holdings agree to reimburse the Payee for certain
payments made in connection with the LC Issuance Documents. If a Letter of
Credit is drawn, the Payer shall provide cash cover to reimburse the Payee in an
amount equal to such drawing.

WHEREAS, the Payer, Holdings and the Payee desire to enter into this Agreement
to document, among other things, the terms governing such reimbursement
arrangement, the fees payable by the Payer to the Payee for procuring the
issuance of the Letters of Credit and the obligation to procure the release of
all Letters of Credit on or prior to the LC Release Date.  The Collateral Agent
is entering into this Agreement in its capacity as Collateral Agent in respect
of the Collateral securing the Obligations.

NOW, THEREFORE, IT IS AGREED:

Article I.
Definitions and Accounting Terms.

 

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

 

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

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

“ABR Tranche” shall have the meaning provided in Section 2.03(a).

“Additional Assets” shall mean:

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

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

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

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

“Additional Guarantor Requirement” shall have the meaning provided in
Section 7.11(c).

“Additional Security Documents” shall have the meaning provided in
Section 7.11(a).

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

(1)     the sum of:

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

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

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

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

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

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

in the case of clauses (i) through (iv) calculated on a pre-tax basis in
accordance with SEC guidelines (utilizing the prices estimated by such Person in
a reserve report prepared as of the end of the fiscal year of such Person);
provided, however, that, in the case of each of the determinations made pursuant
to clauses (i), (ii), (iii) and (iv) above, such increases and decreases shall
be estimated by Holdings’ petroleum engineers or any independent petroleum
engineers engaged by Holdings for that purpose;

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

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

(d)     the greater of:

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

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

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minus:

(2)     the sum of:

(a)     Minority Interests;

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

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

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

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

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

“Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Tranche for any
Fee Period, a rate per annum equal to the greater of (a) 1.25% per annum and
(b) the product of (i) the LIBO Rate in effect for such Fee Period and
(ii) Statutory Reserves (as defined in the Term B Credit Agreement).

“Affiliate” of any specified Person shall mean any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, “control,”
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided, however, that none of the Payee or any of its
Affiliates shall be considered

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an Affiliate of Holdings or any Subsidiary.  For purposes of this definition,
the terms “controlling,” “controlled by” and “under common control with” have
correlative meanings.

“Affiliate Transaction” shall have the meaning provided in Section 8.05.

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

“Agreement Currency” shall have the meaning provided in Section 11.19.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1% and (c) the one-month
Adjusted LIBO Rate plus 1.0%; provided that for the purpose of clause (c), the
Adjusted LIBO Rate for any day shall be based on the rate determined on such day
at approximately 11 a.m. (London time) by reference to the British Bankers’
Association Interest Settlement Rates for deposits in Dollars (as set forth by
any service selected by the Administrative Agent that has been nominated by the
British Bankers’ Association as an authorized vendor for the purpose of
displaying such rates).  If the Collateral Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of the Collateral Agent to obtain sufficient quotations in
accordance with the terms of the definition thereof, the Alternate Base Rate
shall be determined without regard to clause (b) of the preceding sentence until
the circumstances giving rise to such inability no longer exist.  Any change in
the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate or Adjusted LIBO Rate shall be effective on the effective date of
such change in the Prime Rate or the Federal Funds Effective Rate or Adjusted
LIBO Rate, as the case may be.

“Allocation” shall mean the allocation of any portion of the Payee Deposit into
a Eurodollar Tranche or an ABR Tranche.

“Allocation Request” shall mean a request by the Payee for an Allocation in
accordance with the terms of Section 2.03(a).

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

“Applicable Percentage” shall mean, with respect to any fiscal year, 50%;
provided that (a) if the Consolidated Leverage Ratio as of the end of such
fiscal year is less than 2.50:1.0, 25% and (b) if the Consolidated Leverage
Ratio as of the end of such fiscal year is less than 1.75:1.0, 0%.

“Applicable Premium” shall mean, with respect to any reduction of the Maximum LC
Amount, in whole or in part, under Section 3.01, or mandatory posting of Payer
Deposit under Section 3.02(b), (a) if made prior to the first anniversary of the
date hereof, a cash amount with respect to the portion of the Payee Deposit
released in connection with such reduction of the Maximum LC Amount or increase
of Payer Deposit pursuant to Section 3.04 equal to the present value at the date
of the release of all LC Fees which would accrue on the released portion of the

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Payee Deposit (assuming that the Adjusted LIBO Rate prevailing at the time of
the notice of release applies throughout such period) from the date of release
to but excluding the first anniversary of the date hereof, computed using a
discount rate equal to the Treasury Rate as of such date of release plus 50
basis points discounted to the redemption date on a quarterly basis (assuming a
360 day year consisting of twelve 30 day months); and (b) if made on or after
the first anniversary of the date hereof, $0.  Notwithstanding the foregoing,
payment of the Applicable Premium will not be required in connection with any
reduction of the Maximum LC Amount, in whole or in part, under Section 3.01 or
mandatory posting of Payer Deposit under Section 3.02(b) (i) to the extent the
Term A Borrowers elect to borrow additional Term A Loans in the amount of any
resulting prepayment of Term B Loans, as provided in Section 2.01(b) of the Tern
Loan A Credit Agreement or (ii) such reduction is effected on or prior to the
180th day following the Closing Date, and (A) such reduction is the result of
the reduction of the Payer’s obligation to provide security for its
decommissioning liabilities by the applicable Governmental Authority and/or
agreement with the Payer’s joint interest owners and (B) after giving effect
thereto, the Dollar equivalent of the Maximum LC Amount calculated at the Fixed
Exchange Rate is not less than $32,000,000.

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

“Approved Hedge Counterparty” shall have the meaning provided in the Term A
Credit Agreement.

“Asset Sale”  shall mean:

(a)     the sale, lease, conveyance or other disposition of any properties or
assets (including by way of a Production Payment, Sale Leaseback Transaction,
conveyance of any royalty interest, overriding royalty interest, net profits
interest, or mergers, consolidations or otherwise); provided,  however, that the
disposition of all or substantially all of the properties or assets of Holdings
and its Restricted Subsidiaries taken as a whole will not be an “Asset Sale,”
but will be governed by the provisions of Section 8.09 and not by the provisions
of Section 8.04; and

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

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

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

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

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

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

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

(6)     a Restricted Payment that is permitted by Section 8.01 or a Permitted
Investment (or a disposition that would constitute a Restricted Payment but for
the exclusion from the definition thereof);

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

(8)     (i) any trade or exchange by Holdings or any of its Restricted
Subsidiaries of Hydrocarbon properties or other properties or assets for
Hydrocarbon properties or other properties or assets owned or held by one or
more other Persons, and (ii) any transfer or sale of assets, or lease,
assignment or sublease of any real or personal property, (A) in exchange for
services (including in connection with any outsourcing arrangements) related to
the exploration, development, completion or production (and related activities)
of properties of Holdings or any Restricted Subsidiary, (B) in exchange for such
transferee, lessee or assignee (or an Affiliate thereof) agreeing to pay all or
a portion of the costs and expenses related to the exploration, development,
completion or production (and related activities) of properties of Holdings or
any Restricted Subsidiary or (C) in exchange for properties or assets satisfying
the requirements of clause (i) of this clause (8) ((A) and (B) being referred to
herein as a “carry”); provided that the Fair Market Value of the properties or
assets traded, exchanged, transferred, sold, leased, assigned or subleased by
Holdings or such Restricted Subsidiary is equal to or less than the Fair Market
Value of the properties, assets or carry (together with any cash and Cash
Equivalents) agreed by such other Persons to be transferred, provided or paid to
or on behalf of Holdings or such Restricted Subsidiary, and provided further
that any cash or Cash Equivalents received must be applied in accordance with
the provisions of Section 3.02(a);

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

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

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

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

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

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

(15)    any Refinancing Production Payment; and

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

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

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

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

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

“Board of Directors” shall mean:

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

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

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

“Breakage Event” shall have the meaning provided for in Section 2.03(b)(iii).

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

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

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

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

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

“Capital Stock” shall mean:

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

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

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

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

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

“Cash Equivalents” shall mean:

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

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

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

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

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

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

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

“Cash Interest Expense” shall mean, with respect to any Person, for any period,
the Consolidated Interest Expense of such Person and its Restricted Subsidiaries
for such period, less the sum of (a) any pay-in-kind interest expense or other
noncash interest expense (including as a result of the effects of purchase
accounting) of such Person and its Restricted Subsidiaries, (b) to

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the extent included in Consolidated Interest Expense, the amortization of any
financing fees paid by, or on behalf of, such Person and its Restricted
Subsidiaries, (c) the amortization of debt discounts, if any, or fees in respect
of Hedging Agreements and (d) cash interest income of such Person and its
Restricted Subsidiaries for such period.

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

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

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

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

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

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

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

“Charges” shall have the meaning provided in Section 11.09.

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

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“Closing Date” shall mean the date on which the conditions specified in Section
5 are satisfied (or waived in accordance with Section 11.08).

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

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

“Collateral Agent” shall have the meaning provided in the preamble to this
Agreement, and shall include any successor to the Collateral Agent appointed
pursuant to Section 10.05.

“Collateral Assignment” shall mean the Collateral Assignment of LC Procurement
Agreement dated on or about the date of this Agreement between the Payee and the
Collateral Agent in substantially the form attached hereto as Exhibit I.

“Commitment” shall mean the commitment of the Payee to enter into the LC
Issuance Documents as of the Closing Date and from time to time thereafter
during the Commitment Period at the request of the Payer and to instruct the LC
Bank to issue Letters of Credit pursuant to the LC Issuance Documents.

“Commitment Period” shall mean the period from the date of this Agreement until
the date which is thirty (30) days prior to the LC Release Date.

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

“Communications” shall have the meaning provided in Section 11.01.

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

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

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

(3)     depreciation, depletion, amortization (including amortization of
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period), impairment and other non-cash expenses (excluding any such
non-cash expense to the extent that it

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

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

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

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

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

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

“Consolidated Interest Expense” shall mean, with respect to any Person, for any
period, the sum of (a) the interest expense (including imputed interest expense
in respect of Capital Lease Obligations and Synthetic Lease Obligations)
attributable to Indebtedness of such Person and its Restricted Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP (but
excluding interest expense with regard to any Production Payment), plus (b) any
interest accrued during such period in respect of Indebtedness of such Person
and its Restricted Subsidiaries that is required to be capitalized rather than
included in consolidated interest expense for such period in accordance with
GAAP,  plus (c) the LC Fee payable by the Payer for such period.  For purposes
of the foregoing, interest expense shall be determined after giving effect to
any net payments made or received by such Person and its Restricted Subsidiaries
with respect to Interest Rate Hedging Agreements.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Disqualified Stock” shall mean any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the LC Release Date; provided, however, that only the portion
of Capital Stock that so matures or is mandatorily redeemable, is so convertible
or exchangeable or is so redeemable at the option of the holder thereof prior to
such date shall be deemed to be Disqualified Stock. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require
Holdings to repurchase or redeem such Capital Stock upon the occurrence of a
change of control or an asset sale will not constitute Disqualified Stock if the
terms of such Capital Stock provide that Holdings may not repurchase or redeem
any such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 8.01.  The amount (or principal amount) of
Disqualified Stock deemed to be outstanding at any time for purposes of this
Agreement will be the maximum amount that Holdings and its Restricted
Subsidiaries may become obligated to pay upon the maturity of, or pursuant to
any mandatory redemption provisions of, such Disqualified Stock, exclusive of
accrued dividends.

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

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

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

“Dutch Civil Code” means the Burgerlijk Wetboek.

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

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

“EIH” shall mean Endeavour International Holding B.V., a private limited company
organized under the laws of the Netherlands.

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

“English Charge Over Shares” shall have the meaning provided in Section 5.01(j).

“English Debenture” shall have the meaning provided in Section 5.01(i).

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

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

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

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

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

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

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

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

“Estimated Administrative Costs” shall have the meaning provided in
Section 2.04(b).

“Eurodollar Tranche” shall have the meaning provided in Section 2.03(a).

“Events of Default” shall have the meaning provided in Article IX.

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

(1)     Debt Service for such fiscal year;

(2)     any optional prepayment of Term A Loans and the amount of any release of
the Payer Deposit pursuant to Section 3.04 resulting from an optional reduction
in the Maximum LC Amount under Section 3.01 in each case, that results in a
prepayment of Term B Loans during such fiscal year or prior to the date 100 days
following such fiscal year, so long as the amount of such prepayment or release
of the Payer Deposit is not already reflected in Debt Service or otherwise
deducted from Excess Cash Flow;

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

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

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

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

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

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

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

(10)    to the extent added to net income in determining Consolidated Net Income
of Holdings or to Consolidated Net Income in determining Consolidated EBITDA of
Holdings, the aggregate amount of all fees, costs and expenses (other than
depreciation, depletion or amortization expense) incurred by Holdings or any
Restricted Subsidiary in connection with the Transactions, the execution and
delivery of the Term A Credit Agreement and the Term B Credit 

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Agreement and each other agreement or document executed and delivered in
connection therewith, and the borrowings and other transactions contemplated
under the Term A Credit Agreement and/or the Term B Credit Agreement, including,
without limitation, the Transactions (as defined in the Term A Credit Agreement
and the Term B Credit Agreement); and any amendment or other modification of any
such agreements;    

plus, without duplication,

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

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

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

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

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

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

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

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

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

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

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

“Existing Indebtedness” shall mean the aggregate principal amount of
Indebtedness of Holdings and its Restricted Subsidiaries in existence on the
date hereof and specified on Schedule 6.19 (other than the Indebtedness
referenced in Section 5.01(k)), including the 5.5% Convertible Notes, the
Indenture Notes, the 11.5% Convertible Bonds and Indebtedness under the Existing
Credit Agreement, until such amounts are repaid.

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

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

“FATCA” shall mean:

(a)     sections 1471 to 1474 of the Code or any associated regulations or other
official guidance;

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(b)     any treaty, law, regulation or other official guidance enacted in any
other jurisdiction, or relating to an intergovernmental agreement between the
United States and any other jurisdiction, which (in either case) facilitates the
implementation of paragraph (a) above; or

(c)     any agreement pursuant to the implementation of paragraphs (a) or (b)
above with the United States Internal Revenue Service, the United States
government or any governmental or taxation authority in any other jurisdiction.

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

“Federal Funds Effective Rate”  shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day for such transactions received by the Collateral Agent
from three Federal funds brokers of recognized standing selected by it.

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

“Fee Period”  shall mean, (i) with respect to any ABR Tranche, one fiscal
quarter and (ii) with respect to any Eurodollar Tranche, the period commencing
on the date of such Eurodollar Tranche and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the Payer
may elect; provided,  however, that (a) if a Fee Period would end on a day other
than a Business Day, such Fee Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Fee Period shall end on the next preceding
Business Day, (b) any Fee Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Fee Period) shall end on the last
Business Day of the calendar month at the end of such Fee Period and (c) no Fee
Period for any Tranche shall extend beyond the LC Release Date.  LC Fees shall
accrue from and including the first day of a Fee Period to but excluding the
last day of such Fee Period.  For purposes hereof, the date of a Tranche
initially shall be the date on which such Tranche is allocated and thereafter
shall be the effective date of the most recent conversion or continuation of
such Tranche.

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“Fees” shall mean the LC Fee, the Fronting Fee, the Estimated Administrative
Costs and any interest payable pursuant to Section 2.04(c), as applicable.

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

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

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

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

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

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

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

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of letters of credit or bankers’ acceptance financings), and net of the effect
of all payments made or received pursuant to Interest Rate Hedging Agreements;
plus 

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

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

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

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

“Fixed Exchange Rate”  shall mean (a) prior to any increase in the Maximum LC
Amount pursuant to Section 3.03,  the rate at which the Payee exchanges Dollars
for Sterling on the Closing Date for purposes of establishing any portion of the
Payee Deposit established by the Payee on the Closing Date, and (b) from and
after each increase in the Maximum LC Amount pursuant to Section 3.03, the
weighted average of (i) the Fixed Exchange Rate immediately prior to such
increase and (ii) the rate at which the Payee exchanges Dollars for Sterling in
connection with any increase in the Payee Deposit resulting from such increase
in the Maximum LC Amount calculated in accordance with the formula set forth
below.  The Payee shall provide notice to the Payer of the Fixed Exchange Rate
on the Closing Date and any adjustment to the Fixed Exchange Rate in connection
with any increase in the Maximum LC Amount.

(A x X) + (B x Y)

PD

For this purpose:

A = the Sterling amount of the Payee Deposit immediately prior to such increase
in the Maximum LC Amount.

B = the Sterling amount of the increase in the Payee Deposit in connection with
such increase in the Maximum LC Amount.

X = the Fixed Exchange Rate immediately prior to such increase in the Maximum LC
Amount.

Y = the rate at which the Payee exchanges Dollars for Sterling in connection
with any increase in the Payee Deposit  resulting from such increase in the
Maximum LC Amount.

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PD = the aggregate Sterling amount of the Payee Deposit after giving effect to
such increase in the Maximum LC Amount.

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

“FX True Up” shall have the meaning provided in Section 3.05.

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

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

“Grantor” shall have the meaning provided in Section 7.11(c).

“Guarantor” shall mean Holdings and the Subsidiary Guarantors.

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

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

“HMRC” means Her Majesty’s Revenue and Customs.

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

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

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

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

“incur” shall have the meaning provided in Section 8.03.

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

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

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

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

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

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

(6)     all obligations under Hedging Agreements;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Indemnitee” shall have the meaning provided in Section 11.05(b).

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

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

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

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

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

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

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

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

“Information” shall have the meaning provided in Section 11.16.

“Initial Loan” shall have the meaning provided in the Term A Credit Agreement.

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

“Intercreditor Agreement” shall mean that certain Second Amended and Restated
Intercreditor Agreement, dated as of December 12, 2013, by and among Holdings,
EEUK, MC Admin Co LLC, Cidoval S.à r.l. and Sand Waves, S.A. and the joinder
agreement referred to in Section 5.01(o).

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

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Contingent Obligation, repayment, repurchase, redemption, defeasance or other
discharge of Indebtedness, and the use of the proceeds therefrom, as if the same
had occurred at the beginning of the applicable four-quarter reference period.

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

“Investments” shall mean, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans, advances or extensions of credit (including guarantees or similar
arrangements, but excluding (1) commission, travel and similar advances to
officers, directors, employees and consultants made in the ordinary course of
business and (2) advances to customers or suppliers in the ordinary course of
business that are recorded in accordance with GAAP as accounts receivable on the
balance sheet of the lender), or capital contributions, purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities (excluding any interest in a crude oil or natural gas leasehold to
the extent constituting a security under Applicable Law), together with all
items that are or would be classified as investments on a balance sheet of such
Person prepared in accordance with GAAP. If Holdings or any Restricted
Subsidiary of Holdings sells or otherwise disposes of any Equity Interests of
any direct or indirect Restricted Subsidiary of Holdings such that, after giving
effect to any such sale or disposition, such Person is no longer a Restricted
Subsidiary of Holdings, Holdings will be deemed to have made an Investment on
the date of any such sale or disposition in an amount equal to the Fair Market
Value of the Equity Interests of such Restricted Subsidiary not sold or disposed
of in an amount determined as provided in the final paragraph of Section 8.01.
The acquisition by Holdings or any Subsidiary of Holdings of a Person that holds
an Investment in a third Person will be deemed to be an Investment made by
Holdings or such Subsidiary in such third Person in an amount equal to the Fair
Market Value of the Investment held by the acquired Person in such third Person
on the date of any such acquisition in an amount determined as provided in the
final paragraph of Section 8.01. Except as otherwise provided in this Agreement,
the amount of an Investment will be determined at the time the Investment is
made and without giving effect to subsequent changes in value or write-ups,
write-downs or write-offs with respect to such Investment.

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

“Judgment Currency” shall have the meaning provided in Section 11.19.

“LC Bank” shall have the meaning provided in the recitals.

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

“LC Issuance Agreement” shall mean that certain LC Issuance Agreement, dated as
of the date hereof, between the LC Bank and the LC Party in respect of the
issuance of letters of credit and substantially in the form of Exhibit C, as the
same may be amended from time to time as permitted hereunder.

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“LC Issuance Date” shall mean each date on which the Payee requests the issuance
of a Letter of Credit by notice to the LC Bank.

“LC Issuance Documents” means each of the LC Issuance Agreement, the Collateral
Assignment and the Letters of Credit.

“LC Party” shall have the meaning provided in the recitals.

“LC Procurement Documents” shall mean this Agreement, the Subordination
Agreement and each Security Document.

“LC Procurement Obligations” shall mean those obligations of the Payer and
Holdings to reimburse the Payee pursuant to Section 2.02, or to make any payment
to the Payee pursuant to Sections 2.03 and 2.04.

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

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

“Lenders” shall mean the entities party to the Term B Credit Agreement as
“Lenders” as defined therein.

“Letter of Credit” shall mean each letter of credit issued by the LC Bank
pursuant to the LC Issuance Agreement.

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

 “Lien” shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under Applicable Law,
including any conditional sale or other title retention

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agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the UCC (or equivalent statutes) of any jurisdiction
other than a precautionary financing statement respecting a lease not intended
as a security agreement.

“Luxembourg” shall mean the Grand Duchy of Luxembourg.

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

“Maximum LC Amount”  shall mean an amount equal to 98.04% of the Sterling (a)
purchased by the Payee with the proceeds of the Term B Loans (at the Fixed
Exchange Rate) deposited and on hand with the LC Bank as Payee Deposit, and (b)
deposited by Payer and on hand with LC Bank as Payer Deposit, as such amount may
be reduced and increased from time to time pursuant to Section 3.01, 3.02 or
3.03.

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

“Maximum Rate” shall have the meaning provided in Section 11.09.

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

“MNPI” shall have the meaning provided in the final paragraph of Section 7.01.

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

“Mortgages” shall mean the mortgages, leasehold mortgages, deeds of trust,
leasehold deeds of trust, deeds to secure debt, leasehold deeds to secure debt,
debentures, assignments of leases and rents and similar security instruments
delivered to the Collateral Agent, each in form and substance satisfactory to
the Payee and Collateral Agent, as the same may be amended, modified or
supplemented from time to time.

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

“Net Proceeds” shall mean the aggregate cash proceeds received by Holdings or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash

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received upon the sale or other disposition of any non-cash consideration
received in any Asset Sale), net of:

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

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

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

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

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

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

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

“Non-Recourse Debt” shall mean Indebtedness:

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

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

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

For purposes of determining compliance with Section 8.03, in the event that any
Non-Recourse Debt of any of Holdings’ Unrestricted Subsidiaries ceases to be
Non-Recourse Debt of such Unrestricted Subsidiary, such event will be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of Holdings.

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

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

“Obligations” shall mean all amounts owing to the Payee pursuant to the terms of
this Agreement or any other LC Procurement Document, including, without
limitation, the LC Procurement Obligations, all amounts in respect of any of the
Fees or interest thereon (including any fees or interest accruing subsequent to
the filing of a petition in bankruptcy, reorganization or similar proceeding at
the rate provided for in this Agreement or the respective other LC Procurement
Document, whether or not such interest is an allowed claim under any such
proceeding or under applicable state, federal or foreign law), all amounts owing
pursuant to Section 3.01(a), penalties, fees, expenses, indemnifications,
reimbursements, damages and other liabilities, and guarantees of the foregoing
amounts.

“Oil and Gas Business” shall mean:

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

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

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

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

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

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

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the production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests.

“Original Dollar Amount” shall have the meaning provided in Section 3.05.

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

“Payee Deposit” shall mean, collectively, (a) any amounts in Sterling deposited
by the Payee with the LC Bank to secure the obligations of the Payee under the
LC Issuance Documents and (b) the amounts deposited by the Payer with the LC
Bank pursuant to Section 5.01(s).

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

“Payer Deposit” shall mean any amounts deposited by the Payer with the LC Bank
pursuant to the LC Issuance Agreement (excluding, for the avoidance of doubt,
any amounts which constitute the Payee Deposit). 

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

“Payer Party Guaranty” shall have the meaning provided in Section 5.01(g).

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

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

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

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

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

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

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

“Permitted Debt” shall have the meaning provided in Section 8.03.

“Permitted Intercompany Debt” shall have the meaning provided in Section
8.03(6).

“Permitted Investments” shall mean:

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

(2)     any Investment in cash and Cash Equivalents;

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

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

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

(4)     any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with
Section 8.04;

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

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

(7)     Hedging Agreements permitted under this Agreement;

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

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

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

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

(12)    loans or advances to officers, directors, employees or consultants made
in the ordinary course of business or otherwise customary in the Oil and Gas
Business and otherwise in compliance with Section 8.05 of this Agreement;

(13)    Investments of a Restricted Subsidiary acquired after the date hereof or
of any entity merged into or consolidated with Holdings or a Restricted
Subsidiary in accordance with Section 8.09 of this Agreement, to the extent that
such Investments were not made in contemplation of or in connection with such
acquisition, merger or consolidation and were in existence on the date of such
acquisition, merger or consolidation;

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

(15)    subject to compliance with the Additional Guarantor Requirement as of
the date of such Investment, other Investments (but excluding repurchases of or
other Investments in the Indenture Notes or Unsecured Notes) having an aggregate
Fair Market Value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (15) that are at the time
outstanding, not to exceed the greater of $35,000,000 and 3.0% of Holdings’
Adjusted

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Consolidated Net Tangible Assets determined at the time of such Investment
(after giving effect to any dividends, interest payments, return of capital and
subsequent reduction in the amount of any Investment made pursuant to this
clause (15) as a result of the repayment or other disposition thereof, in an
amount not to exceed the amount of such Investments previously made pursuant to
this clause (15)); provided, however, that (a) if any Investment pursuant to
this clause (15) is made in any Person that is not a Restricted Subsidiary of
Holdings at the date of the making of such Investment and such Person becomes a
Restricted Subsidiary of Holdings after such date, such Investment shall,
subject to compliance with the Additional Guarantor Requirement, thereafter be
deemed to have been made pursuant to clause (1) above and shall cease to have
been made pursuant to this clause (15) for so long as such Person continues to
be a Restricted Subsidiary and (b) with respect to any Investment, Holdings may,
in its sole discretion, allocate all or any portion of any Investment and later
re-allocate all or any portion of any Investment to one or more of the above
clauses (1) through (15) so that the entire Investment would be a Permitted
Investment.

“Permitted Liens” shall mean:

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

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

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

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

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

(6)     Liens on any asset or property acquired, constructed or improved by
Holdings or any of its Restricted Subsidiaries in the ordinary course of
business; provided that (a) such Liens are in favor of the seller of such asset
or property, in favor of the Person or Persons developing, constructing,
repairing or improving such asset or property, or in favor of the Person or
Persons that provided the funding for the acquisition, development,
construction, repair or improvement cost, as the case may be, of such asset or
property, (b) such Liens are created within 180 days after the acquisition,
development, construction, repair or improvement, (c) the aggregate principal
amount of the Indebtedness secured by such Liens is otherwise permitted to be
incurred under this Agreement and does not exceed the greater of (i) the cost of
the asset or property so

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acquired, constructed or improved plus related financing costs and (ii) the Fair
Market Value of the asset or property so acquired, constructed or improved,
measured at the date of such acquisition, or the date of completion of such
construction or improvement, and (d) such Liens are limited to the asset or
property so acquired, constructed or improved (including the proceeds thereof,
accessions thereto, upgrades thereof and improvements thereto);

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

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

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

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

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

(12)    Liens upon specific items of inventory, receivables or other goods or
proceeds of Holdings or any of its Restricted Subsidiaries securing such
Person’s obligations in respect of bankers’ acceptances or receivables
securitizations issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory, receivables or other goods
or proceeds and permitted by Section 8.03;

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

(14)    Liens in favor of Approved Hedge Counterparties to secure payment and
performance of Secured Hedging Agreements of Holdings or any of its Restricted
Subsidiaries provided, if such Approved Hedge Counterparty is a Person defined
under clause (f) of the definition thereof, such Approved Hedge Counterparty
enters into an intercreditor agreement with the Administrative Agent, for the
benefit of the Secured Parties, in form and substance and with terms and subject
to conditions acceptable to the Collateral Agent;

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

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

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

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

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

(20)    Liens arising from the deposit of funds or securities in trust for the
purpose of decreasing or defeasing Indebtedness so long as such deposit of funds
or securities and such decreasing or defeasing of Indebtedness are permitted
under Section 8.01 of this Agreement;

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

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

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

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

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

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

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

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

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

(2)     such Permitted Refinancing Indebtedness has a final maturity date or
redemption date, as applicable, later than or equal to the shorter of (a) 91
days following the LC Release Date or (b) the final maturity date or redemption
date, as applicable, of the Refinanced Indebtedness;

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

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

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

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

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

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

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

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

(1)     acquisitions that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers, consolidations or otherwise
(including acquisitions of

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

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

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

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

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

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

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

“Process Agent” shall have the meaning provided in Section 11.18(a).

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

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“Projections” shall have the meaning provided in Section 6.07.

“Protected Party” shall mean the Payee to the extent it is or will be subject to
any liability, or required to make any payment, for or on account of Tax in
relation to a sum received or receivable (or any sum deemed for the purposes of
Tax to be received or receivable) under a this Agreement.

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

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

“Purchased Dollar Amount” shall have the meaning provided in Section 3.05.

“PV-10 Value” shall mean, as of any date of determination, the present value of
future cash flows from Proved Reserves on Holdings’ and each of its Restricted
Subsidiaries’ Oil and Gas Properties as set forth in the most recent Reserve
Report delivered pursuant to Section 7.01(c), utilizing (a) in the case of any
Oil and Gas Properties located in the United States, the Three-Year Strip Price
for crude oil (WTI Cushing) and natural gas (Henry Hub), quoted on the New York
Mercantile Exchange (or its successor), (b) in the case of any Oil and Gas
Properties located in the North Sea, the Three-Year Strip Price for crude oil
(North Sea Brent) and natural gas (UK National Balancing Point), in each case
quoted on the International Petroleum Exchange (or its successor) and (c) in the
case of any Oil and Gas Properties located in any other jurisdiction, the
Three-Year Strip Price for crude oil and natural gas, in each case quoted on any
commodities exchange or other price quotation source generally recognized in the
oil and gas industry in such jurisdiction and reasonably acceptable to the Payee
and the Collateral Agent, in the case of each of clauses (a), (b) and (c), as of
the date as of which the information set forth in such Reserve Report is
provided (as adjusted for basis differentials) and utilizing a 10% discount
rate. For purposes of calculating PV-10 Value, (i) any future cash flow
calculations set forth in any Reserve Report and made in any currency other than
Dollars shall be converted into Dollars based on the Exchange Rate on the date
as of which the information set forth in such Reserve Report is provided, (ii)
PV-10 Value shall be calculated net of the present value of future cash flows
attributable to reserves that are required to be delivered to third parties to
fully satisfy the obligations of such Person and its Restricted Subsidiaries
with respect to Production Payments on the schedules specified with respect
thereto, participation interests, overriding royalty interests, net profits
interests or other interests of third parties, pursuant to participation,
partnership, vendor financing or other agreements then in effect, or which
otherwise are required to be delivered to third parties and (iii) PV-10 Value
shall be calculated net of all associated plugging, abandoning and/or
decommissioning expense or liabilities, contingent or otherwise, of Holdings and
its Restricted Subsidiaries.

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

“Recipient” shall have the meaning provided in Section 4.02(e)(ii).

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

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

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

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

“Reporting Default” shall mean a Default arising from a failure to comply with
Section 7.01, subject to the applicable grace period set forth in Section 9.03.

“Required Lenders” shall mean, collectively, the “Required Lenders” under, and
defined under, each of the Term A Credit Agreement and the Term B Credit
Agreement.

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

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production, operating costs, capital costs and net additions of Proved Reserves
during the calendar months of the respective year specified therein and (iii)
each Reserve Report prepared by Holdings shall be certified by the chief
engineering officer of Holdings as being accurate in all material respects.

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

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

“Restricted Payment” shall have the meaning provided in Section 8.01(e).

“Restricted Subsidiary” shall have the meaning assigned such term in the Term A
Credit Agreement (as in effect on the Closing Date).

“Returns” shall have the meaning provided in Section 6.08.

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

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

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

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

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

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

“Secured Parties” shall have the meaning provided in the Term A Credit
Agreement.

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

“Security Documents” shall mean the Mortgages, the Payer Party Guaranty, the
U.S. Security Agreement, the English Security Documents, the Deposit Account
Control Agreement, after the execution and delivery thereof, the Additional
Security Documents, and the other

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security agreements, mortgages and other instruments and documents, including
each that is executed and delivered pursuant to any of the foregoing or pursuant
to Section 7.11 or any other Section of this Agreement.

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

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

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

“Subject Party” shall have the meaning provided in Section 4.02(e)(ii).

“Subordination Agreement”  shall have the meaning provided in Section 5.01(k).

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

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

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

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

“Successor Company”  shall have the meaning provided in Section 8.09(a).

“Supplier” shall have the meaning provided in Section 4.02(e)(ii).

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

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

“Tax Credit” shall mean a credit against, relief or remission for, or repayment
of any Tax.

“Tax Deduction” shall mean a deduction or withholding for or on account of Tax
from a payment under this Agreement.

“Tax Payment” shall mean a payment under Section 2.04(b)(ii) or Section
11.05(iii), the increase in a payment made by a Payer Party to a Lender or Agent
under Section 4.02(a) or a payment under Section 4.02(b).

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

“Term A Credit Agreement” shall mean that certain Credit Agreement, dated as of
the date hereof, among Holdings, EIH and End Finco LLC, a Delaware limited
liability company, as co-borrowers, the lenders party thereto and Credit Suisse
AG, as administrative agent and as collateral agent.

“Term A Borrowers” shall mean EIH and End Finco LLC, a Delaware limited
liability company.

“Term A Loans” shall have the meaning provided to the term “Loans” in the Term A
Credit Agreement.

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

“Term B Credit Agreement” shall mean that certain Credit Agreement, dated as of
the date hereof, among the Payee and LC Finco US, as co-borrowers, the lenders
party thereto and Credit Suisse AG, as administrative agent and as collateral
agent.

“Term B Loans” shall have the meaning provided to the term “Loans” in the Term B
Credit Agreement.

“Three-Year Strip Price” shall mean, as of any date of determination, (a) for
the 36-month period commencing with the month immediately following the month in
which the date of

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determination occurs, the monthly futures contract prices for crude oil and
natural gas for the 36 succeeding months as quoted on the applicable commodities
exchange or other price quotation source as contemplated in the definition of
“PV-10 Value” and (b) for periods after such 36-month period, the average of
such quoted prices for the period from and including the 25th month in such
36-month period through the 36th month in such period.

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

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

“Tranche” and “Tranches”  shall each have the meaning provided in Section
2.03(a).

“Transaction” shall mean, collectively, (a) the execution, delivery and
performance by the Payee of the LC Issuance Agreement and the issuance of the
Letters of Credit thereunder on the Closing Date, (b) the execution, delivery
and performance by each Payer Party of the LC Procurement Documents, (c) the
execution, delivery and performance by the Payee and the Collateral Agent of the
Collateral Assignment, (d) the crediting of the Payee Deposit to accounts for
the benefit of the LC Bank in an amount up to the Maximum LC Amount in
connection with the repayment of amounts paid by the LC Bank under the Letters
of Credit, and (e) the payment of all fees and expenses in connection with the
foregoing.

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

“UK Process Agent” shall have the meaning provided in Section 11.18(b).

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

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

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

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

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“Unrestricted Subsidiary” shall have the meaning assigned such term in the Term
A Credit Agreement (as in effect on the Closing Date).

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

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

“U.S. Security Agreement” shall have the meaning provided in Section 5.01(h).

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

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

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

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

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

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

SECTION 1.02     Terms Generally.  The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined.  Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation” except in
cases where such words are already expressed.  The word “will” shall be
construed to have the same meaning and effect as the word “shall”.  Unless the
context requires otherwise (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such

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amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person’s successors and
permitted assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words
of similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (iv) any reference to any law or
regulation herein shall, unless otherwise specified, refer to such law or
regulation as amended, modified or supplemented from time to time, and (v) the
words “asset” and “property” shall be construed as having the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.  All
references herein to Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules to, this
Agreement unless the context shall otherwise require.  Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect on the date hereof and
consistent with financial statements delivered pursuant to Section 6.05(a).

Article II.
LC Issuance Procurement; Reimbursement by the Payer.

 

SECTION 2.01     LC Issuance Documents, Procurement and Cancellation of Letters
of Credit.

 

(a)     The Payer hereby requests that the Payee (i) enter into the LC Issuance
Documents as of the Closing Date and (ii) at the request of the Payer from time
to time during the Commitment Period, instruct the LC Bank to issue Letters of
Credit pursuant to the LC Issuance Documents.  Subject to the terms and
conditions hereof, the Payee hereby agrees to enter into the LC Issuance
Documents as of the Closing Date and from time to time thereafter during the
Commitment Period at the request of the Payer instruct the LC Bank to issue
Letters of Credit pursuant to the LC Issuance Documents.

(b)     The Payee shall not be obliged to enter into the LC Issuance Documents
on the Closing Date or instruct the LC Bank to issue any Letter of Credit unless
the conditions precedent set forth in Article V have been satisfied or
waived.  The Payee shall notify Holdings promptly upon satisfaction of all the
conditions precedent set forth in Section 5.01.  In order to request that the
Payee instruct the LC Bank to issue Letters of Credit pursuant to Section
2.01(a), Payer shall notify the Payee of such request by telephone not later
than 12:00 Noon (London) time three Business Days before the proposed issuance
of a Letter of Credit.  Each such telephonic notice shall be irrevocable, and
shall be confirmed promptly by hand delivery or fax to the Payee of a written
notice and shall specify the following information:  (i) the requested date of
the issuance of the Letter of Credit, (ii) the amount of the requested Letter of
Credit and (iii) the beneficiary of the Letter of Credit.

(c)     At no time shall the aggregate outstanding face amount of the Letters of
Credit issued pursuant to the LC Issuance Documents, plus the amount, if any,
demanded by the Payee pursuant to Section 2.02(a) and not reimbursed by the
Payer exceed the Maximum LC Amount.

(d)     Except as otherwise contemplated herein or in the LC Issuance Documents,
the Payee shall not enter into, or agree to enter into, any amendment
or  modification to, or waiver in

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respect of, any LC Issuance Document without the prior written consent of
Holdings and the Payee.

SECTION 2.02     Reimbursement by the Payer.

 

(a)     If the Payee receives a notice of demand for payment under a Letter of
Credit or for payment or indemnification from the LC Bank pursuant to the terms
of an LC Issuance Agreement, the Payee shall immediately notify the Payer of the
amount demanded and the date on which it is payable.  The Payer shall within
three Business Days after receipt of demand from the Payee to the Payer pay to
the Payee an amount equal to the amount of such demand.    

(b)     The Payer, in respect of each Letter of Credit issued or deemed issued
under an LC Issuance Agreement, unconditionally and irrevocably agrees that its
obligations under this Agreement 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 Payer from its obligations under this Agreement, in
whole or in part, including without limitation and whether or not known to the
Payer:

(i)     any time or waiver granted to or composition with the Payee, the LC
Bank, the beneficiary of any such Letter of Credit or any other Person;

(ii)     any taking, variation, compromise, exchange, renewal or release of,
refusal or neglect to perfect, take-up or enforce, any rights, remedies or
securities available to the Payee or any other Person or arising under any such
Letter of Credit or any other LC Issuance Document;

(iii)    any variation or extension of or increase in liabilities under any such
Letter of Credit and any other LC Issuance Documents made with the prior written
consent of the Payee, so that references in this Agreement to the same shall
include each such variation, extension and variation;

(iv)    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; or

(v)     any insolvency or similar proceedings.

(c)     The obligations of the Payer under this Section 2.02 shall be
continuing, shall extend to the ultimate balance of the obligations and
liabilities of the Payer under this Section 2.02 and shall continue in force
notwithstanding any intermediate payment in part of such obligations or
liabilities.

SECTION 2.03     LC Fees.

 

(a)     In consideration for the Payee procuring the issuances of the Letters of
Credit, the Payer shall pay the Payee a fee (the “LC Fee”) on the Payee Deposit.
 The LC Fee shall be payable in Dollars on the applicable Fee Payment Date and
shall accrue on the Payee Deposit from and including the date of this Agreement
to, but excluding, the LC Release Date.  On the

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Closing Date, the Payer shall designate whether the LC Fee shall accrue at the
Adjusted LIBO Rate plus the Applicable Rate or the Alternate Base Rate plus the
Applicable Rate; provided that, for purposes of calculating the LC Fee, the
Payer may, at its option, elect to allocate the Payee Deposit to one or more
tranches and elect to have the LC Fee computed for each tranche by reference to
the Adjusted LIBO Rate (each such tranche calculated by reference to the
Adjusted LIBO Rate, a “Eurodollar Tranche”) or the Alternate Base Rate (each
such Trance calculated by reference to the Alternate Base Rate, an “ABR Tranche”
and together with the Eurodollar Tranche, the “Tranches” and each, a
“Tranche”).  The LC Fee on each Eurodollar Tranche shall be a Dollar amount
equal to a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days), for the applicable Fee Period in respect of
such Eurodollar Tranche, equal to the Adjusted LIBO Rate plus the Applicable
Rate on the Dollar equivalent of the average Payee Deposits comprising such
Eurodollar Tranche (calculated by reference to the Fixed Exchange Rate).  The LC
Fee on each ABR Tranche shall be a Dollar amount equal to a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be), for the applicable Fee Period in respect of
such ABR Tranche, equal to the Alternate Base Rate plus the Applicable Rate on
the Dollar equivalent of the average Payee Deposit comprising such ABR Tranche
(calculated by reference to the Fixed Exchange Rate).   In order to allocate the
Payee Deposit to one or more Tranches on the Closing Date for purposes of
calculating the LC Fee, the Payer shall notify the Payee of such Allocation
Request on or prior to the Closing Date by telephone.  Such telephonic
Allocation Request shall be irrevocable, and shall be confirmed promptly by hand
delivery or fax to the Payee of a written Allocation Request and shall specify
the following information:  (i) whether such Allocation is to be a Eurodollar
Tranche or an ABR Tranche  (provided that, until the Payee shall have notified
the Payer that the primary syndication of the Term B Commitments has been
completed (which notice shall be given as promptly as practicable and, in any
event, within 30 days after the Closing Date), the Payer shall not be permitted
to request a Eurodollar Tranche with a Fee Period in excess of one month);
(ii) the amount of the Payee Deposit that shall be Allocated to the applicable
Tranche; and (iii) if such Allocation is to be a Eurodollar Tranche, the Fee
Period with respect thereto.  

(b)     The Payer shall have the right at any time upon prior irrevocable notice
to the Payee (a) not later than 12:00 (noon), New York City time, one Business
Day prior to conversion, to convert any Eurodollar Tranche into an ABR Tranche,
(b) not later than 12:00 (noon), New York City time, three Business Days prior
to conversion or continuation, to convert any ABR Tranche into a Eurodollar
Tranche or to continue any Eurodollar Tranche as a Eurodollar Tranche for an
additional Fee Period, and (c) not later than 12:00 (noon), New York City time,
three Business Days prior to conversion, to convert the Fee Period with respect
to any Eurodollar Tranche to another permissible Fee Period, subject in each
case to the following:

(i)     unless the administrative agent under the Term B Credit Agreement shall
have notified the Payee that the primary syndication of the Term B Commitments
and/or the Term B Loans has been completed (which notice shall be given as
promptly as practicable), no ABR Tranche may be converted into a Eurodollar
Tranche with a Fee Period in excess of one month prior to the date that is 30
days after the Closing Date;

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(ii)     if less than all the amount of the Payee Deposit in a Tranche shall be
converted or continued, then the amount of any Payee Deposit comprising each
resulting Tranche shall be in an integral multiple of $1,000,000 and not less
than $5,000,000;

(iii)    if any Eurodollar Tranche is converted at a time other than the end of
the Fee Period applicable thereto, the Payer shall pay, upon demand, any amounts
due to the Payee to indemnify the Payee against any loss or expense that the
Payee actually sustains or incurs as a consequence of (a) any event, other than
a default by the Payee in the performance of its obligations hereunder, which
results in (i) the Payee receiving or being deemed to receive any amount on
account of the conversion of any Eurodollar Tranche occurring prior to the end
of the Fee Period in effect therefor or (ii) the conversion of any Eurodollar
Tranche to an ABR Tranche, or the conversion of the Fee Period with respect to
any Eurodollar Tranche, in each case other than on the last day of the Fee
Period in effect therefor (any of the events referred to in this clause (a)
being called a “Breakage Event”) or (b) any default in the making of any payment
required to be made hereunder.  In the case of any Breakage Event, such loss
shall include an amount equal to the excess of (i) its cost of obtaining funds
for the portion of the Payee Deposit that constitutes the Eurodollar Tranche
that is the subject of such Breakage Event for the period from the date of such
Breakage Event to the last day of the Fee Period in effect (or that would have
been in effect) for such Eurodollar Tranche over (ii) the amount of interest
realized by the Payee in redeploying the funds released or not utilized by
reason of such Breakage Event for such period.  A certificate of any Lender
setting forth any amount or amounts which the Payee is entitled to receive
pursuant to this Section 2.03 shall be delivered to the Payer and shall be
conclusive absent manifest error; 

(iv)    no Tranche may be converted into, or continued as, a Eurodollar Tranche
within one month of the LC Release Date; and

(v)     upon notice to the Payer from the Payee and/or the Collateral Agent,
after the occurrence and during the continuance of an Event of Default, no
Tranche may be converted into, or continued as, a Eurodollar Tranche.

Each notice pursuant to this Section 2.03(b) shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Tranche
that the Payer requests be converted or continued, (ii) whether such Tranche is
to be converted to or continued as a Eurodollar Tranche or an ABR Tranche,
(iii) if such notice requests a conversion, the date of such conversion (which
shall be a Business Day) and (iv) if such Tranche is to be converted to or
continued as a Eurodollar Tranche, the Fee Period with respect thereto.  If no
Fee Period is specified in any such notice with respect to any conversion to or
continuation as a Eurodollar Tranche, the Payee shall be deemed to have selected
a Fee Period of one month’s duration.  If the Payee shall not have given notice
in accordance with this Section 2.03(b) to continue any Tranche into a
subsequent Fee Period (and shall not otherwise have given notice in accordance
with this Section 2.03(b) to convert such Tranche), such Tranche shall, at the
end of the Fee Period applicable thereto automatically be converted to an ABR
Tranche.

(c)     In the event, and on each occasion, that on the day two Business Days
prior to the commencement of any Fee Period for any calculation of the LC Fee on
a Eurodollar Tranche, the

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Collateral Agent shall have determined that reasonable means do not exist for
ascertaining the Adjusted LIBO Rate, the Collateral Agent shall, as soon as
practicable thereafter, give written or fax notice of such determination to the
Payer and the Payee.  In the event of any such determination, until the
Collateral Agent shall have advised Payer and the Payee that the circumstances
giving rise to such notice no longer exist, any request by the Payee for a LC
Fee based on reference to the Adjusted LIBO Rate pursuant to this Section 2.03
shall be deemed to be a request for an election that the LC Fee be calculated
based on reference to the Alternate Base Rate.  Each determination by the
Collateral Agent under this Section 2.03 shall be conclusive absent manifest
error.

(d)     Any reduction in the Payee Deposit will be deemed to first reduce all
ABR Tranches before reducing a LIBOR Tranches.

SECTION 2.04     Other Fees.

 

(a)     Fronting Fee.  In respect of the issuances of the Letters of Credit, the
Payer shall pay the Payee a fronting fee (the “Fronting Fee”) equal to 0.25% per
annum on the aggregate daily average face amount of all Letters of Credit
outstanding.  The Fronting Fee shall be payable on the second to last Business
Day of each fiscal quarter.

(b)     Estimated Administrative Costs.  On or prior to the Closing Date, the
Payee shall provide the Payer with a written estimate of the costs for the
maintenance of the Payee’s corporate existence and the expenses expected to be
incurred by the Payee in connection with the LC Issuance Documents to which it
is a party for the first fiscal quarter following the Closing Date (the
“Estimated Administrative Costs”).  The Payer shall pay to the Payee the
Estimated Administrative Costs on the LC Issuance Date.  On last day of each
fiscal quarter thereafter and on the LC Release Date (or, if the LC Release Date
is not a Business Day, the preceding Business Day), the Payer shall (i)
reimburse the Payee for the administrative costs and expenses for the prior
fiscal quarter that are incurred by the Payee and still outstanding, (ii)
promptly reimburse the Payee an amount equal to any Luxembourg Taxes payable by
the Payee and any additional amount or indemnity payable by the Payee with
respect to any Taxes under the terms of the Term B Credit Agreement and (iii)
promptly reimburse the Payee an amount equal to any other amounts payable by the
Payee under Section 2.14 under the Term B Credit Agreement, in each case in the
currency in which such costs, expenses and Taxes have been incurred.

(c)     Default Rate.  If the Payer (or Holdings, as applicable) fails to pay
any amount due and payable by it in connection with or under this Agreement 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 the rate of
the applicable Fee plus two percent (2.0%).  Any interest accruing under this
Section 2.04(c) shall be immediately payable by the Payer on demand by the
Payee.

Article III
Maximum LC Amount; Release of Payee Deposit

 

SECTION 3.01     Voluntary Reduction of Maximum LC Amount

 

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(a)     Subject to the concurrent payment of the Applicable Premium, the Payer
may at any time and from time to time prior to the LC Release Date reduce the
Maximum LC Amount (including to zero).

(b)     The Payer shall notify the Payee of any election to reduce the Maximum
LC Amount under Section 3.01(a) at least three Business Days prior to the
effective date of such reduction, specifying such election and the effective
date thereof. 

(c)     Notwithstanding the foregoing, in no event shall the Maximum LC Amount
be reduced to an amount that is less than the aggregate face amount of the
outstanding Letters of Credit issued pursuant to the LC Issuance Documents, plus
the amount, if any, demanded by the Payee pursuant to Section 2.02(a) and not
reimbursed by the Payer.

SECTION 3.02     Mandatory Posting of Payer Deposit. 

 

(a)     Asset Sales.  Not later than the third Business Day following the
receipt of Net Proceeds from Asset Sales in excess of $10,000,000 in the
aggregate by for Holdings and its Restricted Subsidiaries, the Payer shall apply
100% of the Net Proceeds received with respect thereto (i) first, in accordance
with Section 2.13(a) of the Term A Credit Agreement and (ii) second, the
balance, if any to increase the amount of the Payer Deposit; provided that no
such increase of the Payer Deposit shall be required under this Section 3.02(a)
if (A) the Payer shall deliver a certificate of a Financial Officer to the Payee
at the time of receipt thereof setting forth the intent of Holdings or the
applicable Restricted Subsidiary to use such Net Proceeds to (1) subject to
compliance with the Additional Guarantor Requirement as of the date of such
investment, invest in or acquire Additional Assets or (2) make Capital
Expenditures in respect of Holdings’ or its Restricted Subsidiaries’ Oil and Gas
Business, in each case, within 365 days after receipt of such proceeds and (ii)
no Default or Event of Default shall have occurred and shall be continuing or
would result therefrom at the time of such certificate; provided further that if
such Net Proceeds are not applied as pursuant to clause (1) or (2) above within
such 365-day period, such Net Proceeds shall, subject to clause (a)(i) above, be
applied to increase the Payer Deposit pursuant to this Section 3.02.  The
requirement of clause (1) or (2) above shall be deemed to be satisfied if a bona
fide binding contract committing to make the investment, acquisition or
expenditure referred to therein is entered into by Holdings or any of its
Restricted Subsidiaries with a Person other than an Affiliate of Holdings within
the time period specified above in this paragraph and such Net Proceeds are
subsequently applied in accordance with such contract within six months
following the date such agreement is entered into.

(b)     Incurrence of Indebtedness.  In the event that Holdings or any
Restricted Subsidiary of Holdings shall receive Net Proceeds from the issuance
or incurrence of Indebtedness for money borrowed by any Payer Party or any
Subsidiary of a Payer Party (other than any cash proceeds from the issuance of
Indebtedness permitted pursuant to Section 8.03), the Payer shall substantially
simultaneously with (and in any event not later than the third Business Day
following) the receipt of such Net Proceeds by Holdings or such Restricted
Subsidiary, apply an amount equal to 100% of such Net Proceeds (a) first, in
accordance with Section 3.02(b) of the Term A Credit Agreement and (b) second,
the balance, if any to increase the amount of the Payer Deposit.  All increases
in the Payer Deposit pursuant to this Section 3.02(b) shall be accompanied by
the concurrent payment of the Applicable Premium.

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(c)     Excess Cash Flow.  Not later than 100 days after the end of each fiscal
year of Holdings beginning with the fiscal year ending December 31, 2014, the
Payer shall calculate Excess Cash Flow for such fiscal year and apply an
aggregate amount equal to the Applicable Percentage of such Excess Cash Flow (a)
first, in accordance with Section 2.13(c) of the Term A Credit Agreement and (b)
second, the balance, if any, to increase the amount of the Payer Deposit.  Not
later than the date on which the Payer is required to deliver financial
statements with respect to the end of each fiscal year under Section 7.01(a),
the Payer will deliver to the Payee a certificate signed by a Financial Officer
of Holdings setting forth the amount, if any, of Excess Cash Flow for such
fiscal year and the calculation thereof in reasonable detail. 

(d)     Amortization Payment.  On the second to last Business Day of each fiscal
quarter, beginning with the fiscal quarter in which the Term A Loans are paid in
full, Payer shall increase the amount of the Payer Deposit by an amount equal to
the amount of the Amortization Payment (as defined in the Term A Credit
Agreement and after giving effect to all adjustments to the amount of such
Amortization Payment through the repayment of the Term A Loans).  The amount of
each remaining quarterly increase in the Payer Deposit required pursuant to this
clause shall be ratably reduced by the amount of the Payee Deposit released to
the Payee pursuant to Section 3.04 as a result of (x) any voluntary reduction of
the Maximum LC Amount pursuant to Section 3.01 or (y) any increase in Payer
Deposit as a result of any mandatory posting of Payer Deposit pursuant to
Sections 3.02(a), 3.02(b) and 3.02(c), in each case that results in a prepayment
of Term B Loans.

(e)     LC Release Date.  On the LC Release Date, subject to the procurement of
the release of all Letters of Credit on the LC Release Date, the Maximum LC
Amount shall be reduced to zero.

SECTION 3.03     Increase of Maximum LC Amount.

 

(a)     The Payer may, by written notice to the Payee from time to time, request
an increase of the Maximum LC Amount.  Such notice shall set forth (i) the
amount of the increase of the Maximum LC Amount being requested (which shall be
in minimum increments of $1,000,000 and a minimum amount of $5,000,000) and (ii)
the date on which such increase is requested to become effective (which shall
not be less than 10 Business Days nor more than 60 days after the date of such
notice).

(b)     The Payee shall be entitled to agree or decline to increase the Maximum
LC Amount in its sole discretion.  Holdings and the Payer shall execute and
deliver to the Payee such documentation as the Payee shall reasonably specify to
evidence the increase in the Maximum LC Amount.

(c)     Notwithstanding the foregoing, no increase in the Maximum LC Amount
shall become effective under this Section 3.03 unless (i) on the date of such
effectiveness, the conditions set forth in paragraphs (b) and (c) of Section
5.02 shall be satisfied and the Payee shall have received a certificate to that
effect dated such date and executed by a Financial Officer of the Payee, (ii)
except as otherwise specified by the Payee, the Payee shall have received Board
Resolutions and other closing certificates reasonably requested by the Payee and
consistent with

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those delivered on the Closing Date under Section 5, and (iii) all fees and
expenses owed to the Payee under the LC Procurement Documents shall have been
paid.

SECTION 3.04     Release of Payee Deposit.  In the event at any time the Payee
Deposit, taken together with the Payer Deposit, exceeds 102% of the Maximum LC
Amount, including as a result of the reduction in the Maximum LC Amount or any
posting of the Payer Deposit, the Payee will, upon the request of the Payer,
cause the amount of such excess Payee Deposit to be promptly released by the LC
Bank, and the Payee will use such released amounts to purchase Dollars which,
subject to any upward or downward adjustment with respect to such release
pursuant to the FX True Up, will be required to prepay the Term B Loans, until
repaid in full.

 

SECTION 3.05     FX True Up.  Within one Business Day following any
reimbursement by the Payer of payments made by the Payee under a Letter of
Credit from the LC Bank pursuant to Section 2.02(a) or any release of the Payee
Deposit pursuant to Section 3.04, the Payee shall use the full amount of such
reimbursed or released amount to purchase Dollars (the “Purchased Dollar
Amount”) and not later than one Business Day immediately thereafter (a) the
Payee shall pay to the Payer a cash amount in Dollars equal to the amount, if
any, by which the Purchased Dollar Amount exceeds the amount of Dollars the
Payee used to purchase the Sterling constituting the reimbursed or released
amount at the Fixed Exchange Rate (“Original Dollar Amount”) and (b) the Payer
shall pay to the Payee a cash amount in Dollars equal to the amount, if any, by
which the Original Dollar Amount exceeds the Purchased Dollar Amount (the
foregoing referred to as the “FX True Up”).

 

Article IV.
Payments

 

SECTION 4.01     Method and Place of Payment.  All payments under this Agreement
shall be made to the Payee not later than 12:00 Noon (London time) on the date
when due and shall be made in the currency requested for such payments and in
immediately available funds at the address for notices of the Payee as specified
in Section 11.01(c).  Except as otherwise expressly provided herein, whenever
any payment to be made hereunder shall be stated to be due on a day which is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable at the applicable rate during such extension.

 

SECTION 4.02     Tax Gross-Up and Indemnities.

 

(a)     Tax gross-up.

(i)     Each Payer Party shall make all payments to be made by it or on its
behalf without any Tax Deduction, unless a Tax Deduction is required by law.

(ii)     The Payer shall promptly upon becoming aware that a Payer Party must
make a Tax Deduction (or that there is any change in the rate or the basis of a
Tax Deduction) notify the Payee accordingly.  Similarly, the Payee shall notify
the Payer Party on becoming so aware in respect of a payment payable to the
Payee.

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(iii)    If a Tax Deduction is required by law to be made by a Payer Party, the
amount of the payment due from such Payer Party shall be increased to an amount
which (after making any Tax Deduction) leaves an amount equal to the payment
which would have been due if no Tax Deduction had been required.

(iv)     If a Payer Party is required to make a Tax Deduction (including any
deduction or withholding under FATCA), such Payer Party shall make such Tax
Deduction and any payment required in connection with such Tax Deduction within
the time allowed and in the minimum amount required by law.

(v)     Within 30 days of making either a Tax Deduction or any payment required
in connection with that Tax Deduction, the Payer Party making such Tax Deduction
shall deliver to the Payee for the Lender entitled to the payment a statement
under section 975 of the U.K.’s Income Tax Act 2007 or other evidence reasonably
satisfactory to such Lender that the Tax Deduction has been made or (as
applicable) any appropriate payment paid to the relevant taxing authority.

(vi)     The Payee (to the extent it is legally entitled to), and each Payer
Party which makes a payment to which the Payee is entitled, shall cooperate in
completing any procedural formalities necessary for such Payer Party to obtain
authorization to make that payment without a Tax Deduction (including, without
limitation, submitting a claim under the applicable double tax treaty) and shall
take such action as the Payer requests (including authorizing the Payer to take
conduct of such dispute) to dispute any refusal of an application to obtain such
authorization, provided that all costs of such dispute be borne by the Payer.

(vii)    The Payee, if requested by the Payer, shall deliver such other
documentation prescribed by Applicable Law or reasonably requested by the Payer
as will enable the Payer to determine whether or not the Payee is subject to
United States backup withholding or information reporting requirements.

(b)     Tax indemnity.

(i)     The Payer shall (within 10 Business Days of demand by the Payee) pay to
a Protected Party an amount equal to the loss, liability or cost which that
Protected Party determines will be or has been suffered for or on account of Tax
(including any withholding or deduction imposed under FATCA) by that Protected
Party in respect of a LC Procurement Document.

(ii)     Paragraph (i) above shall not apply to the extent the loss, liability
or cost is compensated for by an increased payment under Section 4.02(a),
Section 2.04(b) or Section 11.05(iii). 

(iii)    A Protected Party making, or intending to make a claim under
paragraph (i) above shall promptly notify the Payee of the event which will
give, or has given, rise to the claim, following which the Payee shall notify
the Payer.

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(iv)     A Protected Party shall, on receiving a payment from a Payer Party
under this Section 4.02(b), notify the Payee.

(c)     Tax Credit.  If a Payer Party makes a Tax Payment and the Payee
determine that:

(i)     a Tax Credit is attributable either to an increased payment of which
that Tax Payment forms part, or to that Tax Payment; and

(ii)     the Payee has obtained, utilized and retained that Tax Credit,

the Payee shall pay an amount to the applicable Payer Party which the Payee
reasonably determines will leave the Payee (after such payment) in the same
after-Tax position as it would have been in had the Tax Payment not been
required to be made by such Payer Party.  

(d)     Stamp Taxes.  The Payer shall pay and, within 3 Business Days of demand,
indemnify the Payee against any cost, loss or liability that the Payee incur in
relation to all stamp duty, registration and other similar Taxes payable in
respect of this Agreement except for any tax imposed as a result of a voluntary
registration by the Payee of this Agreement.

(e)     VAT.

(i)     All amounts set out, or expressed in a LC Procurement Document to be
payable by any Payer Party to the Payee which (in whole or in part) constitute
the consideration for a supply or supplies for VAT purposes shall be deemed to
be exclusive of any VAT which is chargeable on such supply or supplies, and
accordingly, subject to paragraph (ii) below, if VAT is or becomes chargeable on
any supply made by the Payee to any Payer Party under a LC Procurement Document
and the Payee is required to account for the VAT, that Payer Party shall pay to
the Payee (in addition to and at the same time as paying any other consideration
for such supply) an amount equal to the amount of such VAT (and the Payee shall
promptly provide an appropriate VAT invoice to such Payer Party).

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

(iii)    Where a LC Procurement Document requires any Payer Party to reimburse
or indemnify the Payee for any cost or expense, the Payer Party shall reimburse
or indemnify (as the case may be) the Payee for the full amount of such cost or
expense,

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including such part thereof as represents VAT, save to the extent that the Payee
reasonably determines that it is entitled to credit or repayment in respect of
such VAT from the relevant tax authority.

(iv)     Any reference in this Section 4.02(e) to any Payer Party shall, at any
time when such Payer 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).

For the purposes of this Section 4.02, any reference to a U.K. statutory
provision includes a reference to that provision as modified or replaced from
time to time after the Closing Date.

(f)     FATCA Information.  Each party shall, within ten Business Days of a
reasonable request by another party supply to that other party such forms,
documentation and other information relating to its status under FATCA
(including its applicable “passthru payment percentage” or other information
required under the United States Treasury Regulations or other official guidance
including intergovernmental agreements) as that other party reasonably requests
for the purposes of that other party's compliance with FATCA. Notwithstanding
the foregoing, a Payee shall not be obligated to do anything which would or
might in its reasonable opinion constitute a breach of: (i) any law or
regulation, (ii) any fiduciary duty, or (iii) any duty of confidentiality.

Article V.
Conditions Precedent.

 

SECTION 5.01     Conditions Precedent to the Closing Date.  The obligations of
the Payee to enter into the Commitment are subject to the satisfaction of the
following conditions on the Closing Date:

 

(a)     Legal Opinions.  The Payee shall have received, on behalf of itself, a
favorable written opinion of (i) Vinson & Elkins L.L.P., special New York
counsel to the Payer Parties, in substantially the form attached as Exhibit H-1
hereto, (ii)  Vinson & Elkins R.L.L.P., special English counsel to the Credit
Parties, in substantially the form attached as Exhibit H-2 hereto; (iii) Vinson
& Elkins L.L.P., special New York counsel to the Payer Parties, in connection
with the joinder agreement to the Intercreditor Agreement referenced in Section
5.01(o) and with respect to such matters, and in form, reasonably acceptable to
the Collateral Agent; (iv) Woodburn and Wedge, special Nevada counsel to
Holdings, in substantially the form attached as Exhibit H-3 hereto, in each case
dated the Closing Date, and (v)  Allen & Overy, a  société en commandite simple,
 special Luxembourg counsel to the Payee,  in substantially the form attached as
Exhibit H-4 hereto, in each case, dated the Closing Date.

(b)     Officer’s Certificates.  The Payee shall have received (i) a copy of the
certificate or articles of incorporation (or equivalent agreement or instrument
governing the formation or operation of the applicable Payer Party), including
all amendments thereto, of each Payer Party except EIH, to the extent
applicable, certified, as of a recent date by the Secretary of State of the
state of its formation (or equivalent Governmental Authority), and, to the
extent applicable, a

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

(c)     Certificate.  The Payee shall have received a certificate, dated the
Closing Date and signed by a Responsible Officer of the Payer, certifying
compliance with the conditions precedent set forth in paragraphs (b) and (c) of
Section 5.02.

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

(e)     LC Procurement Documents.  The Payee and the Collateral Agent shall have
received each of (i) this Agreement and (ii) the Security Documents, in each
case, duly executed by each applicable Payer Party and each other party that is
to be a party hereto or thereto and each such document shall be in full force
and effect on the Closing Date.  The Collateral Agent on behalf of the Payee
shall have a security interest in the Collateral of the type and priority
described in each Security Document.

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

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

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

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

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

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

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

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

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

(k)     Subordination Agreement.  The Collateral Agent shall have received a
subordination agreement, duly executed by each of EOC, EEUK, EIH and Endeavour
Energy

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Luxembourg S.à r.l.,  (as amended, modified, restated and/or supplemented from
time to time, the “Subordination Agreement”), with respect to (i) that certain
Inter-Company Loan Agreement, dated as of May 31, 2012, and between EOC and EEUK
and (ii) that certain revolving loan facility agreement dated January 23, 2008
between EIH and Endeavour Energy Luxembourg S.à.r.l., which agreement shall be
in substantially the form of Exhibit J and otherwise acceptable to the
Collateral Agent.  

(l)     Solvency Certificate.  The Payee shall have received a solvency
certificate from a Financial Officer of Holdings in the form of Exhibit A. 

(m)     Insurance Certificates.  The Collateral Agent shall have received
certificates of insurance complying with the requirements of Section 7.03 for
the business and properties of Holdings and its Restricted Subsidiaries, in form
and substance reasonably satisfactory to the Payee and naming the Collateral
Agent as an additional insured and/or as loss payee, as applicable.

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

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

(p)     Term B Credit Agreement.  The Payee and the Collateral Agent shall have
received evidence satisfactory to it that the Term B Credit Agreement and the
other Credit Documents (as defined thereunder), including, without limitation,
the Collateral Assignment shall have been duly authorized, executed and
delivered by each of the parties thereto and in full force and effect and that
all conditions to the effectiveness of the parties obligations thereunder (other
than the effectiveness of this Agreement) shall have been satisfied. 

(q)     LC Issuance Agreement.  Each of the Payee and the Collateral Agent shall
have received evidence satisfactory to it that the LC Issuance Agreement shall
have been duly authorized, executed and delivered by each of the parties thereto
and shall be in full force and effect, and  the Payee shall have received a
notice to instruct the LC Bank to issue Letters of Credit pursuant to Section
2.01(b).

(r)     Service of Process.  On or prior to the Closing Date, the Payee shall
have received evidence satisfactory to them that (i) each Payer Party has
appointed CT Corporation as agent for service of process as contemplated in
Section 11.18 and (ii) CT Corporation has accepted its appointment.

(s)     Payee Deposit.  The Payer shall have paid the Payee an amount in
Sterling equal to the Dollar equivalent of one and a half percent (1.5%) of 102%
of the Maximum LC Amount in

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effect on the Closing Date (calculated by reference to the Fixed Exchange Rate),
which amount shall be deposited by the Payee with the LC Bank on the Closing
Date and shall constitute a portion of the Payee Deposit.

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

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

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

SECTION 5.02     Additional Conditions.  The obligation of the Payee to instruct
the LC Bank to issue any Letter of Credit under the LC Issuance Documents
pursuant to Section 2.01(a) is subject to the satisfaction of the following
conditions:

 

(a)     The Payee shall have received a request to enter into a LC Issuance
Document as required by Section 2.01(b).

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

(c)     At the time of and immediately after the entry into the LC Issuance
Documents, no Default or Event of Default shall have occurred and be continuing.

Each request to enter into a LC Issuance Document shall be deemed to constitute
a representation and warranty by the Payer and Holdings on the date thereof as
to the matters specified in paragraphs (b) and (c) of this Section 5.02.

Article VI.
Representations and Warranties.

 

The Payer and the Collateral Agent represents and warrants to the Payee that:

 

SECTION 6.01     Company Status.  Each of Holdings and each of its Subsidiaries
(a) is a duly organized and validly existing Business in good standing (or, in
the case of any Foreign Subsidiary of Holdings, the applicable equivalent of
“good standing” to the extent that such

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

 

SECTION 6.02     Power and Authority.  Each Payer Party has the Business power
and authority to execute, deliver and perform the terms and provisions of each
of the LC Procurement Documents to which it is a party and has taken all
necessary Business action to authorize the execution, delivery and performance
by it of each of such LC Procurement Documents.  Each Payer Party has duly
executed and delivered each of the LC Procurement Documents to which it is a
party, and each of such LC Procurement Documents constitutes its legal, valid
and binding obligation enforceable in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws generally affecting
creditors’ rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law).

 

SECTION 6.03     No Violation.  Neither the execution, delivery or performance
by any Payer Party of the LC Procurement Documents to which it is a party, nor
compliance by it with the terms and provisions thereof, (a) will contravene any
provision of any law, statute, rule or regulation or any order, writ, injunction
or decree of any court or Governmental Authority, (b) will conflict with or
result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (except pursuant to the
Security Documents) upon any of the property or assets of any Payer Party or any
of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument, in each case to which any Payer Party or any of its
Subsidiaries is a party or by which it or any its property or assets is bound or
to which it may be subject or (c) will violate any provision of the certificate
or articles of incorporation, certificate of formation, limited liability
company agreement or by-laws (or equivalent constitutional, organizational
and/or formation documents), as applicable, of any Payer Party or any of its
Subsidiaries.

 

SECTION 6.04     Approvals.  No order, consent, approval, license, authorization
or validation of, or filing, recording or registration with (except (a) for
those that have otherwise been obtained or made on or prior to the date hereof
and remain in full force and effect on the date hereof and (b) filings which are
necessary to perfect the security interests created or intended to be created
under the Security Documents, which filings will be made within 10 days
following the Closing Date), or exemption by, any Governmental Authority or
other Person is required to be obtained or made by, or on behalf of, any Payer
Party to authorize, or is required

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to be obtained or made by, or on behalf of, any Payer Party in connection with,
(i) the execution, delivery and performance of any LC Procurement Document or
(ii) the legality, validity, binding effect or enforceability of any such LC
Procurement Document.

 

SECTION 6.05     Financial Statements; Financial Condition; Undisclosed
Liabilities.

 

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

(b)     On and as of the Closing Date, and after giving effect to those of the
Transactions to be consummated on the Closing Date and to all Indebtedness being
incurred or assumed and Obligations incurred by the Payer Parties in connection
therewith on such date, (i) the sum of the fair value of the assets, at a fair
valuation, of the Payer Parties and their Subsidiaries (taken as a whole) will
exceed their debts (taken as a whole), (ii) the sum of the present fair salable
value of the assets of the Payer Parties and their Subsidiaries (taken as a
whole) will exceed their debts (taken as a whole), (iii) the Payer Parties and
their Subsidiaries (taken as a whole) have not incurred and do not intend to
incur, and do not believe that they will incur, debts beyond their ability to
pay such debts as such debts mature and (iv) the Payer Parties and their
Subsidiaries (taken as a whole) will have sufficient capital with which to
conduct their businesses.  For purposes of this Section 6.05(b), “debt” means
any liability on a claim, and “claim” means (A) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured,
or unsecured or (B) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.  The amount of contingent liabilities at any
time shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

(c)     Except as disclosed in the financial statements delivered pursuant to
Section 6.05(a), and except for the obligations under this Agreement, there are
as of the date hereof and the Closing Date no liabilities or obligations with
respect to Holdings or any of its Subsidiaries of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether or not due) which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.  As of the date hereof and the Closing Date, neither
Holdings nor the Payer knows of any basis for the assertion against Holdings or
any of its Subsidiaries of any liability or obligation of any nature whatsoever
that is not disclosed in such financial statements delivered pursuant to
Section 6.05(a) or referred to in the immediately preceding sentence which,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

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

SECTION 6.06     Litigation.  There are no actions, suits or proceedings pending
or, to the knowledge of Holdings or the Payer, threatened (a) with respect to
the Transactions or any LC Procurement Document or (b) that has had, or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.

 

SECTION 6.07     True and Complete Disclosure.  All written factual information
(taken as a whole) furnished by or on behalf of Holdings or the Payer to the
Payee (including, without limitation, all information contained in the LC
Procurement Documents) for purposes of or in connection with this Agreement, the
other LC Procurement Documents or any transaction contemplated herein or therein
is, and all other such written factual information (taken as a whole) hereafter
furnished by or on behalf of Holdings or the Payer in writing to the Payee will
be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances under which such
information was provided.  Any projections or forward-looking statements (the
“Projections”) furnished by or on behalf of Holdings or the Payer to the Payee
will be based on assumptions and estimates developed by management of Holdings
in good faith that management believes to be reasonable as of the date
thereof.  It is understood that all such information, including, without
limitation, any Projections furnished by or on behalf of Holdings or the Payer
to the Payee is supplemented in its entirety by Holdings’ filings with the
SEC.  Whether or not such Projections are in fact achieved will depend upon
future events some of which are not within the control of Holdings and the
Payer. Accordingly, actual results may vary from the Projections and such
variations may be material. Such Projections should not be regarded as a
representation by Holdings or the Payer or its or their management that the
projected results will be achieved.

 

SECTION 6.08     Tax Returns and Payments; Tax Residency.  Each of Holdings and
each of its Subsidiaries has timely filed or caused to be timely filed with the
appropriate taxing authority all federal and all material foreign, state and
local returns, statements, forms and reports for Taxes (the “Returns”) required
to be filed by, or with respect to the income, properties or operations of,
Holdings and/or any of its Subsidiaries, and has paid all Taxes and assessments
payable by it which have become due, other than (a) Taxes that are being
contested in good faith and adequately disclosed and for which adequate reserves
have been established in accordance with GAAP or (b) where the failure to pay
any such Taxes would not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.  Each Payer Party is resident
for Tax purposes only in its jurisdiction of organization.  LC Finco US is a
“disregarded entity” for U.S. federal income tax purposes and does not carry out
any business activities in the United States.

 

SECTION 6.09     Compliance with ERISA.  (a) Schedule 6.09 hereto sets forth
each Plan as of the date of this Agreement.  Each Plan (and each related trust,
insurance contract or fund) is in compliance with its terms and with all
applicable laws, including without limitation ERISA and the Code, except to the
extent that any non-compliance could not reasonably be

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expected to result in a material liability to Holdings or any of its
Subsidiaries; each Plan (and each related trust, if any) which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service (or has submitted, or is
within the remedial amendment period for submitting, an application for a
determination letter with the Internal Revenue Service, and is awaiting receipt
of a response) to the effect that it meets the requirements of Sections 401(a)
and 501(a) of the Code or is comprised of a master or prototype plan that has
received a favorable opinion letter from the Internal Revenue Service; or a
volume submitter plan that has received a favorable advisory letter from the
Internal Revenue Service as of the date of this Agreement; no Employee Benefit
Plan is a Multiemployer Plan; no Plan has an Unfunded Current Liability that
could reasonably be expected to result in a material liability; no ERISA Event
has occurred, or is reasonably expected to occur, with respect to any Plan that
could reasonably be expected to result in a material liability to Holdings or
any of its Subsidiaries; all contributions required to be made with respect to a
Plan have been timely made or have been reflected on the most recent
consolidated balance sheet filed prior to the date hereof or accrued in the
accounting records of Holdings and its Subsidiaries; no action, suit,
proceeding, hearing, or audit or investigation by a Governmental Authority with
respect to the administration, operation or the investment of assets of any Plan
(other than routine claims and appeals for benefits) is pending, expected or
threatened  that is reasonably expected to result in a material liability to
Holdings or any of its Subsidiaries; no Multiemployer Plan that is subject to
Section 412 of the Code or Section 302 of ERISA has applied for or received an
extension of any amortization period, within the meaning of Section 431(d) of
the Code or Section 304(d) of ERISA; Holdings, any of its Subsidiaries and any
ERISA Affiliate have not withdrawn as a substantial employer so as to become
subject to the provisions of Section 4063 of ERISA or ceased making
contributions to any Plan subject to Section 4064(a) of ERISA that has
terminated and to which it made contributions at any time within the five Plan
years preceding the date of termination;  none of Holdings, any of its
Subsidiaries or any ERISA Affiliate have incurred or reasonably expect to incur
any liability to the PBGC except for any liability for premiums due in the
ordinary course or other liability which could not reasonably be expected to
result in material liability, and no lien imposed under the Code or ERISA on the
assets of Holdings or any of its Subsidiaries or any ERISA Affiliate exists or
is expected to arise on account of any Plan; none of Holdings, any of its
Subsidiaries or any ERISA Affiliate has incurred, or is expected to incur, any
liability under Section 4069 or 4212(c) of ERISA;  each  Employee Benefit Plan
that is a group health plan (as defined in Section 607(1) of ERISA or Section
4980B(g)(2) of the Code) has at all times been operated in compliance with the
provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the
Code, except to the extent that any non-compliance with any such provisions
could not reasonably be expected to result in a material liability to Holdings
or any of its Subsidiaries; each  Employee Benefit Plain that is group health
plan (as defined in 45 Code of Federal Regulations Section 160.103) has at all
times been operated in compliance with the provisions of the Health Insurance
Portability and Accountability Act of 1996 and the regulations promulgated
thereunder, except to the extent that any non-compliance with such provisions
and regulations could not reasonably be expected to result in a material
liability to Holdings or any of its Subsidiaries; and Holdings and its
Subsidiaries may amend any Plan sponsored by any of them (other than a defined
benefit plan) to cease contributions thereunder and may terminate any Plan
sponsored by any of them without, in each case, incurring any material liability
(other than ordinary administrative termination costs that are immaterial in
nature).

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

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

SECTION 6.10     Security Documents.  When executed and delivered pursuant to
Article V, the provisions of each Security Document, will be effective to create
in favor of the Collateral Agent for the benefit of the Payee a legal, valid and
enforceable security interest of the type that it purports to create in all
right, title and interest of the Payer Parties in the Collateral described
therein, and the Collateral Agent, for the benefit of the Payee, upon such
execution and delivery, will have (or upon filing of UCC financing statements
and other required filings registrations or notices or taking of possession or
control (which shall occur within 10 days following the Closing Date) will have)
a fully perfected security interest in all right, title and interest in all of
the Collateral described therein, subject to no other Liens other than Permitted
Liens, and such security interest shall be a first priority security interest,
subject to Permitted Liens; provided that (i) the Payer shall not be deemed to
represent pursuant to the foregoing that the U.S. Security Agreement creates a
legal, valid and enforceable security interest in any Collateral (as defined in
the U.S. Security Agreement) granted by any Grantor (as defined in the U.S.
Security Agreement) that is not organized under the laws of the United States or
any state thereof (other than Equity Interests held by any such Grantor in any
Person that is organized under the laws of the United States or any state
thereof), and (ii) no steps have been taken in order to perfect any such
security interest in the Collateral referred to in clause (i) (other than Equity
Interests held by any such Grantor in any Person that is organized under the
laws of the United States or any state thereof), in each case granted pursuant
to the U.S. Security Agreement. The recordation of (i) the grant of security
interest in Patents (as defined in the U.S. Security Agreement) and (ii) the
grant of security interest in Trademarks (as defined in the U.S. Security
Agreement) in the respective form attached to the U.S. Security Agreement, in
each case in the United States Patent and Trademark Office, together with
filings on Form UCC-1 made pursuant

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to the U.S. Security Agreement, will create, to the extent as may be perfected
by such filings and recordation, a perfected security interest in the United
States trademarks and patents covered by the U.S. Security Agreement, and the
recordation of the grant of security interest in Copyrights (as defined in the
U.S. Security Agreement) in the form attached to the U.S. Security Agreement
with the United States Copyright Office, together with filings on Form UCC-1
made pursuant to the U.S. Security Agreement, will create, to the extent as may
be perfected by such filings and recordation, a perfected security interest in
the United States copyrights covered by the U.S. Security Agreement.

 

SECTION 6.11     Properties 

 

(a)     All Real Property (other than Oil and Gas Properties) leased by Holdings
or any of its Subsidiaries as of the date hereof and the Closing Date, and the
nature of the interest therein, is set forth in Schedule 6.11(a) hereto.  Each
of Holdings and each of its Subsidiaries has a valid and indefeasible leasehold
interest in the material properties set forth in Schedule 6.11(a) free and clear
of all Liens other than Permitted Liens.  As of the date hereof and the Closing
Date, none of Holdings or any of its Subsidiaries owns any Real Property other
than Oil and Gas Properties.

(b)     All Oil and Gas Properties owned or leased by Holdings or any of its
Subsidiaries as of the date hereof and the Closing Date (other than Oil and Gas
Properties (i) which are not developed, (ii) which have no reserves or (iii) in
which none of Holdings or any of its Subsidiaries have any material working
interests) are reflected in the Reserve Report as of December 31, 2012 or are
otherwise set forth in Schedule 6.11(b).

(c)     Each of Holdings and each of its Subsidiaries, as applicable, has good
and defensible (from the perspective of a reasonably prudent investor in the Oil
and Gas Business) title to all of the Oil and Gas Properties included in the
most recent Reserve Report delivered pursuant to Section 5.01(f) or 7.01(c), as
the case may be, free from all Liens, claims and title imperfections, except for
(i) such imperfections of title as do not in the aggregate detract from the
value thereof to, or the use thereof in, the business of Holdings and its
Subsidiaries in any material respect, (ii) Oil and Gas Properties disposed of
since the date of the most recent Reserve Report as permitted by Section 8.04 or
Section 8.04 of the Existing Credit Agreement and (iii) Liens expressly
permitted by Section 8.06. Except as set forth on Schedule 6.11(c) or to the
extent otherwise permitted under this Agreement, the quantum and nature of the
interest of Holdings and each of its Subsidiaries in and to the Oil and Gas
Properties as set forth in each Reserve Report includes or will include the
entire interest of Holdings and each of its Subsidiaries in such Oil and Gas
Properties as of the date of such Reserve Report and are or will be complete and
accurate in all material respects as of the date of such Reserve Report; and
there are no “back-in” or “reversionary” interests held by third parties which
could reduce the interest (working, net revenue or otherwise) of Holdings and
its Subsidiaries in such Oil and Gas Properties in any material respect, except
as expressly set forth or given effect to in such Reserve Report or on Schedule
6.11(c). Except for obligations to contribute a proportionate share of the costs
of defaulting or non-consenting co-owners or as otherwise expressly set forth in
the most recent Reserve Report, neither Holdings nor any Subsidiary is obligated
to bear any percentage share of the costs and expenses relating to the drilling,
development and production of the Oil and Gas Properties in excess of its
working interests.

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

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

SECTION 6.12     Reserved.

 

SECTION 6.13     Subsidiaries.  On and as of the date hereof, Holdings has no
Subsidiaries other than those Subsidiaries listed on Schedule 6.13
hereto.  Schedule 6.13 sets forth, as of the date hereof and the Closing Date,
the percentage ownership (direct and indirect) of Holdings in each class of
Capital Stock of each of its Subsidiaries and also identifies the direct owner
thereof.  All outstanding Capital Stock of each Subsidiary of Holdings has been
duly and validly issued, is fully paid and non-assessable and has been issued
free of preemptive rights.  Other than as set forth on Schedule 6.13, no
Subsidiary of Holdings has outstanding any securities convertible into or
exchangeable for its Capital Stock or outstanding any right to subscribe for or
to purchase, or any options or warrants for the purchase of, or any agreement
providing for the issuance (contingent or otherwise) of or any calls,
commitments or claims of any character relating to, its Capital Stock or any
appreciation or similar rights.  On the date hereof and the Closing Date, 100%
of the Equity Interests of each Payer Party is owned directly or indirectly by
Holdings.

 

SECTION 6.14     Compliance with Statutes, etc.    

 

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(a)     Each of Holdings and each of its Subsidiaries is qualified under and is
in compliance with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, and has obtained all required Authorizations
from, all Governmental Authorities in respect of the conduct of its business and
the ownership of its property (including statutes, regulations, orders and
restrictions applicable to the Oil and Gas Business and applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls, except such statutes, regulations, orders and restrictions that are
expressly addressed in Section 6.16), except such non-compliances as could not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

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

SECTION 6.15     Investment Company Act.  Neither Holdings nor any of its
Subsidiaries is an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.

 

SECTION 6.16     Environmental Matters.  Except as could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect:  (a) each of Holdings and each of its Subsidiaries is in compliance with
all applicable Environmental Laws and, with respect to its current operations,
has obtained and is in compliance with all permits required of it under
Environmental Law, and there are no proceedings pending or, to the knowledge of
Holdings or the Payer, threatened to revoke or rescind any such permit;
(b) there are no claims, proceedings, investigations or notices of violation
pending or, to the knowledge of Holdings or the Payer, threatened  against
Holdings or any of its Subsidiaries under any Environmental Law; (c) no Lien,
other than a Permitted Lien, has been recorded or, to the knowledge of Holdings
or the Payer, threatened under any Environmental Law with respect to any Real
Property currently owned by Holdings or any of its Subsidiaries; (d) neither
Holdings nor any of its Subsidiaries has contracted to assume or accept
responsibility for any liability of any non-affiliated Person under any
Environmental Law; and (e) there are no facts, circumstances, conditions or
occurrences with respect to the past or present business or operations of
Holdings, any of its Subsidiaries or any of their respective predecessors, or
any Real Property or facility at any time owned, leased or operated by Holdings,
any of its Subsidiaries or any of their respective predecessors, that could be
reasonably expected to give rise to any claim, proceeding, investigation, action
or liability of or against Holdings or any of its Subsidiaries under any
Environmental Law.

 

SECTION 6.17     Employment and Labor Relations.  (a) Neither Holdings nor any
of its Subsidiaries is engaged in any unfair labor practice that could
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect.  There is (i) no unfair labor practice complaint
pending against Holdings or any of its Subsidiaries or, to the knowledge of
Holdings or the Payer, threatened against any of them, before the National Labor
Relations Board, and no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against Holdings or any
of its Subsidiaries or, to the knowledge of Holdings or the Payer, threatened
(in writing) against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against Holdings or any of its Subsidiaries or, to the
knowledge of Holdings or the Payer, threatened (in writing) against Holdings or
any of its Subsidiaries, (iii) no union representation question exists with
respect to the employees of

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Holdings or any of its Subsidiaries, (iv) no legal actions, lawsuits,
arbitrations, administrative or other proceedings, charges, complaints,
investigations, inspections, audits or notices of violations or possible
violations are pending or, to the knowledge of Holdings or the Payer, threatened
against Holdings or any of its Subsidiaries by or on behalf of, or otherwise
involving, any current or former employee, any person alleging to be a current
or former employee, any applicant for employment, or any class of the foregoing,
or any Governmental Authority, that involve the labor or employment relations
and practices of Holdings or any of its Subsidiaries, including but not limited
to claims of employment discrimination and (v) no violation of the Fair Labor
Standards Act or any other applicable federal, state or foreign wage and hour
laws, except (with respect to any matter specified in clauses (i) – (v) above,
either individually or in the aggregate) such as could not reasonably be
expected to have a Material Adverse Effect.

 

(a)     Neither Holdings nor any of its Subsidiaries is, within the United
Kingdom, engaged in any unfair or unlawful employment practice that could
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect.  There is within the United Kingdom (i) no unfair or
discriminatory employment practice complaint or investigation pending against
Holdings or any of its Subsidiaries or, to the knowledge of Holdings or the
Payer, threatened against any of them, before the United Kingdom’s Equality and
Human Rights Commission or Health and Safety Executive or any other bodies with
similar functions in relation to any person engaged as a worker or afforded the
status of a worker (under any laws applicable within the United Kingdom), and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against Holdings or the Payer or any of
either of their Subsidiaries or, to the knowledge or Holdings or the Payer,
threatened (in writing) against any of them, (ii) no strike or other employee
relations dispute pending against Holdings or any of its Subsidiaries or, to the
knowledge of Holdings or the Payer, threatened (in writing) against any of them,
(iii) no disagreement pending against Holdings or any of its Subsidiaries or, to
the knowledge of Holdings or the Payer, threatened (in writing) against any of
them in respect of the relations of any of them with any trade union, works
council, special negotiating body, staff association or any other body
representing individuals afforded the status of workers (under any laws
applicable within the United Kingdom), (iv) no legal actions, lawsuits,
arbitrations, administrative or other proceedings, charges, complaints,
investigations, inspections, audits or notices of violations or possible
violations are pending or, to the knowledge of Holdings or the Payer, threatened
against Holdings or any of its Subsidiaries by or on behalf of, or otherwise
involving, any current or former employee, any person alleging to be a current
or former employee, any applicant for employment or any other individual
claiming the status of, or protection afforded to, a worker (under any laws
applicable within the United Kingdom), or any Governmental Authority, that
involve the employment relations and practices of Holdings or any of its
Subsidiaries, including but not limited to claims of employment discrimination,
victimization or harassment on any irrational, perverse or prohibited bases,
accidents or injuries, breach of contract or unfair dismissal or any claims
under the United Kingdom’s Working Time Regulations 1998, National Minimum Wage
Act 1998, Data Protection Act 1998, Equal Pay Act 1970, Sex Discrimination Act
1975, Race Relations Act 1976, Disability Discrimination Act 1995, Employment
Equality (Sexual Orientation) Regulations 2003, Employment Equality (Age)
Regulations 2006 or Employment Equality (Religion and Belief) Regulations 2003
and (v) no complaint of non-compliance by Holdings or any of its Subsidiaries
with any provisions of the Treaty of Rome, European Union directives or

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other directly applicable European Union laws, statutes, regulations, codes of
conduct, collective agreements, terms and conditions of employment, orders,
declarations and awards relevant to any individual afforded the status of a
worker, except (with respect to any matter specified in clauses (i) – (v) above,
either individually or in the aggregate) such as could not reasonably be
expected to have a Material Adverse Effect.

SECTION 6.18     Intellectual Property, etc. Each of Holdings and each of its
Subsidiaries owns or has the right to use all the patents, trademarks, permits,
domain names, service marks, trade names, copyrights, licenses, franchises,
inventions, trade secrets, proprietary information and know-how of any type,
whether or not written (including, but not limited to, rights in computer
programs and databases) and formulas and has obtained assignments of all leases,
licenses and other rights of whatever nature, necessary for the present conduct
of its business, without any known conflict with the rights of others which, or
the failure to own or have which, as the case may be, could reasonably be
expected, either individually or in the aggregate, to have a Material Adverse
Effect.

 

SECTION 6.19     Indebtedness.  Schedule 6.19 hereto sets forth a list of all
Indebtedness (including Contingent Obligations) and preferred stock of Holdings
and its Subsidiaries as of the date hereof and the Closing Date and which is to
remain outstanding after giving effect to those of the Transactions to be
consummated on the Closing Date (excluding the Obligations) in each case showing
the aggregate principal amount or stated amount thereof and the name of the
respective borrower or issuer and any Person that directly or indirectly
guarantees such debt or preferred stock.

 

SECTION 6.20     Insurance.  Schedule 6.20 hereto sets forth a listing of all
insurance maintained by Holdings and its Subsidiaries as of the date hereof and
the Closing Date, with the amounts insured (and any deductibles) set forth
therein.

 

SECTION 6.21     Holding Company.  Holdings is a holding company and does not
(a) have any material liabilities (other than (i) liabilities arising under the
Credit Documents (as defined in the Term A Credit Agreement), any Class C
Convertible Preferred Stock and Series B Preferred Stock outstanding on the date
hereof and any Existing Indebtedness to which it is a party, (ii) other
liabilities which are permitted by this Agreement and are incurred in connection
with the financing and operation of Holdings’ and its Subsidiaries’ businesses,
(iii) taxes and other liabilities arising under applicable law and (iv)
obligations arising under this Agreement or the Security Documents) or (b) own
any material assets or engage in any operations or business (other than (i) its
direct or indirect ownership of its Subsidiaries and (ii) Investments permitted
under Section 8.05).

 

SECTION 6.22     Immaterial Subsidiaries.  On the date hereof and the Closing
Date, each of Endeavour Colorado Corporation, Endeavour Energy Luxembourg S.à
r.l., Endeavour Energy Netherlands B.V., Endeavour Energy New Ventures Inc., END
Management Company and Endeavour North Sea Limited is an Immaterial Subsidiary.

 

SECTION 6.23     Liens.  Schedule 6.23 hereto sets forth a list of all Liens
(other than Liens arising under the Security Documents and the Security
Documents (as defined in the Term A Credit Agreement) or securing Indebtedness
under the Existing Credit Agreement or

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guarantees thereof) on the assets of Holdings and its Restricted Subsidiaries as
of the date hereof and the Closing Date that secure Indebtedness for borrowed
money or Capital Lease Obligations and which are to remain outstanding after
giving effect to those of the Transactions to be consummated on the Closing
Date, in each case showing the aggregate principal amount of Indebtedness or
other obligations secured thereby and the name of the respective grantor.

 

Article VII.
Affirmative Covenants.

 

Each of Holdings and the Payer hereby covenants and agrees with the Payee that
until the Maximum LC Amount has been reduced to zero and all Fees and all other
Obligations (other than indemnities described in Section 11.05 which are not
then due and payable and for which no claim has been made) shall have been paid
in full, unless waived in accordance with Section 11.08:

SECTION 7.01     Information Covenants.  The Payer will furnish to the Payee and
the Collateral Agent:

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

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

(c)     Reserve Report.  Prior to or concurrently with any delivery of financial
statements under clause (a) of this Section 7.01 and, solely as to each quarter
ending on June 30, under clause (b) of this Section 7.01 (or more frequently at
Holdings’ option) (1) a Reserve Report (which shall be (i) 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 (ii) a
semi-annual Reserve Report (as so described) in the case of a Reserve Report
delivered in connection

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with quarterly financial statements for any fiscal quarter ending June 30) and
(2) a certificate of a Responsible Officer showing any additions to or deletions
from the Oil and Gas Properties made by Holdings and each of its Restricted
Subsidiaries and in Proved Reserves and Probable Reserves attributable to such
Oil and Gas Properties since the date of the most recently delivered previous
Reserve Report.

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

(e)     Compliance Certificate.  At the time of the delivery of the financial
statements provided for in Sections 7.01(a) and (b), a compliance certificate
from a Financial Officer of Holdings in the form of Exhibit B certifying on
behalf of Holdings that, to such officer’s knowledge after due inquiry, no
Default or Event of Default has occurred and is continuing or, if any Default or
Event of Default has occurred and is continuing, specifying the nature and
extent thereof, which certificate shall (i) set forth in reasonable detail the
calculations required to establish whether Holdings and its Subsidiaries were in
compliance with the provisions of Sections 8.10, 8.11 and 8.12 at the end of
such fiscal quarter or year, as the case may be, (ii) for the compliance
certificate delivered at the time of delivery of the financial statements
provided for in Section 7.01(a) only, set forth the Payee’s calculation of
Excess Cash Flow for the applicable fiscal year, and (iii) certify that there
have been no changes to Schedule VI of the U.S. Security Agreement, in each case
since the Closing Date or, if later, since the date of the most recent
certificate delivered pursuant to this Section 7.01(e), or if there have been
any such changes, a list in reasonable detail of such changes (but, in each case
with respect to this clause (ii), only to the extent that such changes are
required to be reported to the Collateral Agent pursuant to the terms of the
U.S. Security Agreement) and whether Holdings and the other Payer Parties have
otherwise taken all actions required to be taken by them pursuant to the U.S.
Security Agreement in connection with any such changes.

(f)     Notice of Default, Litigation and Material Adverse Effect.  Promptly,
and in any event within three Business Days after any Responsible Officer of
Holdings or any of its Subsidiaries obtains knowledge thereof, notice of (i) the
occurrence of any event which constitutes a Default or an Event of Default,
(ii) any litigation or governmental investigation or proceeding pending against
Holdings or any of its Subsidiaries (A) which, either individually or in the
aggregate, has had, or could reasonably be expected to have, a Material Adverse
Effect or (B) with respect to any LC Procurement Document or (iii) any other
event, change or circumstance that has had, or could reasonably be expected to
have, a Material Adverse Effect.

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

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

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

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

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

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

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

(i)     Production and Hedging Reports.  Concurrently with any delivery of
financial statements under clause (a) or (b) of this Section 7.01, (i)
production and operating reports (the same to include information as to volumes
produced and sold and the amount received by the Payer) in respect of the Oil
and Gas Properties of the Payer Parties, and (ii) a certificate of a Financial
Officer of Holdings in form and substance reasonably satisfactory to the Payee
setting forth as of a recent date, a true and complete list of all Hedging
Agreements of Holdings and each Restricted Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), any new credit support agreements relating thereto (other
than Credit Documents (as defined in the Term A Credit Agreement)), any margin
required or supplied under any credit support document, and the counterparty to
each such agreement; provided, that unless and until Holdings makes such reports
and information provided under this Section 7.01(i) publicly available, such
information and reports shall be considered MNPI and, absent the consent of such
Lender, shall not be delivered to any Public Lender (as defined in the Term A
Credit Agreement).

(j)     Other Information.  From time to time, such other information or
documents (financial or otherwise) with respect to Holdings or any of its
Subsidiaries as the Payee and the Collateral Agent may reasonably request.

Notwithstanding the foregoing, the obligations in clauses (a), (b) and (g) of
this Section 7.01 may be satisfied with respect to financial information (or, in
the case of such

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clause (i), other information) of Holdings and the Subsidiaries by filing
Holdings’ Form l0-K or 10-Q, as applicable (or, in the case of such clause (i),
such other applicable filing), with the SEC or by making such information
available on Holdings’ website, in each case to the extent Holdings has notified
the Payee of such filing or that such information is available on such website.

Each of Holdings and the Payer hereby acknowledges that the Payee and the
Collateral Agent may have personnel who do not wish to receive material
non-public information with respect to the Payer, Holdings or their respective
Subsidiaries, or the respective securities of any of the foregoing (“MNPI”), and
who may be engaged in investment and other market-related activities with
respect to such Persons’ securities.  Prior to the delivery of any information
to the Collateral Agent or the Payee pursuant to this Agreement, a Responsible
Officer of Holdings will certify on behalf of Holdings and the Payer as to
whether such information contains any MNPI.  In the case any such information
contains MNPI, the Collateral Agent or the Payee may decline to receive such
information in which case neither Holdings nor the Payer shall deliver such
information to the Collateral Agent or the Payee, as applicable.

SECTION 7.02     Books, Records and Inspections; Annual Meetings. 

 

(a)     Holdings will, and will cause each of its Subsidiaries to, keep proper
books of record and accounts in which full, true and correct entries in
conformity with GAAP and all requirements of law shall be made of all dealings
and transactions in relation to its business and activities.  Holdings will, and
will cause each of its Subsidiaries to, permit officers and designated
representatives of the Payee (i) to visit and inspect, under guidance of
officers of the Payer or such Subsidiary, any of the properties of the Payer or
such Subsidiary and (ii) to examine the books of account of the Payer or such
Subsidiary and discuss the affairs, finances and accounts of the Payer or such
Subsidiary with, and be advised as to the same by, its and their officers and
independent accountants, all upon reasonable prior notice and at such reasonable
times and intervals and to such reasonable extent as the Payee may reasonably
request.

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

SECTION 7.03     Maintenance of Property; Insurance.    (a) Holdings will, and
will cause each of its Subsidiaries to, (i) keep all property necessary to the
business of Holdings and its Subsidiaries in good working order and condition,
ordinary wear and tear excepted and subject to the occurrence of casualty
events, (ii) maintain with financially sound and reputable insurance companies
insurance on all such property and against all such risks as is consistent and
in accordance with industry practice for companies similarly situated owning
similar properties and engaged in similar businesses as Holdings and its
Subsidiaries and (iii) furnish to the Payee, 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

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basis.  The provisions of this Section 7.03 shall be deemed supplemental to, but
not duplicative of, the provisions of any Security Documents that require the
maintenance of insurance.

 

(a)     Holdings will, and will cause each of its Subsidiaries to, at all times
keep its property insured in favor of the Collateral Agent, and all policies or
certificates (or certified copies thereof) with respect to such insurance (and
any other insurance maintained by Holdings and/or such Subsidiaries) (i) shall
be endorsed to the Collateral Agent’s satisfaction for the benefit of the
Collateral Agent (including, without limitation, by naming the Collateral Agent
as loss payee and/or additional insured), (ii) shall state that such insurance
policies shall not be canceled without at least 30 days’ prior written notice
thereof by the respective insurer to the Collateral Agent, (iii) shall provide
that the respective insurers irrevocably waive any and all rights of subrogation
with respect to the Collateral Agent and the Payee and (iv) shall be deposited
with the Collateral Agent.

(b)     If Holdings or any of its Subsidiaries shall fail to maintain insurance
in accordance with this Section 7.03, or if Holdings or any of its Subsidiaries
shall fail to so endorse and deposit all policies or certificates with respect
thereto, the Payee shall have the right (but shall be under no obligation) to
procure such insurance, and Holdings and the Payer jointly and severally agree
to reimburse the Payee for all costs and expenses of procuring such insurance.

SECTION 7.04     Existence; Franchises; Oil and Gas Properties.  (a) Holdings
will, and will cause each of its Subsidiaries to, do or cause to be done, all
things necessary to preserve and keep in full force and effect its existence and
its material rights, franchises, licenses, permits, copyrights, trademarks and
patents and pay all royalties when due; provided, that nothing in this Section
7.04 shall prevent (i) sales of assets and other transactions by Holdings or any
of its Subsidiaries in accordance with Section 8.04, (ii) the termination of the
existence of an Immaterial Subsidiary, (iii) other than in connection with the
foregoing clause (ii), the withdrawal by Holdings or any of its Subsidiaries of
its qualification as a Business in any jurisdiction other than the United States
or any State thereof or the United Kingdom if such withdrawal could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(a)     Holdings will, and will cause each of its Subsidiaries to, (i) comply in
all material respects with the terms and provisions of all oil and gas leases
and licenses relating to the Oil and Gas Properties of Holdings and each of its
Subsidiaries and all contracts and agreements relating thereto or to the
production and sale of Hydrocarbons therefrom; provided that Holdings and its
Subsidiaries shall have the right to abandon Oil and Gas Properties in the
exercise of Holdings’ or such Subsidiaries’ reasonable judgment, in each case in
compliance with the relevant Oil and Gas Contracts governing such Oil and Gas
Properties, and (ii) with respect to any such Oil and Gas Properties or oil and
gas gathering assets that are operated by operators other than Holdings or any
of its Subsidiary, use all commercially reasonable efforts to enforce in a
manner consistent with industry practice the operator’s contractual obligations
to maintain, develop, and operate such Oil and Gas Properties and oil and gas
gathering assets in accordance with the applicable operating agreements.

SECTION 7.05     Compliance with Statutes, etc.  (a) Holdings will, and will
cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all

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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 Section 7.06), except
such non-compliances as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(a)     Holdings shall, and shall cause each of its Subsidiaries to, maintain
and comply with the terms and conditions of any material Authorization required
under any law or regulation (including Environmental Law) (i) to enable it to
perform its obligations and/or exercise its rights under, or the validity or
enforceability of, each LC Procurement Document and Oil and Gas Contract and
(ii) to enable it to conduct the Oil and Gas Business in which it has an
interest except, in the case of preceding clause (ii) only, such failure to
maintain or non-compliance as could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

SECTION 7.06     Compliance with Environmental Laws.  (a) Holdings will comply,
and will cause each of its Subsidiaries to comply, with all Environmental Laws
and permits applicable to, or required by, the ownership, lease  or operation
of  Real Property, facilities and Oil and Gas Property now or hereafter owned,
leased or operated by Holdings or any of its Subsidiaries, except such
noncompliances as could not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, and will promptly pay or cause to
be paid all costs and expenses for which Holdings or its Subsidiaries are
legally obligated that are incurred in connection with such compliance, and will
keep or cause to be kept all such Real Property, facilities and Oil and Gas
Properties free and clear of any Liens imposed pursuant to such Environmental
Laws.  Holdings and its Subsidiaries will generate, use, treat, store, Release
and dispose of, and will cause the generation, use, treatment, storage, Release
and disposal of Hazardous Materials on any Real Property, facilities or Oil and
Gas Properties now or hereafter owned, leased or operated by Holdings or any of
its Subsidiaries, and transport or cause the transportation of Hazardous
Materials to or from any such Real Property, facilities or Oil and Gas
Properties in compliance with all applicable Environmental Laws, except for such
Hazardous Materials generated, used, treated, stored, Released and disposed of
at any such Real Properties, facilities or Oil and Gas Properties in connection
with or arising out of the business or operations of Holdings or any of its
Subsidiaries as would not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

 

(a)     Upon (i) the receipt by the Payee of any notice from Holdings or the
Payer of the type described in Section 7.01(h), (ii) a reasonable determination
that Holdings or any of its Subsidiaries are not in compliance with Section 7.06
or (iii) the exercise by the Payee of any of the remedies pursuant to Article
IX, each of Holdings and the Payer will (in each case) collectively, or if
either Holdings or the Payer so desire, individually, provide, upon the request
of the Payee at the sole expense of Holdings and the Payer, as applicable, an
environmental site assessment report concerning any Real Property or facilities
owned, leased or operated by Holdings or any of its Subsidiaries, prepared by an
environmental consulting firm reasonably acceptable to by the Payee, indicating,
as the circumstances may dictate, the presence or absence of Hazardous Materials
and the potential cost of any removal or remedial action in connection with such
Hazardous Materials on such Real Property or facilities.  If either Holdings or
the

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Payer fails to provide the same within 30 days after such request was made, the
Payee may order the same, the cost of which shall be borne by the non-responsive
Payer Party; and each of Holdings and the Payer shall grant and hereby grants to
the Payee and their respective agents access to such Real Property or facilities
and specifically grant the Payee an irrevocable non-exclusive license, subject
to the rights of tenants, to undertake such an assessment at any reasonable time
upon reasonable notice to Holdings and the Payer, all at the sole expense of
each of Holdings and the Payer.

SECTION 7.07     ERISA.  (a) As soon as reasonably practicable and, in any
event, within ten (10) days after Holdings, any of its Subsidiaries or any ERISA
Affiliate knows or has reason to know of the occurrence of any of the following,
Holdings will deliver to the Payee a certificate of any Responsible Officer of
Holdings setting forth the full details as to such occurrence and the action, if
any, that Holdings, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given or
filed by Holdings, such Subsidiary, the Plan administrator or such ERISA
Affiliate to or with the PBGC or any other Governmental Authority, or a Plan
participant with respect thereto, and any notices received by Holdings, such
Subsidiary or ERISA Affiliate from the PBGC or any other Governmental Authority,
or a Plan participant with respect thereto:  an ERISA Event (except to the
extent that Holdings has previously delivered to the Payee a certificate and
notices (if any) concerning such event pursuant to the next clause of this
Section 7.07); a contributing sponsor (as defined in Section 4001(a)(13) of
ERISA) of a Plan subject to Title IV of ERISA becoming subject to the advance
reporting requirement of PBGC Regulation Section 4043.61 (without regard to
subparagraph (b)(1) thereof), and an event described in subsection .62, .63,
.64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected
to occur with respect to such Plan within the following 30 days (except to the
extent that a waiver to the advance reporting requirement of PBGC Regulation
Section 4043.61 applies with respect to such event); a failure of Holdings, any
of its Subsidiaries, or an ERISA Affiliate to timely make any material
contribution required to be made with respect to a Plan or Non-U.S. Pension
Plan; the existence of potential withdrawal liability under Section 4201 of
ERISA if Holdings, any of its Subsidiaries and any ERISA Affiliate were to
withdraw completely from any and all Multiemployer Plans if such withdrawal is
reasonably expected to occur and such liability to Holdings or any of its
Subsidiaries could reasonably be expected to result in a material liability to
Holdings or any of its Subsidiaries; the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code by Holdings, any
of its Subsidiaries or any ERISA Affiliate; the adoption of any amendment to a
Plan subject to Section 412 of the Code that results in a material increase in
the contribution obligations of Holdings, any of its Subsidiaries or any ERISA
Affiliate; a Plan has an Unfunded Current Liability that could reasonably be
expected to result in a material liability; with respect to group health plans
(as defined in Section 607(1) of ERISA, or Section 4980B(g)(2) of the Code), a
violation of the provisions of Part 6 of subtitle B of Title 1 of ERISA and
Section 4980B of the Code that is reasonably expected to result in a material
liability to Holdings or any of its Subsidiaries; with respect to group health
plans (as defined in 45 Code of Federal Regulations Section 160.103), a
violation of the Health Insurance Portability and Accountability Act of 1996 and
the regulations promulgated thereunder that could reasonably be expected to
result in a material liability to Holdings or any of its Subsidiaries; or the
incurrence of any material liability by Holdings or any of its Subsidiaries
pursuant to any portion of an employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as

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required by Section 601 of ERISA).  Holdings will deliver to the Payee (i) a
copy of each funding waiver request filed with the Internal Revenue Service or
any other Governmental Authority with respect to any Plan pursuant to Section
412(d) of the Code or Section 302(c) of ERISA and all communications received by
Holdings, any of its Subsidiaries or any ERISA Affiliate from the Internal
Revenue Service or any other Governmental Authority regarding such funding
waiver request, (ii) copies of any records, documents or other information that
must be furnished to the PBGC with respect to any Plan pursuant to Section 4010
of ERISA and (iii) a complete copy of the annual report (on Internal Revenue
Service Form 5500-series) of each Plan (including, to the extent required, the
related financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information) required to be filed with
the U.S. Department of Labor. In addition to any certificates or notices
delivered to the Payee pursuant to the first sentence of this Section 7.07,
copies of annual reports and any records, documents or other information
required to be furnished to the PBGC or any other Governmental Authority, and
any material notices received by Holdings or any of its Subsidiaries or any
ERISA Affiliate, with respect to any Plan or Non-U.S. Pension Plan, shall be
delivered to the Payee no later than ten (10) days after the date such annual
reports have been filed or such records, documents and/or information have been
furnished to the PBGC or other Governmental Authority or such notice has been
received by Holdings, any of its Subsidiaries, or any ERISA Affiliate, as
applicable.

 

(a)     If, at any time after the date of this Agreement, Holdings or any of its
Subsidiaries or any ERISA Affiliate maintains, or contributes to (or incurs an
obligation to contribute to), a pension plan as defined in Section 3(2) of ERISA
that is subject to Section 412 of the Code or Section 302 or Title IV of ERISA
(including, without limitation, a Multiemployer Plan) which is not set forth in
Schedule 6.09 hereto as may be updated from time to time, then Holdings shall
deliver to the Agent an updated Schedule 6.09 as soon as reasonably practicable
and, in any event, within ten (10) days after Holdings, such Subsidiary or such
ERISA Affiliate first maintains, or contributes to (or incurs an obligation to
contribute to), such pension plan.  Such updated Schedule 6.09 shall supersede
and replace the existing Schedule 6.09.

(b)     Holdings and each of its applicable Subsidiaries shall ensure that all
Non-U.S. Pension Plans administered by it or to which it contributes obtains or
retains (as applicable) registered status under and as required by applicable
law and is administered in a timely manner in all respects in compliance with
all applicable laws, except where the failure to do any of the foregoing, either
individually or in the aggregate, would not be reasonably likely to result in a
Material Adverse Effect.

(c)     Holdings and its Subsidiaries shall ensure that none of Holdings or any
of its Subsidiaries is or has at any time been, within the United Kingdom, an
employer (for the purposes of sections 38 through 51 of the United Kingdom’s
Pensions Act 2004) of an occupational pension scheme which is not a money
purchase scheme (both terms as defined in the United Kingdom’s Pension Schemes
Act 1993) or “connected” with or an “associate” of (as those terms are used in
sections 38 or 43 of the United Kingdom’s Pensions Act 2004) such an employer.

SECTION 7.08     End of Fiscal Years; Fiscal Quarters.  Holdings will cause
(a) its and each of its Restricted Subsidiaries’ fiscal years to end on
December 31 of each calendar year and

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(b) its and each of its Restricted Subsidiaries’ fiscal quarters to end on
March 31, June 30, September 30 and December 31; provided that nothing in this
Section 7.08 shall prohibit any Restricted Subsidiary of Holdings from
maintaining a tax year that does not end on December 31.

 

SECTION 7.09     Performance of Obligations.  Holdings will, and will cause each
of its Subsidiaries to, perform all of its obligations under the terms of each
mortgage, indenture, security agreement, loan agreement or credit agreement and
each other agreement, contract or instrument by which it is bound, except such
non-performances as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

SECTION 7.10     Payment of Taxes, etc.  Holdings will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, would
become a Lien or charge upon any properties of Holdings or any of its
Subsidiaries not otherwise permitted under Section 8.06; provided that neither
Holdings nor any of its Subsidiaries shall be required to pay any such tax,
assessment, charge, levy or claim which is being contested in good faith and by
proper proceedings if it has maintained adequate reserves with respect thereto
in accordance with GAAP.  The Payer will not change its tax residency.  LC Finco
US LLC will continue to be a “disregarded entity” for U.S. federal income tax
purposes and will not carry out any business activities in the United States.

 

SECTION 7.11     Additional Security; Further Assurances; etc.

 

(a)     Holdings will, and will cause each other Payer Party to, grant to the
Collateral Agent for the benefit of the Payee security interests in such Oil and
Gas Assets and other assets of Holdings and such other Payer Party (including,
without limitation properties of Holdings and such other Payer Party acquired
subsequent to the Closing Date) as are not covered by the original Security
Documents (including, without limitation, with respect to any such property,
pursuant to grants pursuant to the laws of Scotland) and as may be reasonably
requested from time to time by the Payee or the Collateral Agent (collectively,
the “Additional Security Documents”); provided that no Payer Party shall be
required to take any action to grant or perfect a security interest on any
Excluded Asset for so long as, and to the extent that, such Oil and Gas
Properties constitute Excluded Assets; provided, further, that within 60 days
following the date of the first Reserve Report reflecting that any Payer Party
owns Oil and Gas Properties in North America that are not Excluded Assets, the
applicable Payer Party shall cause such Oil and Gas Properties to become
Collateral subject to the Liens of the Security Documents.  In addition, at such
time as any deposit account of Holdings or any Payer Party ceases to be an
Excluded Account, Holdings or the applicable Payer Party, shall, within 60 days
thereafter, cause such deposit account to become Collateral subject to the Liens
of the Security Documents.  All such security interests shall be granted
pursuant to documentation satisfactory in form and substance to the Collateral
Agent and shall constitute valid and enforceable perfected security interests,
hypothecations and mortgages superior to and prior to the rights of all third
Persons and enforceable against third parties and subject to no other Liens
except for Permitted Liens.  The Additional Security Documents or instruments
related thereto shall have been duly recorded or

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filed in such manner and in such places as are required by law to establish,
perfect, preserve and protect the Liens in favor of the Collateral Agent
required to be granted pursuant to the Additional Security Documents and all
taxes, fees and other charges payable in connection therewith shall have been
paid in full.

(b)     Holdings will, and will cause each of the other Payer Parties to, at the
expense of Holdings and the Payer, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports, landlord lien waivers, collateral access agreements,
bailee agreements, control agreements and other assurances or instruments and
take such further steps relating to the Collateral covered by any of the
Security Documents as the Collateral Agent may reasonably require.  Furthermore,
Holdings will, and will cause the other Payer Parties to, deliver to the
Collateral Agent such opinions of counsel, title insurance and other related
documents as may be reasonably requested by the Collateral Agent to assure
itself that this Section 7.11 has been complied with.

(c)     Holdings will cause (i) each Subsidiary (other than any Immaterial
Subsidiary or Unrestricted Subsidiary) that is established, created or acquired
after the Closing Date and (ii) each Non-Guarantor Subsidiary (other than an
Unrestricted Subsidiary) that ceases to be an Immaterial Subsidiary, in each
case, to become a Guarantor and a party (in such capacity, a “Grantor”) to the
U.S. Security Agreement, the English Security Documents and/or such other
Security Documents as may be required by the Collateral Agent such that the
Collateral Agent, for the benefit of the Payee, has a first priority security
interest in all assets (other than Excluded Assets) of such Subsidiary or
Non-Guarantor Subsidiary (as applicable).  In addition, if, after the date
hereof, any Restricted Subsidiary of Holdings that is not already a Guarantor
and a Grantor (including any Immaterial Subsidiary) guarantees any other
Indebtedness of Holdings or any Guarantor in excess of the De Minimis Guaranteed
Amount, then that Subsidiary shall become a Guarantor and a Grantor.  Any such
Subsidiary shall become a Guarantor and a Grantor pursuant to this clause (c) by
executing joinders to the Payer Party Guaranty and the applicable Security
Documents in form and substance satisfactory to the Collateral Agent whereby
such Subsidiary shall guarantee the Obligations and grant a security interest to
the Collateral Agent, for the benefit of the Payee, in the assets (other than
Excluded Assets) of such Subsidiary and, in each case, delivering such documents
to the Collateral Agent within 60 days after the date on which it was
established, created or acquired or ceased to be an Immaterial Subsidiary, as
applicable (or such later date as may be agreed by the Collateral Agent in its
sole discretion), or within 15 days of the date on which it guaranteed such
other Indebtedness (or such later date as may be agreed by the Collateral Agent
in its sole discretion), as the case may be, together with any officer’s
certificate and opinion which may be reasonably requested by the Collateral
Agent. In connection with the execution of such Security Documents, such
Subsidiary shall take or cause to be taken such other actions (including
delivering properly completed Uniform Commercial Code financing statements) as
may be necessary or advisable in the opinion of the Collateral Agent to vest in
the Collateral Agent, for the benefit of the Payee, a first-priority perfected
security interest in such assets and to have such assets added to the Collateral
and thereupon all provisions of this Agreement and the Security Documents
relating to the Collateral shall be deemed to relate to such assets to the same
extent and with the same force and effect.  The

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requirements set forth above in this clause (c) are collectively referred to
herein as the “Additional Guarantor Requirement”.

(d)     Each of Holdings and the Payer agrees that each action required by
clauses (a) through (c) of this Section 7.11 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 Payee or Collateral Agent or such later date as may be otherwise
provided in such clauses.

SECTION 7.12     Maintenance of Company Separateness.  Holdings will, and will
cause each of its Subsidiaries to, satisfy customary Business formalities,
including the holding of regular Board of Directors’ and members’ meetings or
action by managers or members without a meeting and the maintenance of Business
records.  Neither Holdings nor any other Payer Party shall make any payment to a
creditor of any Non-Guarantor Subsidiary in respect of any liability of any
Non-Guarantor Subsidiary (other than (a) pursuant to Holdings’ guarantee of
Endeavour Energy Luxembourg S.à. r.l.’s obligations under the 11.5% Convertible
Bonds and (b) any guarantee by Holdings or such other Payer Party of
intercompany Indebtedness of any such Non-Guarantor Subsidiary owing to Holdings
or any of its Subsidiaries), and no bank account of any Non-Guarantor Subsidiary
shall be commingled with any bank account of Holdings or any other Payer
Party.  Any financial statements distributed to any creditors of any
Non-Guarantor Subsidiary shall clearly establish or indicate the corporate
separateness of such Non-Guarantor Subsidiary from Holdings and its other
Subsidiaries.  Finally, neither Holdings nor any of its Subsidiaries shall take
any action, or conduct its affairs in a manner, which is likely to result in the
Business existence of Holdings, any other Payer Party or any Non-Guarantor
Subsidiaries being ignored, or in the assets and liabilities of Holdings or any
other Payer Party being substantively consolidated with those of any other such
Person or any Non-Guarantor Subsidiary in a bankruptcy, reorganization or other
insolvency proceeding.

 

SECTION 7.13     Oil and Gas Properties.  Each Payer Party shall (a) exercise
such votes and other rights as it may have under each Oil and Gas Contract to
which it is a party with a view to ensuring (so far as able) that each Oil and
Gas Property in which Holding or any of its Subsidiaries has an interest is at
all times exploited and operated in a reasonable and prudent manner and in
accordance with good industry practice, all applicable laws and regulations and
the provisions of each such Oil and Gas Contract, (b) not concur in, and shall
vote against, any proposal or decision to abandon all or any material part of
any of Oil and Gas Properties in which Holdings or any of its Subsidiaries has
an interest unless the Payee have granted their prior written consent, (c) not
exercise its rights on any operating or similar committee in a manner that would
be materially prejudicial to the interests of any Payer Party or the Payee and
(d) maintain full and proper technical and financial records in relation to each
Oil and Gas Property in which Holdings or any of its Subsidiaries has an
interest and ensure (so far as it is able) that the Payee (and/or any Person
nominated by it) are afforded reasonable access to each Oil and Gas Property in
which it has an interest and all such records during normal business hours on
reasonable notice.

 

SECTION 7.14     Post-Closing Obligations.  Holdings shall (or shall procure
that the relevant Payer Party shall), except as otherwise stated below, as soon
as reasonably practicable but not later than 10 Business Days (or such later
date as may be permitted by the Collateral Agent in its sole discretion) after
the  Closing Date, deliver to the Collateral Agent:

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(a)     evidence of making of all recordings and filings and all action
necessary or desirable in connection with the registration of the security
interests intended to be created by the English Debenture in accordance with the
Companies Act 2006 in form and substance satisfactory to the Collateral Agent
not later than 21 days after the date of the English Debenture;

(b)     evidence that the Secretary of State has been notified of the creation
of the security interests intended to be created by the English Debenture in
respect of each Project Licence (as such term is defined in the English
Debenture) in form and substance satisfactory to the Collateral Agent not later
than 10 days after the date of the English Debenture;

(c)     evidence of the making of all recordings and filings (or arrangements
therefor satisfactory to the Collateral Agent) and all action necessary or, in
the reasonable opinion of the Collateral Agent, desirable, in connection with,
the English Debenture as may be necessary to perfect and protect the security
interests intended to be created by the English Debenture;

(d)     evidence that all other actions necessary or, in the reasonable opinion
of the Collateral Agent, desirable, to perfect and protect the security
interests purported to be created by the English Debenture have been taken (or
arrangements therefor satisfactory to the Collateral Agent);

(e)     all of the Collateral consisting of certificated securities referred to
in the English Charge Over Shares and then owned by the relevant Payer Party,
together with executed and undated endorsements for transfer; and all other
Collateral consisting of certificated securities and promissory notes, if any,
owned by each Credit Party, (i) endorsed in blank in the case of any such
promissory notes and (ii) together with executed and undated endorsements for
transfer in the case of any such certificated securities;

(f)     evidence of the completion (or arrangements therefor satisfactory to the
Collateral Agent) of all other recordings and filings of, or with respect to,
and all action necessary or, in the reasonable opinion of the Collateral Agent,
desirable, in connection with, the English Charge Over Shares as may be
necessary to perfect and protect the security interests intended to be created
by the English Charge Over Shares;

(g)     evidence that all other actions necessary to perfect and protect the
security interests purported to be created by the English Charge Over Shares
have been taken (or arrangements therefor satisfactory to the Collateral Agent);
and

(h)     a share pledge agreement, in form and substance satisfactory to the
Collateral Agent, duly authorized, executed and delivered by EIH, as pledgor, in
favor of the Collateral Agent, pledging the share capital of Endeavour Energy
Luxembourg S.à.r.l.

Article VIII.

Negative Covenants.

 

Each of Holdings and the Payer hereby covenants and agrees with the Payee that
until the Maximum LC Amount has been reduced to zero and all Fees and all other
Obligations (other than indemnities described in Section 11.05 which are not
then due and payable and for which no

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claim has been made) shall have been paid in full, unless waived in accordance
with Section 11.08:

SECTION 8.01     Restricted Payments.  Holdings will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly:

 

(a)     declare or pay any dividend or make any other payment or distribution on
account of Holdings’ or any of its Restricted Subsidiaries’ Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving Holdings or any of its Restricted Subsidiaries) or to
the direct or indirect holders of Holdings’ or any of its Restricted
Subsidiaries’ Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
Holdings or payable to Holdings or, subject to compliance with the Additional
Guarantor Requirement at the time of such dividend, payment or distribution, a
Restricted Subsidiary of Holdings);

(b)     purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation involving
Holdings) any Equity Interests of Holdings or any direct or indirect parent of
Holdings;

(c)     make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value, any Indebtedness that is subordinated in
right of payment to the Obligations (excluding (i) the purchase, redemption,
defeasance or other acquisition or retirement for value of any other
Indebtedness (other than intercompany Indebtedness) that is subordinated in
right of payment to the Obligations in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of purchase, redemption, defeasance or other acquisition or
retirement for value, (ii) any payment of principal or interest at the Stated
Maturity thereof and (iii) any payment, purchase, redemption, defeasance or
other acquisition or retirement for value made with the prior written consent of
the Payee; provided that the aggregate amount of any payments, purchases,
redemptions, defeasances or other acquisitions or retirements made in reliance
on the exclusions from the restrictions contained in this clause (c)(iii), when
aggregated with the aggregate amount of all payments, purchases, redemptions,
defeasances or other acquisitions or retirements for value made in reliance on
clause (e)(iii) below, shall not exceed $35,000,000); or

(d)     make any Restricted Investment; or

(e)     make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indenture Notes (other than (i) at the
Stated Maturity thereof, (ii) pursuant to any covenant contained in either
Indenture (in each case as in effect as of the date hereof) requiring Holdings
to make an offer to holders of Indenture Notes to purchase Indenture Notes in
connection with a Change of Control or an Asset Sale in respect of Indenture
Collateral or (iii) with the prior written consent of the Payee) or Unsecured
Notes (other than at the Stated Maturity thereof; provided that the aggregate
amount of any payments, purchases, redemptions, defeasances or other
acquisitions or retirements for value made in reliance on this clause (iii),
when aggregated with the aggregate amount of all payments, purchases,
redemptions, defeasances or other acquisitions or retirements for value made in
reliance on the exclusions from the restrictions contained in clause (c)(iii)
above, shall not exceed $35,000,000) (all such

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payments and other actions set forth in these clauses (a) through (e) being
collectively referred to as “Restricted Payments”);

unless, at the time of and after giving effect to such Restricted Payment, no
Default or Event of Default has occurred and is continuing or would occur as a
consequence of such Restricted Payment and:

(A)     Holdings would, at the time of such Restricted Payment immediately after
giving pro forma effect thereto as if the same had occurred at the beginning of
the applicable four-quarter period, have been permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 8.03; and

(B)     such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by Holdings and its Restricted Subsidiaries (excluding
Restricted Payments permitted by clauses (2), (3), (4), (5), (8), (9), (11) and
(12) of the next succeeding paragraph) since the date of this Agreement, is less
than the sum, without duplication, of:

(i)     50% of the Consolidated Net Income of Holdings for the period (taken as
one accounting period) from January 1, 2014 to the last day of Holdings’ last
fiscal quarter ending prior to the date of the Restricted Payment for which
internal financial statements are in existence at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period shall be a loss,
minus 100% of such loss); plus

(ii)     100% of the aggregate net cash proceeds and the Fair Market Value of
any Capital Stock of Persons (other than Holdings or an Affiliate of Holdings)
engaged primarily in the Oil and Gas Business or any other assets that are used
or useful in the Oil and Gas Business, in each case received by Holdings after
the date of this Agreement as a contribution to its common equity capital or
from the issue or sale after the date of this Agreement of Equity Interests of
Holdings (other than Disqualified Stock) or from the issue or sale after the
date of this Agreement of convertible or exchangeable Disqualified Stock or
convertible or exchangeable debt securities of Holdings that have been converted
into or exchanged for such Equity Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a Subsidiary of Holdings) or
received upon the exercise of any options, warrants or rights to purchase Equity
Interests (other than Disqualified Stock) of Holdings, plus

(ii)    the amount equal to the net reduction in Restricted Investments made by
Holdings or any of its Restricted Subsidiaries in any Person since the date of
this Agreement resulting from:

(C)     repurchases or redemptions of such Restricted Investments by such
Person, proceeds realized upon the sale of such Restricted Investment to a

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purchaser other than Holdings or a Subsidiary of Holdings, repayments of loans
or advances or other transfers of assets (including by way of interest payments,
dividend or distribution) by such Person to Holdings or any Restricted
Subsidiary of Holdings; plus

(D)     the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries or the merger or consolidation of an Unrestricted Subsidiary with
and into Holdings or any Restricted Subsidiary (valued in each case as provided
in the definition of “Investment”) not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously made by Holdings
or any Restricted Subsidiary of Holdings in such Unrestricted Subsidiary; plus

(E)     an amount equal to any amount included as a Restricted Payment pursuant
to clause (II) above on account of any guarantee entered into by Holdings or any
Restricted Subsidiary; to the extent that such guarantee has not been called
upon and the obligation arising under such guarantee no longer exists or has
been reduced; plus

(F)     in the event Holdings or any Restricted Subsidiary makes any Investment
in a Person that, as a result of or in connection with such Investment, becomes
a Restricted Subsidiary or is merged or consolidated with Holdings or a
Restricted Subsidiary, an amount equal to the amount included as a Restricted
Payment pursuant to clause (II) above on account of Holdings’ or any Restricted
Subsidiary’s Investment in such Person prior to the time it became a Restricted
Subsidiary or the time of such merger or consolidation; plus

(i)     the amount by which Indebtedness of Holdings or its Restricted
Subsidiaries is reduced on Holdings’ balance sheet upon the conversion or
exchange (other than by a Subsidiary of Holdings) subsequent to the date of this
Agreement of any Indebtedness of Holdings or its Restricted Subsidiaries
convertible into or exchangeable for Equity Interests of Holdings (other than
Disqualified Stock) (less the amount of cash, or the Fair Market Value of any
other property, distributed by Holdings upon such conversion or exchange),

in the case of clauses (b) through (d) above, to the extent such amounts have
not been included in Consolidated Net Income for the applicable period.

The preceding provisions will not prohibit:

(1)     the payment of any dividend or distribution within 60 days after the
date of its declaration, if at the date of declaration the payment would have
complied with the provisions of this Agreement;

(2)     the purchase, redemption, defeasance or other acquisition or retirement
for value of any subordinated Indebtedness, Indenture Notes or Unsecured Notes
of Holdings or any other Payer Party or of any Equity Interests of Holdings in
exchange for, or out of the net cash proceeds of the substantially concurrent
(A) contribution (other than from a Restricted

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Subsidiary of Holdings) to the equity capital of Holdings or (B) sale (other
than to a Restricted Subsidiary of Holdings) of, Equity Interests of Holdings
(other than Disqualified Stock), with a sale being deemed substantially
concurrent if such purchase, redemption, defeasance or other acquisition or
retirement for value occurs not more than 120 days after such sale; provided,
that the amount of any such net cash proceeds that are utilized for any such
purchase, redemption, defeasance or other acquisition or retirement for value
will be excluded or deducted from clause (II) above;

(3)     the purchase, redemption, defeasance or other acquisition or retirement
for value of subordinated Indebtedness, Indenture Notes or Unsecured Notes or
Disqualified Stock of Holdings or any other Payer Party with the net cash
proceeds from a substantially concurrent incurrence of, or in exchange for,
Permitted Refinancing Indebtedness, with an incurrence of Permitted Refinancing
Indebtedness being deemed substantially concurrent if such purchase, redemption,
defeasance or other acquisition or retirement for value occurs not more than
120 days after such incurrence;

(4)     the payment of any dividend or distribution by a Restricted Subsidiary
of Holdings to the holders of such Restricted Subsidiary’s Equity Interests
(other than Disqualified Stock) on a pro rata basis or on a basis more favorable
to Holdings or a Restricted Subsidiary; provided, that distributions or
dividends by EIH shall be promptly applied to fund any Capital Expenditure, the
payment of any expense, any Investment or other use, in each case, permitted
under this Agreement, and not permitted to accumulate other than on a temporary
basis in the deposit or other account of the payee of such Indebtedness or any
Affiliate thereof;

(5)     so long as no Default (other than a Reporting Default) or Event of
Default shall have occurred and be continuing or would be caused thereby, the
purchase, redemption or other acquisition or retirement for value (other than
for any Equity Interest) of any Equity Interests of Holdings or any Restricted
Subsidiary of Holdings pursuant to any director, employee or consultant equity
subscription agreement or equity option agreement or other employee benefit plan
or to satisfy obligations under any Equity Interests option plan or similar
arrangement; provided that the aggregate price paid for all such purchased,
redeemed, acquired or retired Equity Interests may not exceed $5,000,000 in the
2014 calendar year and $2,500,000 in any calendar year thereafter (with any
portion of such amount that is unused in any calendar year to be carried forward
to successive calendar years and added to such amount) plus, to the extent not
previously applied or included,

(i)     the cash proceeds received by Holdings or any of its Restricted
Subsidiaries from sales of Equity Interests of Holdings to employees,
consultants or directors of Holdings or its Affiliates that occur after the date
of this Agreement (to the extent the cash proceeds from the sale of such Equity
Interests have not otherwise been applied to the payment of Restricted Payments
by virtue of clause (II)(b) of the first paragraph of this Section 8.01); and

(ii)     the cash proceeds of key man life insurance policies received by
Holdings or any of its Restricted Subsidiaries after the date of this Agreement.

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(6)     any purchase, redemption, defeasance or other acquisition or retirement
for value of Indebtedness (other than any intercompany Indebtedness) that is
subordinated in right of payment to the Obligations pursuant to the provisions
of such Indebtedness in the event of a Change of Control or an Asset Sale, in
each case plus accrued and unpaid interest thereon, but only if:

(i)     in the case of a Change of Control, the purchase price therefor is not
greater than 101% of the principal amount of such Indebtedness and accrued and
unpaid interest thereon; or

(ii)     in the case of an Asset Sale, the purchase price therefor is not
greater than 100% of the principal amount of such Indebtedness and accrued and
unpaid interest thereon, and Holdings has complied with and fully satisfied its
obligations in accordance with Section 3.02(a);

(7)     the purchase, redemption or other acquisition or retirement for value of
Equity Interests of Holdings or any Restricted Subsidiary of Holdings
representing fractional shares of such Equity Interests in connection with a
merger or consolidation involving Holdings or such Restricted Subsidiary or any
other transaction permitted by this Agreement;

(8)     the purchase, redemption or other acquisition or retirement for value of
Equity Interests deemed to occur upon the exercise or conversion of stock
options, warrants or other convertible securities if such Equity Interests
represent a portion of the exercise or conversion price thereof;

(9)     the purchase, redemption or other acquisition or retirement for value of
any Equity Interests of Holdings or any Restricted Subsidiary of Holdings held
by any current or former officers, directors or employees of Holdings or any of
its Restricted Subsidiaries in connection with the exercise or vesting of any
equity compensation (including, without limitation, stock options, restricted
stock and phantom stock) in order to satisfy any tax withholding obligation with
respect to such exercise or vesting;

(10)    payments to dissenting stockholders pursuant to Applicable Law in
connection with a consolidation, merger or transfer of assets in connection with
a transaction that is not prohibited by this Agreement not to exceed $5,000,000
in the aggregate since the date of this Agreement;

(11)    any payment with respect to, purchase, redemption, defeasance or other
acquisition or retirement for value of any Permitted Intercompany Debt,
including, without limitation, that certain Inter-Company Loan Agreement, dated
as of May 31, 2012, between EOC and the Payer (the “Intercompany Loan
Agreement”);  provided (a) no Default or Event of Default shall have occurred
and be continuing or would result therefrom, (b) such payment, purchase,
redemption, defeasance or other acquisition or retirement for value does not
obligate Holdings or any Restricted Subsidiary of Holdings to make or offer to
make any payment on, or purchase or redeem any other Indebtedness and (c) solely
with respect to any payment with respect to, purchase, redemption, defeasance or
other acquisition or retirement for value in respect of any Indebtedness under
the Intercompany Loan Agreement,  the proceeds of such purchase,

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redemption or other acquisition or retirement for value are promptly applied to
fund any Capital Expenditure, the payment of any expense, any Investment or
other use, in each case, permitted under this Agreement, and not permitted to
accumulate other than on a temporary basis in the deposit or other account of
the payee of such Indebtedness or any Affiliate thereof;

(12)    the declaration and payment of dividends payable pursuant to the terms
(as of the date of this Agreement) of Holdings’ Class C Convertible Preferred
Stock outstanding on the date of this Agreement; and

(13)    so long as no Default (other than a Reporting Default) or Event of
Default shall have occurred and be continuing or would be caused thereby, other
Restricted Payments in an aggregate amount not to exceed $25,000,000 at any time
outstanding since the date of this Agreement (after giving effect to any
dividends, interest payments, return of capital and subsequent reduction in the
amount of any Investments made pursuant to this clause as a result of the
repayment or other disposition thereof, in an amount not to exceed the amount of
such Investments previously made pursuant to in this clause); provided, that if
any Investment pursuant to this clause (13) is made in any Person that is not a
Restricted Subsidiary of Holdings at the date of the making of such Investment
and such Person becomes a Restricted Subsidiary of Holdings after such date,
such Investment shall, subject to compliance with such clause (1), thereafter be
deemed to have been made pursuant to clause (1) of the definition of “Permitted
Investments” and shall cease to have been made pursuant to this clause (13) for
so long as such Person continues to be a Restricted Subsidiary.

The amount of all Restricted Payments (other than cash) will be the Fair Market
Value, on the date of the Restricted Payment, of the Restricted Investment
proposed to be made or asset(s) or securities proposed to be paid, transferred
or issued by Holdings or such Restricted Subsidiary, as the case may be,
pursuant to such Restricted Payment, except that the amount of any non-cash
Restricted Payment referred to in the preceding clause (1) will be the Fair
Market Value on the date of declaration.  The Fair Market Value of any assets or
securities that are required to be valued by this covenant will be determined by
the method prescribed in the definition of such term, except that the Fair
Market Value of any non-cash consideration received from an Affiliate as a
capital contribution for Equity Interests of Holdings shall be determined in
good faith by the Board of Directors of Holdings in the case of amounts of
$10,000,000 or more, such determination to be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing.  For purposes of determining compliance with this Section 8.01, in the
event that a Restricted Payment meets the criteria of more than one of the
categories of Restricted Payments described in the preceding clauses (1) through
(13) or as a Permitted Investment, Holdings will be permitted to divide or
classify (or later divide, classify or reclassify in whole or in part in its
sole discretion) such Restricted Payment in any manner that complies with this
Section 8.01.

SECTION 8.02     Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries.  Holdings will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary of Holdings to:

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(a)     pay dividends or make any other distributions on its Capital Stock to
Holdings or any of its Restricted Subsidiaries, or pay any Indebtedness or other
obligations owed to Holdings or any of its Restricted Subsidiaries;

(b)     make loans or advances to Holdings or any of its Restricted
Subsidiaries; or

(c)     sell, lease or transfer any of its properties or assets to Holdings or
any of its Restricted Subsidiaries;

provided, that the preceding restrictions of this Section 8.02 will not apply to
encumbrances or restrictions existing under or by reason of:

(1)     agreements (including those governing Existing Indebtedness) as in
effect on the date of this Agreement and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof; provided that the amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings are
no more restrictive, taken as a whole, with respect to such dividend,
distribution and other payment restrictions than those contained in those
agreements on the date of this Agreement, as determined by the Board of
Directors of Holdings in its reasonable and good faith judgment;

(2)     this Agreement, the Existing LC Procurement Agreements, the Term A
Credit Agreement, the Existing Credit Agreement, the other Security Documents,
the other Credit Documents (as defined in the Term A Credit Agreement) and the
Indenture Documents;

(3)     Applicable Law or similar restriction;

(4)     any agreement or instrument with respect to a Restricted Subsidiary that
is not a Restricted Subsidiary of Holdings on the date of this Agreement, in
existence at the time such Person becomes a Restricted Subsidiary of Holdings
and not incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary; provided that such encumbrances and
restrictions are not applicable to Holdings or any Restricted Subsidiary or the
properties or assets of Holdings or any Restricted Subsidiary other than such
Subsidiary which is becoming a Restricted Subsidiary;

(5)     any agreement or instrument governing any Permitted Acquisition
Indebtedness, so long as such agreement or instrument (a) was not entered into
in contemplation of the acquisition, merger or consolidation transaction related
thereto, and (b) is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the properties or assets or Subsidiaries
of the Person, subject to such acquisition, merger or consolidation, so long as
the agreement containing such restriction does not violate any other provision
of this Agreement;

(6)     instruments or agreements governing Indebtedness of Holdings or any of
the Restricted Subsidiaries permitted to be incurred pursuant to an instrument
or agreement entered into subsequent to the date of this Agreement in accordance
with Section 8.03; provided that either (a) the encumbrance or restriction
contained in the instrument or agreement governing such Indebtedness applies
only in the event of a payment default or a default with respect to a financial
covenant in such Indebtedness or agreement or (b) the Board of Directors of
Holdings

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determines in good faith that any such encumbrance or restriction will not
materially affect Holdings’ ability to make principal or interest payments on
the Obligations;

(7)      (a) customary non-assignment provisions in Hydrocarbon purchase and
sale or exchange agreements, joint operating agreements, or similar operational
agreements or in licenses or leases entered into in the ordinary course of
business, or (b) in the case of clause (c) of the preceding paragraph, other
encumbrances or restrictions in agreements or instruments (including joint
venture agreements, asset sale agreements, stock sale agreements and agreements
of the type described in the definition of “Permitted Business Investments”)
relating to specific assets or property (and not to Indebtedness) that restrict
generally the transfers of such assets or property; provided that such other
encumbrances or restrictions do not materially impair the ability of Holdings to
make scheduled payments on the Obligations when due and in each case entered
into in the ordinary course of business or customary in the Oil and Gas
Business;

(8)     Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case for property acquired in the ordinary course of
business or which is customary in the Oil and Gas Business that impose
restrictions on that property purchased or leased of the nature described in
clause (c) of the preceding paragraph;

(9)     any agreement for the sale or other disposition of a Restricted
Subsidiary of Holdings that restricts distributions by that Restricted
Subsidiary pending its sale or other disposition;

(10)    Permitted Refinancing Indebtedness; provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are not materially more restrictive, taken as a whole, than those contained in
the agreements governing the Indebtedness being refinanced, as determined by the
Board of Directors of Holdings in its reasonable and good faith judgment;

(11)    Liens securing Indebtedness otherwise permitted to be incurred under the
provisions of Section 8.06 that limit the right of the debtor to dispose of the
assets subject to such Liens;

(12)    restrictions on cash, Cash Equivalents or other deposits or net worth
imposed by customers or lessors under contracts or leases entered into in the
ordinary course of business or which are customary in the Oil and Gas Business;

(13)    Hedging Agreements permitted from time to time under this Agreement;

(14)    any subordination of intercompany Indebtedness or other intercompany
obligations (including any intercompany revolving credit) to the claims or Liens
(otherwise permitted by this Agreement) of any other creditor of the obligor or
obligors of such intercompany Indebtedness or other obligations, including to
the claims or Liens (otherwise permitted by this Agreement) of any lender or
other party to any Credit Facility (as a lender, letter of credit issuer or in
any other capacity); and

(15)    the issuance of preferred securities by any Restricted Subsidiary of
Holdings or the payment of dividends thereon in accordance with the terms
thereof; provided that issuance of

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such preferred securities is permitted pursuant to Section 8.03 and the terms of
such preferred securities do not expressly restrict the ability of a Restricted
Subsidiary of Holdings to pay dividends or make any other distributions on its
Equity Interests (other than requirements to pay dividends or liquidation
preferences on such preferred securities prior to paying any dividends or making
any other distributions on such other Equity Interests).

SECTION 8.03     Limitation on Incurrence of Indebtedness and Issuance of
Preferred Stock.  Holdings will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, “incur”) any Indebtedness, Holdings will not
issue any Disqualified Stock, and Holdings will not permit any of its Restricted
Subsidiaries to issue any Disqualified Stock or preferred securities; provided,
that Holdings and any other Payer Party may incur Indebtedness, Holdings may
issue Disqualified Stock and any other Payer Party may issue Disqualified Stock
or preferred securities, if the Fixed Charge Coverage Ratio for Holdings’ most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such preferred securities or Disqualified Stock is
issued, as the case may be, would have been at least 2.25 to 1.0, determined on
a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred or such
preferred securities or Disqualified Stock had been issued, as the case may be,
at the beginning of such four-quarter period.

 

The first paragraph of this Section 8.03 will not prohibit the incurrence of any
of the following items of Indebtedness or the issuance of any Disqualified Stock
or any preferred securities described below (collectively, “Permitted Debt”):

(1)     Indebtedness incurred pursuant to the Term A Credit Agreement, the
Existing Credit Agreement and the other Credit Documents (as defined in the Term
A Credit Agreement) and the unsecured intercompany loan made by EIH to the Payer
with the proceeds of the Initial Loans;

(2)     the incurrence by Holdings or any of the Restricted Subsidiaries of
additional unsecured Indebtedness under one or more Credit Facilities, provided
that, after giving effect to any such incurrence, the aggregate principal amount
of all Indebtedness outstanding under Holdings and its Restricted Subsidiaries’
Credit Facilities incurred under this clause (2) does not exceed:

(a)     if Holdings’ Adjusted Consolidated Net Tangible Assets determined as of
the date of such incurrence are $2,000,000,000 or less, the greater of
(i) $100,000,000 and (ii) 7.5% of Holdings’ Adjusted Consolidated Net Tangible
Assets determined as of such date;

(b)     if Holdings’ Adjusted Consolidated Net Tangible Assets determined as of
the date of such incurrence are $3,000,000,000 or less, but exceed
$2,000,000,000, the greater of (i) $100,000,000 and (ii) 10% of Holdings’
Adjusted Consolidated Net Tangible Assets determined as of such date; and

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(c)     if Holdings’ Adjusted Consolidated Net Tangible Assets determined as of
the date of such incurrence exceed $3,000,000,000, the greater of
(i) $100,000,000 and (ii) 15% of Holdings’ Adjusted Consolidated Net Tangible
Assets determined as of such date;

(3)     the incurrence by Holdings or its Restricted Subsidiaries of the
Existing Indebtedness not otherwise referred to in this definition of “Permitted
Debt”;

(4)     the incurrence by Holdings or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for the purpose of financing
all or any part of the purchase price or cost of design, installation, repair,
replacement, construction or improvement of property, plant or equipment used in
the business of Holdings or such Restricted Subsidiary (whether through the
direct purchase of such assets or the Capital Stock of any Person owning such
assets (but no other material assets)) and related financing costs, and
Attributable Debt in respect of Sale Leaseback Transactions, including all
Permitted Refinancing Indebtedness incurred to extend, refinance, renew,
replace, defease, discharge, refund or otherwise retire for value any
Indebtedness incurred pursuant to this clause (4), provided that after giving
effect to any such incurrence, the aggregate principal amount of all
Indebtedness incurred pursuant to this clause (4) and then outstanding does not
exceed the greater of (A) $25,000,000 and (B) 2.0% of Holdings’ Adjusted
Consolidated Net Tangible Assets determined as of the date of such incurrence;

(5)     the incurrence by Holdings or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which
shall be used to extend, refinance, renew, replace, defease, discharge, refund
or otherwise retire for value, in whole or in part, Indebtedness of Holdings or
any of its Restricted Subsidiaries (other than intercompany Indebtedness) or
Disqualified Stock of Holdings, in each case that was permitted by this
Agreement to be incurred pursuant to the first paragraph of this Section 8.03 or
clauses (3) (other than in respect of Indebtedness under the Existing Credit
Agreement) and (12) of this paragraph or this clause (5);

(6)     the incurrence by Holdings or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among any of Holdings and any of its
Restricted Subsidiaries (“Permitted Intercompany Debt”); provided that:

(a)     such Indebtedness must be expressly subordinated in all respects to the
prior payment in full in cash of all Obligations pursuant to a written
subordination agreement satisfactory in form and substance to the Administrative
Agent; and

(b)      (i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than Holdings or a
Restricted Subsidiary of Holdings and (ii) any sale or other transfer of any
such Indebtedness to a Person that is neither Holdings nor a Restricted
Subsidiary of Holdings shall be deemed, in each case, to constitute an
incurrence (as of the date of such issuance, sale or transfer) of such
Indebtedness by Holdings or such Restricted Subsidiary, as the case may be, that
was not permitted by this clause (6);

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(7)     the incurrence by Holdings or any of its Restricted Subsidiaries of
obligations under Hedging Agreements entered into not for speculative purposes;

(8)      (A) the guarantee by Holdings or any other Payer Party of Indebtedness
of Holdings or any other Payer Party that was permitted to be incurred by the
first paragraph of this Section 8.03; provided that if the Indebtedness being
guaranteed is subordinated to the Obligations, then the guarantee of Holdings or
such other Payer Party (or, (i) in the case of a guarantee made by a Term A
Borrower, such Term A Borrower’s Obligations (as defined in the Term A Credit
Agreement) and (ii) in the case of a guarantee made by the Payer,  the Payer’s
Obligations) made pursuant to the Credit Party Guaranty (as defined in the Term
A Credit Agreement) shall be senior to its guarantee of such subordinated
Indebtedness; and (B) the guarantee by Holdings or any of its Restricted
Subsidiaries of Indebtedness of Holdings or any of its Restricted Subsidiaries
that was permitted to be incurred by another provision of this Section 8.03
other than the first paragraph hereof; provided that if the Indebtedness being
guaranteed is subordinated to the Obligations, then the guarantee of Holdings or
such other Payer Party (or, in the case of a guarantee made by a Term A
Borrower, such Term A Borrower’s Obligations (as defined in the Term A Credit
Agreement)), if it is a Guarantor, made pursuant to the Credit Party Guaranty
(as defined in the Term A Credit Agreement), shall be senior to its guarantee of
such subordinated Indebtedness;

(9)     the incurrence by Holdings or any of its Restricted Subsidiaries of
Indebtedness relating to net gas balancing positions arising in the ordinary
course of business and consistent with past practice;

(10)    the incurrence by Holdings or any of its Restricted Subsidiaries of
Indebtedness in respect of bid, performance, surety, appeal and similar bonds
issued for the account of Holdings and any of its Restricted Subsidiaries, or
obligations in respect of letters of credit posted in lieu of, or to secure, any
such bonds, in the ordinary course of business or which are customary in the Oil
and Gas Business;

(11)    the issuance by any of Holdings’ Restricted Subsidiaries to Holdings or
to any of its Restricted Subsidiaries of any preferred securities; provided,
that:

(a)     any subsequent issuance or transfer of Equity Interests that results in
any such preferred securities being held by a Person other than Holdings or a
Restricted Subsidiary of Holdings; and

(b)     any sale or other transfer of any such preferred securities to a Person
that is not either Holdings or a Restricted Subsidiary of Holdings shall be
deemed, in each case, to constitute an issuance (as of the date of such
issuance, sale or transfer) of such preferred securities by such Restricted
Subsidiary that was not permitted by this clause (11);

(12)    Permitted Acquisition Indebtedness;

(13)    the incurrence by Holdings or its Restricted Subsidiaries of
Indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument

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inadvertently drawn against insufficient funds in the ordinary course of
business, so long as such Indebtedness is covered within five Business Days;

(14)    the incurrence by Holdings or its Restricted Subsidiaries of
Indebtedness consisting of the financing of insurance premiums in customary
amounts consistent with the operations and business of Holdings and the
Restricted Subsidiaries; and

(15)    the incurrence by Holdings or any other Payer Party of additional
Indebtedness or the issuance by Holdings of additional Disqualified Stock,
provided that, after giving effect to any such incurrence or issuance, the
aggregate principal amount of all Indebtedness and Disqualified Stock incurred
or issued under this clause (15) and then outstanding does not exceed the
greater of (a) $75,000,000 and (b) 5.0% of Holdings’ Adjusted Consolidated Net
Tangible Assets determined as of the date of such incurrence or issuance.

Notwithstanding any of the foregoing, Holdings shall not, and shall not permit
any of its Restricted Subsidiaries to (and the provisions of this Section 8.03
shall not permit Holdings or any of its Restricted Subsidiaries to), incur any
Indebtedness for borrowed money having a maturity date occurring on or prior to
the LC Release Date.

For purposes of determining compliance with this Section 8.03, in the event that
an item of Indebtedness or Disqualified Stock or preferred securities meets the
criteria of more than one of the categories of Permitted Debt described in
clauses (1) through (15) above, or is entitled to be incurred or issued pursuant
to the first paragraph of this Section 8.03, Holdings will be permitted to
divide and classify (or later classify, reclassify or re-divide in whole or in
part in its sole discretion) such item of Indebtedness or Disqualified Stock or
preferred securities in any manner that complies with this Section 8.03;
provided that Indebtedness under the Term A Credit Agreement and the other
Credit Documents (as defined in the Term A Credit Agreement) shall be considered
to have been incurred under clause (1) above.  For purposes of determining any
particular amount of Indebtedness under this covenant, guarantees of
Indebtedness otherwise included in the determination of such amount shall not
also be included except to the extent that such Indebtedness exceeds such
guarantee.

The accrual of interest, accrual of dividends, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness and the payment of dividends on Disqualified Stock or
preferred securities in the form of additional shares of Disqualified Stock or
preferred securities will not be deemed to be an incurrence of Indebtedness or
an issuance of Disqualified Stock or preferred securities for purposes of this
Section 8.03.

For purposes of determining compliance with any U.S. dollar-denominated
restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of Indebtedness denominated in a foreign currency will be
calculated based on the relevant currency exchange rate in effect on the date
the Indebtedness was incurred, in the case of term Indebtedness, or first
committed, in the case of revolving credit Indebtedness; provided that if such
Indebtedness is incurred to refinance other Indebtedness denominated in a
foreign currency, and the refinancing would cause the applicable U.S.
dollar-dominated restriction to be exceeded if calculated at the relevant
currency exchange rate in effect on the date of the refinancing, such U.S.
dollar-

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dominated restriction shall be deemed not to have been exceeded so long as the
principal amount of such refinancing Indebtedness does not exceed the principal
amount of such Indebtedness being refinanced (plus all accrued and unpaid
interest on such Indebtedness, and the amount of all fees, expenses and premiums
incurred in connection therewith).  Notwithstanding any other provision of this
covenant, the maximum amount of Indebtedness that Holdings or any Restricted
Subsidiary may incur pursuant to this covenant shall not be deemed to be
exceeded solely as a result of fluctuations in the exchange rate of
currencies.  The principal amount of any Permitted Refinancing Indebtedness
incurred to refinance other Indebtedness, if incurred in a different currency
from the Indebtedness being refinanced, will be calculated based on the currency
exchange rate applicable to the currencies in which the Permitted Refinancing
Indebtedness is denominated that is in effect on the date of such refinancing.

SECTION 8.04     Limitation on Asset Sales.  Holdings will not, and will not
permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

 

(a)     Holdings (or the Restricted Subsidiary, as the case may be) receives
consideration at least equal to the Fair Market Value of the assets or Equity
Interest issued or sold or otherwise disposed of;

(b)     in the case of any Asset Sale constituting the grant, sale, assignment
or other conveyance of any Production Payment, such Production Payment
constitutes a Refinancing Production Payment; and

(c)     at least 75% of the aggregate consideration to be received by Holdings
and its Restricted Subsidiaries in such Asset Sale (determined on the date of
contractually agreeing to such Asset Sale) and any other Asset Sale since the
date of this Agreement, on a cumulative basis, is in the form of cash or Cash
Equivalents.  For purposes of this provision, each of the following will be
deemed to be cash:

(i)     any liabilities, as shown on Holdings’ or any Restricted Subsidiary’s
most recent balance sheet, of Holdings or such Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated in
right of payment to the Obligations) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases Holdings or
such Restricted Subsidiary from further liability; and

(ii)     any securities, notes or other obligations received by Holdings or any
Restricted Subsidiary from such transferee that are, within 90 days after the
Asset Sale, converted by Holdings or such Restricted Subsidiary into cash or
Cash Equivalents, to the extent of the cash received in that conversion;

provided that in the case of any Asset Sale pursuant to a condemnation,
appropriation or similar governmental taking, including by deed in lieu of
condemnation, such Asset Sale shall not be required to satisfy the requirements
of clauses (a) and (b) above.  Notwithstanding the preceding, the 75% limitation
referred to above shall be deemed satisfied with respect to any Asset Sale to
which such limitation applies in which the cash or Cash Equivalents portion of
the consideration received therefrom, determined in accordance with the
preceding provision on an after-tax basis,

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is equal to or greater than what the after-tax proceeds would have been had such
Asset Sale complied with the aforementioned 75% limitation.

SECTION 8.05     Limitation on Transactions with Affiliates.  Holdings will not,
and will not permit any of its Restricted Subsidiaries to, make any payment to,
or sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any properties or assets from, or enter into or make or amend
any transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate of Holdings (each, an “Affiliate
Transaction”), unless:

 

(a)     the Affiliate Transaction is on terms that are not less favorable to
Holdings or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by Holdings or such Restricted Subsidiary
with an unrelated Person or, if in the good faith judgment of Holdings’ Board of
Directors, no comparable transaction is available with which to compare such
Affiliate Transaction, such Affiliate Transaction is otherwise fair to Holdings
or the relevant Restricted Subsidiary from a financial point of view; and

(b)     Holdings delivers to the Payee:

(i)     with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration to or from an Affiliate in excess
of $10,000,000, a resolution of the Board of Directors of Holdings set forth in
a certificate of a Financial Officer of Holdings certifying that such Affiliate
Transaction or series of related Affiliate Transactions complies with this
Section 8.05 and that such Affiliate Transaction or series of related Affiliate
Transactions has been approved by a majority of the disinterested members of the
Board of Directors of Holdings; and

(ii)     with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration to or from an Affiliate
in excess of $20,000,000, an opinion as to the fairness to Holdings or such
Restricted Subsidiary of such Affiliate Transaction or series of related
Affiliate Transactions from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.

The following items will not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph of this
Section 8.05:

(1)     any employment agreement or arrangement, equity award, equity option or
cash or equity settled equity appreciation agreement or plan, employee benefit
plan, officer or director indemnification agreement, severance agreement,
consulting agreement or other compensation plan or arrangement entered into by
Holdings or any of its Restricted Subsidiaries in the ordinary course of
business or which is customary in the Oil and Gas Business, and payments,
awards, grants or issuances of securities pursuant thereto;

(2)     transactions between or among any of Holdings and its Restricted
Subsidiaries;

(3)     transactions with a Person (other than an Unrestricted Subsidiary of
Holdings) that is an Affiliate of Holdings solely because Holdings owns,
directly or indirectly, an Equity

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Interest in, or otherwise controls, such Person or has nominated or appointed a
person to the Board of Directors of that Person;

(4)     customary compensation, indemnification and other benefits made
available to officers, directors, employees or consultants of Holdings or a
Restricted Subsidiary of Holdings, including reimbursement or advancement of
out-of-pocket expenses and provisions of officers’ and directors’ liability
insurance;

(5)     issuances of Equity Interests (other than Disqualified Stock) of
Holdings to, or receipt of capital contributions from, Affiliates of Holdings
and any dividend or distribution payable in Equity Interests (other than
Disqualified Stock) of Holdings;

(6)     any Permitted Investments or Restricted Payments that are permitted by
Section 8.01;

(7)     transactions between Holdings or any of its Restricted Subsidiaries and
any Person that would not otherwise constitute an Affiliate Transaction except
for the fact that one director of such other Person is also a director of
Holdings or such Restricted Subsidiary, as applicable; provided that such
director abstains from voting as a director of Holdings or such Restricted
Subsidiary, as applicable, on any matter involving such other Person;

(8)     the existence of, and the performance of obligations of Holdings or any
of its Restricted Subsidiaries under the terms of, any written agreement to
which Holdings or any of its Restricted Subsidiaries is a party on the date of
this Agreement, as such agreements may be amended, modified, supplemented or
replaced from time to time; provided, however, that any amendment, modification,
supplement or replacement entered into after the date of this Agreement will be
permitted to the extent that its terms are not materially more disadvantageous,
taken as a whole, to the Payee than the terms of the agreements in effect on the
date of this Agreement (as conclusively evidenced by a Board Resolution of
Holdings or such Subsidiary);

(9)     any transaction in which Holdings or any of its Restricted Subsidiaries,
as the case may be, delivers to the Payee an opinion from an accounting,
appraisal or investment banking firm of national standing stating that such
transaction is fair to Holdings or such Restricted Subsidiary from a financial
point of view or that such transaction meets the requirements of clause (1) of
the preceding paragraph of this Section 8.05;

(10)     (a) guarantees by Holdings or any of its Restricted Subsidiaries of
performance of obligations of Holdings’ Unrestricted Subsidiaries in the
ordinary course of business or which are customary in the Oil and Gas Business
and (b) pledges by Holdings or any Restricted Subsidiary of Holdings of Equity
Interests in Unrestricted Subsidiaries for the benefit of lenders or other
creditors of Holdings’ Unrestricted Subsidiaries;

(11)    any Affiliate Transaction with a Person in its capacity as a holder of
Indebtedness or Capital Stock of Holdings or any Restricted Subsidiary of
Holdings if such Person is treated no more favorably than the other holders of
Indebtedness or Capital Stock of Holdings or such Restricted Subsidiary;

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(12)    transactions with joint venture partners, customers, clients, suppliers
or purchasers or sellers of goods or services, or lessors or lessees of
property, in each case in the ordinary course of business or which are customary
in the Oil and Gas Business and otherwise in compliance with the terms of this
Agreement similar to those contained in similar contracts entered into by
Holdings or any Restricted Subsidiary and unrelated third parties, or if neither
Holdings nor any Restricted Subsidiary has entered into a similar contract with
an unrelated third party, which are, in the aggregate (taking into account all
the costs and benefits associated with such transactions), not materially less
favorable to Holdings and its Restricted Subsidiaries than those that would have
been obtained in a comparable transaction by Holdings or such Restricted
Subsidiary with an unrelated third party, in the good faith determination of
Holdings’ Board of Directors or any executive officer of Holdings involved in or
otherwise familiar with such transaction; and

(13)    dividends and distributions to Holdings and its Restricted Subsidiaries
by any Unrestricted Subsidiary.

SECTION 8.06     Limitation on Liens.  Holdings will not, and will not permit
any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause
or suffer to exist or become effective any Lien of any kind securing
Indebtedness upon any of their property or assets (whether now owned or
hereafter acquired) other than Permitted Liens.

 

SECTION 8.07     Business Activities.  Holdings will not, and will not permit
any Restricted Subsidiary to, engage in any business other than the Oil and Gas
Business, except to such extent as would not be material to Holdings and its
Restricted Subsidiaries taken as a whole.

 

SECTION 8.08     Designation of Restricted and Unrestricted Subsidiaries.  The
Board of Directors of Holdings may designate any Restricted Subsidiary of
Holdings (other than the Term A Borrowers) to be an Unrestricted Subsidiary if
that designation would not cause a Default or Event of Default and the other
requirements for such designation prescribed in the definition of “Unrestricted
Subsidiary” are satisfied.  If a Restricted Subsidiary of Holdings is designated
as an Unrestricted Subsidiary, the aggregate Fair Market Value of all
outstanding Investments owned by Holdings and its Restricted Subsidiaries in the
Subsidiary properly designated as an Unrestricted Subsidiary will be deemed to
be an Investment made as of the time of the designation and will reduce the
amount available for Restricted Payments under the first paragraph of
Section 8.01 or represent Permitted Investments, as determined by
Holdings.  That designation shall only be permitted if the Investment would be
permitted at that time and if the Subsidiary so designated otherwise meets the
definition of an Unrestricted Subsidiary.

 

The Board of Directors of Holdings may at any time designate any Unrestricted
Subsidiary of Holdings to be a Restricted Subsidiary of Holdings, provided that
such designation will be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of Holdings of any outstanding Indebtedness of such
Unrestricted Subsidiary, and such designation will only be permitted if (1) such
Indebtedness is permitted under Section 8.03, calculated on a pro forma basis as
if such designation had occurred at the beginning of the four-quarter reference
period, and (2) no Default (other than a Reporting Default) or Event of Default
would be in existence following such designation.

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SECTION 8.09     Merger, Consolidation, or Sale of Assets.  Neither Holdings nor
the Payer may:  (x) consolidate or merge with or into another Person (whether or
not Holdings or the Payer (as applicable) is the survivor), convert into another
form of entity or continue in another jurisdiction; or (y) directly or
indirectly, sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets, in one or more related
transactions to another Person, unless:

 

(a)     either (i) Holdings or the Payer (as applicable) is the survivor or
(ii) the Person formed by or surviving any such consolidation or merger or
resulting from such conversion (if other than Holdings or the Payer) or to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made is a corporation, limited liability company or limited
partnership organized or existing under the laws of the United States, any state
of the United States or the District of Columbia or, in the case of any such
merger or consolidation involving the Payer, or any sale, assignment, transfer,
lease, conveyance or other disposition of assets of the Payer, organized or
existing under the laws of England and Wales or the Netherlands (Holdings, the
Payer or such other Person, as the case may be, being herein called the
“Successor Company”);

(b)     the Successor Company unconditionally assumes all the obligations of
Holdings or the Payer (as applicable) under this Agreement, the Security
Documents and any and all other LC Procurement Documents to which it is a party
pursuant to a joinder agreement or other agreement in a form reasonably
satisfactory to the Payee and the Collateral Agent;

(c)     immediately after such transaction or transactions, no Default (other
than a Reporting Default) or Event of Default exists;

(d)     either:

(i)     the Successor Company would, on the date of such transaction immediately
after giving pro forma effect thereto and any related financing transactions as
if the same had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 8.03 hereof; or

(ii)     immediately after giving pro forma effect to such transaction and any
related financing transactions as if the same had occurred at the beginning of
the applicable four-quarter period, the Fixed Charge Coverage Ratio of the
Successor Company, will be equal to or greater than the Fixed Charge Coverage
Ratio of Holdings immediately prior to such transaction;

(e)     the Successor Company causes such amendments, supplements or other
instruments to be executed, delivered, filed and recorded, as applicable, in
such jurisdictions as may be required by applicable law or desired by the
Collateral Agent to preserve and protect the Lien of the Security Documents on
any Collateral owned by or transferred to the Successor Company;

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(f)     any Collateral owned by or transferred to the Successor Company shall
(i) continue to constitute Collateral, (ii) be subject to a first-priority Lien
in favor of the Collateral Agent for the benefit of the Payee and (iii) not be
subject to any Lien other than the Liens securing the Obligations and other
Permitted Liens; and

(g)     the property and assets of the Person which is merged or consolidated
with or into the Successor Company, to the extent that they are property or
assets of the types which would constitute Collateral, shall be treated as
after-acquired property and the Successor Company shall take such action as may
be reasonably necessary or desired by the Collateral Agent to cause such
property and assets to be made subject to a first-priority Lien in favor of the
Collateral Agent for the benefit of the Payee.

(h)     Notwithstanding the restrictions described in the foregoing clause (f),
(i) any Restricted Subsidiary of Holdings (other than the Payer) may consolidate
with, merge into or dispose of all or part of its properties or assets to
Holdings or another Restricted Subsidiary, in each case, subject to compliance
with the Additional Guarantor Requirement as of the time of such merger or
disposition and (ii) Holdings may merge with or into an Affiliate formed solely
for the purpose of reincorporating Holdings in another jurisdiction.

(i)     For purposes of the foregoing, the sale, assignment, transfer, lease,
conveyance or other disposition (in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Subsidiaries of Holdings, which properties or assets, if held by Holdings
instead of such Subsidiaries, would constitute all or substantially all of the
properties or assets of Holdings on a consolidated basis, shall be deemed to be
the transfer of all or substantially all of the properties or assets of
Holdings.

(j)     Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
properties or assets of Holdings in accordance with this Section 8.09, in which
Holdings is not the surviving entity, the Successor Company shall succeed to,
and be substituted for, and may exercise every right and power of, Holdings
under this Agreement and any other Security Document to which it is a party with
the same effect as if such Successor Company had been named as Holdings herein
(so that from and after the date of such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition, the provisions of
this Agreement referring to “Holdings” shall refer instead to such Successor
Company and not to Holdings); and thereafter (except in the case of a lease of
all or substantially all of Holdings’ properties or assets), Holdings shall be
discharged and released from all obligations and covenants under this Agreement
and the other Security Documents to which it is a party.

SECTION 8.10     Minimum Interest Coverage Ratio.  Holdings will not permit the
Interest Coverage Ratio as of the last day of each fiscal quarter for the period
of four consecutive fiscal quarters ending on such date, beginning with the
fiscal quarter ending June 30, 2014, to be less than 1.50:1.00.

 

SECTION 8.11     Maximum Leverage Ratio.  Holdings will not permit the
Consolidated Leverage Ratio, as of the last day of any period of four
consecutive fiscal quarters, beginning with the fiscal quarter ending June 30,
2014, to be greater than 5.00:1.00.

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SECTION 8.12     Minimum Asset Coverage Ratios.  Holdings will not permit the
Proved Reserves Coverage Ratio, as of the last day of each fiscal quarter
beginning with the fiscal quarter ending June 30, 2014, to be less than 2.0 to
1.0.

 

SECTION 8.13     Elections.  Without the prior written consent of the Required
Lenders, Holdings will not, and will not permit any of its Subsidiaries to, make
any election for U.S. federal income tax purposes that causes the Indebtedness
of the Borrowers to be treated as the Indebtedness of a “U.S. person” (as such
term is defined under Section 7701(a)(30) of the Code) for U.S. federal income
tax purposes.

 

SECTION 8.14     Amendments to Certain Documents.  Holdings will not, and will
not permit any of its Restricted Subsidiaries to amend, modify, restate,
supplement or otherwise change (pursuant to a waiver or otherwise), the
Subordination Agreement, any LC Procurement Document or the LC Issuance
Agreement other than (i) any such amendment, restatement, supplement,
modification or other change which would not be adverse to any Payer Party or
the Collateral Agent and which does not involve the payment of a consent fee or
(ii) any such amendment as may be necessary, if any, with respect to the
Applicable Rate and related provisions and definitions hereunder in order to
provide for the payment of a LC Fee equal to the sum of the weighted average
Applicable Margin (as defined in the Term B Credit Agreement), the Alternate
Base Rate (as defined in the Term B Credit Agreement) (with respect to the ABR
Tranches of ABR Borrowings under the Term B Credit Agreement), and the Adjusted
LIBO Rate (as defined in the Term B Credit Agreement) (with respect to the
Eurodollar Tranches of Eurodollar Borrowings under the Term B Credit Agreement)
after giving effect to the incurrence of Other Term Loans (as defined in the
Term B Credit Agreement) in accordance with Section 2.22 of the Term B Credit
Agreement; provided that no such amendment, modification, change, waiver,
discharge or termination shall, without the consent of the Collateral Agent,
(a) extend the LC Release Date, or reduce the Fees or extend the time of payment
of any LC Procurement Agreement Obligations (as defined in the Term B Credit
Agreement) (except in connection with the waiver of applicability of any
post-default increase in interest rates), or reduce (or forgive) the outstanding
amount of Reimbursement Obligations (as defined in the Term B Credit Agreement),
(b) release any Collateral, (c) amend, modify or waive any provision of
Section 10.05, or (d) consent to the assignment or transfer by LuxCo of any of
its rights thereunder.

 

Article IX.
Events of Default.

 

In case of the happening of any of the following events (“Events of Default”):

SECTION 9.01     Payments.  The Payer shall (a) default in the payment when due
of any LC Procurement Obligations or (b) default, and such default shall
continue unremedied for three or more Business Days, in the payment when due of
any Fees or any interest payable hereunder, or any other amounts owing hereunder
or any other Credit Document.

 

SECTION 9.02     Representations, etc..  Any representation, warranty or
statement made or deemed made by any Payer Party herein or in any other LC
Procurement Document or

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in any certificate delivered to the Payee pursuant hereto or thereto shall prove
to be untrue in any material respect on the date as of which made or deemed
made.

 

SECTION 9.03     Covenants.  Holdings or any of its Restricted Subsidiaries
shall (a) default in the due performance or observance by it of any term,
covenant or agreement contained in Section 7.01(f)(i), 7.04 (with respect to the
Payer only), 7.11(c) or 7.12 or Article VIII or (b) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement (other than those set forth in Sections 9.01, 9.02
and 9.03(a)) and such default shall continue unremedied for a period of 30 days
following the earlier of (i) Holdings’ or the Payer’s actual knowledge of such
default and (ii) written notice from the Payee specifying such default.

 

SECTION 9.04     Default Under Other Agreements.  (a) Holdings or any of its
Restricted Subsidiaries shall (i) default in any payment of any Indebtedness
(other than the Obligations under the Credit Documents) beyond the period of
grace, if any, provided in an instrument or agreement under which such
Indebtedness was created or (ii) default in the observance or performance of any
agreement or condition relating to any Indebtedness (other than the Obligations
under the Credit Documents) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause any such Indebtedness to become due prior to its stated maturity, or
(b) any Indebtedness (other than the Obligations under the Credit Documents) of
Holdings or any of its Restricted Subsidiaries shall be declared to be (or shall
become) due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the Stated Maturity thereof; provided
that, it shall not be a Default or an Event of Default under this Section 9.04
unless the principal amount of all Indebtedness as described in preceding
clauses (a) and (b) is at least $25,000,000.

 

SECTION 9.05     Bankruptcy, etc.    Holdings or any of the other Payer Parties,
other than EIH, shall commence a voluntary case concerning itself under any
Debtor Relief Law; or an involuntary case is commenced against Holdings or any
of the other Payer Parties, other than EIH, and the petition is not controverted
within 10 days, or is not dismissed within 60 days after the filing thereof; or
a custodian (as defined in a Debtor Relief Law) is appointed for, or takes
charge of, all or substantially all of the property of Holdings or any of the
other Payer Parties, other than EIH, to operate all or any substantial portion
of the business of Holdings or any of the other Payer Parties, other than EIH,
or Holdings or any of the other Payer Parties, other than EIH, commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to Holdings or any of
the other Payer Parties, other than EIH, or there is commenced against Holdings
or any of the other Payer Parties any such proceeding which remains undismissed
for a period of 60 days after the filing thereof, or Holdings or any of the
other Payer Parties, other than EIH, is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding is
entered; or Holdings or any of the other Payer Parties, other than EIH, makes a
general assignment for the benefit of creditors; or any Business action is taken
by Holdings or any of the other Payer Parties, other than EIH, for the purpose
of effecting any of the foregoing.

 

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SECTION 9.06     Dutch Insolvency Event.  A Dutch Insolvency Event shall have
occurred with respect to EIH.

 

SECTION 9.07     ERISA.  (a) An ERISA Event shall have occurred, a contributing
sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title
IV of ERISA shall be subject to the advance reporting requirement of PBGC
Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof) and
an event described in Subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC
Regulation Section 4043 shall be reasonably expected to occur with respect to
such Plan within the following 30 days (except to the extent that a waiver to
the advance reporting requirement of PBGC Regulation 4043.61 applies with
respect to such event); any Plan shall have an Unfunded Current Liability; there
is or arises any potential withdrawal liability under Section 4201 of ERISA, if
Holdings, any of its Subsidiaries, or any ERISA Affiliate were to withdraw
completely from any and all Multiemployer Plans; a contribution required to be
made by Holdings, any of its Subsidiaries or any ERISA Affiliate with respect to
a Plan or Non-U.S. Plan has not been timely made, Holdings, any of its
Subsidiaries or any ERISA Affiliate has incurred or is likely to incur any
liability on account of a group health plan (as defined in Section 607(1) of
ERISA, Section 4980B(g)(2) of the Code or 45 Code of Federal Regulations Section
160.103) under Section 4980B of the Code and/or the Health Insurance Portability
and Accountability Act of 1996; or Holdings or any of its Subsidiaries has
incurred or is likely to incur liabilities pursuant to any portion of any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA); any Change in Law occurs, or, as a result of
a Change in Law, an event occurs following a Change in Law, with respect to or
otherwise affecting any Plan; (b) there shall result from any of the events set
forth in clause (a) above the imposition of a lien, the granting of a security
interest, or a liability or a material risk of incurring a liability; and
(c) such lien, security interest or liability described in clause (a) or (b)
above, either individually or in the aggregate, in the opinion of the Payee has
had, or could reasonably be expected to have, a Material Adverse Effect.

 

SECTION 9.08     Security Documents.  Any of the Security Documents shall cease
to be in full force and effect, or shall cease to give the Collateral Agent for
the benefit of the Payee the Liens, rights, powers and privileges purported to
be created thereby (including, without limitation, a perfected security interest
in, and Lien on, all of the Collateral (other than any immaterial portion
thereof), in favor of the Collateral Agent, subject to no other Liens (except
Permitted Liens), or any Payer Party shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any such Security Document and such default shall continue
beyond the period of grace, if any, specifically applicable thereto pursuant to
the terms of such Security Document.

 

SECTION 9.09     Guaranties.  The Payer Party Guaranty or any provision thereof
shall cease to be in full force or effect as to any Guarantor (except as a
result of a release of any Guarantor in accordance with the terms thereof), or
any Guarantor or any Person acting for or on behalf of such Guarantor shall deny
or disaffirm such Guarantor’s obligations under the Payer Party Guaranty to
which it is a party or any Guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to the Payer Party Guaranty.

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SECTION 9.10     Judgments.  One or more judgments or decrees shall be entered
against Holdings or any of the other Payer Parties involving in the aggregate
for Holdings and the other Payer Parties a liability that equals or exceeds
$25,000,000 (to the extent not paid or not covered by a reputable and solvent
insurance company pursuant to which the insurer has accepted liability therefor
in writing) and such judgments and decrees either shall be final and
non-appealable or shall not be vacated, discharged or stayed or bonded pending
appeal for any period of 30 consecutive days.

 

SECTION 9.11     Nationalization.  All or any part of the interest of Holdings
or any of the other Payer Parties in any Oil and Gas Property (or any
Hydrocarbons or revenues or other monies arising in respect of it) is
(o) nationalized, expropriated, compulsorily acquired or seized by any
Governmental Authority or (p) 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.

 

SECTION 9.12     Cross-Default.  Either Term A Borrower shall (i) default in any
payment obligation under the Term A Credit Agreement beyond the period of grace,
if any, provided thereunder or in the observance or performance of any agreement
contained in the Term A Credit Agreement or (ii) any of the Term A Credit
Documents shall cease to be in full force and effect, or shall cease to give the
Collateral Agent for the benefit of lenders the Term A Credit Agreement the
Lien, rights, powers and privileges purported to be created thereby, in favor of
the Collateral Agent, or any Payer Party shall default in the due performance or
observance of any term, covenant or agreement on its part shall continue beyond
the period of grace, if any, specifically applicable thereto pursuant to the
terms of such Term A Credit Document or any Payer Party or any Person acting for
or on behalf of such Payer Party shall deny or disaffirm such Payer Party’s
obligations under the Term A Credit Document to which it is a party.

 

SECTION 9.13     Change of Control.  A Change of Control shall occur;

 

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Payee and/or the Collateral Agent may by written
notice to the Payer take any or all of the following actions, without prejudice
to the rights of the Payee to enforce its claims against any Payer Party
 (provided that, if an Event of Default respecting the covenant in Section 9.05
shall occur with respect to the Payer, the result which would occur upon the
giving of written notice by the Payee as specified below, shall occur
automatically without the giving of any such notice):  (1) declare any Fees
owing hereunder to be, whereupon the same shall become, forthwith due and
payable, together with the Applicable Premium, without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Payer Party, (2) terminate the Commitment, and (3) require the Payer to
immediately provide to the LC Bank the immediate return to the Payee of the
Payer Deposit, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Payer; and (4) enforce, as Collateral
Agent, all of the Liens and security interests created pursuant to the Security
Documents.

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After the occurrence and during the continuance of an Event of Default, any
amounts received on account of the Obligations shall be applied by the Payee in
the following order (to the fullest extent permitted by mandatory provisions of
applicable law):

First, to payment of that portion of the Obligations constituting fees
(including the Fees without accounting for any accrued interest thereon),
indemnities, expenses and other amounts (other than LC Procurement Obligations,
but including attorneys’ and consultant fees and other out-of-pocket expenses
payable under Section 11.05) payable to the Payee and the Collateral Agent;

Second, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Obligations owing to the Payee;

Third, to payment of that portion of the Obligations constituting LC Procurement
Obligations owing to the Payee;

Fourth, to the payment of all other Obligations that are due and payable to the
Payee on such date; and

Fifth, to the Default Deposit; and

Last, the balance, if any, to the Payer or other Payer Party as otherwise
required by applicable law.

Article X.
The Collateral Agent.

 

SECTION 10.01    Appointment and Authority.  The Payee hereby irrevocably
appoint the Collateral Agent its agent and authorizes the Collateral Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Collateral Agent by the terms of the LC Procurement Documents, together with
such actions and powers as are reasonably incidental thereto.  Without limiting
the generality of the foregoing, the Collateral Agent is hereby expressly
authorized to (i) execute any and all documents (including releases) with
respect to the Collateral or any Guarantor and the rights of the Payee with
respect thereto, as contemplated by and in accordance with the provisions of
this Agreement and the Security Documents and (ii) negotiate, enforce or the
settle any claim, action or proceeding affecting the Payee in their capacity as
such, at the direction of the Payee, which negotiation, enforcement or
settlement will be binding upon the Payee.

 

SECTION 10.02    Exculpatory Provisions. 

 

(a)     The Collateral Agent shall not have any duties or obligations except
those expressly set forth in the LC Procurement Documents.  Without limiting the
generality of the foregoing, (i) the Collateral Agent shall not be subject to
any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (ii) the Collateral Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that the
Collateral Agent is instructed in

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writing to exercise by the Payee, and (iii) except as expressly set forth in the
LC Procurement Documents, the Collateral Agent shall not have any duty to
disclose, nor shall it be liable for the failure to disclose, any information
relating to Holdings, the Payer or any of the Subsidiaries that is communicated
to or obtained by the bank serving as Collateral Agent or any of its Affiliates
in any capacity.

(b)     The Collateral Agent shall not be liable for any action taken or not
taken by it with the consent or at the request of the Payee or in the absence of
its own gross negligence or willful misconduct.  The Collateral Agent shall not
be deemed to have knowledge of any Default unless and until written notice
thereof is given to the Collateral Agent by Holdings or the Payee.

(c)     The Collateral Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any LC Procurement Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any LC Procurement
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
LC Procurement Document or any other agreement, instrument or document, or (v)
the satisfaction of any condition set forth in Article V or elsewhere in any LC
Procurement Document, other than to confirm receipt of items expressly required
to be delivered to the Collateral Agent.

(d)     Each of the Payee and the Payer hereby acknowledges and agrees that (i)
the Collateral Agent is acting as administrative agent under the Term A Credit
Agreement and the Term B Credit Agreement and each of the other agreements and
documents executed or made in connection therewith, (ii) the Collateral Agent is
acting as the collateral agent and as a secured party under each of the security
agreements and documents executed or made pursuant to any of the foregoing
agreements, for the benefit of secured parties under each of the this Agreement,
the Term A Credit Agreement and the Term B Credit Agreement, (iii) the LC Bank
is acting as letter of credit issuing bank under the LC Issuance Agreement and
(iv) neither the Collateral Agent nor the LC Bank shall be liable under this
Agreement or any Security Document for any actual or deemed conflict of interest
as a result thereof, or as a result of any actions which either the Collateral
Agent or the LC Bank shall take or fail to take under any such other document.

SECTION 10.03    Reliance by Collateral Agent.  The Collateral Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed or
sent by the proper Person.  The Collateral Agent may also rely upon any
statement made to it orally or by telephone and believed by it to have been made
by the proper Person, and shall not incur any liability for relying
thereon.  The Collateral Agent may consult with legal counsel (who may be
counsel for the Payer), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.

 

SECTION 10.04    Delegation of Duties.  The Collateral Agent may perform any and
all its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by it.  The Collateral Agent and any such sub-agent may
perform any and all its duties and

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exercise its rights and powers by or through its Related Parties.  The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of the Collateral Agent and any such
sub-agent, and shall apply to their respective activities as Collateral
Agent.  The Collateral Agent shall not be responsible for the negligence or
misconduct of any sub-agents except to the extent that a court of competent
jurisdiction determines in a final and non-appealable judgment that the
Collateral Agent acted with gross negligence or willful misconduct in the
selection of such sub-agents.

 

SECTION 10.05    Resignation of Collateral Agent.  Subject to the appointment
and acceptance of a successor Collateral Agent as provided below, the Collateral
Agent may resign at any time by notifying the Payee and the Payer; provided that
unless a retiring Collateral Agent’s resignation would not, in the judgment of
legal counsel, adversely affect the validity, perfection, enforceability or
priority of the Liens securing the Obligations, the Collateral Agent’s
resignation notice shall only take effect upon: (i) the appointment of a
successor Collateral Agent; and (ii) the transfer of all the Collateral to that
successor Collateral Agent.  Upon any such resignation, the Payee and the Payer
agree that the collateral agent appointed under the Term A Credit Agreement
shall automatically become the Collateral Agent hereunder.  If no successor
shall have been so appointed and shall have accepted such appointment within 30
days after the retiring Collateral Agent gives notice of its resignation, then
the retiring Collateral Agent may appoint a successor Collateral Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank.  If no successor Collateral Agent has been appointed pursuant to the
immediately preceding sentence by the 30th day after the date such notice of
resignation was given by Collateral Agent, Collateral Agent’s resignation shall
become effective and the Payee shall thereafter perform all the duties of
Collateral Agent hereunder and/or under any other LC Procurement Document until
such time, if any, as the Payee, with the consent of the Payer so long as no
Event of Default has occurred and is continuing, appoint a successor Collateral
Agent.  Upon the acceptance of its appointment as Collateral Agent hereunder by
a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall be discharged from its duties and obligations
hereunder.  The fees payable by the Payer to a successor Collateral Agent shall
be the same as those payable to its predecessor unless otherwise agreed between
the Payer and such successor.  After a Collateral Agent’s resignation hereunder,
the provisions of this Article and Section 11.05 shall continue in effect for
the benefit of the retiring Collateral Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while acting as Collateral Agent.

 

SECTION 10.06    Non-Reliance on Collateral Agent.  The Payee acknowledges that
it has, independently and without reliance upon the Collateral Agent and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement.  The Payee also
acknowledges that it will, independently and without reliance upon the
Collateral Agent and based on such documents and information as it shall from
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement or any other LC Procurement
Document, any related agreement or any document furnished hereunder or
thereunder.

 

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Article XI.
Miscellaneous.

 

SECTION 11.01    Notices; Electronic Communications.  Notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by fax, as follows:

 

(a)     if to the Payer, to it at 21-31 Woodfield Road, London, W9 2BA, England,
Attention: Chief Financial Officer, Fax No. 44 20 7451 2351, with a copy to
Holdings at 811 Main Street, Suite 2100 Houston, TX 77002, Attention: Chief
Financial Officer, Fax No. (713) 307-8794;

(b)     if to any Payer Party (other than the Payer), to it at c/o Endeavour
International Corporation, 811 Main Street, Suite 2100 Houston, TX, 77002,
Attention: Chief Financial Officer;

(c)     if to the Payee, to it at 40, avenue Monterey, L-2163 Luxembourg; and

(d)     if to the Collateral Agent, to it at Credit Suisse, Eleven Madison
Avenue, 23rd Floor, New York, NY  10010, Attn:  Loan Operations – Boutique
Management, Telephone No.:  (212) 538 3525,
Email:  Ops-collateral@credit-suisse.com.

All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by fax
(or other electronic communications pursuant to procedures approved by the
Payee) or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 11.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 11.01.  As agreed to among Holdings, the Payer, the Payee and the
Collateral Agent from time to time, notices and other communications may also be
delivered by e‑mail to the e‑mail address of a representative of the applicable
Person provided from time to time by such Person and shall be deemed to have
been given as of the date of receipt thereof.

The Payer hereby agrees, unless directed otherwise by the Payee or unless the
electronic mail address referred to below has not been provided by the Payee to
the Payer, that it will, or will cause its Subsidiaries to, provide to the Payee
all information, documents and other materials that it is obligated to furnish
to the Payee pursuant to the LC Procurement Documents or to the Lenders under
Article VII, including all notices, requests, financial statements, financial
and other reports, certificates and other information materials, but excluding
any such communication that (i) relates to the payment of any Fees or other
amounts due under this Agreement prior to the scheduled date therefor,
(ii) provides notice of any Default or Event of Default under this Agreement or
any other LC Procurement Document or (iii) is required to be delivered to
satisfy any condition precedent to the effectiveness of this Agreement (all such
non-excluded communications being referred to herein collectively as
“Communications”), by transmitting the Communications in an electronic/soft
medium that is properly identified in a format acceptable to the Payee to an
electronic mail address as directed by the Payee.  In

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addition, the Payer agrees, and agrees to cause its Subsidiaries, to continue to
provide the Communications to the Payee, as the case may be, in the manner
specified in the LC Procurement Documents but only to the extent requested by
the Payee.

Nothing herein shall prejudice the right of the Payee or the Collateral Agent to
give any notice or other communication pursuant to any LC Procurement Document
in any other manner specified in such LC Procurement Document.

SECTION 11.02    Survival of Agreement.  All covenants, agreements,
 representations and warranties made by the Payer or Holdings herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other LC Procurement Document shall be
considered to have been relied upon by the Payee and shall survive the
consummation of the Transactions, regardless of any investigation made by the
Payee or on their behalf, and shall continue in full force and effect as long as
any Fee or any other amount payable under this Agreement or any other LC
Procurement Document is outstanding and unpaid.  The provisions of Section 11.05
shall remain operative and in full force and effect regardless of the expiration
of the term of this Agreement, the consummation of the transactions contemplated
hereby, the invalidity or unenforceability of any term or provision of this
Agreement or any other LC Procurement Document, or any investigation made by or
on behalf of the Payee or the Collateral Agent.

 

SECTION 11.03    Binding Effect.  This Agreement shall become effective when it
shall have been executed by Holdings, the Payer, the Payee and the Collateral
Agent and when the Payee shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto.

 

SECTION 11.04    Successors and Assigns.

 

(a)     Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the permitted successors and assigns
of such party; and all covenants, promises and agreements by or on behalf of
Holdings, the Payer, the Payee and the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.

(b)     Neither Holdings nor the Payer shall assign or delegate any of its
rights or duties hereunder (other than pursuant to that certain Collateral
Assignment Agreement, dated as of the date hereof, among the Payee, in its
capacity as a borrower under the Term B Credit Agreement, and the Collateral
Agent) without the prior written consent of the Payee and the Collateral Agent,
and any attempted assignment without such consent shall be null and void.

(c)     Payee shall not consent to any assignment by a Term B Lender of such
Term B Lender’s interests, rights and obligations under the Term B Credit
Agreement pursuant to Section 9.04(b)(i) of the Term B Credit Agreement unless
Payee shall have received Payer’s prior written consent to Payee’s approval of
such assignment. 

SECTION 11.05    Expenses; Indemnity.

 

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(a)      Holdings and the Payer agree, jointly and severally, to pay (i) all
reasonable out-of-pocket expenses incurred by the Payee and the Collateral Agent
in connection with the preparation and administration of this Agreement and the
other LC Procurement Documents or in connection with any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions hereby or thereby contemplated shall be consummated) including the
reasonable and documented fees, charges and disbursements of Latham & Watkins
LLP and NautaDutilh, counsel for the Collateral Agent (and, if necessary, by a
firm of local counsel in each appropriate jurisdiction and in the case of an
actual conflict of interest, one additional firm of counsel to the affected
Lenders), (ii) all out-of-pocket expenses incurred by the Payee and the
Collateral Agent Lender in connection with the enforcement or protection of its
rights in connection with this Agreement and the other LC Procurement Documents,
and, in connection with any such enforcement or protection, the reasonable fees,
charges and disbursements of any other counsel for the Payee or the Collateral
Agent and (iii) without duplication, any Taxes payable by the Payee to maintain
its existence or attributable to any income or activities contemplated by this
Agreement to the extent such Taxes are not grossed-up or indemnified by other
provisions of this Agreement.

(b)     Holdings and the Payer agree, jointly and severally, to indemnify the
Payee, the Collateral Agent and each Related Party of any of the foregoing
Persons (each such Person being called an “Indemnitee”) against, and to hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any Indemnitee arising out of, in
any way connected with, or as a result of (i) the execution or delivery of this
Agreement or any other LC Procurement Document or any agreement or instrument
contemplated thereby, the performance by the parties thereto of their respective
obligations thereunder or the consummation of the Transactions and the other
transactions contemplated thereby, (ii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto (and regardless of whether such matter is initiated by a third
party or by the Payer, any other Payer Party or any of their respective
Affiliates), or (iii) any actual or alleged presence or Release of Hazardous
Materials on any property currently or formerly owned or operated by the Payer
or any of the Subsidiaries, or any Environmental Liability related in any way to
the Payer or the Subsidiaries; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and non-appealable judgment to have resulted from the
willful misconduct, bad faith or gross negligence of such Indemnitee or (iv) any
proceeding not involving an act or omission by the Payer or its affiliates that
is brought by an Indemnitee against any other Indemnitee (other than disputes
involving claims against the Payee in their capacity as such).

(c)     To the extent permitted by applicable law, neither Holdings nor the
Payer shall assert, and each hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby or the Transactions.

(d)     The provisions of this Section 11.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the invalidity or
unenforceability of any term or provision of this Agreement or any other LC
Procurement Document, or any investigation made by or on

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behalf of the Payee or the Collateral Agent.  All amounts due under this Section
11.05 shall be payable on written demand therefor.

SECTION 11.06    Right of Setoff.  If an Event of Default shall have occurred
and be continuing, the Payee are hereby authorized at any time and from time to
time, except to the extent prohibited by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Payee to or for the credit
or the account of the Payer or Holdings against any of and all the obligations
of the Payer or Holdings now or hereafter existing under this Agreement and
other LC Procurement Documents, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other LC Procurement Document
and although such obligations may be unmatured.  The rights of the Payee under
this Section 11.06 are in addition to other rights and remedies (including other
rights of setoff) which the Payee may have.

 

SECTION 11.07    Applicable Law.  THIS AGREEMENT, THE OTHER LC PROCUREMENT
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
(INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT
WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE) (IN EACH CASE, OTHER
THAN AS EXPRESSLY SET FORTH IN OTHER CREDIT DOCUMENTS) SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT
IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

 

SECTION 11.08    Waivers; Amendment.

 

(a)     No failure or delay of the Payee or the Collateral Agent in exercising
any power or right hereunder or under any other LC Procurement Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power.  The rights and remedies of the Payee and
the Collateral Agent hereunder and under the other LC procurement Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any provision of this Agreement or any other LC
Procurement Document or consent to any departure by the Payer or any other Payer
Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.  No
notice or demand on the Payer in any case shall entitle the Payer to any other
or further notice or demand in similar or other circumstances.

(b)     Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by Holdings, the Payer, the Payee and the Collateral Agent.

SECTION 11.09    Interest Rate Limitation.  Notwithstanding any provision herein
to the contrary, if at any time any interest rate applicable to the Obligations,
together with all fees,

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charges and other amounts which are treated as interest on such Obligations
under applicable law (collectively, the “Charges”) shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Payee or the Collateral Agent in accordance with
applicable law, the rate of interest payable in respect of such Obligations
hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Obligations but were not payable
as a result of the operation of this Section 11.09 shall be cumulated and the
interest and Charges payable to such Person in respect of other Obligations or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate (as defined in the Term A Credit Agreement) to the date of repayment, shall
have been received by such Person.

 

SECTION 11.10    Entire Agreement.  This Agreement, the other LC Procurement
Documents and any other written agreement regarding the payment of Fees
constitute the entire contract between the parties relative to the subject
matter hereof.  Any other previous agreement among the parties with respect to
the subject matter hereof is superseded by this Agreement and the other LC
Procurement Documents.  Nothing in this Agreement or in the other LC Procurement
Documents, expressed or implied, is intended to confer upon any Person (other
than the parties hereto and thereto, their respective successors and assigns
permitted hereunder and, to the extent expressly contemplated hereby, the
Related Parties of each of the Payee and the Collateral Agent) any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
other LC Procurement Documents.

 

SECTION 11.11    WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LC PROCUREMENT
DOCUMENTS.  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LC PROCUREMENT DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 11.11.

 

SECTION 11.12    Severability.  In the event any one or more of the provisions
contained in this Agreement or in any other LC Procurement Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction).  The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions

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with valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.

 

SECTION 11.13    Counterparts.  This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section
11.03.  Delivery of an executed signature page to this Agreement by facsimile
transmission or as a “.pdf” shall be as effective as delivery of a manually
signed counterpart of this Agreement.

 

SECTION 11.14    Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

 

SECTION 11.15    Jurisdiction; Consent to Service of Process.

 

(a)     EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR
ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY COMPETENT NEW YORK
STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK
CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LC PROCUREMENT
DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF
THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT
SHALL AFFECT ANY RIGHT THAT THE PAYEE AND THE COLLATERAL AGENT MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE OTHER
LC PROCUREMENT DOCUMENTS AGAINST THE PAYER OR THEIR PROPERTIES IN THE COURTS OF
ANY JURISDICTION.

(b)     EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LC PROCUREMENT
DOCUMENTS IN ANY NEW YORK STATE OR FEDERAL COURT.  EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT.

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(c)     EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.01.  NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.

SECTION 11.16    Confidentiality.  Each of the Payee and the Collateral Agent
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates’
officers, directors, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority or quasi-regulatory authority (such as the National
Association of Insurance Commissioners), (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
in connection with the exercise of any remedies hereunder or under the other LC
Procurement Documents or any suit, action or proceeding relating to the
enforcement of its rights hereunder or thereunder, (e) subject to an agreement
containing provisions substantially the same as those of this Section 11.16, (i)
any actual or prospective assignee of in any of its rights or obligations under
this Agreement and the other LC Procurement Documents or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Payee or any Subsidiary or any of their respective obligations
as designated by the Payee, (f) on a confidential basis to (i) any rating agency
in connection with rating Holdings, the Payer or any of their  respective
Subsidiaries or the facilities hereunder, (ii) the CUSIP Service Bureau or any
similar agency in connection with the issuance and monitoring of CUSIP numbers
with respect to the facilities or (iii) market data collectors, similar service
providers to the lending industry and service providers to the Collateral Agent
in connection with the administration, settlement and management of this
Agreement and the LC Procurement Documents, (g) with the consent of the Payee or
(h) to the extent such Information becomes publicly available other than as a
result of a breach of this Section 11.16.  For the purposes of this Section,
“Information” shall mean all information received from the Payer and related to
the Payer or its business, other than any such information that was available to
the Payee or the Collateral Agent on a nonconfidential basis prior to its
disclosure by the Payer; provided that, in the case of Information received from
the Payer after the date hereof, such information is clearly identified at the
time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section 11.16 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord its own confidential information.

 

SECTION 11.17    USA PATRIOT Act Notice.  Each of the Payee and the Collateral
Agent (for itself) hereby notifies the Payer that pursuant to the requirements
of the USA PATRIOT Act, it is required to obtain, verify and record information
that identifies the Payer, which information includes the name and address of
the Payer and other information that will allow such Person, to identify the
Payer in accordance with the USA PATRIOT Act.

 

SECTION 11.18    Process Agent.

 

(a)     Each Payer Party hereby irrevocably and unconditionally appoints CT
Corporation with an office on the date hereof at 111 Eighth Avenue, New York,
New York 10011, and its

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successors hereunder (the “Process Agent”), as its agent to receive on behalf of
such Payer Party and its property all writs, claims, process, and summonses in
any action or proceeding brought against such Payer Party in the State of New
York. Such service may be made by mailing or delivering a copy of such process
to any Payer Party in care of the Process Agent at the address specified above
for the Process Agent, and such Payer Party irrevocably authorizes and directs
the Process Agent to accept such service on its behalf. Failure by the Process
Agent to give notice to the applicable Payer Party, or failure of the applicable
Payer Party, to receive notice of such service of process shall not impair or
affect the validity of such service on the Process Agent or any such Payer
Party, or of any judgment based thereon. Each Payer Party hereto covenants and
agrees that it shall take any and all reasonable action, including the execution
and filing of any and all documents that may be necessary to continue the
designation of the Process Agent above in full force and effect, and to cause
the Process Agent to act as such. Each Payer Party hereto further covenants and
agrees to maintain at all times an agent with offices in New York City to act as
its Process Agent. Nothing herein shall in any way be deemed to limit the
ability to serve any such writs, process or summonses in any other manner
permitted by applicable law.

(b)     Each Payer Party that is not incorporated in England and Wales and that
has executed, or will on the Closing Date execute, any LC Procurement Document
governed by the law of England and Wales irrevocably and unconditionally
appoints Law Debenture Corporate Services Limited, with an office on the date
hereof at 100 Wood Street, London, EC2V 7EX, UK., and its successors hereunder
(the “UK Process Agent”), as its agent to receive on behalf of such Payer Party
and its property all writs, claims, process, and summonses in any action or
proceeding brought against such Payer Party in England and Wales. Such service
may be made by mailing or delivering a copy of such process to any Payer Party
in care of the UK. Process Agent at the address specified above for the UK
Process Agent, and such Payer Party irrevocably authorizes and directs the UK
Process Agent to accept such service on its behalf. Failure by the UK Process
Agent to give notice to such Payer Party, or failure of such Payer Party, to
receive notice of such service of process shall not impair or affect the
validity of such service on the UK Process Agent or any such Payer Party, or of
any judgment based thereon. Each such Payer Party covenants and agrees that it
shall take any and all reasonable action, including the execution and filing of
any and all documents that may be necessary to continue the designation of the
UK Process Agent above in full force and effect, and to cause the UK Process
Agent to act as such. Each such Payer Party further covenants and agrees to
maintain at all times an agent with offices in England to act as its UK Process
Agent. Nothing herein shall in any way be deemed to limit the ability to serve
any such writs, process or summonses in any other manner permitted by applicable
law. If any person appointed as an agent for service in England and Wales is
unable for any reason to act as agent for service of process, Holdings (on
behalf of all such Payer Parties) shall immediately (and in any event within
five days of such event taking place) appoint another agent on terms acceptable
to the Payee. In the event that Holdings fails to appoint such agent on terms
acceptable to the Payee, the Payee shall have the right to appoint an agent for
service of process.

SECTION 11.19    Judgment Currency.  If, for the purposes of obtaining judgment
in any court, it is necessary to convert a sum due hereunder or any other LC
Procurement Document in one currency into another currency, the rate of exchange
used shall be that at which in accordance with normal banking procedures the
Payee could purchase the first currency with

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such other currency on the Business Day preceding that on which final judgment
is given. The obligation of the Payer Parties in respect of any such sum due
from it to the Payee hereunder or under the other LC Procurement Documents
shall, notwithstanding any judgment in a currency (the “Judgment Currency”)
other than that in which such sum is denominated in accordance with the
applicable provisions of this Agreement (the “Agreement Currency”), be
discharged only to the extent that on the Business Day following receipt by the
Payee of any sum adjudged to be so due in the Judgment Currency, the Payee may
in accordance with normal banking procedures purchase the Agreement Currency
with the Judgment Currency. If the amount of the Agreement Currency so purchased
is less than the sum originally due to the Payee from the Payer Parties in the
Agreement Currency, the Payer Parties agree, jointly and severally, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Payee or the Person to whom such obligation was owing against such loss.

 

SECTION 11.20    Disregarded Entity.  The Payee will not change its tax
residency.  LC Finco US will continue to be a “disregarded entity” for US
federal income tax purposes and will not carry out any business activities in
the United States.

 

 

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

 

Senior Vice President & Chief Financial Officer

 

ENDEAVOUR INTERNATIONAL CORPORATION

By:       /s/  Catherine Stubbs
Name:  Catherine Stubbs

Title:    Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

ENDEAVOUR ENERGY UK LIMITED

By:      /s/  Catherine Stubbs
Name:  Catherine Stubbs
Title:    Senior Vice President & Chief Financial Officer

 

 

 

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By:  Lux Business Management S.a.r.l., its sole manager
By:/s/  Otto Broumeister

Otto Broumeister
Title:Manager

 

 

LC FINCO S.À R.L.,

as Payee

By:  Lux Business Management S.a.r.l., its sole manager
By:       /s/  Otto Broumeister

Name:  Otto Broumeister
Title:    Manager

 

By:       /s/  Gills Jacquet

Name:  Gills Jacquet
Title:    Manager

 

 

 

 

 

 

 

 

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By:/s/  Mikhail Faybusovich
Name: Mikhail Faybusovich
Title:
Authorized Signatory

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

as Collateral Agent

By:      /s/  Mikhail Faybusovich
Name: Mikhail Faybusovich
Title:    Authorized Signatory

 

By:        /s/  Tyler R. Smith
Name:   Tyler R. Smith
Title:     Authorized Signatory

 

 

 

 

 

 

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SCHEDULE 1.01(b) Subsidiary Guarantors

SCHEDULE 6.09(a) Plans

SCHEDULE 6.11(a) Leased Real Property

SCHEDULE 6.11(b) Oil and Gas Properties

SCHEDULE 6.11(c) Interests in Oil and Gas Properties

 

SCHEDULE 6.13 Subsidiaries

 

SCHEDULE 6.19 Existing Indebtedness

 

SCHEDULE 6.20 Insurance

 

SCHEDULE 6.23 Existing Liens.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Schedule 1.01(b)
Subsidiary Guarantors

1)

Endeavour Energy North Sea L.P.

2)

Endeavour Operating Corporation

3)

Endeavour Energy UK Limited

4)

Endeavour Energy North Sea LLC

5)

Endeavour International Holding B.V.

6)

LC Finco LLC

 

 

 

 

 

 

 

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Schedule 6.09(a)
Plans

None.

 

 

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Schedule 6.11(a)
Leased Real Property

Leased Real Property of the Credit Parties

1.19,479 sq. ft. of rentable area on Floor 21 of the BG Group Place Building,
811 Main Street, Houston, Texas  77002, leased through June 30, 2017;

2.The fourth floor south of the building known as Brettenham House, 2-19
Lancaster Place, London, WCE 7EN, England, leased through February 16, 2022;

3.40 Queens Land, Aberdeen, AB15 4YE, Scotland, leased through January 30, 2021;
and

4.7,331sq. ft. of rentable area at 1125 17th Street, Suite 1525, Denver,
Colorado 80202, leased through December 31, 2016.

 

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Schedule 6.11(b)
Oil and Gas Properties

None.

 

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Schedule 6.11(c)
Interests in Oil and Gas Properties

None.

 

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Schedule 6.13
Subsidiaries

Owner

Issuer

Class of Equity Interest

Par Value

Number of Shares

Certificate Number

Percentage of outstanding shares

Endeavour Energy North Sea L.P.

Endeavour Energy UK Limited

Original

£0.10

1,400

8, 9, 10

100

Endeavour International Corporation

Endeavour Operating Corporation

Common

$0.001

100

2

100

Endeavour International Corporation

Endeavour Colorado Corporation

Common

$0.01

1,000

1

100

Endeavour Operating Corporation

Endeavour Energy New Ventures Inc.

Common

$0.01

1,000

1

100

Endeavour Operating Corporation

END Management Company

Common

$0.01

1,000

1

100

Endeavour Energy North Sea LLC

Endeavour Energy North Sea L.P.

General Partnership Interest

N/A

N/A

Un-certificated

0.1

Endeavour Energy Netherlands B.V.

Endeavour Energy North Sea LLC

Member Interest

N/A

N/A

Un-certificated

100

Endeavour International Holding, B.V.

Endeavour Energy North Sea L.P.

Limited Partnership  Interest

N/A

N/A

Un-certificated

99.9

Endeavour Operating Corporation

Endeavour International Holding B.V.

Ordinary

€ 100

180

Un-certificated

100

Endeavour International Holding B.V.

Endeavour Energy Netherlands B.V.

Ordinary

€ 100

180

Un-certificated

 

100

Endeavour International Holding B.V.

Endeavour Energy Luxembourg S.a.r.l.

Ordinary

N/A

500

Un-certificated

100

Endeavour Energy UK Limited

Endeavour North Sea Limited

Ordinary

£1

44,250,002

5

100

Endeavour International Holding B.V.

END Finco LLC

Limited Liability Company

N/A

N/A

Un-certificated

100

 

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Schedule 6.19
Existing Indebtedness

Holdings has Indebtedness pursuant to its 5.5% Convertible Senior Notes due
2016, in a principal amount of $135,000,000, which Indebtedness is guaranteed by
certain of U.S. Subsidiaries of Holdings.

Holdings has Indebtedness pursuant to its 12% First and Second Priority Notes
due 2018, in total principal amount of $554,000,000, which Indebtedness is
guaranteed by certain of U.S. Subsidiaries of Holdings.

Endeavour Energy Luxembourg S.à.r.l. has Indebtedness pursuant to its 11.50%
Convertible Bonds due 2016, in a principal amount of $78,436,704 , which
Indebtedness is guaranteed by Holdings.

EIH has Indebtedness pursuant to that certain revolving loan facility agreement
dated January 23, 2008 (as amended, supplemented or modified from time to time)
in a principal amount of $78,436,704 between EIH and Endeavour Energy Luxembourg
S.à r.l., which Indebtedness is guaranteed by Holdings.

Series C Preferred Stock, issued by Holdings, with the terms set forth in the
Certificate of Designation of Series C Preferred Stock originally filed with the
Nevada Secretary of State on October 30, 2006, as amended.

Series B Preferred Stock, issued by Holdings, which the terms set forth in the
Amended and Restated Certificate of Designation of Series B Preferred Stock
originally filed with the Nevada Secretary of State on February 26, 2004.

EEUK has Indebtedness pursuant to that certain Inter-Company Loan Agreement,
dated as of May 31, 2012, in a total principal amount of $554,000,000.

EIH has Indebtedness pursuant to that certain revolving loan facility agreement
dated January 23, 2008 between EIH and Endeavour Energy Luxembourg S.à r.l., in
a total principal amount of 78,845,338.00.

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Schedule 6.20
Insurance

[See Attached.]

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Schedule 6.23

Existing Liens

 

1.

The liens securing the DEED OF GRANT OF A PRODUCTION PAYMENT in respect of
United Kingdom Continental Shelf Seaward Production Licence P.213 (Block 16/26a
A-ALBA) (the Alba Field) and Seaward Production Licence P.255 (Blocks 22/6c A
and 22/6s A) (the Bacchus Field).

2.

The liens securing the DEED OF GRANT OF A PRODUCTION PAYMENT in respect of
United Kingdom Continental Shelf Seaward Production Licence P.1615 (Block
15/26c) and Seaward Production Licence P.226 (Block 15/27 Area E) (the Rochelle
Field).

 

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EXHIBIT A

FORM OF SOLVENCY CERTIFICATE

 

This Solvency Certificate is delivered to you pursuant to Section 5.01(m)(i) of
the LC Procurement Agreement, dated as of January 24, 2014, among Endeavour
International Corporation (“Holdings”), Endeavour Energy UK Limited, as the
payer and LC Finco S.à r.l., and Credit Suisse AG, as Collateral Agent (as
amended, restated, modified and/or supplemented from time to time, the “LC
Procurement Agreement”). Terms defined in the LC Procurement Agreement and not
otherwise defined herein are used herein as therein defined.

 

1.     I am a duly elected, qualified and acting Financial Officer of Holdings.

 

2.     Based on and subject to the foregoing, I hereby certify, solely in my
capacity as a Financial Officer of Holdings, and not as an individual, on behalf
of Holdings that,  as of the date hereof, and after giving effect to those of
the Transactions to be consummated on the Closing Date and to all Indebtedness
being incurred or assumed and Obligations incurred by the Payer Parties in
connection therewith on such date:

 

(a) the sum of the fair value of the assets, at a fair valuation, of the Payer
Parties and their Subsidiaries (taken as a whole) will exceed their debts (taken
as a whole);

 

(b) the sum of the present fair salable value of the assets of the Payer Parties
and their Subsidiaries (taken as a whole) will exceed their debts (taken as a
whole);

 

(c) the Payer Parties and their Subsidiaries (taken as a whole) have not
incurred and do not intend to incur, and do not believe that they will incur,
debts beyond their ability to pay such debts as such debts mature; and

 

(d) the Payer Parties and their Subsidiaries (taken as a whole) will have
sufficient capital with which to conduct their businesses. 

 

For purposes hereof, “debt” means any liability on a claim, and “claim” means
(A) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured or (B) right to an equitable
remedy for breach of performance if such breach gives rise to a payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured.  The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

 

[Remainder of Page Left Intentionally Blank]

 

 

1

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EXHIBIT A

 

IN WITNESS WHEREOF, the undersigned has set his hand this ____ day of January,
2014.

 

 

 

 

 

 

 

ENDEAVOUR INTERNATIONAL

 

 

CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

Catherine L. Stubbs

 

 

 

Title:

Senior Vice President & Chief

 

 

 

 

Financial Officer

 

 

 

 

2

HN\1120456.3

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EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

 

This Compliance Certificate is delivered to you pursuant to Section 7.01(e) of
the LC Procurement Agreement, dated as of January 24, 2014, among Endeavour
International Corporation (“Holdings”), Endeavour Energy UK Limited, as the
Payer, LC Finco S.à r.l., as the Payee, and Credit Suisse AG, as Collateral
Agent (as amended, restated, modified and/or supplemented from time to time, the
“LC Procurement Agreement”). Terms defined in the LC Procurement Agreement and
not otherwise defined herein are used herein as therein defined.

 

1.     I am a duly elected, qualified and acting Financial Officer of Holdings.

 

2.     I have reviewed and am familiar with the contents of this Compliance
Certificate.  I am providing this Compliance Certificate solely in my capacity
as a Financial Officer of Holdings. The matters set forth herein are true to the
best of my knowledge in my capacity as a Financial Officer of Holdings after due
inquiry.

 

3.     As of the date of this Compliance Certificate, to my knowledge after due
inquiry, no Default or an Event of Default has occurred and is continuing [,
except as set forth below].

 

4.     Attached hereto as ANNEX 1 are the calculations showing (in reasonable
detail) compliance with the covenants specified therein [and the amount of
Excess Cash Flow on the date specified therein.]1

 

5.      [I hereby certify that there have been no changes to Schedule VI of the
U.S. Security Agreement in each case since the Closing Date, or if later, since
the date of the most recent certificate delivered pursuant to Section 7.01(e) of
the LC Procurement Agreement.][Attached hereto as ANNEX 2 is a list in
reasonable detail of any changes to Schedule VI of the U.S. Security Agreement
to the extent required to be reported to the Collateral Agent under the terms of
the U.S. Security Agreement and confirmation that Holdings and/or the other
Credit Parties have taken all actions necessary under the terms of the U.S.
Security Agreement in relation to such changes, or if not, details of what
actions remain required to be taken.]

 

 

 

 

 

 

 

 

 

 

1. To be included in any Compliance Certificate delivered with financial
statements with respect to the end of each fiscal year under Section 7.01(a) of
the LC Procurement Agreement.

 

 

 

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EXHIBIT B

IN WITNESS WHEREOF, I have executed this Compliance Certificate this ____ day of
_______.

 

 

 

 

 

ENDEAVOUR INTERNATIONAL CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

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ANNEX 1

to EXHIBIT B

The information described herein is as of _________, ______1 (the “Calculation
Date”).2,  3

1.     Section 8.10 – Minimum Interest Coverage Ratio.  For the four consecutive
fiscal quarters ended as of the Calculation Date, the Interest Coverage Ratio of
Holdings and its Restricted Subsidiaries is _____:1.00.

 

The Interest Coverage Ratio was computed as follows:4,  5

 

 

 

 

1.  Consolidated EBITDA for the period of four consecutive

 

 

 

Fiscal quarters most recently ended prior to

 

 

 

the Calculation Date: (a) + (b) – (c)

 

 

$[    ,    ,    ]

 

 

 

 

(a) Consolidated Net Income for such period; plus

 

$[    ,    ,    ]

 

(b) To the extent deducted in computing Consolidated Net income for such period:

 

 

 

(1) provision for taxes based on income or profits:

$[    ,    ,    ]

 

 

(2) Fixed Charges:

$[    ,    ,    ]

 

 

(3) depreciation, depletion, amortization (including amortization of intangibles
but excluding amortization of prepaid cash expenses that were paid in a prior
period), impairment and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period):

$[    ,    ,    ]

 

 

 

 

 

1. Insert the last day of the respective fiscal quarter or year covered by the
financial statements which are required to be accompanied with this Compliance
Certificate.

2. Capitalized terms used but not defined herein shall have the meanings set
forth in the LC Procurement Agreement.

3. All calculations on a consolidated basis for Holdings and its Restricted
Subsidiaries.

4. Interest Coverage Ratio to be calculated after giving effect to any
applicable Pro Forma Adjustments.

5. For purposes of calculating the Interest Coverage Ratio, in the event that
Holdings or a Restricted Subsidiary incurs, assumes, incurs a Contingent
Obligation for, repays, repurchases, redeems, defeases or otherwise discharges
any Indebtedness (other than ordinary working capital borrowings) subsequent to
the commencement of the period for which the Interest Coverage Ratio is being
calculated and on or prior to the applicable Calculation Date, then the Interest
Coverage Ratio will be calculated giving pro forma effect to such incurrence,
assumption, Contingent Obligation, repayment, repurchase, redemption, defeasance
or other discharge of Indebtedness, and the use of the proceeds therefrom, as if
the same had occurred at the beginning of the applicable four-quarter reference
period.

 

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ANNEX 1

to EXHIBIT B

 

 

 

 

 

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

$[    ,    ,    ]

 

 

(5) unrealized non-cash losses resulting from foreign currency balance sheet
adjustments required by GAAP:

$[    ,    ,    ]

 

 

TOTAL of (b):

$[    ,    ,    ]

 

 

(c)

(1) non-cash items increasing Consolidated Net Income, other than items that
were accrued in the ordinary course of business:

$[    ,    ,    ]

 

 

 

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

$[    ,    ,    ]

 

 

TOTAL of (c):

 

$[    ,    ,    ]

 

 

 

 

 

to

 

 

 

 

 

 

 

2.  Cash Interest Expense:

 

 

$[    ,    ,    ]

 

 

 

 

 

 

 

 

The minimum Interest Coverage Ratio is:

 

 

1.50:1.00

In compliance

 

 

[YES][NO]

 

 

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ANNEX 1

to EXHIBIT B

2.       Section 8.11 – Maximum Consolidated Leverage Ratio.  For the four
consecutive fiscal quarters ended as of the Calculation Date, the Consolidated
Leverage Ratio of Holdings and its Restricted Subsidiaries is _____:1.00.

 

The Consolidated Leverage Ratio was computed as follows: 6

 

 

 

 

1.  Sum of:  (a) + (b) – (c)

 

 

$[    ,    ,    ]

 

 

 

 

(a) Total Funded Debt:

 

$[    ,    ,    ]

 

(b) Maximum LC Procurement Obligation:

 

$[    ,    ,    ]

 

(c) Aggregate amount of unrestricted cash on the consolidated balance sheet:7

 

$[    ,    ,    ]

 

to

 

 

 

 

 

 

 

2. Consolidated EBITDA (see item 1 in Interest Coverage Ratio calculation
above):

 

 

$[    ,    ,    ]

 

 

 

 

 

 

 

 

The maximum Consolidated Leverage Ratio is:

 

 

5.00:1.00

In compliance

 

 

[YES][NO]

 

3.       Section 8.12 – Minimum Proved Reserves Coverage Ratio.  For the four
consecutive fiscal quarters ended as of the Calculation Date, the Proved
Reserves Coverage Ratio of Holdings and its Restricted Subsidiaries is
_____:1.00.

 

 

 

 

 

1.  PV-10 Value:8

 

 

$[    ,    ,    ]

 

 

 

 

to

 

 

 

 

 

 

 

2. Total Funded Secured Debt:9

 

 

$[    ,    ,    ]

 

 

 

 

 

 

 

 

The minimum Proved Reserves Coverage Ratio is:

 

 

2.00:1.00

In compliance

 

 

[YES][NO]

 

 

 

 

 

 

 

 

 

6. Consolidated Leverage Ratio to be calculated after giving effect to any
applicable Pro Forma Adjustments.

7. The maximum amount of unrestricted cash shall not exceed $25,000,000.

8. As reflect on the most recently prepared Reserve Report which has been
delivered to the Administrative Agent (together with any supplements, revisions
or updates thereto after such date and to the date of such calculation).

9. As shown in Holdings’ financial statement as of the end of the immediately
preceding fiscal quarter.

 

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ANNEX 1

to EXHIBIT B

4.       [Excess Cash Flow.  For the fiscal year ended as of the Calculation
Date, the amount of Excess Cash Flow of Holdings is $______________________.

 

 

 

 

Consolidated EBITDA (see item 1 in Interest

Coverage Ratio calculation above):

 

 

$[    ,    ,    ]

 

 

 

 

minus, without duplication:

 

 

 

 

 

 

 

(1) Holdings’ Debt Service for such fiscal year,

 

$[    ,    ,    ]

 

(2) any optional prepayment of Term A Loans and the amount of any release of the
Payer Deposit pursuant to Section 3.04 resulting from an optional reduction in
the Maximum LC Amount under Section 3.01 in each case, that results in a
prepayment of Term B Loans during such fiscal year or prior to the date 100 days
following such fiscal year, so long as the amount of such prepayment or release
of the Payer Deposit is not already reflected in Debt Service or otherwise
deducted from Excess Cash Flow,

 

$[    ,    ,    ]

 

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

 

$[    ,    ,    ]

 

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

 

$[    ,    ,    ]

 

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

 

$[    ,    ,    ]

 

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

 

$[    ,    ,    ]

 

 

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ANNEX 1

to EXHIBIT B

 

 

 

 

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

 

$[    ,    ,    ]

 

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

 

$[    ,    ,    ]

 

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

 

$[    ,    ,    ]

 

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

 

$[    ,    ,    ]

 

plus, without duplication:

 

 

 

 

 

 

 

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

 

$[    ,    ,    ]

 

 

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ANNEX 1

to EXHIBIT B

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

 

$[    ,    ,    ]

 

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

 

$[    ,    ,    ]

 

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

 

$[    ,    ,    ]

 

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

 

$[    ,    ,    ]

 

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

 

$[    ,    ,    ]

 

 

 

 

 

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ANNEX 2

to EXHIBIT B

[Changes to Schedule VI of the U.S. Security Agreement]

 

 

 

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EXHIBIT C

FORM OF LC ISSUANCE AGREEMENT

 

This LC Issuance Agreement, dated as of January 24, 2014 (as amended,
supplemented, amended and restated or otherwise modified from time to time, this
“Agreement”), is by and between LC Finco S.à r.l., a private limited company
(société à responsabilité limitée) incorporated under the laws of the Grand
Duchy of Luxembourg, whose registered office is 40, Avenue Monterey, L-2163
Luxembourg, Grand Duchy of Luxembourg, having a share capital of USD 20,000 and
in the process of being registered with the Luxembourg Register of Commerce and
Companies, represented by Onno Bouwmeister and Gilles Jacquet duly authorized to
the effect hereof (the “Company”) and Credit Suisse AG, LONDON BRANCH (in such
capacity, including any successor thereto, the “Bank”);

 

WHEREAS, Endeavour International Corporation, Endeavour Energy UK Limited
(“EEUK”), as the payer, the Company, as the payee, and Credit Suisse AG, Cayman
Islands Branch, as the collateral agent (in such capacity, the “Collateral
Agent”), are parties to that certain LC procurement agreement, dated as of the
date hereof (as amended, supplemented, amended and restated or otherwise
modified from time to time, the “LC Procurement Agreement”);

 

WHEREAS, pursuant to the LC Procurement Agreement, EEUK has requested that the
Company enter into this Agreement and, on the terms and conditions set forth
hereunder and the terms and conditions set forth in the LC Procurement
Agreement, the Company has agreed to cause the Bank to issue standby letters of
credit (“Letters of Credit”) from time to time; and

 

WHEREAS, in consideration of the agreements of EEUK under the LC Procurement
Agreement, the Company is willing to cause the Bank to issue Letters of Credit
to support the decommissioning liabilities of EEUK and to secure payment bonds
or other surety arrangements issued by third parties in support of such
decommissioning liabilities.

 

NOW, THEREFORE, IT IS AGREED:

 

Capitalized terms not otherwise defined herein shall have the meaning given to
them in the LC Procurement Agreement.

 

Issuances of Letters of Credit; Aggregate Deposit.

 

(a)     On the terms and subject to the conditions set forth herein, the Bank
hereby agrees upon written request of the Company to issue Letters of Credit
from time to time for account of EEUK provided that: 

the Letter of Credit is to be issued in form and substance reasonably acceptable
to the Bank;

 

the Letter of Credit is to be issued in favor of such Persons as the Company may
specify in its request (provided such Persons are reasonably acceptable to the
Bank) (each a “Beneficiary”);

 

 

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

 

EXHIBIT C

the maximum aggregate face amount of all such Letters of Credit at any time
outstanding (the “Maximum Amount”) shall not exceed the lesser of: (A) the
maximum aggregate face amount of the Initial Letters of Credit (as defined
below); and (B) 98.04% of the amount of the Aggregate Deposit (as defined below)
at such time; and

 

no Letter of Credit shall have an expiry date beyond the date 364 days following
the LC Release Date.

 

(b)     The Bank confirms that it has approved the form, substance and
Beneficiaries of the Letters of Credit described on Schedule I hereto (the
“Initial Letters of Credit”) in substantially the form of Exhibits A-1, A-2, A-3
and A-4 hereto.

(c)     The Bank shall have no obligation to issue any Letter of Credit unless,
no later than the time of any request to issue such Letter of Credit pursuant to
Section 1(e) below, the Company and/or EEUK shall have paid, or caused to be
paid, to the Bank (or such affiliate of the Bank that the Bank may notify in
writing to the Company for such purpose from time to time) an aggregate cash
amount (after deducting any amounts paid to the Company or EEUK pursuant to
Section 1(d) below or any Claim Settlement Amounts (as defined below)) that is
equal to at least 102% of the aggregate face amount of all Letters of Credit
which will be outstanding after giving effect to such issuance. Any amount paid
by the Company pursuant to the foregoing, less any amounts paid to the Company
pursuant to Section 1(d) below and any Claim Settlement Company Amounts (as
defined below), is referred to herein as the “Company Deposit”.  Any amount paid
by EEUK pursuant to the foregoing, less any amounts paid to EEUK pursuant to
Section 1(d) below below and any Claim Settlement EEUK Amounts (as defined
below), is referred to herein as the “EEUK Deposit” and, together with the
Company Deposit, the “Aggregate Deposit”.  The Bank shall acquire full legal
title to all Aggregate Deposit paid by the Company and EEUK free of any Lien or
other interest of the Company or EEUK and accordingly the Bank shall be entitled
to deal with all amounts constituting the Aggregate Deposit as it may in its
sole discretion determine.

(d)     Upon written request of the Company, the Bank will transfer, or cause to
be paid, to the Company and/or EEUK (as applicable) within one (1) Business Day
after any such request an amount equal to:

(i)     the Aggregate Deposit at such time; minus

(ii)     an amount equal to the sum of (A) 102% of the aggregate face amount of
all Letters of Credit outstanding at such time; and (B) the aggregate amount of
all Obligations (as defined below) which has become due but is unpaid at such
time (the “Required Deposit”),

provided that any payment to the Company pursuant to this Section 1(d) will have
priority over payment to EEUK and EEUK will be a third party beneficiary of this
Agreement for purposes of its rights to a payment pursuant to this Section 1.
 The obligation of the Bank to transfer, or procure the transfer of, such amount
shall, subject to the terms of this Agreement, be irrevocable and unconditional.

 

(e)     In order to request that the Bank issue any Letters of Credit, the
Company shall notify the Bank of such request by telephone not later than
12:00 Noon (London) time three (3)

 

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EXHIBIT C

Business Days before the proposed issuance of a Letter of Credit (or by 12:00
Noon (London) time on the proposed date of issuance in the case of the Initial
Letters of Credit).  Each such telephonic notice shall be irrevocable, and shall
be confirmed promptly by hand delivery or fax to the Bank of a written notice
and shall specify the following information: (i) the requested date of the
issuance of the requested Letter of Credit (which must be a Business Day);
(ii) the amount of the requested Letter of Credit in Pounds Sterling; (iii) the
Beneficiary; (iv) the expiry date for the requested Letter of Credit (such date
to comply with the terms of Section 1(a)(iv) above); and (v) the delivery
instructions for the requested Letter of Credit.

(f)     The Company shall cause all Letters of Credit to be terminated on or
prior to the LC Release Date.  The foregoing notwithstanding, this Agreement
shall continue in full force and effect until all Letters of Credit have expired
or have been terminated, but, notwithstanding any such expiration or
termination, this Agreement shall continue in full force and effect until all
Obligations then outstanding (whether absolute or contingent) shall have been
paid in full and all rights of the Bank hereunder shall have been satisfied or
other arrangements for the securing of such rights reasonably satisfactory to
the Bank shall have been made (the “Discharge Date”).  On the Discharge Date,
and after all Obligations have been satisfied in full, the Bank shall release
the remaining portion, if any, of the Company Deposit to the Company and the
EEUK Deposit to EEUK.

(g)     The Company irrevocably authorizes and directs the Bank to pay forthwith
any sums which may be from time to time requested to be paid under and in
accordance with the terms of any Letters of Credit by or on behalf of the
applicable Beneficiaries (a “Claim”) up to the Maximum Amount, without the Bank
having first to refer to the Company or provide the demand for the Company’s
prior approval.  The amount of any such payment by the Bank shall be referred to
herein as a “Claim Settlement Amount”.  For the purposes of any calculation
pursuant to Section 1(d), any Claim Settlement Amount shall be attributed first
to the EEUK Deposit (any amount attributed being an “Claim Settlement EEUK
Amount”) until such time as the aggregate Claim Settlement EEUK Amount equals
the EEUK Deposit at such time, following which all Claim Settlement Amounts
shall attributed to the Company Deposit (any amount so attributed being a “Claim
Settlement Company Amount”).

(h)     The Company acknowledges that the Bank: (i) is not obliged to carry out
any investigation or seek any confirmation from any other Person before paying a
Claim; and (ii) deals in documents only and will not be concerned with the
legality of a Claim or any underlying transaction or any available set-off,
counterclaim or other defense of any Person.

(i)     The obligations of the Company under this Section 1 will not be affected
by: (i) the sufficiency, accuracy or genuineness of any Claim or any other
document; or (ii) any incapacity of, or limitation on the powers of, any Person
signing a Claim or other document.

(j)     For the avoidance of doubt, in no event shall any amount of the
Aggregate Deposit be deemed to be held by or on behalf of the Bank as Security
for the Obligations.

Acknowledgements and Agreements of the Company.  The Company hereby:

 

(a)     acknowledges and is fully aware that each Letter of Credit is an
autonomous, irrevocable and unconditional undertaking and that, accordingly, the
Bank shall pay the Beneficiary of each Letter of Credit on its first demand and
without being

 

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EXHIBIT C

able to delay such payment, nor to raise any objections, counterclaims, disputes
or defenses of any kind in respect of, in particular, the validity or the
performance by the Beneficiary of its obligations thereunder;

(b)     acknowledges that each Letter of Credit is issued under the Company’s
full responsibility and that the Company shall remain responsible towards the
Bank, without prejudice to Section 1(g) above, until the full discharge of any
sums in principal, interests, fees, expenses or Liabilities (as defined below)
which the Company may be liable to pay or reimburse to the Bank under or
pursuant to this Agreement (collectively, the “Obligations”);

(c)     irrevocably and unconditionally waives any right it may have (i) to
raise any objection, counterclaim, dispute or defense of any kind, including but
not limited to, objections, counterclaims, disputes or defenses arising out of
(A) the execution, performance or extension of any Letter of Credit; (B) any
contractual relationship existing between the Company and the Bank or between
the Company and EEUK (notably under the LC Procurement Agreement) or between
EEUK and the Bank (if any); or (C) the contractual relationship existing between
EEUK and any Beneficiary, with a view to discharge itself from its unconditional
reimbursement obligations to the Bank as provided in this Section 2; or (ii) to
seek or to commence any judicial or other action, including ex parte or interim,
to prevent the Bank from fulfilling its obligations towards a Beneficiary under
any Letter of Credit;

(d)     acknowledges that neither the Bank nor any of its correspondents shall
be responsible for (i) any act made or omission in the course of carrying out
the Company’s instructions; (ii) any other act or omission of the Bank or its
correspondents or their respective agents or employees other than any such
arising from its or their gross negligence or willful misconduct; (iii) the
validity, sufficiency, accuracy or genuineness of documents or required
statements; (iv) errors (including in translation), omissions, interruptions or
delays in transmission or delivery of any messages however sent and whether or
not in code or cipher; (v) any act, default, omission, insolvency or failure in
business of any other Person (including any correspondent, including those
appointed by the Bank upon its own initiative) or any consequences arising from
causes beyond the Bank’s control; or (vi) any acts or omissions of the Company,
EEUK or any Beneficiary;

(e)     acknowledges that the Bank has the right to transmit any document,
statement or instructions in their original language without translation;

(f)     irrevocably and unconditionally undertakes, without set-off or
counterclaim, withholding or deduction, arising inter alia under the LC
Procurement Agreement or any other agreement, to immediately on demand indemnify
the Bank and each of its affiliates and the respective directors, trustees,
officers, employees, agents and advisors of the Bank and their respective
affiliates (each, a “Related Party”), and to hold the Bank and each Related
Party (each, an “Indemnitee”) harmless from and against all actions,
proceedings, claims and demands which may be brought or made against the Bank
and any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and disbursements (collectively, the
“Liabilities”), incurred by or asserted against any Indemnitee arising out of,
in any way connected with, or as a result of (i) the execution or delivery of
this Agreement or any agreement or instrument contemplated hereby, the issue or
payment (or resisting payment) of any Letter of Credit, the enforcement or
attempted enforcement of its recovery rights under a Letter of Credit

 

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EXHIBIT C

against any party including the Company; (ii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto (and regardless of whether such matter is
initiated by a third party or by the Company or any of its affiliates); or (iii)
any loss incurred by the Bank as a result of any judgment or order being given
or made for the payment of any amount due hereunder and such judgment or order
being expressed in a currency other than the currency of any Liability
hereunder, and as a result of, any variation having occurred in rates of
exchange between the date as of which such amount is converted into such other
currency for the purposes of such judgment or order and the date of actual
payment pursuant thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such Liabilities are determined by a
court of competent jurisdiction by final and non-appealable judgment to have
resulted from the willful misconduct, bad faith or gross negligence of such
Indemnitee or with respect to any proceeding not involving an act or omission by
the Company or its affiliates that is brought by an Indemnitee against any other
Indemnitee;

(g)     unconditionally and irrevocably agrees that, to the extent permitted by
applicable law, the Company shall not assert, and the Company hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby or the issue and payment of (or
failure to pay) any Letter of Credit;

(h)     irrevocably and unconditionally undertakes to pay the Obligations to the
Bank, or its designated agents, immediately, on first demand in available funds
in the same currency stipulated in the Bank’s demand pursuant to which such
payment is made at the Bank’s London office or such other bank or office as the
Bank may designate, to such account as the Bank may notify to the Company for
this purpose, without any set-off or counterclaim and without any deduction or
withholding whatsoever.  If the Company is required to make any deduction or
withholding from any sum payable by it to the Bank hereunder, then the sum
payable by the Company in respect of which such deduction or withholding is
required to be made shall be increased to the extent necessary to ensure that,
after the making of such deduction or withholding, the Bank receives and retains
a net sum equal to the sum which it would have received and so retained had no
such deduction or withholding been made;

(i)     acknowledges and agrees that this Section 2 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
invalidity or unenforceability of any term or provision of this Agreement or any
investigation made by or on behalf of the Bank, and that all amounts due under
this Section 2 shall be payable immediately on written demand therefor;

(j)     acknowledges and agrees that the Bank shall not be required to hold the
Aggregate Deposit in a segregated account, and that the Company shall not be
entitled to interest on the Aggregate Deposit;

 

(k)     irrevocably and unconditionally undertakes to, at any time upon the
written request of the Bank, promptly and duly do all such acts and execute and
deliver any and all such further instruments and documents as the Bank may
consider necessary for the

 

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EXHIBIT C

purpose of obtaining the full benefit of this Agreement and of the rights and
powers hereby granted;

(l)     acknowledges and agrees that the obligations of the Company under this
Agreement are continuing obligations and will extend to the ultimate balance of
all Obligations, regardless of any intermediate payment or discharge in whole or
in part;

(m)     irrevocably and unconditionally undertakes to ensure that its
Obligations at all times rank at least pari passu with all its other present and
future unsecured payment obligations, except for obligations mandatorily
preferred by law applying to companies generally; and

(n)     irrevocably and unconditionally agrees that, if the Company shall
default on the payment of any amount due hereunder, then until such defaulted
amount shall have been paid in full, to the extent permitted by law, such
overdue amount shall bear interest (after as well as before judgment), payable
on demand, at a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be), equal to the
rate that would be applicable to an ABR Tranche plus 2.00% per annum.

Conditions.    

 

(a)     The obligations of the Bank to enter into this Agreement and to issue
Letters of Credit hereunder are subject to the satisfaction of the following
conditions:

(i)     the Bank shall have received this Agreement duly executed by the
Company;

(ii)     the Aggregate Deposit shall not be less than the Required Deposit after
giving effect to such issuance;

(iii)    the Bank shall have received, on behalf of itself, a favorable written
opinion of Vinson & Elkins L.L.P., special English counsel to the Company;

(iv)     the Bank shall have received, on behalf of itself, a written opinion of
Allen & Overy, special Luxembourg counsel to the Company in form and substance
reasonably acceptable to the Bank;

(v)     the Collateral Agent shall have received the Collateral Assignment, duly
executed and delivered by the Company, in form and substance reasonably
acceptable to the Collateral Agent;

(vi)     the Collateral Agent shall have received the LC Procurement Agreement
duly executed and delivered by the Company, EEUK and Holdings, and each of the
conditions precedent set forth in Section 5.01 of the LC Procurement Agreement
shall have been satisfied;

(vii)    the Collateral Agent shall have received the Term B Credit Agreement
duly executed and delivered by the Company and LC Finco US, and each of the
conditions precedent set forth in Section 3.01 of the Term B Credit Agreement
(other than any such conditions relating to, or contingent upon, the
satisfaction of all conditions precedent under this Agreement) shall have been
satisfied;

 

(viii)    each of the representations and warranties of the Company hereunder
shall be true and correct as of such date and the Company shall not have
breached any agreement or covenant hereunder which breach is continuing; and

 

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EXHIBIT C

(ix)     no default or event of default shall have occurred and be continuing
under the LC Procurement Agreement or the Collateral Assignment or would result
thereunder from such issuances.

(b)     The obligations of the Bank to issue Letters of Credit at any time after
the date hereof are subject to the satisfaction of the following conditions on
the date of any request to issue any Letter of Credit and on the date of such
issuance:

(i)     the Aggregate Deposit shall not be less than the Required Deposit after
giving effect to such issuance;

(ii)     each of the representations and warranties of the Company hereunder
shall be true and correct as of such date

(iii)    the Company shall not have breached any agreement, covenant or other
obligation hereunder which breach is continuing;

(iv)     no default or event of default shall have occurred and be continuing
under the LC Procurement Agreement or the Collateral Assignment or would result
thereunder from such issuances; and

(v)     no notice has been issued by the Bank under to Section 6(a).

Representations and Warranties of the Company.  The Company represents and
warrants to the Bank that:

 

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

(b)     neither the execution, delivery or performance by the Company of this
Agreement, nor compliance by it with the terms and provisions hereof, (i) will
contravene any provision of any law, statute, rule or regulation or any order,
writ, injunction or decree of any court or governmental authority; (ii) will
conflict with, or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose), any Lien
(except pursuant to the Collateral Assignment) upon any of the property or
assets of the Company 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 the Company is a party or by which
it or any of its property or assets is bound or to which it may be subject; or
(iii) will violate any provision of the constitutional documents of the Company;
and

(c)     no order, consent, approval, license, authorization or validation of, or
filing, recording or registration with (except (i) for those that have otherwise
been obtained or made on or prior to the date hereof and remain in full force
and effect on the date hereof; and (ii) filings which are necessary to perfect
the security interests created or intended to be created under the Collateral
Assignment), or exemption by, any governmental authority or other Person is
required to be obtained or made by, or on behalf of, the Company to authorize,
or is required to be obtained or made by, or on behalf of, the

 

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EXHIBIT C

Company in connection with (A) the execution, delivery and performance of this
Agreement; or (B) the legality, validity, binding effect or enforceability of
this Agreement. 

 

Fees.    The Company shall pay to the Bank, for its account, a fee equal to
0.25% per annum on the aggregate daily average face amount of all Letters of
Credit outstanding hereunder, which fee shall be payable on a quarterly basis on
the last Business Day (as defined in the LC Procurement Agreement) of each
March, June, September and December, beginning March 31, 2014.    

 

Mandatory Cancellation. 

 

(a)     The Bank shall notify the Company if it becomes aware that it is, or
will become, unlawful in any applicable jurisdiction for the Bank to perform any
of its obligations under this Agreement or to have a Letter of Credit
outstanding. 

(b)     After notification under Section 6(a) above the Company must use its
best endeavors to ensure the release of the liability of the Bank under each
Letter of Credit as soon as possible. 

(c)     In the event of any cancellation under this Section 6, any amounts owing
to the Bank under this Agreement shall be immediately due and payable.

 

Miscellaneous. 

(a)     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.

(b)     The courts of England have exclusive jurisdiction to settle any dispute
arising out of or in connection with this Agreement (including a dispute
regarding 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 Company agrees that the courts of England are the most
appropriate and convenient courts to settle Disputes, and accordingly the
Company will not argue to the contrary.  The Company acknowledges and agrees
that the foregoing submission to jurisdiction shall not (and shall not be
construed so as to) prevent the Bank 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. 

(c)     The Company irrevocably and unconditionally appoints Law Debenture
Corporate Services Limited, 100 Wood Street, London EC2V 7EX (the “UK Process
Agent”) as its agent to receive on behalf of the Company and its property all
writs, claims, process and summonses in any action or proceeding brought against
the Company before the courts of England.  Such service may be made by mailing
or delivering a copy of such process to the Company in care of the UK Process
Agent at the address specified above for the UK Process Agent, and the Company
irrevocably authorizes and directs the UK Process Agent to accept such service
on its behalf.  Failure by the UK Process Agent to give notice to the Company,
or failure of the Company to receive notice of such service of process, shall
not impair or affect the validity of such service on the UK Process Agent or the
Company, or of any judgment based thereon.  The Company

 

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EXHIBIT C

covenants and agrees that it shall take any and all reasonable action, including
the execution and filing of any and all documents that may be necessary to
continue the designation of the UK Process Agent above in full force and effect,
and to cause the UK Process Agent to act as such.  Nothing herein shall in any
way be deemed to limit the ability to serve any such writs, claims, process or
summonses in any other manner permitted by applicable law.  If any Person
appointed as an agent for service in England and Wales is unable for any reason
to act as agent for service of process, the Company shall immediately (and in
any event within five (5) days of such event taking place) appoint another agent
on terms acceptable to the Bank.  In the event that the Company fails to appoint
such agent on terms acceptable to the Bank, the Bank shall have the right to
appoint an agent for service of process.

(d)     The Company irrevocably and unconditionally (i) agrees not to claim any
immunity from proceedings brought by the Bank or any of its Related Parties
against it in relation to this Agreement and to ensure that no such claim is
made on its behalf; (ii) consents generally to the giving of any relief or the
issue of any process in connection with those proceedings; and (iii) waives all
rights of immunity in respect of it or its assets.

(e)     The Company agrees that it will not be released from its obligations
under this Agreement without the Bank’s prior written consent.  In addition, the
Company undertakes to, following the Discharge Date, take all necessary steps to
perfect the release of the Bank’s obligations under the Letter of Credit at the
Company’s expense.

(f)     The Company will not be entitled to any right of contribution or
indemnity from the Bank or any of its Related Parties in respect of any payment
it may make under this Agreement.

If a payment is due under this Agreement on a day which is not a Business Day,
the due date for that payment shall be the next Business Day in the same
calendar month (if there is one) or the preceding Business Day (if there is not)
or whatever day the Bank determines is market practice.

(g)     Any certification or determination by the Bank of a rate or amount under
this Agreement is, in the absence of manifest error, conclusive evidence of the
matters to which it relates.

(h)     If, at any time, any provision of this Agreement 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.

(i)     Except as otherwise provided for in Section 2(n), any interest,
commission or fee accruing under this Agreement will accrue from day to day and
is calculated on the basis of the actual number of days elapsed and a year of
360 days or otherwise as the Bank may determine is market practice.

(j)     No failure to exercise, nor any delay in exercising, on the part of the
Bank or any of its Related Parties any right or remedy under this Agreement
shall operate as a waiver of any such right or remedy or constitute an election
to affirm this Agreement.  No election to affirm this Agreement on the part of
the Bank or any of its Related Parties shall be effective unless it is in
writing.  No single or partial exercise of any right or remedy shall prevent any
further or other exercise or the exercise of any other right or

 

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EXHIBIT C

remedy.  The rights and remedies provided in this Agreement are cumulative and
not exclusive of any rights or remedies provided by law.

(k)     This Agreement 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 this Agreement.

(l)     The Company may not assign or transfer any of its rights or obligations
under this Agreement without the prior consent of the Bank, except in accordance
with the Collateral Assignment.

Notices; Electronic Communications.    

 

(a)     Notices and other communications provided for herein shall be in writing
and shall be delivered by hand or overnight courier service, mailed by certified
or registered mail or sent by fax, as follows:

(i)     if to the Bank, to it at Credit Suisse, Eleven Madison Avenue, 23rd
Floor, New York, NY 10010; Attn: Loan Operations – Boutique Management;
Telephone No.: +1 (212) 538 3525; Email: Ops-collateral@credit-suisse.com; and

(ii)     if to the Company, to it at 40, avenue Monterey, L-2163 Luxembourg,
Grand Duchy of Luxembourg; Attn: Mr. Sebastien Gaddini; Telephone No:
+352.49.6767.9865; Email: Sebastien.Gaddini@orangefield.com,

with copy to EEUK at: c/o Vinson & Elkins RLLP, CityPoint, 33rd Floor, One
Ropemaker Street, London, EC2Y 9UE, UK.

(b)     All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by fax (or other electronic communications pursuant to procedures
approved by the Bank) or on the date five (5) Business Days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed
(properly addressed) to such party as provided in this Section 8 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 8.  As agreed to among the parties from time to
time, notices and other communications may also be delivered by e-mail to the
e-mail address of a representative of the applicable Person provided from time
to time by such Person and shall be deemed to have been given as of the date of
receipt thereof.

[Remainder of Page Intentionally Left Blank]

 

 

 

 

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

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective duly authorized officers as of the day and year
stated at the beginning of this Agreement.

 

 

 

By:

 

 

LC Finco S.à r.l.

(as the Company)

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

Signature Page to LC Issuance Agreement

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

 

 

 

 

 

 

 

CREDIT SUISSE AG, LONDON BRANCH
(as Bank)

 

By:

 

 

 

Name:

 

Title:

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

 

Signature Page to LC Issuance Agreement

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

 

 

SCHEDULE I

INITIAL LETTERS OF CREDIT

1.Standby letter of credit in favor of The Law Debenture Trust Corporation
p.l.c., which is incorporated under the laws of England and Wales and whose
registered office is 100 Wood Street, London EC2V 7EX, as beneficiary, for a
maximum amount of £57,420,000.

 

2.Standby letter of credit in favor of Hess Limited, which is a company
incorporated under the laws of England and Wales and whose registered office is
Level 9, 1-11 John Adam Street, London WC2N 6AG, as beneficiary, for a maximum
amount of £2,100,000.00.

 

3.Standby letter of credit in favor of Hess Limited, which is a company
incorporated under the laws of England and Wales and whose registered office is
Level 9, 1-11 John Adam Street, London WC2N 6AG, as beneficiary, for a maximum
amount of £6,600,000.00.

 

4.Standby letter of credit in favor of Hess Limited, which is a company
incorporated under the laws of England and Wales and whose registered office is
Level 9, 1-11 John Adam Street, London WC2N 6AG, as beneficiary, for a maximum
amount of £11,900,000.00.

 

 

 

Schedule I

LO\3311565.7

 

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

 

 

EXHIBIT A-1

FORM OF INITIAL LETTER OF CREDIT

 

 

Exhibit A-1

LO\3311565.7

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

 

 

EXHIBIT A-2

FORM OF INITIAL LETTER OF CREDIT

 

 

Exhibit A-2

LO\3311565.7

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

 

 

EXHIBIT A-3

FORM OF INITIAL LETTER OF CREDIT

 

 

Exhibit A-3

 

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

 

 

 

EXHIBIT A-4

FORM OF INITIAL LETTER OF CREDIT

 

 

 

Exhibit A-4

 

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

 

EXHIBIT D

FORM OF PAYER PARTY GUARANTY

 

PAYER PARTY GUARANTY (as amended, modified, restated and/or supplemented from
time to time, this “Guaranty”), dated as of January 24, 2014, made by and among
each of the undersigned guarantors (each, a “Guarantor” and, together with any
other entity that becomes a guarantor hereunder pursuant to Section 22 hereof,
collectively, the “Guarantors”) in favor of Credit Suisse AG, acting through one
or more of its branches and affiliates, as Collateral Agent (together with any
successor collateral agent, the “Collateral Agent”).  Unless otherwise defined
herein, capitalized terms used herein shall have the meanings assigned to such
terms in the LC Procurement Agreement (as defined below) or the Credit Agreement
(as defined below), as applicable.

 

W I T N E S S E T H :

 

WHEREAS, Endeavour International Corporation, a Nevada corporation, as holdings
(“Holdings”), Endeavour Energy UK Limited, a private limited company registered
in laws of England and Wales, as payer (“Payer”), LC Finco S.à r.l., a private
limited liability company (société à responsabilité limitée) incorporated and
existing under the laws of the Grand Duchy of Luxembourg, whose registered
office is 40, Avenue Monterey, L-2163 Luxembourg, Grand Duchy of Luxembourg,
pending registration with the Luxembourg Register of Commerce and Companies and
having a share capital of USD 20,000 (“Payee”), and the Collateral Agent have
entered into that certain LC Procurement Agreement, dated as of January 24, 2014
(as amended, modified, restated and/or supplemented from time to time, the “LC
Procurement Agreement”), pursuant to which a.Payer has instructed Payee to enter
into LC Issuance Documents with Credit Suisse AG, London Branch (“LC Bank”) and,
as applicable, the Collateral Agent, as of the Closing Date and will instruct
Payee to enter into LC Issuance Documents from time to time thereafter pursuant
to which Payee will instruct the LC Bank to issue Letters of Credit and (b)
Payer has agreed to reimburse Payee for certain payments made in connection with
such LC Issuance Documents and to pay Payee certain fees for the procurement of
the issuance of the Letters of Credit;

 

WHEREAS, Holdings, as holdings, Endeavour International Holding B.V., a besloten
vennootschap organized under the laws of the Netherlands (“EIH”), End Finco LLC,
a Delaware limited liability company (“DE Borrower” and, with EIH, each a
“Borrower” and collectively “Borrowers”), the lenders from time to time party
thereto (the “Lenders”), the Collateral Agent and the other Agents and parties
thereto have entered into a Credit Agreement, dated as of January 24, 2014 (as
amended, modified, restated and/or supplemented from time to time, the “Credit
Agreement”, and the Lenders, the Collateral Agent, the Arranger and each other
Agent  thereto being the “Lender Creditors”), providing for the making of Loans
to the Borrowers, all as contemplated therein;

 

WHEREAS, Holdings and its Restricted Subsidiaries may at any time and from time
to time enter into one or more Secured Hedging Agreements with one or more
Approved Hedge Counterparties (herein “Secured Hedge Counterparties” to the
extent, and for so long as, the obligations in respect of Secured Hedging
Agreements constitute “Obligations” under the Credit

LO\3311565.7

 

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Agreement (the Payee, Secured Hedge Counterparties and Lender Creditors are
collectively referred to herein as the “Secured Creditors”));

 

WHEREAS, each Guarantor (other than Holdings) is a direct or indirect Subsidiary
of Holdings, which is the indirect parent company of the Payer and the
Borrowers;

 

WHEREAS, it is a condition precedent to the procurement by the Payee of the
issuance of the Letters of Credit pursuant to the LC Issuance Documents that the
Guarantors shall have executed and delivered to the Collateral Agent this
Guaranty;

 

WHEREAS, it is a condition precedent to the making of Loans to the Borrowers
under the Credit Agreement and to the entering into of Secured Hedging
Agreements by Approved Hedge Counterparties that each Guarantor shall have
executed and delivered to the Collateral Agent this Guaranty;

 

WHEREAS, each Guarantor will obtain benefits from the procurement by the Payee
of the issuance of the Letters of Credit pursuant to the LC Issuance Documents
from time to time and, accordingly, desires to execute this Guaranty in order to
satisfy the condition described above and to induce the Payee to procure the
issuance of the Letters of Credit; and

 

WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans by the
Borrowers under the Credit Agreement and the entering into by Holdings and/or
one or more of its Restricted Subsidiaries of Secured Hedging Agreements with
Approved Hedge Counterparties from time to time and, accordingly, desires to
execute this Guaranty in order to satisfy the condition described above and to
induce the Lenders to make Loans to the Borrowers and the Approved Hedge
Counterparties to enter into Secured Hedging Agreements.

 

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to
each Guarantor, the receipt and sufficiency of which are hereby acknowledged,
each Guarantor hereby makes the following representations and warranties to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenants
and agrees with each other Guarantor and the Collateral Agent for the benefit of
the Secured Creditors as follows:

 

·

GUARANTY.

· (a)Each Guarantor, jointly and severally, irrevocably and unconditionally
guarantees as a primary obligor and not merely as surety (as shown on the
signature pages hereto):

(i)to the Collateral Agent, for the benefit itself and the Payee, the full and
prompt payment when due (whether at the stated maturity, by required prepayment,
acceleration or otherwise) of all obligations of the Payer and Holdings and all
other obligations (including, without limitation, all Obligations (as defined in
the LC Procurement Agreement) and all obligations which, but for the automatic
stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities
and indebtedness owing by the Payer and Holdings to the Payee and the Collateral
Agent under each LC Procurement Document to which the Payer or Holdings is a
party (including, without

 

 

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limitation, indemnities, fees and interest thereon (including, without
limitation, any interest accruing after the commencement of any bankruptcy,
insolvency, receivership or similar proceeding at the rate provided for in the
LC Procurement Agreement, whether or not such interest is an allowed claim in
any such proceeding)), whether now existing or hereafter incurred under, arising
out of or in connection with each such LC Procurement Document and the due
performance and compliance by the Payer and Holdings with all of the terms,
conditions, covenants and agreements contained in all such LC Procurement
Documents (all such principal, premium, interest, liabilities, indebtedness and
obligations under this clause (i) being herein collectively called the “LC
Procurement Document Obligations”);

(ii)to the Collateral Agent, for the ratable benefit of the Lender Creditors,
the full and prompt payment when due (whether at the stated maturity, by
required prepayment, acceleration or otherwise) of (x) the principal of,
premium, if any, and interest on the Notes issued by, and the Loans made to, the
Borrowers under the Credit Agreement, and (y) all other obligations (including,
without limitation, all Obligations described in clause (a) of the definition
thereof (as defined in the Credit Agreement) and all obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by the Credit Parties to the Lender
Creditors under each Credit Document to which such Credit Parties are a party
(including, without limitation, indemnities, fees and interest thereon
(including, without limitation, any interest accruing after the commencement of
any bankruptcy, insolvency, receivership or similar proceeding at the rate
provided for in the Credit Agreement, whether or not such interest is an allowed
claim in any such proceeding)), whether now existing or hereafter incurred
under, arising out of or in connection with each such Credit Document and the
due performance and compliance by the Credit Parties with all of the terms,
conditions, covenants and agreements contained in all such Credit Documents (all
such principal, premium, interest, liabilities, indebtedness and obligations
under this clause (ii) being herein collectively called the “Credit Document
Obligations”); and

(iii)to the Collateral Agent, for the ratable benefit of the Secured Hedge
Counterparties, the full and prompt payment when due (whether at the stated
maturity, by required prepayment, acceleration or otherwise) of all obligations
(including, without limitation, obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due), liabilities and
indebtedness (including, without limitation, any interest accruing after the
commencement of any bankruptcy, insolvency, receivership or similar proceeding
at the rate provided for in the respective Secured Hedging Agreements, whether
or not such interest is an allowed claim in any such proceeding) owing by
Holdings, the Borrowers and each other Guaranteed Party (as defined below) to
the Secured Hedge Counterparty under any Secured Hedging Agreements to which
Holdings, a Borrower or any other Guaranteed Party is a party, whether now in
existence or hereafter arising, and the due performance and compliance by
Holdings, the Borrowers and each other Guaranteed Party with all of the terms,
conditions, covenants and agreements contained therein (all such obligations,
liabilities and indebtedness contained in this clause (iii) being herein
collectively called the “Secured Hedge Obligations”, and, together with the LC
Procurement Document Obligations and the Credit Document Obligations, the
“Guaranteed Obligations”).

 

 

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(b) Each Guarantor, jointly and severally, unconditionally and irrevocably,
guarantees as a primary obligor and not merely as surety the payment of any and
all Guaranteed Obligations whether or not due or payable by the Payer or any
other Guaranteed Party upon the occurrence in respect of the Payer or any other
Guaranteed Party of any of the events specified in Section 9.05 or 9.06 of the
LC Procurement Agreement, and unconditionally and irrevocably, jointly and
severally, promises to pay such Guaranteed Obligations to the Collateral Agent
for the benefit of itself and the Payee, or order, on demand.

(c)Each Guarantor, jointly and severally, unconditionally and irrevocably,
guarantees as a primary obligor and not merely as surety the payment of any and
all Guaranteed Obligations whether or not due or payable by the Borrowers or any
other Guaranteed Party upon the occurrence in respect of a Borrower or any other
Guaranteed Party of any of the events specified in Section 7.01(e) or (f) of the
Credit Agreement, and unconditionally and irrevocably, jointly and severally,
promises to pay such Guaranteed Obligations to the Collateral Agent, for the
ratable benefit of the Lender Creditors and the Secured Hedge Counterparties, or
order, on demand.

· (d)As used herein, the term “Guaranteed Party” shall mean each of the Payer,
each Borrower, Holdings, and each other Subsidiary of Holdings that has executed
or delivered this Guaranty or has otherwise become a party hereto by means of
the execution of a joinder, accession or similar agreement, or is a party to any
other LC Procurement Document, any other Credit Document or any Secured Hedging
Agreement.  Each Guarantor understands, agrees and confirms that the Collateral
Agent, on behalf of the Secured Creditors, may enforce this Guaranty up to the
full amount of the Guaranteed Obligations against such Guarantor without
proceeding against any other Guarantor, the Payer, the Borrowers or any other
Guaranteed Party, or against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations.  This Guaranty is a guaranty of prompt payment and not of
collection; provided that notwithstanding anything in this Guaranty to the
contrary, in no event will any Guarantor be responsible for specific performance
of any Guaranteed Obligation then due if the performance of such Guaranteed
Obligation is specific to a Credit Party and it would be impossible or
reasonably impracticable after using all reasonable efforts for such other
Guarantor to perform the Guaranteed Obligation.

·

LIABILITY OF GUARANTORS ABSOLUTE

.  The liability of each Guarantor hereunder is primary, absolute, joint and
several, and unconditional and is exclusive and independent of any security for
or other guaranty of the indebtedness of the Payer, a Borrower or any other
Guaranteed Party whether executed by such Guarantor, any other Guarantor, any
other guarantor or by any other party, and the liability of each Guarantor
hereunder shall not be affected or impaired by any circumstance or occurrence
whatsoever, including, without limitation:  (a) any direction as to application
of payment by the Payer, the Borrowers, any other Guaranteed Party or any other
party, (b) any other continuing or other guaranty, undertaking or maximum
liability of a Guarantor or of any other party as to the Guaranteed Obligations,
(c) any payment on or in reduction of any such other guaranty or undertaking
(other than any payment applied in satisfaction of the Guaranteed Obligations),
(d) any dissolution, termination or increase, decrease or change in personnel by
the Payer, a Borrower or any other Guaranteed Party, (e) the failure of any
Guarantor to receive any benefit from or as a result of its execution, delivery
and performance of this Guaranty, (f) any payment

 

 

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made to any Secured Creditor on the indebtedness which any Secured Creditor
repays the Payer, a Borrower or any other Guaranteed Party pursuant to court
order in any bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, and each Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding, (g)
any action or inaction by the Secured Creditors as contemplated in Section 5
hereof, (h) any invalidity, rescission, irregularity or unenforceability of all
or any part of the Guaranteed Obligations or of any security therefore and (i)
any legal or equity defenses, including suretyship defenses.

·

OBLIGATIONS OF GUARANTORS INDEPENDENT

.  The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor, the Payer, the
Borrowers or any other Guaranteed Party, and a separate action or actions may be
brought and prosecuted against each Guarantor whether or not action is brought
against any other Guarantor, any other guarantor, the Payer, the Borrowers or
any other Guaranteed Party and whether or not any other Guarantor, any other
guarantor, the Payer, the Borrowers or any other Guaranteed Party be joined in
any such action or actions.  Each Guarantor waives (to the fullest extent
permitted by applicable law) the benefits of any statute of limitations
affecting its liability hereunder or the enforcement thereof.  Any payment by
the Payer, the Borrowers or any other Guaranteed Party or other circumstance
which operates to toll any statute of limitations as to the Payer, the Borrowers
or such other Guaranteed Party shall operate to toll the statute of limitations
as to each Guarantor.

·

WAIVERS BY GUARANTORS.

· (a)Each Guarantor hereby waives (to the fullest extent permitted by applicable
law) notice of acceptance of this Guaranty and notice of the existence, creation
or incurrence of any new or additional liability to which it may apply, and
waives promptness, diligence, presentment, demand of payment, demand for
performance, protest, notice of dishonor or nonpayment of any such liabilities,
suit or taking of other action by the Collateral Agent or any other Secured
Creditor against, and any other notice to, any party liable thereon (including
such Guarantor, any other Guarantor, any other guarantor, the Payer, a Borrower
or any other Guaranteed Party) and each Guarantor further hereby waives any and
all notice of the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice or proof of reliance by any Secured Creditor
upon this Guaranty, and the Guaranteed Obligations shall conclusively be deemed
to have been created, contracted or incurred, or renewed, extended, amended,
modified, supplemented or waived, in reliance upon this Guaranty.

· (b)Each Guarantor waives any right to require the Secured Creditors to:  (i)
proceed against the Payer, the Borrowers, any other Guaranteed Party, any other
Guarantor, any other guarantor of the Guaranteed Obligations or any other party;
(ii) proceed against or exhaust any security held from the Payer, the Borrowers,
any other Guaranteed Party, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party; or (iii) pursue any other remedy in
the Secured Creditors’ power whatsoever.  Each Guarantor waives any defense
based on or arising out of any defense of the Payer, the Borrowers, any other
Guaranteed Party, any other Guarantor, any other guarantor of the Guaranteed
Obligations or any other party other than payment

 

 

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of the Guaranteed Obligations to the extent of such payment, including, without
limitation, any defense based on or arising out of the disability of the Payer,
the Borrowers, any other Guaranteed Party, any other Guarantor, any other
guarantor of the Guaranteed Obligations or any other party, or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Payer, the
Borrowers or any other Guaranteed Party other than payment of the Guaranteed
Obligations to the extent of such payment.  The Secured Creditors may, at their
election, foreclose on any collateral serving as security held by the Collateral
Agent or the other Secured Creditors by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable
(to the extent such sale is permitted by applicable law), or exercise any other
right or remedy the Secured Creditors may have against the Payer, the Borrowers,
any other Guaranteed Party or any other party, or any security, without
affecting or impairing in any way the liability of any Guarantor hereunder
except to the extent the Guaranteed Obligations have been paid.  Each Guarantor
waives any defense arising out of any such election by the Secured Creditors,
even though such election operates to impair or extinguish any right of
reimbursement, contribution, indemnification or subrogation or other right or
remedy of such Guarantor against the Payer, the Borrowers, any other Guaranteed
Party, any other guarantor of the Guaranteed Obligations or any other party or
any security.

· (c)Each Guarantor has knowledge and assumes all responsibility for being and
keeping itself informed of the Payer’s, the Borrowers’, each other Guaranteed
Party’s and each other Guarantor’s financial condition, affairs and assets, and
of all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and has adequate means to obtain from the Payer,
the Borrowers, each other Guaranteed Party and each other Guarantor on an
ongoing basis information relating thereto and the Payer’s, the Borrowers’, each
other Guaranteed Party’s and each other Guarantor’s ability to pay and perform
its respective Guaranteed Obligations, and agrees to assume the responsibility
for keeping, and to keep, so informed for so long as this Guaranty is in
effect.  Each Guarantor acknowledges and agrees that (x) the Secured Creditors
shall have no obligation to investigate the financial condition or affairs of
the Payer, the Borrowers, any other Guaranteed Party or any other Guarantor for
the benefit of such Guarantor nor to advise such Guarantor of any fact
respecting, or any change in, the financial condition, assets or affairs of the
Payer, the Borrowers, any other Guaranteed Party or any other Guarantor that
might become known to any Secured Creditor at any time, whether or not such
Secured Creditor knows or believes or has reason to know or believe that any
such fact or change is unknown to such Guarantor, or might (or does) increase
the risk of such Guarantor as guarantor hereunder, or might (or would) affect
the willingness of such Guarantor to continue as a guarantor of the Guaranteed
Obligations hereunder and (y) the Secured Creditors shall have no duty to advise
any Guarantor of information known to them regarding any of the aforementioned
circumstances or risks.

· (d)Each Guarantor hereby acknowledges and agrees that no Secured Creditor nor
any other Person shall be under any obligation (i) to marshal any assets in
favor of such Guarantor or in payment of any or all of the liabilities of any

 

 

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Guaranteed Party under the LC Procurement Documents, the Credit Documents, the
Secured Hedging Agreements or the obligation of such Guarantor hereunder or (ii)
to pursue any other remedy that such Guarantor may or may not be able to pursue
itself any right to which such Guarantor hereby waives.

· (e)Each Guarantor warrants and agrees that each of the waivers set forth in
Section 3 and in this Section 4 is made with full knowledge of its significance
and consequences and that if any of such waivers are determined to be contrary
to any applicable law or public policy, such waivers shall be effective only to
the maximum extent permitted by applicable law.

·

RIGHTS OF SECURED CREDITORS

.  Subject to Section 4, any Secured Creditor may (except as shall be required
by applicable statute and cannot be waived) at any time and from time to time
without the consent of, or notice to, any Guarantor, without incurring
responsibility to any Guarantor, without impairing or releasing the obligations
or liabilities of any Guarantor hereunder, upon or without any terms or
conditions and in whole or in part:

· (a)change the manner, place or terms of payment of, and/or change, increase or
extend the time of payment of, renew, increase, accelerate or alter, any of the
Guaranteed Obligations (including, without limitation, any increase or decrease
in the rate of interest thereon or the principal amount thereof), any security
therefor, or any liability incurred directly or indirectly in respect thereof,
and the guaranty herein made shall apply to the Guaranteed Obligations as so
changed, extended, increased, accelerated, renewed or altered;

· (b)take and hold security for the payment of the Guaranteed Obligations and
sell, exchange, release, surrender, impair, realize upon or otherwise deal with
in any manner and in any order any property or other collateral by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;

· (c)exercise or refrain from exercising any rights against the Payer, the
Borrowers, any other Guaranteed Party, any other Credit Party, any Subsidiary
thereof, any other guarantor of the foregoing or others or otherwise act or
refrain from acting;

· (d)release or substitute any one or more endorsers, Guarantors, other
guarantors, the Payer, the Borrowers, any other Guaranteed Party or other
obligors;

· (e)settle or compromise any of the Guaranteed Obligations, any security
therefor or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any liability (whether due or not) of
the Payer, the Borrowers or any other Guaranteed Party to creditors of the
Payer, the Borrowers or such other Guaranteed Party other than the Secured
Creditors;

 

 

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· (f)apply any sums by whomsoever paid or howsoever realized to any liability or
liabilities of the Payer, the Borrowers or any other Guaranteed Party to the
Secured Creditors regardless of what liabilities of the Payer, the Borrowers or
such other Guaranteed Party remain unpaid;

· (g)consent to or waive any breach of, or any act, omission or default under,
any of the Secured Hedging Agreements, the Credit Documents, the LC Procurement
Documents or any of the instruments or agreements referred to therein, or
otherwise amend, modify or supplement any of the Secured Hedging Agreements, the
Credit Documents, the LC Procurement Documents or any of such other instruments
or agreements;

· (h)act or fail to act in any manner which may deprive such Guarantor of its
right to subrogation against the Payer, the Borrowers or any other Guaranteed
Party to recover full indemnity for any payments made pursuant to this Guaranty;
and/or

· (i)take any other action or omit to take any other action which would, under
otherwise applicable principles of common law, give rise to a legal or equitable
discharge of such Guarantor from its liabilities under this Guaranty (including,
without limitation, any action or omission whatsoever that might otherwise vary
the risk of such Guarantor or constitute a legal or equitable defense to or
discharge of the liabilities of a guarantor or surety or that might otherwise
limit recourse against such Guarantor).

No invalidity, illegality, irregularity or unenforceability of all or any part
of the Guaranteed Obligations, the LC Procurement Documents, the Credit
Documents, the Secured Hedging Agreements or any other agreement or instrument
relating to the Guaranteed Obligations or of any security or guarantee therefor
shall affect, impair or be a defense to this Guaranty, and this Guaranty shall
be primary, absolute and unconditional notwithstanding the occurrence of any
event or the existence of any other circumstances which might constitute a legal
or equitable discharge of a surety or guarantor except payment of the Guaranteed
Obligations to the extent of such payment.

·

CONTINUING GUARANTY

.  This Guaranty is a continuing one and all liabilities to which it applies or
may apply under the terms hereof shall be conclusively presumed to have been
created in reliance hereon.  No failure or delay on the part of any Secured
Creditor in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies
which any Secured Creditor would otherwise have.  No notice to or demand on any
Guarantor in any case shall entitle such Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Secured Creditor to any other or further action in any circumstances
without notice or demand.  It is not necessary for any Secured Creditor to
inquire into the capacity or powers of the Payer, the Borrowers, or any other
Guaranteed Party or the officers, directors, partners or

 

 

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agents acting or purporting to act on its or their behalf, and any indebtedness
made or created under this Guaranty, the Credit Documents, the LC Procurement
Documents, or the Secured Hedging Agreements (being collectively the “Secured
Debt Agreements”) in reliance upon the professed exercise of such powers shall
be guaranteed hereunder.

·

SUBORDINATION OF INDEBTEDNESS HELD BY GUARANTORS

.  Any indebtedness of the Payer, the Borrowers or any other Guaranteed Party
now or hereafter held by any Guarantor is hereby subordinated to the
indebtedness of the Payer, the Borrowers or such other Guaranteed Party to the
Secured Creditors, and such indebtedness of the Payer, the Borrowers or such
other Guaranteed Party to any Guarantor, if the Collateral Agent, after an Event
of Default has occurred and is continuing, so requests, shall be collected,
enforced and received by such Guarantor as trustee for the Secured Creditors and
be paid over to the Collateral Agent, for the benefit of the Secured Creditors,
on account of the indebtedness of the Payer, the Borrowers or such other
Guaranteed Party to the Secured Creditors, but without affecting or impairing in
any manner the liability of such Guarantor under the other provisions of this
Guaranty except to the extent that Guaranteed Obligations have been paid.  Prior
to the transfer by any Guarantor of any note or negotiable instrument evidencing
any indebtedness of any Borrower or any other Guaranteed Party to such
Guarantor, such Guarantor shall mark such note or negotiable instrument with a
legend that the same is subject to this subordination. Without limiting the
generality of the foregoing, each Guarantor hereby agrees with the Secured
Creditors that it will not exercise any right of subrogation which it may at any
time otherwise have as a result of this Guaranty (whether contractual, under
Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed
Obligations have been irrevocably paid in full in cash (other than unasserted
contingent indemnification obligations); provided, that if any amount shall be
paid to such Guarantor on account of such subrogation rights at any time prior
to the irrevocable payment in full in cash of all the Guaranteed Obligations,
such amount shall be held in trust for the benefit of the Secured Creditors and
shall forthwith be paid to the Collateral Agent, for the benefit of the Secured
Creditors, to be credited and applied upon the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms of the LC Procurement
Documents or Credit Documents or, if the LC Procurement Documents or Credit
Documents do not provide for the application of such amount, to be held by the
Collateral Agent, for the benefit of the Secured Creditors, as collateral
security for any Guaranteed Obligations thereafter existing. 

·

GUARANTY ENFORCEABLE BY COLLATERAL AGENT

.  Notwithstanding anything to the contrary contained elsewhere in this
Guaranty, the Secured Creditors agree (by their acceptance of the benefits of
this Guaranty) that this Guaranty may be enforced only by the action of the
Collateral Agent, in each case acting upon the instructions of the Required
Lenders (or, after the date on which all Credit Document Obligations have been
paid in full, the holders of at least a majority of the outstanding LC
Procurement Document Obligations and Secured Hedge Obligations) and that no
other Secured Creditor shall have any right individually to seek to enforce or
to enforce this Guaranty or to realize upon the security to be granted by the
Security Documents, it being understood and agreed that such rights and remedies
may be exercised by the Collateral Agent or, after all the Credit Document
Obligations have been paid in full, by the holders of at least a majority of the
outstanding LC Procurement Document Obligations and Secured Hedge Obligations,
as the case may be, for the benefit of the Secured Creditors upon the terms of
this Guaranty and the Security Documents.  The Secured

 

 

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Creditors further agree that this Guaranty may not be enforced against any
director, officer, employee, partner, member or stockholder of any Guarantor
(except to the extent such partner, member or stockholder is also a Guarantor
hereunder).  It is understood and agreed that the agreement in this Section 8 is
among and solely for the benefit of, and binding upon, the Secured Creditors and
that, if the Required Lenders (or, after the date on which all Credit Document
Obligations have been paid in full, the holders of at least a majority of the
outstanding LC Procurement Document Obligations and Secured Hedge Obligations)
so agree (without requiring the consent of any Guarantor), this Guaranty may be
directly enforced by any Secured Creditor.

·

REPRESENTATIONS, WARRANTIES AND COVENANTS OF GUARANTORS

.  In order to (a) induce the Payee to procure the issuance of the Letters of
Credit pursuant to the LC Issuance Documents, (b) induce the Lenders to make
Loans to the Borrowers pursuant to the Credit Agreement and (c) induce the
Secured Hedge Counterparties to execute, deliver and perform the Secured Hedging
Agreements to which they are a party, each Guarantor represents, warrants and
covenants that:

(i) such Guarantor (A) is a duly organized and validly existing Business in good
standing under the laws of the jurisdiction of its organization, (B) has the
Business, power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (C) is duly
qualified and is authorized to do business and, to the extent applicable, is in
good standing in each jurisdiction where the nature of its business requires
such qualification, authorization and good standing, except for failures to be
so qualified which, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect;

(ii) such Guarantor has the Business power and authority to execute, deliver and
perform the terms and provisions of this Guaranty and each other Secured Debt
Agreement to which it is a party and has taken all necessary Business action to
authorize the execution, delivery and performance by it of this Guaranty and
each such other Secured Debt Agreement;

(iii) such Guarantor has duly executed and delivered this Guaranty and each
other Secured Debt Agreement to which it is a party, and this Guaranty and each
such other Secured Debt Agreement constitutes the legal, valid and binding
obligation of such Guarantor enforceable in accordance with its terms, except to
the extent that the enforceability hereof or thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors’ rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law);

(iv) neither the execution, delivery or performance by such Guarantor of this
Guaranty or any other Secured Debt Agreement to which it is a party, nor
compliance by it with the terms and provisions hereof and thereof, will (A)
contravene any provision of any applicable law, statute, rule or regulation or
any applicable order, writ, injunction or decree of any court or Governmental
Authority, (B) conflict with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or impose) any
Lien (except pursuant to the Security Documents) upon any of the property or
assets of such Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, credit agreement, or any
other

 

 

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material agreement, contract or instrument to which such Guarantor or any of its
Subsidiaries is a party or by which it or any of its property or assets is bound
or to which it may be subject or (C) violate any provision of the certificate or
articles of incorporation, by-laws, partnership agreement or limited liability
company agreement (or equivalent organizational documents), as the case may be,
of such Guarantor or any of its Subsidiaries;

(v) no order, consent, approval, license, authorization or validation of, or
filing, recording or registration with (except as have been obtained or made
prior to the date when required and which remain in full force and effect), or
exemption by, any Governmental Authority is required to authorize, or is
required in connection with, (A) the execution, delivery and performance by such
Guarantor of this Guaranty or any other Secured Debt Agreement to which such
Guarantor is a party or (B) the legality, validity, binding effect or
enforceability of this Guaranty or any other Secured Debt Agreement to which
such Guarantor is a party;

(vi) there are no actions, suits or proceedings pending or, to such Guarantor’s
knowledge, threatened (A) with respect to this Guaranty or any other Secured
Debt Agreement to which such Guarantor is a party or (B) with respect to such
Guarantor or any of its Subsidiaries that, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect;

(vii) until the termination of the Commitment and all Secured Hedging Agreements
and until such time as no Note or Loan remains outstanding and all Guaranteed
Obligations have been paid in full (other than indemnities (A) described in
Section 11.05 of the LC Procurement Agreement and analogous provisions in the
Security Documents and (B) described in Section 9.05 of the Credit Agreement and
analogous provisions in the Security Documents which are not then due and
payable and for which no claim has been made), such Guarantor will comply, and
will cause each of its Subsidiaries  to comply, with all of the applicable
provisions, covenants and agreements contained in Articles VII and VIII of the
LC Procurement Agreement and Articles V and VI of the Credit Agreement, and will
take, or will refrain from taking, as the case may be, all actions that are
necessary to be taken or not taken so that no violation of any provision,
covenant or agreement contained in Articles VII and VIII of the LC Procurement
Agreement and Articles V and VI of the Credit Agreement, and so that no Default
or Event of Default, is caused by the actions of such Guarantor; and

(viii) an executed copy of each of the LC Procurement Documents, Credit
Documents and each other Secured Debt Agreement has been made available to a
senior officer of such Guarantor and such officer is familiar with the contents
thereof.

·

EXPENSES

.  The Guarantors hereby jointly and severally agree to pay all out-of-pocket
costs and expenses of the Collateral Agent and each other Secured Creditor in
connection with the enforcement of this Guaranty and the protection of the
Secured Creditors’ rights hereunder and any amendment, waiver or consent
relating hereto (including, in each case, without limitation, the reasonable
fees and disbursements of counsel employed by the Collateral Agent and each
other Secured Creditor).

·

BENEFIT AND BINDING EFFECT

 

 

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

 

 

.  This Guaranty shall be binding upon each Guarantor and its successors and
assigns and shall inure to the benefit of the Secured Creditors and their
successors and assigns.

·

AMENDMENTS; WAIVERS

.  Neither this Guaranty nor any provision hereof may be changed, waived,
discharged or terminated except with the written consent of each Guarantor
directly affected thereby (it being understood that the addition or release of
any Guarantor hereunder shall not constitute a change, waiver, discharge or
termination affecting any Guarantor other than the Guarantor so added or
released) and with the written consent of the Collateral Agent at the direction
of either (x) the Required Lenders (or, to the extent an amendment of the type
requiring the consent of all Lenders under Section 9.08(b) of the Credit
Agreement, with the written consent of each Lender) at all times prior to the
time at which all Credit Document Obligations have been paid in full or (y) the
holders of at least a majority of the outstanding LC Procurement Document
Obligations and Secured Hedge Obligations at all times after the time at which
all Credit Document Obligations have been paid in full.    

·

SET OFF

.  In addition to any rights now or hereafter granted under applicable law
(including, without limitation, Section 151 of the New York Debtor and Creditor
Law) and not by way of limitation of any such rights, upon the occurrence and
during the continuance of an Event of Default (such term to mean and include any
“Event of Default” as defined in the Credit Agreement or the LC Procurement
Agreement and any payment default under any Secured Hedging Agreement continuing
after any applicable grace period), each Secured Creditor is hereby authorized,
at any time or from time to time, without notice to any Guarantor or to any
other Person, any such notice being expressly waived, to set off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Secured Creditor to or for the
credit or the account of such Guarantor, against and on account of the
obligations and liabilities of such Guarantor to such Secured Creditor under
this Guaranty, irrespective of whether or not such Secured Creditor shall have
made any demand hereunder and although said obligations, liabilities, deposits
or claims, or any of them, shall be contingent or unmatured.  Each Secured
Creditor (by its acceptance of the benefits hereof) acknowledges and agrees that
the provisions of this Section 13 are subject to the sharing provisions set
forth in Section 2.18 of the Credit Agreement.

·

NOTICE

.  Notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by fax, as follows: (i) in the case of the Payer, to it
at 21-31 Woodfield Road, London, W9 2BA, England, Attention: Chief Financial
Officer, Fax No. 44 20 7451 2351, with a copy to Holdings at 811 Main Street,
Suite 2100 Houston, TX, Houston, TX 77002, Attention: Chief Financial Officer,
Fax No. (713) 307-8794; (ii) if to any Credit Party (other than the Payer), to
it at c/o Endeavour International Corporation, 811 Main Street, Suite 2100
Houston, TX, Houston, TX 77002, Attention: Chief Financial Officer;  (iii) if to
the Payee, to it at 40, avenue Monterey, L-2163 Luxembourg, Grand Duchy of
Luxembourg, Attn: Mr. Sebastien Gaddini, Telephone No: +352.49.6767.9865, Email
Address: Sebastien.Gaddini@orangefield.com; (iv) if to the

 

 

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Collateral Agent, to it at Credit Suisse, Eleven Madison Avenue, 23rd Floor, New
York, NY  10010, Attn:  Loan Operations – Boutique Management, Telephone
No.:  (212) 538 3525, Email:  Ops-collateral@credit-suisse.com; and (v) in the
case of any Secured Hedge Counterparty, at such address as such Secured Creditor
shall have specified in writing to the Guarantors; or in any case at such other
address as any of the Persons listed above may hereafter notify the others in
writing.  All notices and other communications given to any party hereto in
accordance with the provisions of this Guaranty shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by fax (or other electronic communications pursuant to procedures
approved by the Collateral Agent) or on the date five Business Days after
dispatch by certified or registered mail if mailed, in each case delivered, sent
or mailed (properly addressed) to such party as provided in this Section 14 or
in accordance with the latest unrevoked direction from such party given in
accordance with this Section 14.  As agreed to among the Guarantors, the Secured
Creditors and the Collateral Agent from time to time, notices and other
communications may also be delivered by e mail to the e mail address of a
representative of the applicable Person provided from time to time by such
Person and shall be deemed to have been given as of the date of receipt thereof.

·

REINSTATEMENT

.  If any claim is ever made upon any Secured Creditor for repayment or recovery
of any amount or amounts received in payment or on account of any of the
Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including, without limitation, the Payer, the Borrowers
or any other Guaranteed Party), then and in such event each Guarantor agrees
that any such judgment, decree, order, settlement or compromise shall be binding
upon such Guarantor, notwithstanding any revocation hereof or the cancellation
of any Credit Document, any Secured Hedging Agreement, any LC Procurement
Document or any other instrument evidencing any liability of the Payer, the
Borrowers or any other Guaranteed Party, and such Guarantor shall be and remain
liable to the aforesaid payees hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by any
such payee. 

·

CONSENT TO JURISDICTION; SERVICE OF PROCESS; AND WAIVER OF TRIAL BY JURY.    

THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED CREDITORS AND OF THE
UNDERSIGNED HEREUNDER (INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR
RELATING TO THIS GUARANTY, any other Credit Document or any other LC Procurement
Document to which any Guarantor is a party WHETHER SOUNDING IN CONTRACT LAW,
TORT LAW OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW
OTHER THAN THE LAW OF THE STATE OF NEW YORK. 

EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR ITSELF AND
ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF

 

 

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

 

 

ANY COMPETENT NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF
AMERICA SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, any other
Credit Document or any other LC Procurement Document to which any Guarantor is a
party, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF
THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS GUARANTY SHALL
AFFECT ANY RIGHT THAT THE SECURED CREDITORS MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS GUARANTY AGAINST THE GRANTORS OR THEIR
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS GUARANTY IN ANY NEW YORK STATE OR FEDERAL
COURT.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

EACH PARTY TO THIS GUARANTY IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 14.  NOTHING IN THIS GUARANTY, any other
Credit Document or any other LC Procurement Document to which any Guarantor is a
party WILL AFFECT THE RIGHT OF ANY PARTY TO THIS GUARANTY TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW.

EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
GUARANTY, any other Credit Document or any other LC Procurement Document to
which any Guarantor is a party.  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 16.

·

RELEASE OF LIABILITY OF GUARANTOR UPON SALE OR DISSOLUTION

.  In the event that all of the capital stock or other equity interests of one
or more Guarantors is sold or otherwise disposed of or liquidated in compliance
with the requirements of (a) Sections

 

 

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

 

 

8.04 and 8.09 of the LC Procurement Agreement and (b) Sections 6.04 or 6.09 of
the Credit Agreement (or any such sale, other disposition or liquidation has
been approved in writing by the Required Lenders (or all the Lenders if required
by Section 9.08 of the Credit Agreement)) and the proceeds of such sale,
disposition or liquidation are applied in accordance with the provisions of the
LC Procurement Agreement and the Credit Agreement, to the extent applicable,
such Guarantor shall, upon consummation of such sale or other disposition
(except to the extent that such sale or disposition is to Holdings or another
Subsidiary thereof), be released from this Guaranty automatically and without
further action and this Guaranty shall, as to each such Guarantor or Guarantors,
terminate, and have no further force or effect (it being understood and agreed
that the sale of one or more Persons that own, directly or indirectly, all of
the capital stock or other equity interests of any Guarantor shall be deemed to
be a sale of such Guarantor for the purposes of this Section 17).

·

CONTRIBUTION

.  At any time a payment in respect of the Guaranteed Obligations is made under
this Guaranty, the right of contribution of each Guarantor against each other
Guarantor shall be determined as provided in the immediately following sentence,
with the right of contribution of each Guarantor to be revised and restated as
of each date on which a payment (a “Relevant Payment”) is made on the Guaranteed
Obligations under this Guaranty.  At any time that a Relevant Payment is made by
a Guarantor that results in the aggregate payments made by such Guarantor in
respect of the Guaranteed Obligations to and including the date of the Relevant
Payment exceeding such Guarantor’s Contribution Percentage (as defined below) of
the aggregate payments made by all Guarantors in respect of the Guaranteed
Obligations to and including the date of the Relevant Payment (such excess, the
“Aggregate Excess Amount”), each such Guarantor shall have a right of
contribution against each other Guarantor who has made payments in respect of
the Guaranteed Obligations to and including the date of the Relevant Payment in
an aggregate amount less than such other Guarantor’s Contribution Percentage of
the aggregate payments made to and including the date of the Relevant Payment by
all Guarantors in respect of the Guaranteed Obligations (the aggregate amount of
such deficit, the “Aggregate Deficit Amount”) in an amount equal to (x) a
fraction the numerator of which is the Aggregate Excess Amount of such Guarantor
and the denominator of which is the Aggregate Excess Amount of all Guarantors
multiplied by (y) the Aggregate Deficit Amount of such other Guarantor.  A
Guarantor’s right of contribution pursuant to the preceding sentences shall
arise at the time of each computation, subject to adjustment to the time of each
computation; provided that no Guarantor may take any action to enforce such
right until the Guaranteed Obligations have been irrevocably paid in full in
cash and the Commitments  and all Secured Hedging Agreements have been
terminated, it being expressly recognized and agreed by all parties hereto that
any Guarantor’s right of contribution arising pursuant to this Section 18
against any other Guarantor shall be expressly junior and subordinate to such
other Guarantor’s obligations and liabilities in respect of the Guaranteed
Obligations and any other obligations owing under this Guaranty.  As used in
this Section 18:  (i) each Guarantor’s “Contribution Percentage” shall mean the
percentage obtained by dividing (x) the Adjusted Net Worth (as defined below) of
such Guarantor by (y) the aggregate Adjusted Net Worth of all Guarantors; (ii)
the “Adjusted Net Worth” of each Guarantor shall mean the greater of (x) the Net
Worth (as defined below) of such Guarantor and (y) zero; and (iii) the “Net
Worth” of each Guarantor shall mean the amount by which the fair saleable value
of such Guarantor’s assets on the date of any Relevant Payment exceeds its

 

 

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existing debts and other liabilities (including contingent liabilities, but
without giving effect to any Guaranteed Obligations arising under this Guaranty)
or any guaranteed obligations arising under any guaranty of subordinated
indebtedness of Holdings or any of its Subsidiaries (“Subordinated
Indebtedness”) on such date.  Notwithstanding anything to the contrary contained
above, any Guarantor that is released from this Guaranty pursuant to Section 17
hereof shall thereafter have no contribution obligations, or rights, pursuant to
this Section 18, and at the time of any such release, if the released Guarantor
had an Aggregate Excess Amount or an Aggregate Deficit Amount, same shall be
deemed reduced to $0, and the contribution rights and obligations of the
remaining Guarantors shall be recalculated on the respective date of release (as
otherwise provided above) based on the payments made hereunder by the remaining
Guarantors.  All parties hereto recognize and agree that, except for any right
of contribution arising pursuant to this Section 18, each Guarantor who makes
any payment in respect of the Guaranteed Obligations shall have no right of
contribution or subrogation against any other Guarantor in respect of such
payment until all of the Guaranteed Obligations have been irrevocably paid in
full in cash.  Each of the Guarantors recognizes and acknowledges that the
rights to contribution arising hereunder shall constitute an asset in favor of
the party entitled to such contribution.  In this connection, each Guarantor has
the right to waive its contribution right against any Guarantor to the extent
that after giving effect to such waiver such Guarantor would remain solvent, in
the determination of the Required Lenders.

·

LIMITATION ON GUARANTEED OBLIGATIONS

.  Each Guarantor and each Secured Creditor (by its acceptance of the benefits
of this Guaranty) hereby confirms that it is its intention that this Guaranty
not constitute a fraudulent transfer or conveyance for purposes of any Debtor
Relief Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar Federal or state law.  To effectuate the foregoing
intention, each Guarantor and each Secured Creditor (by its acceptance of the
benefits of this Guaranty) hereby irrevocably agrees that the Guaranteed
Obligations guaranteed by such Guarantor shall be limited to such amount as
will, after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Guarantor that are relevant under such laws and
after giving effect to any rights to contribution pursuant to any agreement
providing for an equitable contribution among such Guarantor and the other
Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of
such maximum amount not constituting a fraudulent transfer or conveyance.

·

COUNTERPARTS

.  This Guaranty may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.  A set of counterparts executed by all
the parties hereto shall be lodged with the Collateral Agent.  Delivery of an
executed signature page to this Guaranty by facsimile transmission or as a
“.pdf” shall be as effective as delivery of a manually signed counterpart of
this Guaranty.

·

PAYMENTS

.  All payments made by any Guarantor hereunder will be made without setoff,
counterclaim or other defense, and shall be made in immediately available funds
to the office of the Collateral

 

 

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

 

 

Agent specified in Section 2.19 of the Credit Agreement or at such other address
as the Collateral Agent may designate in writing to the Guarantors.

·

ADDITIONAL GUARANTORS

.  It is understood and agreed that any Subsidiary of Holdings that is required
to execute a counterpart of this Guaranty after the date hereof pursuant to the
LC Procurement Agreement or the Credit Agreement shall become a Guarantor
hereunder by (x) executing and delivering a counterpart hereof to the Collateral
Agent or executing a joinder agreement and delivering same to the Collateral
Agent, in each case as may be requested by (and in form and substance
satisfactory to) the Collateral Agent and (y) taking all actions as specified in
this Guaranty as would have been taken by such Guarantor had it been an original
party to this Guaranty, in each case with all documents and actions required to
be taken above to be taken to the reasonable satisfaction of the Collateral
Agent.

·

HEADINGS DESCRIPTIVE

.  The headings of the several Sections of this Guaranty are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Guaranty.

·

JUDGMENT CURRENCY

.  If, for the purposes of obtaining judgment in any court, it is necessary to
convert a sum due hereunder or any other Secured Debt Agreement in one currency
into another currency, the rate of exchange used shall be that at which in
accordance with normal banking procedures the Collateral Agent could purchase
the first currency with such other currency on the Business Day preceding that
on which final judgment is given.  The obligation of any Guarantor in respect of
any such sum due from it to the Collateral Agent or any other Secured Creditor
hereunder or under the other Secured Debt Agreements shall, notwithstanding any
judgment in a currency (the “Judgment Currency”) other than that in which such
sum is denominated in accordance with the applicable provisions of the Secured
Debt Agreements (the “Agreement Currency”), be discharged only to the extent
that on the Business Day following receipt by the Collateral Agent of any sum
adjudged to be so due in the Judgment Currency, the Collateral Agent may in
accordance with normal banking procedures purchase the Agreement Currency with
the Judgment Currency.  If the amount of the Agreement Currency so purchased is
less than the sum originally due to the Collateral Agent or any other Secured
Creditor from the Guarantors in the Agreement Currency, the Guarantors agree,
jointly and severally, as a separate obligation and notwithstanding any such
judgment, to indemnify the Collateral Agent or such other Secured Creditor to
whom such obligation was owing against such loss.   

*  *  *

 

 

 

 

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

 

 

IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and
delivered as of the date first above written.

 

 

 

 

 

 

ENDEAVOUR INTERNATIONAL

 

 

CORPORATION

 

 

 

as a Guarantor of the Guaranteed Obligations

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

ENDEAVOUR INTERNATIONAL HOLDING

 

 

B.V.,

 

 

 

as a Guarantor of the LC Procurement

 

 

Document Obligations and the Secured Hedging Obligations

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

ENDEAVOUR OPERATING CORPORATION,

 

 

 

as a Guarantor of the Guaranteed Obligations

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

ENDEAVOUR ENERGY NORTH SEA L.P.,

 

 

 

as a Guarantor of the Guaranteed Obligations

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

LO\3311565.7

 

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

 

 

 

 

 

 

 

ENDEAVOUR ENERGY UK LIMITED,

 

 

 

as a Guarantor of the Secured Hedge

 

 

Obligations and Credit Document Obligations

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

END Finco LLC,

 

 

 

as a Guarantor of the Secured Hedge

 

 

Obligations and LC Procurement Document Obligations

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

ENDEAVOUR ENERGY NORTH SEA LLC,

 

 

 

as a Guarantor of the Guaranteed Obligations

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

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

 

 

 

Accepted and Agreed to:

 

Credit Suisse AG, Cayman Islands Branch,

as Collateral Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

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

 

 

U.S. SECURITY AGREEMENT

Dated as of January 24, 2014

From

The Grantors referred to herein
as Grantors

to

Credit Suisse AG,
as Collateral Agent

 

 

 

HN\1119607.7

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

 

 

TABLE OF CONTENTS

 

 

 

 

 

 

Page

Section 1.

Grant of Security

2 

Section 2.

Security for Obligations

7 

Section 3.

Grantors Remain Liable

8 

Section 4.

Delivery and Control of Security Collateral

9 

Section 5.

Maintaining the Account Collateral

9 

Section 6.

Representations and Warranties

10 

Section 7.

Further Assurances

12 

Section 8.

Post‑Closing Changes; Collections on Assigned Agreements, Receivables and
Related Contracts

13 

Section 9.

As to Intellectual Property Collateral

14 

Section 10.

Voting Rights; Dividends; Etc

16 

Section 11.

As to the Assigned Agreements

17 

Section 12.

As to Letter‑of‑Credit Rights

17 

Section 13.

Commercial Tort Claims

17 

Section 14.

Transfers and Other Liens; Additional Shares

18 

Section 15.

Collateral Agent Appointed Attorney in Fact

18 

Section 16.

Collateral Agent May Perform

18 

Section 17.

The Collateral Agent’s Duties

18 

Section 18.

Remedies

19 

Section 19.

Indemnity and Expenses

22 

Section 20.

Amendments; Waivers; Additional Grantors; Etc

23 

Section 21.

Notices, Etc

23 

Section 22.

Continuing Security Interest; Assignments under the Credit Agreements

24 

Section 23.

Release; Termination

24 

Section 24.

Security Interest Absolute

24 

Section 25.

Execution in Counterparts

26 

Section 26.

Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial

26 

 

 

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SCHEDULES

 

 

 

Schedule I

-

Investment Property

Schedule II

-

Pledged Accounts

Schedule III

-

Intellectual Property

Schedule IV

-

Commercial Tort Claims

Schedule V

-

Location, Chief Executive Office, Type of Organization, Jurisdiction of
Organization and Organizational Identification Number

Schedule VI

-

Changes in Name, Location, Etc.

Schedule VII

-

Locations of Equipment and Inventory

 

 

 

EXHIBITS

 

 

 

Exhibit A

-

Form of Consent and Agreement

Exhibit B

-

Form of Intellectual Property Security Agreement

Exhibit C

-

Form of Intellectual Property Security Agreement Supplement

Exhibit D

-

Form of Security Agreement Supplement

 

 

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U.S. SECURITY AGREEMENT

U.S. SECURITY AGREEMENT (this “Agreement”) dated as of January 24, 2014 (the
“Effective Date”) made by the persons listed on the signature pages hereof (such
persons so listed, collectively, the “Grantors”), to Credit Suisse AG, acting
through one or more of its branches and affiliates, as collateral agent under
the Credit Agreement (as defined below) and the LC Procurement Agreement (as
defined below) (together with any successor collateral agent appointed pursuant
to Section 8.06 of the Credit Agreement and Section 10.05 of the LC Procurement
Agreement, the “Collateral Agent”).

W I T N E S S E T H :

WHEREAS, Endeavour International Corporation, a Nevada corporation, as holdings
(“Holdings”), Endeavour International Holdings B.V., a private limited company
organized under the laws of the Netherlands (“EIH”), End Finco LLC, a Delaware
limited liability company (“DE Borrower” and, with EIH, each a “Borrower” and
collectively, the “Borrowers”), Credit Suisse AG, acting through one or more of
its branches and affiliates, as administrative agent and collateral agent (the
“Collateral Agent”), the lenders from time to time party thereto (the “Lenders”)
and other parties thereto have entered into a Credit Agreement, dated as of
January 24, 2014 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”, and the Lenders, the
Collateral Agent, the Arranger and each other Agent thereto being the “Lender
Creditors”).

WHEREAS, Holdings, as holdings, Endeavour Energy UK Limited, a private limited
company registered in laws of England and Wales, as payer (“EEUK”), LC Finco S.à
r.l., a private limited liability company (société à responsabilité limitée)
incorporated and existing under the laws of the Grand Duchy of Luxembourg, whose
registered office is 40, Avenue Monterey, L-2163 Luxembourg, Grand Duchy of
Luxembourg, pending registration with the Luxembourg Register of Commerce and
Companies and having a share capital of USD 20,000 (“Payee”), and the Collateral
Agent have entered into that certain LC Procurement Agreement, dated as of
January 24, 2014 (as amended, modified, restated and/or supplemented from time
to time, the “LC Procurement Agreement”), pursuant to which (a) EEUK has
instructed Payee to enter into LC Issuance Documents (as defined in the LC
Procurement Agreement) with Credit Suisse AG, London Branch (“LC Bank”) and, as
applicable, the Collateral Agent, as of the Closing Date and will instruct Payee
to enter into LC Issuance Documents from time to time thereafter pursuant to
which Payee will instruct the LC Bank to issue letters of credit and (b) EEUK
has agreed to reimburse Payee for certain payments made in connection with such
LC Issuance Documents and to pay Payee certain fees for the procurement of the
issuance of the letters of credit. The Payee, Secured Hedge Counterparties (as
defined below) and the Lender Creditors are collectively referred to herein as
the “Secured Creditors”.

WHEREAS, Holdings and its Restricted Subsidiaries may at any time and from time
to time enter into one or more Secured Hedging Agreements with one or more
Approved Hedge Counterparties (herein “Secured Hedge Counterparties” to the
extent, and for so long as, the obligations in respect of Secured Hedging
Agreements constitute “Obligations”  under the Credit Agreement).

 

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WHEREAS, the Grantors, the Payee and the Collateral Agent have entered into a
Credit Party Guaranty, dated as of the date hereof, pursuant to which such
Grantors have guaranteed to the Collateral Agent, on behalf of the Secured
Creditors (as defined therein) the payment when due of all Guaranteed
Obligations (as defined therein) (as amended, amended and restated, supplemented
or otherwise modified from time to time, the “Credit Party Guaranty”).

WHEREAS, each Grantor is the owner of the shares of stock or other Equity
Interests (the “Initial Pledged Equity”) set forth opposite such Grantor’s name
on and as otherwise described in Part I of Schedule I hereto and issued by the
Persons named therein.

WHEREAS, each Grantor is the owner of the deposit accounts (the “Pledged Deposit
Accounts”) set forth opposite such Grantor’s name on Schedule II hereto.

WHEREAS, it is a condition precedent to the making of the Loans pursuant to the
Credit Agreement, the entering into of Secured Hedging Agreements by Approved
Hedge Counterparties and the procurement by the Payee of the issuance of letters
of credit pursuant to the LC Issuance Documents that the Grantors shall have
granted the security interests contemplated by this Agreement.  Each Grantor
will derive substantial direct and indirect benefit from the transactions
contemplated by the Credit Documents, the Secured Hedging Agreements and the LC
Procurement Documents (collectively, the “Secured Debt Agreements”).

WHEREAS, terms defined in the Credit Agreement or the LC Procurement Agreement
and not otherwise defined herein are used herein as defined in the Credit
Agreement and/or LC Procurement Agreement, as applicable.  Further, unless
otherwise defined in this Agreement, the LC Procurement Agreement or in the
Credit Agreement, terms defined in Article 8 or 9 of the UCC (as defined below)
are used in this Agreement as such terms are defined in such Article 8 or
9.  “UCC” means the Uniform Commercial Code as in effect from time to time in
the State of New York; provided that, if perfection or the effect of perfection
or non-perfection or the priority of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, “UCC” means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the provisions
hereof relating to such perfection, effect of perfection or non-perfection or
priority.  For purposes of the term “Event of Default”, such term shall mean any
Event of Default under, and as defined in, the Credit Agreement and shall also
include any Event of Default under, and as defined in, the LC Procurement
Agreement.

NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Loans, the Secured Hedge Counterparties to enter into Secured
Hedging Agreements and the procurement by the Payee of the issuance of Letters
of Credit pursuant to the LC Issuance Documents, the undersigned hereby agree
with the Collateral Agent, for the benefit of the Secured Creditors:

SECTION 1.     Grant of Security.  Each Grantor hereby grants to the Collateral
Agent, for the benefit of the Secured Creditors, a security interest in all such
Grantor’s right, title and interest in and to the following, in each case, as to
each type of property described below, whether now owned or hereafter acquired
by such Grantor, wherever located, and whether now or hereafter existing or
arising (collectively, the “Collateral”):

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(a) all equipment in all of its forms, including, without limitation, all
machinery, tools, motor vehicles, vessels, aircraft, furniture and fixtures, and
all parts thereof and all accessions thereto, including, without limitation,
computer programs and supporting information that constitute equipment within
the meaning of the UCC (any and all such property being the “Equipment”);

(b) all inventory in all of its forms, including, without limitation, (i)all raw
materials, work in process, finished goods and materials used or consumed in the
manufacture, production, preparation or shipping thereof, (ii)goods in which
such Grantor has an interest in mass or a joint or other interest or right of
any kind (including, without limitation, goods in which such Grantor has an
interest or right as consignee) and (iii)goods that are returned to or
repossessed or stopped in transit by such Grantor, and all accessions thereto
and products thereof and documents therefor, including, without limitation,
computer programs and supporting information that constitute inventory within
the meaning of the UCC (any and all such property being the “Inventory”);

(c) all accounts (including, without limitation, health‑care‑insurance
receivables), chattel paper (including, without limitation, tangible chattel
paper and electronic chattel paper), instruments (including, without limitation,
promissory notes), deposit accounts, letter‑of‑credit rights, general
intangibles (including, without limitation, payment intangibles) and other
obligations of any kind, whether or not arising out of or in connection with the
sale or lease of goods or the rendering of services and whether or not earned by
performance, and all rights now or hereafter existing in and to all supporting
obligations and in and to all security agreements, mortgages, Liens, leases,
letters of credit and other contracts securing or otherwise relating to the
foregoing property (any and all of such accounts, chattel paper, instruments,
deposit accounts, letter‑of‑credit rights, general intangibles and other
obligations, to the extent not referred to in clause (d), (e) or (f) below,
being the “Receivables,” and any and all such supporting obligations, security
agreements, mortgages, Liens, leases, letters of credit and other contracts
being the “Related Contracts”);

(d) the following (the “Security Collateral”):

(i) the Initial Pledged Equity and the certificates, if any, representing the
Initial Pledged Equity, and all dividends, distributions, return of capital,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Initial
Pledged Equity and all warrants, rights or options issued thereon or with
respect thereto;

(ii) all additional shares of stock and other Equity Interests in which such
Grantor shall from time to time acquire any interest in any manner (such shares
and other Equity Interests, together with the Initial Pledged Equity, being the
“Pledged Equity”), and the certificates, if any, representing such additional
shares or other Equity Interests, and all dividends, distributions, return of
capital, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares or other Equity Interests and all warrants, rights or options
issued thereon or with respect thereto;

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(iii) all indebtedness from time to time owed to such Grantor (all such
indebtedness owed to the Grantors, including any indebtedness owed to the
Grantors as of the date hereof, collectively being the “Pledged Debt”) and the
instruments, if any, evidencing such indebtedness, and all interest, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
indebtedness; and

(iv) all other investment property (including, without limitation, all
(A)securities, whether certificated or uncertificated, (B)security entitlements,
(C)securities accounts, (D)commodity contracts and (E)commodity accounts) in
which such Grantor has now, or acquires from time to time hereafter, any right,
title or interest in any manner, and the certificates or instruments, if any,
representing or evidencing such investment property, and all dividends,
distributions, return of capital, interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such investment property and all warrants, rights
or options issued thereon or with respect thereto;

(e) all contract rights of each Grantor including, without limitation, each
Hedging Agreement, to which such Grantor is now or may hereafter become a party,
in each case as such agreements may be amended, amended and restated,
supplemented or otherwise modified from time to time (collectively, the
“Assigned Agreements”), including, without limitation, (i)all rights of such
Grantor to receive moneys due and to become due under or pursuant to the
Assigned Agreements, (ii)all rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii)claims of such Grantor for damages arising out of or for breach
of or default under the Assigned Agreements and (iv)the right of such Grantor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder (all such Collateral
being the “Agreement Collateral”);

(f) the following (collectively, the “Account Collateral”):

(i) the Pledged Deposit Accounts and all funds and financial assets from time to
time credited thereto (including, without limitation, all cash and Cash
Equivalents and all certificates and instruments, if any, from time to time
representing or evidencing the Pledged Deposit Accounts);

(ii) all promissory notes, certificates of deposit, checks and other instruments
from time to time delivered to or otherwise possessed by the Collateral Agent
for or on behalf of such Grantor in substitution for or in addition to any or
all of the then existing Account Collateral; and

(iii) all interest, dividends, distributions, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Account
Collateral;

(g) the following (collectively, the “Intellectual Property Collateral”):

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(i) all patents, patent applications, utility models and statutory invention
registrations, all inventions claimed or disclosed therein and all improvements
thereto (“Patents”);

(ii) all trademarks, service marks, domain names, trade dress, logos, designs,
slogans, trade names, business names, corporate names and other source
identifiers, whether registered or unregistered (provided that no security
interest shall be granted in United States intent‑to‑use trademark applications
to the extent that, and solely during the period in which, the grant of a
security interest therein would impair the validity or enforceability of such
intent‑to‑use trademark applications under applicable federal law), together, in
each case, with the goodwill symbolized thereby (“Trademarks”);

(iii) all copyrights, including, without limitation, copyrights in Computer
Software (as defined below), internet web sites and the content thereof, whether
registered or unregistered (“Copyrights”);

(iv) all computer software, programs and databases (including, without
limitation, source code, object code and all related applications and data
files), firmware and documentation and materials relating thereto, together with
any and all maintenance rights, service rights, programming rights, hosting
rights, test rights, improvement rights, renewal rights and indemnification
rights and any substitutions, replacements, improvements, error corrections,
updates and new versions of any of the foregoing (“Computer Software”);

(v) all confidential and proprietary information, including, without limitation,
know‑how, trade secrets, manufacturing and production processes and techniques,
inventions, research and development information, databases and data, including,
without limitation, technical data, financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information (collectively, “Trade Secrets”), and all other
intellectual, industrial and intangible property of any type, including, without
limitation, industrial designs and mask works;

(vi) all registrations and applications for registration for any of the
foregoing, including, without limitation, those registrations and applications
for registration set forth in Schedule III hereto, together with all reissues,
divisions, continuations, continuations‑in‑part, extensions, renewals and
reexaminations thereof;

(vii) all tangible embodiments of the foregoing, all rights in the foregoing
provided by international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto;

(viii) all agreements, permits, consents, orders and franchises relating to the
license, development, use or disclosure of any of the foregoing to which such
Grantor, now or hereafter, is a party or a beneficiary, including, without
limitation, the agreements set forth in Schedule III hereto (“IP Agreements”);
and

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(ix) any and all claims for damages and injunctive relief for past, present and
future infringement, dilution, misappropriation, violation, misuse or breach
with respect to any of the foregoing, with the right, but not the obligation, to
sue for and collect, or otherwise recover, such damages,

but in any event excluding any intellectual property component of any undivided
interest of any Grantor in a joint operating agreement, the terms of which
preclude the granting of a separate security interest in such intellectual
property component;

(h) to the extent that such commercial tort claims may lawfully be pledged or
assigned under the laws of any relevant jurisdiction, the commercial tort claims
described in Schedule IV hereto (together with any commercial tort claims as to
which the Grantors have complied with the requirements of Section 13, the
“Commercial Tort Claims Collateral”);

(i) all books and records (including, without limitation, customer lists, credit
files, printouts and other computer output materials and records) of such
Grantor pertaining to any of the Collateral;

(j) all general intangibles; and

(k) all proceeds of, collateral for, income, royalties and other payments now or
hereafter due and payable with respect to, and supporting obligations relating
to, any and all of the Collateral (including, without limitation, proceeds,
collateral and supporting obligations that constitute property of the types
described in clauses (a) through (j) of this Section 1), and, to the extent not
otherwise included, all (A)payments under insurance (whether or not the
Collateral Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral, and (B)cash.

Notwithstanding the foregoing, the Collateral shall not include:  (a)any
Grantor’s right, title or interest in any permit, lease, license, contract or
other agreement, to which such Grantor is a party to the extent, but only to the
extent, that the creation by such Grantor of any lien or encumbrance thereon,
would, under the terms of such permit, lease, license, contract or other
agreement constitute or result in (i)the abandonment, invalidation, or
unenforceability of any such right, title or interest of such Grantor therein or
(ii)a breach or termination pursuant to the terms thereof, or a default under
such permit, lease, license, contract or other agreement (other than to the
extent that any such term would be rendered unenforceable or otherwise deemed
ineffective by the UCC (including Sections 9‑406, 9‑407, 9‑408 and 9‑409
thereof) of any relevant jurisdiction or any other legal or regulatory
requirement or principle of equity); provided that (A)immediately upon the
ineffectiveness, lapse or termination of any such terms, the Collateral shall
include, and such Grantor shall be deemed to have granted a security interest
in, all such rights, title and interests as if such provision had never been in
effect and (B)to the extent that any such permit, lease, license, contract or
other agreement would otherwise constitute Collateral (but for the provisions of
this paragraph), all proceeds resulting from the sale or disposition by any
Grantor of any rights, title or interests of such Grantor under such permit,
lease, license contract or other agreement shall constitute Collateral; (b)any
Equipment owned by any Grantor that is subject to a purchase money lien or a
Capital Lease Obligation if the contract or other agreement in which such lien
or encumbrance is granted (or the

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documentation providing for such Capital Lease Obligation) prohibits or requires
the consent of any person other than such Grantor as a condition to the creation
of any other lien or encumbrance on such equipment for so long as such
encumbrance is not removed, terminated, or rendered unenforceable or otherwise
deemed ineffective by the UCC (including Section 9‑406, 9‑407, 9‑408 and 9‑409
of the UCC) of any relevant jurisdiction or any other legal or regulatory
requirement or principle of equity; (c)any letter‑of‑credit rights solely to the
extent any Grantor is required by applicable law to apply the proceeds of a
drawing of such letter of credit for a specified purpose; (d)any monies, checks,
securities or other items on deposit or otherwise held in deposit accounts or
trust accounts specifically and exclusively used for payroll, payroll taxes,
deferred compensation and other employee wage and benefit payments to or for the
benefit of any Grantor’s employees; (e)any Excluded Assets at any time; and (f)
Equity Interests issued by any First-Tier Foreign Subsidiary (collectively, the
“Excluded Property”).  It is acknowledged and agreed that the Excluded Property
shall not constitute Collateral hereunder until such time as such property or
assets shall no longer constitute Excluded Property.

SECTION 2.     Security for Obligations.  This Agreement secures, in the case of
each Grantor, the payment and performance of the following (collectively, the
“Secured Obligations”):

 

(a) the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of all obligations, liabilities and indebtedness
(including, without limitation, all Obligations described in clause (a) of the
definition thereof (as defined in the Credit Agreement) and all principal,
premium, interest (including, without limitation, all interest that accrues
after the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency, reorganization or similar proceeding of such Grantor at
the rate provided for in the respective documentation, whether or not a claim
for post‑petition interest is allowed in any such proceeding), fees, costs and
indemnities) of such Grantor to the Lender Creditors, whether now existing or
hereafter incurred under, arising out of, or in connection with, each Credit
Document to which such Grantor is a party (including, without limitation, all
such obligations, liabilities and indebtedness of such Grantor under the Credit
Party Guaranty with respect to the Credit Document Obligations (as defined in
the Credit Party Guaranty)) and the due performance and compliance by such
Grantor with all of the terms, conditions and agreements contained in each such
Credit Document;

(l) the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of all obligations, liabilities and indebtedness
(including, without limitation, all interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of such Grantor at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such proceeding) owing by such Grantor to each Secured Hedge
Counterparty under any Secured Hedging Agreement, whether now in existence or
hereafter arising (including, without limitation, all obligations, liabilities
and indebtedness of such Grantor under the Credit Party Guaranty with respect to
the Secured Hedge Obligations (as defined in the Credit Party Guaranty)), and
the due performance and compliance by such Grantor with all of the terms,
conditions and agreements contained in each such Secured Hedging Agreement;

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(m) the full and prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of all obligations, liabilities and indebtedness
(including, without limitation, all Obligations (as defined in the LC
Procurement Agreement) and all interest that accrues after the commencement of
any case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of such Grantor at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such proceeding) owing by such Grantor to the Payee under the
LC Procurement Documents, whether now in existence or hereafter arising
(including, without limitation, all obligations, liabilities and indebtedness of
such Grantor under the Credit Party Guaranty with respect to the LC Procurement
Document Obligations (as defined in the Credit Party Guaranty)), and the due
performance and compliance by such Grantor with all of the terms, conditions and
agreements contained in each LC Procurement Document;

(n) any and all sums advanced by the Collateral Agent in order to preserve the
Collateral or preserve its security interest in the Collateral;

(o) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of such Grantor referred to in
clauses (a), (b) and (c) above, after an Event of Default shall have occurred
and be continuing, the expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys’ fees and court costs;

(p) all amounts paid by any Indemnitee (as defined below) as to which such
Indemnitee has the right to reimbursement under Section 19 of this Agreement;
and

(q) all amounts owing to any Agent pursuant to any of the Credit Documents,
Secured Hedging Agreements or LC Procurement Documents in its capacity as such;

it being acknowledged and agreed that the Secured Obligations shall include
extensions of credit of the types described above, whether outstanding on the
date of this Agreement or extended from time to time after the date of this
Agreement.

Without limiting the generality of the foregoing, this Agreement secures, as to
each Grantor, the payment of all amounts that constitute part of the Secured
Obligations and would be owed by such Grantor to any Secured Creditor under the
Secured Debt Agreements but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Credit Party.

SECTION 3.     Grantors Remain Liable.  Anything herein to the contrary
notwithstanding, (h)each Grantor shall remain liable under the contracts and
agreements included in such Grantor’s Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (i)the exercise by the Collateral Agent of
any of the rights hereunder shall not release any Grantor from any of its duties
or obligations under the contracts and agreements included in the Collateral and
(j)no Secured Creditor shall have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this Agreement,
any other Credit Document, any Secured

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Hedging Agreement or any other LC Procurement Document, nor shall any Secured
Creditor be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.

SECTION 4.     Delivery and Control of Security Collateral.  (k)All certificates
or instruments representing or evidencing Security Collateral shall be delivered
to and held by or on behalf of the Collateral Agent, for the benefit of the
Secured Creditors, pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Collateral
Agent.  The Collateral Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Security Collateral for
certificates or instruments of smaller or larger denominations.

 

(a) With respect to any Security Collateral that constitutes an uncertificated
security, the relevant Grantor will cause the issuer thereof either (i)to
register the Collateral Agent as the registered owner of such security or (ii)to
agree with such Grantor and the Collateral Agent that such issuer will comply
with instructions with respect to such security originated by the Collateral
Agent without further consent of such Grantor, such agreement to be in form and
substance satisfactory to the Collateral Agent (such agreement being an
“Uncertificated Security Control Agreement”).

(r) With respect to any Security Collateral that constitutes a security
entitlement as to which the Collateral Agent is not the securities intermediary,
the relevant Grantor will at all times following the Effective Date (or such
later date as may be applicable pursuant to Section 5.16 of the Credit
Agreement) cause the securities intermediary with respect to such securities
account or security entitlement either (i)to identify in its records the
Collateral Agent as the entitlement holder thereof or (ii)to agree with such
Grantor and the Collateral Agent that such securities intermediary will comply
with entitlement orders originated by the Collateral Agent without further
consent of such Grantor, such agreement to be in form and substance satisfactory
to the Collateral Agent (a “Securities Account Control Agreement” or
“Securities/Deposit Account Control Agreement,” respectively).

(s) The Collateral Agent shall have the right, at any time in its discretion and
without notice to any Grantor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Security Collateral,
subject only to the revocable rights specified in Section 10.

(t) Upon the request of the Collateral Agent, each Grantor will notify each
issuer of Security Collateral granted by it hereunder that such Security
Collateral is subject to the security interest granted hereunder.

SECTION 5.     Maintaining the Account Collateral.  So long as any Loans or any
other Secured Obligations shall remain unpaid or any Secured Debt Agreement
shall be in effect:

 

(a) Each Grantor will maintain deposit accounts only with the Collateral Agent
or with a bank (a “Pledged Account Bank”) that has agreed with such Grantor and
the Collateral Agent to comply with instructions originated by the Collateral
Agent directing the disposition of funds in such deposit account without the
further consent of such Grantor, such agreement to be

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in form and substance satisfactory to the Collateral Agent (a “Deposit Account
Control Agreement”); provided,  however, this Section 5(a) shall not apply to
(i) any deposit account with a principal balance that does not exceed, or has
not exceeded within the past 12 months, $250,000 or (ii) that certain deposit
account maintained with JPMorgan Chase Bank in Houston, Texas (reference
Endeavour Operating CO 010 General – Enertia), unless and until the principal
balance of such account on any day exceeds $250,000);

(u) Each Grantor will (i)promptly instruct each Person obligated at any time to
make any payment to such Grantor for any reason (an “Obligor”) to make such
payment to a Pledged Deposit Account, and (ii)deposit in a Pledged Deposit
Account, at the end of each Business Day, all proceeds of Collateral and all
other cash of such Grantor in excess of $250,000 in the aggregate; 

(v) Each Grantor agrees that it shall not close any Pledged Deposit Account or
terminate any Deposit Account Control Agreement, in each case, without the prior
written consent of the Collateral Agent; and

(w) The Collateral Agent may, at any time and without notice to, or consent
from, the Grantor, transfer, or direct the transfer of, funds from the Pledged
Deposit Accounts to satisfy the Grantor’s obligations under the Credit
Documents, the Secured Hedging Agreements or the LC Procurement Documents;
provided, that the Collateral Agent may only exercise any such rights if an
Event of Default shall have occurred and be continuing.

SECTION 6.     Representations and Warranties.  Each Grantor represents and
warrants as follows:

 

(a) Such Grantor’s exact legal name, location, chief executive office, type of
organization, jurisdiction of organization and organizational identification
number is set forth in Schedule V hereto.  Such Grantor has no trade names other
than as listed on Schedule III hereto.  Within the five years preceding the date
hereof, such Grantor has not changed its name, location, chief executive office,
type of organization, jurisdiction of organization or organizational
identification number from those set forth in Schedule V hereto except as set
forth in Schedule VI hereto.

(x) Such Grantor is the legal and beneficial owner of the Collateral granted or
purported to be granted by it free and clear of any Lien, claim, option or right
of others, except for the security interest created under this Agreement or
permitted under the Credit Agreement and the LC Procurement Agreement.  No
effective financing statement or other instrument similar in effect covering all
or any part of such Collateral or listing such Grantor or any trade name of such
Grantor as debtor is on file in any recording office, except such as may have
been filed in favor of the Collateral Agent relating to the Credit Documents or
the LC Procurement Documents or as otherwise permitted under the Credit
Agreement and the LC Procurement Agreement.

(y) All of the Equipment and Inventory of such Grantor are located at the places
specified therefor in Schedule VII hereto or at another location as to which
such Grantor has complied with the requirements of Section 8.  Such Grantor has
exclusive possession and control of its Equipment and Inventory, other than
Inventory stored at any leased premises or warehouse

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for which a landlord’s or warehouseman’s agreement, in form and substance
satisfactory to the Collateral Agent, is in effect.

(z) None of the Receivables or Agreement Collateral is evidenced by a promissory
note or other instrument that has not been delivered to the Collateral Agent.

(aa) If such Grantor is an issuer of Security Collateral, such Grantor confirms
that it has received notice of the security interest granted hereunder.

(bb) The Pledged Equity pledged by such Grantor hereunder has been duly
authorized and validly issued and is fully paid and non-assessable.  The Pledged
Debt pledged by such Grantor hereunder has been duly authorized, authenticated
or issued and delivered, is the legal, valid and binding obligation of the
issuers thereof, is evidenced by one or more promissory notes (which promissory
notes have been delivered to the Collateral Agent) and is not in default.

(cc) The Initial Pledged Equity pledged by such Grantor constitutes the
percentage of the issued and outstanding Equity Interests of the issuers thereof
indicated on Schedule I hereto.  As of the date hereof, (i) the Pledged Debt
described on Schedule I hereto constitutes all of the outstanding Indebtedness
owed to such Grantor by the issuers thereof and is outstanding in the principal
amount indicated and (ii) other than as set forth on Schedule I hereto, there is
no Pledged Debt outstanding.

(dd) Such Grantor has no deposit accounts, other than (i)the Pledged Deposit
Accounts listed on Schedule II hereto and (ii)the additional Pledged Deposit
Accounts as to which such Grantor has complied with the applicable requirements
of Section 5.  

(ee) This Agreement creates in favor of the Collateral Agent for the benefit of
the Secured Creditors a valid security interest in the Collateral granted by
such Grantor, securing the payment of the Secured Obligations; all filings and
other actions (including, without limitation, (A)actions necessary to obtain
control of Collateral as provided in Sections 9‑104, 9‑106 and 9‑107 of the UCC
and (B)actions necessary to perfect the Collateral Agent’s security interest
with respect to Collateral, as required by the Collateral Agent) to perfect the
security interest in the Collateral granted by such Grantor have been duly made
or taken, or to the extent such actions have not been completed as of the date
hereof, will be duly made or taken promptly following the execution and delivery
hereof, and in any event within two Business Days of the date hereof; and such
security interest is (or will be upon the completion of such actions not yet
completed) first priority (subject to the terms of the Intercreditor Agreement);
provided, that (1)no Grantor shall be deemed to represent pursuant to the
foregoing that this Agreement creates a valid security interest in any Pledged
Equity Interests of any Person that is not organized under the laws of the
United States or any state thereof and (2)no steps have been taken in order to
perfect any such security interest in the Pledged Equity Interests referred to
in clause (1) above.

(ff) No authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or any other third party is
required for (i)the grant by such Grantor of the security interest granted
hereunder or for the execution, delivery or performance of this Agreement by
such Grantor, (ii)the perfection or maintenance of the security interest created
hereunder (including, subject to the Intercreditor Agreement, the first priority

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nature of such security interest), except for the filing of financing and
continuation statements under the UCC, which financing statements have either
been filed or will be filed promptly (and in any event within two Business Days
after the execution and delivery of this Agreement), the other actions required
by the Collateral Agent as referred to in clause (i) above and the actions
described in Section 4 with respect to the Security Collateral, which actions
have been taken, or will be taken promptly after the execution and delivery of
this Agreement, or (iii)the exercise by the Collateral Agent of its voting or
other rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement, except as may be required in connection
with the disposition of any portion of the Security Collateral by laws affecting
the offering and sale of securities generally; provided, that the Collateral
Agent acknowledges and agrees that no Grantor is making (or will be deemed to
have made) the foregoing representations with respect to any Pledged Equity
Interests of any Person that is not organized under the laws of the United
States or any state thereof.

(gg) As of the date hereof, the aggregate fair market value of all Intellectual
Property Collateral of the Credit Parties is less than $100,000.

SECTION 7.     Further Assurances.  (a)Each Grantor agrees that from time to
time, at the expense of such Grantor, such Grantor will promptly execute and
deliver, or otherwise authenticate, all further instruments and documents, and
take all further action that may be necessary or desirable, or that the
Collateral Agent may reasonably request, in order to perfect and protect any
pledge or security interest granted or purported to be granted by such Grantor
hereunder or to enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral of such Grantor.  Without
limiting the generality of the foregoing, each Grantor will promptly with
respect to Collateral of such Grantor:  (i)if any such Collateral shall be
evidenced by a promissory note or other instrument or chattel paper, deliver and
pledge to the Collateral Agent hereunder such note or instrument or chattel
paper duly indorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Collateral Agent;
(ii)file such financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary or desirable, or as the
Collateral Agent may reasonably request, in order to perfect and preserve the
security interest granted or purported to be granted by such Grantor hereunder;
and (iii)deliver to the Collateral Agent evidence that all other actions that
the Collateral Agent may deem reasonably necessary or desirable in order to
perfect and protect the security interest granted or purported to be granted by
such Grantor under this Agreement has been taken.

 

(a) Each Grantor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, including, without
limitation, one or more financing statements indicating that such financing
statements cover all assets or all personal property (or words of similar
effect) of such Grantor, regardless of whether any particular asset described in
such financing statements falls within the scope of the UCC or the granting
clause of this Agreement.  A photocopy or other reproduction of this Agreement
shall be sufficient as a financing statement where permitted by law.  Each
Grantor ratifies its authorization for the Collateral Agent to have filed such
financing statements, continuation statements or amendments filed prior to the
date hereof.

(hh) Each Grantor will furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral of
such Grantor subject to this

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Agreement and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.

(ii) Each Grantor will furnish to the Collateral Agent, at any time upon the
reasonable request of the Collateral Agent, an opinion of counsel, from outside
counsel reasonably satisfactory to the Collateral Agent, to the effect that all
financing or continuation statements have been filed, and all other action has
been taken to perfect continuously from the date hereof the security interest
granted hereunder; provided, that no Grantor shall be required pursuant to this
Section 7(d) to deliver opinions with respect to the perfection of any such
security interest in the Pledged Equity Interests of any Person that is not
organized under the laws of the United States or any state thereof.

SECTION 8.     Post‑Closing Changes; Collections on Assigned Agreements,
Receivables and Related Contracts.  (a)No Grantor will change its name, type of
organization, jurisdiction of organization, organizational identification number
or location, except that any such changes shall be permitted (so long as not in
violation of the applicable requirements of the Secured Debt Agreements and so
long as same do not involve (x) a registered organization ceasing to constitute
same or (y) such Grantor changing its jurisdiction of organization or location
from the United States or a State thereof to a jurisdiction of organization or
location, as the case may be, outside the United States or a State thereof) if
(i)it shall have given to the Collateral Agent  not less than 15 days’ prior
written notice of each change to the information listed on Schedule V (as
adjusted for any subsequent changes thereto previously made in accordance with
this sentence), together with a supplement to Schedule V which shall correct all
information contained therein for such Grantor, and (ii)in connection with such
change or changes, it shall have taken all action reasonably requested by the
Collateral Agent to maintain the security interests of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.  In addition, to the extent that such Grantor does not
have an organizational identification number and later obtains one, such Grantor
shall promptly thereafter notify the Collateral Agent of such organizational
identification number and shall take all actions reasonably satisfactory to the
Collateral Agent to the extent necessary to maintain the security interest of
the Collateral Agent in the Collateral intended to be granted hereby fully
perfected and in full force and effect.

 

(a) Except as otherwise provided in this subsection (b), each Grantor will
continue to collect, at its own expense, all amounts due or to become due such
Grantor under the Assigned Agreements, Receivables and Related Contracts.  In
connection with such collections, such Grantor may take such action as such
Grantor or the Collateral Agent may deem necessary or advisable to enforce
collection of the Assigned Agreements, Receivables and Related Contracts;
provided,  however, that the Collateral Agent shall have the right at any time
following the occurrence of an Event of Default, and upon written notice to such
Grantor of its intention to do so, to notify the Obligors under any Assigned
Agreements, Receivables and Related Contracts of the assignment of such Assigned
Agreements, Receivables and Related Contracts to the Collateral Agent and to
direct such Obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to the Collateral Agent and, upon such notification
and at the expense of such Grantor, to enforce collection of any such Assigned
Agreements, Receivables and Related Contracts, to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done, and to

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otherwise exercise all rights with respect to such Assigned Agreements,
Receivables and Related Contracts, including, without limitation, those set
forth set forth in Section 9‑607 of the UCC.  After receipt by any Grantor of
the notice from the Collateral Agent referred to in the proviso to the preceding
sentence, (i)all amounts and proceeds (including, without limitation,
instruments) received by such Grantor in respect of the Assigned Agreements,
Receivables and Related Contracts of such Grantor shall be received in trust for
the benefit of the Collateral Agent hereunder, shall be segregated from other
funds of such Grantor and shall be forthwith paid over to the Collateral Agent
in the same form as so received (with any necessary endorsement) to be deposited
in a cash collateral account and applied as provided in Section 18(b) and
(ii)such Grantor will not adjust, settle or compromise the amount or payment of
any Receivable or amount due on any Assigned Agreement or Related Contract,
release wholly or partly any Obligor thereof or allow any credit or discount
thereon.  No Grantor will permit or consent to the subordination of its right to
payment under any of the Assigned Agreements, Receivables and Related Contracts
to any other indebtedness or obligations of the Obligor thereof.

SECTION 9.     As to Intellectual Property Collateral.  Each Grantor hereby
agrees that, if at any time, and from time to time, the aggregate fair market
value of the Intellectual Property Collateral of all the Credit Parties shall
exceed $100,000, then the Grantors shall:

 

(a) With respect to each item of its Intellectual Property Collateral, each
Grantor agrees to take, at its expense, all necessary steps, including, without
limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office
and any other Governmental Authority, to (i)maintain the validity and
enforceability of such Intellectual Property Collateral and maintain such
Intellectual Property Collateral in full force and effect, and (ii)pursue the
registration and maintenance of each patent, trademark, or copyright
registration or application, now or hereafter included in such Intellectual
Property Collateral of such Grantor, including, without limitation, the payment
of required fees and taxes, the filing of responses to office actions issued by
the U.S. Patent and Trademark Office, the U.S. Copyright Office or other
Governmental Authorities, the filing of applications for renewal or extension,
the filing of affidavits under Section 8 and 15 of the U.S. Trademark Act, the
filing of divisional, continuation, continuation in part, reissue and renewal
applications or extensions, the payment of maintenance fees and the
participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings.  No Grantor shall, without the
written consent of the Collateral Agent, discontinue use of or otherwise abandon
any Intellectual Property Collateral, or abandon any right to file an
application for patent, trademark, or copyright, unless such Grantor shall have
previously determined that such use or the pursuit or maintenance of such
Intellectual Property Collateral is no longer desirable in the conduct of such
Grantor’s business and that the loss thereof would not be reasonably likely to
have a Material Adverse Effect, in which case, such Grantor will give prompt
notice of any such abandonment to the Collateral Agent.

(jj) Each Grantor agrees promptly to notify the Collateral Agent if such Grantor
becomes aware (i)that any item of the Intellectual Property Collateral may have
become abandoned, placed in the public domain, invalid or unenforceable, or of
any adverse determination or development regarding such Grantor’s ownership of
any of the Intellectual Property Collateral or its right to register the same or
to keep and maintain and enforce the same, or (ii)of any adverse determination
or the institution of any proceeding (including, without limitation, the
institution of any proceeding in the U.S. Patent and Trademark Office or any
court) regarding any item of the Intellectual Property Collateral.

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(kk) In the event that any Grantor becomes aware that any item of the
Intellectual Property Collateral is being infringed or misappropriated by a
third party, such Grantor shall promptly notify the Collateral Agent and shall
take such actions, at its expense, as such Grantor or the Collateral Agent deems
reasonable and appropriate under the circumstances to protect or enforce such
Intellectual Property Collateral, including, without limitation, suing for
infringement or misappropriation and for an injunction against such infringement
or misappropriation.

(ll) Each Grantor shall use proper statutory notice in connection with its use
of each item of its Intellectual Property Collateral.  No Grantor shall do or
permit any act or knowingly omit to do any act whereby any of its Intellectual
Property Collateral may lapse or become invalid or unenforceable or placed in
the public domain.

(mm) Each Grantor shall take all steps which it or the Collateral Agent deems
reasonable and appropriate under the circumstances to preserve and protect each
item of its Intellectual Property Collateral, including, without limitation,
maintaining the quality of any and all products or services used or provided in
connection with any of the Trademarks, consistent with the quality of the
products and services as of the date hereof, and taking all steps necessary to
ensure that all licensed users of any of the Trademarks use such consistent
standards of quality.

(nn) Each Grantor agrees that, should it obtain an ownership interest in any
item of the type set forth in Section 1(g) (excluding any intellectual property
component of any undivided interest of any Grantor in a joint operating
agreement, the terms of which preclude the granting of a separate security
interest in such intellectual property component; except to the extent any such
terms are rendered ineffective by Sections 9‑406, 9‑407, 9‑408 or 9‑409 of the
UCC) that is not on the date hereof a part of the Intellectual Property
Collateral, and such acquisition shall cause the total aggregate value of the
Intellectual Property Collateral to exceed $100,000 (“After‑Acquired
Intellectual Property”), then (i)the provisions of this Agreement shall
automatically apply thereto, (ii)any such After‑Acquired Intellectual Property
and, in the case of trademarks, the goodwill symbolized thereby, shall
automatically become part of the Intellectual Property Collateral subject to the
terms and conditions of this Agreement with respect thereto and (iii)in the case
of the first such ownership interest obtained in After‑Acquired Intellectual
Property, within ten business days following the date on which each such Grantor
obtains such ownership interest each such Grantor shall execute or otherwise
authenticate an agreement, in substantially the form set forth in Exhibit B
hereto or otherwise in form and substance satisfactory to the Collateral Agent
(an “Intellectual Property Security Agreement”), for recording the security
interest granted hereunder to the Collateral Agent in such Intellectual Property
Collateral with the U.S. Patent and Trademark Office, the U.S. Copyright Office
and any other Governmental Authorities necessary to perfect the security
interest hereunder in such Intellectual Property Collateral.

(oo) If, at the end of each fiscal quarter of each Grantor following the
execution of the Intellectual Property Security Agreement, the acquisition of
After‑Acquired Intellectual Property shall have caused the total aggregate value
of the Intellectual Property Collateral to exceed $100,000, such Grantor shall
give prompt written notice to the Collateral Agent identifying any additional
After‑Acquired Intellectual Property acquired during such fiscal quarter, and
such

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Grantor shall execute and deliver to the Collateral Agent with such written
notice, or otherwise authenticate, an agreement substantially in the form of
Exhibit C hereto or otherwise in form and substance satisfactory to the
Collateral Agent (an “IP Security Agreement Supplement”) covering such
After‑Acquired Intellectual Property, which IP Security Agreement Supplement
shall be recorded with the U.S. Patent and Trademark Office, the U.S. Copyright
Office and any other governmental authorities necessary to perfect the security
interest hereunder in such After‑Acquired Intellectual Property.

SECTION 10.     Voting Rights; Dividends; Etc.  (a)So long as no Default  or
Event of Default shall have occurred and be continuing:

 

(i) Each Grantor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Security Collateral of such Grantor or any
part thereof for any purpose; provided however, that such Grantor will not
exercise or refrain from exercising any such right if such action would have a
material adverse effect on the value of the Security Collateral or any part
thereof or of the rights of the Secured Creditors therein.

(ii) Each Grantor shall be entitled to receive and retain any and all dividends,
interest and other distributions paid in respect of the Security Collateral of
such Grantor if and to the extent that the payment thereof is not otherwise
prohibited by the terms of the Credit Documents; provided,  however, that any
and all

(A) dividends, interest and other distributions paid or payable other than in
cash in respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Security
Collateral,

(B) dividends and other distributions paid or payable in cash in respect of any
Security Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid in surplus; and

(C) cash paid, payable or otherwise distributed in respect of principal of, or
in redemption of, or in exchange for, any Security Collateral,

that in each case are not otherwise expressly permitted to be retained by such
Grantor pursuant to the terms of the Credit Agreement shall be, and shall be
forthwith delivered to the Collateral Agent to hold as, Security Collateral and
shall, if received by such Grantor, be received in trust for the benefit of the
Collateral Agent, be segregated from the other property or funds of such Grantor
and be forthwith delivered to the Collateral Agent as Security Collateral in the
same form as so received (with any necessary indorsement).

(iii) The Collateral Agent will execute and deliver (or cause to be executed and
delivered) to each Grantor all such proxies and other instruments as such
Grantor may reasonably request for the purpose of enabling such Grantor to
exercise the voting and other rights that it is entitled to exercise pursuant to
paragraph (i) above and to receive the

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dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.

(pp) Upon the occurrence and during the continuance of a Default or Event of
Default:

(i) All rights of each Grantor (A)to exercise or refrain from exercising the
voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 10(a)(i) shall, upon notice to such Grantor by the
Collateral Agent, cease and (B)to receive the dividends, interest and other
distributions that it would otherwise be authorized to receive and retain
pursuant to Section 10(a)(ii) shall automatically cease, and all such rights
shall thereupon become vested in the Collateral Agent, which shall thereupon
have the sole right to exercise or refrain from exercising such voting and other
consensual rights and to receive and hold as Security Collateral such dividends,
interest and other distributions.

(ii) All dividends, interest and other distributions that are received by any
Grantor contrary to the provisions of paragraph (i) of this Section 10(b) shall
be received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of such Grantor and shall be forthwith paid over to
the Collateral Agent as Security Collateral in the same form as so received
(with any necessary indorsement).

SECTION 11.     As to the Assigned Agreements.  (a)Each Grantor hereby consents
on its behalf and on behalf of its Subsidiaries to the assignment and pledge to
the Collateral Agent for benefit of the Secured Creditors of each Assigned
Agreement to which it is a party by any other Grantor hereunder.

 

(a) Each Grantor agrees, and has effectively so instructed each other party to
each Assigned Agreement to which it is a party, that all payments due or to
become due under or in connection with such Assigned Agreement will be made
directly to a Pledged Deposit Account.

(qq) All moneys received or collected pursuant to subsection (b) above and not
deposited directly into a Pledged Deposit Account shall be applied as provided
in Section 18(b).

SECTION 12.     As to Letter‑of‑Credit Rights.  Upon the occurrence of a Default
or Event of Default, each Grantor will, promptly upon request by the Collateral
Agent, (a)notify (and such Grantor hereby authorizes the Collateral Agent to
notify) the issuer and each nominated person with respect to each of the Related
Contracts consisting of letters of credit that the proceeds thereof have been
assigned to the Collateral Agent hereunder and any payments due or to become due
in respect thereof are to be made directly to the Collateral Agent or its
designee and (b)arrange for the Collateral Agent to become the transferee
beneficiary of letter of credit.

 

SECTION 13.     Commercial Tort Claims.  Each Grantor will promptly give notice
to the Collateral Agent of any material commercial tort claim capable of
lawfully being pledged or assigned that may arise after the date hereof and will
immediately execute or otherwise authenticate a supplement to this Agreement,
and otherwise take all necessary action, to subject such commercial tort claim
to the first priority security interest created under this Agreement.

 

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SECTION 14.     Transfers and Other Liens; Additional Shares.  (a)Each Grantor
agrees that it will not (i)sell, assign or otherwise dispose of, or grant any
option with respect to, any of the Collateral, other than sales, assignments and
other dispositions of Collateral, and options relating to Collateral, permitted
under the Secured Debt Agreements, or (ii)create or suffer to exist any Lien
upon or with respect to any of the Collateral of such Grantor except for the
pledge, assignment and security interest created under the Secured Debt
Agreements and Liens permitted under the Secured Debt Agreements.

 

(a) Each Grantor agrees that it will (i)cause each issuer of the Pledged Equity
pledged by such Grantor not to issue any Equity Interests or other securities in
addition to or in substitution for the Pledged Equity issued by such issuer,
except to such Grantor, and (ii)pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional Equity
Interests or other securities (except to the extent constituting Excluded
Property).

SECTION 15.     Collateral Agent Appointed Attorney in Fact.  Following the
occurrence and during the continuance of a Default or Event of Default, each
Grantor hereby irrevocably appoints the Collateral Agent such Grantor’s attorney
in fact, with full authority in the place and stead of such Grantor and in the
name of such Grantor or otherwise, from time to time in the Collateral Agent’s
discretion, to take any action and to execute any instrument that the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:

 

(a) to obtain and adjust insurance required to be paid to the Collateral Agent
pursuant to this Agreement,

(rr) to ask for, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral,

(ss) to receive, indorse and collect any drafts or other instruments, documents
and chattel paper, in connection with clause (a) or (b) above, and

(tt) to file any claims or take any action or institute any proceedings that the
Collateral Agent may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce compliance with the terms and conditions
of any Assigned Agreement or the rights of the Collateral Agent with respect to
any of the Collateral.

SECTION 16.     Collateral Agent May Perform.  If any Grantor fails to perform
any agreement contained herein, the Collateral Agent may, but without any
obligation to do so and without notice, itself perform, or cause performance of,
such agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor under Section 19.

 

Section 17.     The Collateral Agent’s Duties.  (a)The powers conferred on the
Collateral Agent hereunder are solely to protect the Secured Creditors’ interest
in the Collateral and shall not impose any duty upon it to exercise any such
powers.  Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any

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Collateral, whether or not any Secured Creditor has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral.  The Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which it accords
its own property.

 

(a) Anything contained herein to the contrary notwithstanding, the Collateral
Agent may from time to time, when the Collateral Agent deems it to be necessary,
appoint one or more subagents (each a “Subagent”) for the Collateral Agent
hereunder with respect to all or any part of the Collateral.  In the event that
the Collateral Agent so appoints any Subagent with respect to any Collateral,
(i)the assignment and pledge of such Collateral and the security interest
granted in such Collateral by each Grantor hereunder shall be deemed for
purposes of this Agreement to have been made to such Subagent, in addition to
the Collateral Agent, for the benefit of the Secured Creditors, as security for
the Secured Obligations of such Grantor, (ii)such Subagent shall automatically
be vested, in addition to the Collateral Agent, with all rights, powers,
privileges, interests and remedies of the Collateral Agent hereunder with
respect to such Collateral, and (iii)the term “Collateral Agent,” when used
herein in relation to any rights, powers, privileges, interests and remedies of
the Collateral Agent with respect to such Collateral, shall include such
Subagent; provided,  however, that no such Subagent shall be authorized to take
any action with respect to any such Collateral unless and except to the extent
expressly authorized in writing by the Collateral Agent.

Section 18.     Remedies.    

 

If any Event of Default shall have occurred and be continuing:

(a) The Collateral Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party upon default under the UCC
(whether or not the UCC applies to the affected Collateral) and also may: 
(i)require each Grantor to, and each Grantor hereby agrees that it will at its
expense and upon request of the Collateral Agent forthwith, assemble all or part
of the Collateral as directed by the Collateral Agent and make it available to
the Collateral Agent at a place and time to be designated by the Collateral
Agent that is reasonably convenient to both parties; (ii)without notice except
as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of the Collateral Agent’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms
as the Collateral Agent may deem commercially reasonable; (iii)occupy any
premises owned or leased by any of the Grantors where the Collateral or any part
thereof is assembled or located for a reasonable period in order to effectuate
its rights and remedies hereunder or under law, without obligation to such
Grantor in respect of such occupation; and (iv)exercise any and all rights and
remedies of any of the Grantors under or in connection with the Collateral, or
otherwise in respect of the Collateral, including, without limitation, (A)any
and all rights of such Grantor to demand or otherwise require payment of any
amount under, or performance of any provision of, the Assigned Agreements, the
Receivables, the Related Contracts and the other Collateral, (B)withdraw, or
cause or direct the withdrawal, of all funds with respect to the Account
Collateral and (C)exercise all other rights and remedies with respect to the
Assigned Agreements, the Receivables, the Related Contracts and the other
Collateral, including, without limitation, those set forth in Section 9‑607 of
the UCC.  Each Grantor agrees that, to the extent notice of sale shall

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be required by law, at least ten days’ notice to such Grantor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification.  The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given.  The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.

(uu) Any cash held by or on behalf of the Collateral Agent and all cash proceeds
received by or on behalf of the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Collateral Agent, be held by the Collateral Agent
as collateral for, and/or then or at any time thereafter applied in whole or in
part by the Collateral Agent for the benefit of the Secured Creditors against,
all or any part of the Secured Obligations in the following order:

(i) FIRST, to the payment of all amounts owing to the Collateral Agent (in its
capacity as such) pursuant to the terms of any Secured Debt Agreement,

(ii) SECOND, to the payment in full of the Secured Obligations on a ratable
basis in accordance with the terms of the applicable Secured Debt Agreements,
and

(iii) THIRD, after payment of all Secured Obligations, to Holdings, the
Borrowers, the Payee and the other Grantors or their successors and assigns, as
their interests may appear, or to whosoever may be lawfully entitled to receive
the same, or as a court of competent jurisdiction may direct.

The provisions of this Section 18(b) (i) shall inure solely to the benefit of
each of the Secured Creditors and their respective successors and assigns and
(ii) are intended solely for the purpose of defining the relative rights of the
Secured Creditors.  No Grantor or any other creditor thereof (including, without
limitation, any Person who is entitled to or is otherwise granted a ratable Lien
over any Collateral pursuant to any contractual obligation of any Grantor) shall
have any rights hereunder.  Nothing in this Agreement is intended to or shall
impair the obligations of the Borrowers or any other Grantor, which are absolute
and unconditional, to pay the Secured Obligations owing to the Secured Creditors
as and when the same shall become due and payable in accordance with the terms
of the Credit Documents, the Secured Hedging Agreements or the LC Procurement
Documents, as applicable.

(vv) All payments received by any Grantor under or in connection with any
Assigned Agreement or otherwise in respect of the Collateral shall be received
in trust for the benefit of the Collateral Agent, shall be segregated from other
funds of such Grantor and shall be forthwith paid over to the Collateral Agent
in the same form as so received (with any necessary endorsement).

(ww) The Collateral Agent may, without notice to any Grantor except as required
by law and at any time or from time to time, charge, set off and otherwise apply
all or any part of the Secured Obligations against any funds held with respect
to the Account Collateral or in any other deposit account.

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(xx) The Collateral Agent may send to each bank, securities intermediary or
issuer party to any Deposit Account Control Agreement, Securities/Deposit
Account Control Agreement, Securities Account Control Agreement or
Uncertificated Security Control Agreement a “Notice of Exclusive Control” (or
similar term) as defined in and under such Agreement.

(yy) In the event of any sale or other disposition of any of the Intellectual
Property Collateral of any Grantor, the goodwill symbolized by any Trademarks
subject to such sale or other disposition shall be included therein, and such
Grantor shall supply to the Collateral Agent or its designee such Grantor’s
know‑how and expertise, and documents and things relating to any Intellectual
Property Collateral subject to such sale or other disposition, and such
Grantor’s customer lists and other records and documents relating to such
Intellectual Property Collateral and to the manufacture, distribution,
advertising and sale of products and services of such Grantor.

(zz) If the Collateral Agent shall determine to exercise its right to sell all
or any of the Security Collateral of any Grantor pursuant to this Section 18,
each Grantor agrees that, upon request of the Collateral Agent, such Grantor
will, at its own expense:

(i) execute and deliver, and cause each issuer of such Security Collateral
contemplated to be sold and the directors and officers thereof to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts and things, as may be necessary or, in the opinion of the Collateral
Agent, advisable to register such Security Collateral under the provisions of
the Securities Act of 1933 (as amended from time to time, the “Securities Act”),
to cause the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to be
furnished and to make all amendments and supplements thereto and to the related
prospectus that, in the opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto;

(ii) use its best efforts to qualify the Security Collateral under the state
securities or “Blue Sky” laws and to obtain all necessary governmental approvals
for the sale of such Security Collateral, as requested by the Collateral Agent;

(iii) cause each such issuer of such Security Collateral to make available to
its security holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act;

(iv) provide the Collateral Agent with such other information and projections as
may be necessary or, in the opinion of the Collateral Agent, advisable to enable
the Collateral Agent to effect the sale of such Security Collateral; and

(v) do or cause to be done all such other acts and things as may be necessary to
make such sale of such Security Collateral or any part thereof valid and binding
and in compliance with applicable law.

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(aaa) The Collateral Agent is authorized, in connection with any sale of the
Security Collateral pursuant to this Section 18, to deliver or otherwise
disclose to any prospective purchaser of the Security Collateral:  (i)any
registration statement or prospectus, and all supplements and amendments
thereto, prepared pursuant to subsection (g)(i) above; (ii)any information and
projections provided to it pursuant to subsection (g)(iv) above; and (iii)any
other information in its possession relating to such Security Collateral.

(bbb) Each Grantor acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Secured Creditors by reason of the failure
by such Grantor to perform any of the covenants contained in subsection (g)
above and, consequently, agrees that, if such Grantor shall fail to perform any
of such covenants, it will pay, as liquidated damages and not as a penalty, an
amount equal to the value of the Security Collateral on the date the Collateral
Agent shall demand compliance with subsection (g) above.

Section 19.     Indemnity and Expenses.  Each Grantor agrees, jointly and
severally, to indemnify each Secured Creditor and each of their respective
Affiliates and the respective directors, trustees, officers, employees, agents
and advisors of each Secured Creditor and their respective Affiliates (each, a
“Related Party”) against, and to hold each Secured Creditor and each Related
Party of each Secured Creditor (each such person being called an “Indemnitee”)
harmless from all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and disbursements (collectively, the
“Liabilities”), incurred by or asserted against any Indemnitee arising out of,
in any way connected with, or as a result of (i) the execution or delivery of
this Agreement or any other Secured Debt Agreement or any agreement or
instrument contemplated thereby, the performance by the parties thereto of their
respective obligations thereunder or the consummation of the Transactions and
the other transactions contemplated thereby, (ii) the use of the proceeds of the
Loans, (iii) any claim, litigation, investigation or proceeding relating to any
of the foregoing, whether or not any Indemnitee is a party thereto (and
regardless of whether such matter is initiated by a third party or by any
Secured Creditor or any of their respective Affiliates), or (iv) any actual or
alleged presence or Release of Hazardous Materials on any property currently or
formerly owned or operated by such Grantor or its Subsidiaries, or any
Environmental Liability related in any way to such Grantor or its Subsidiaries;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and non-appealable
judgment to have resulted from the willful misconduct, bad faith or gross
negligence of such Indemnitee or any proceeding not involving an act or omission
by any Secured Creditor or any of their respective Affiliates that is brought by
an Indemnitee against any other Indemnitee (other than disputes involving claims
against an Agent in its capacity as such).  To the extent permitted by
applicable law, no Grantor shall assert, and each Grantor hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby.

 

Section 20.     Amendments; Waivers; Additional Grantors; Etc.  (a)No amendment,
modification or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by each Grantor directly affected thereby
(it being understood that the addition or release

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of any Grantor hereunder shall not constitute an amendment, modification, waiver
or consent affecting any Grantor other than the Grantor so added or released),
and the Collateral Agent (at the direction of the Required Secured Creditors),
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

 

(a) For the purpose of this Agreement, “Required Secured Creditors” shall mean
(i) at any time when any Secured Obligations of the type described in Section
2(a) are outstanding, the Required Lenders (or, to the extent provided in
Section 9.08 of the Credit Agreement, each of the Lenders), and (ii) at any time
when all of Secured Obligations of the type described in Section 2(a) have been
paid in full, the holders of at least a majority of the outstanding Secured
Obligations of the types described in Sections 2(b) and 2(c). No failure on the
part of the Collateral Agent or any other Secured Creditor to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.

(ccc) Upon the execution and delivery by any Person of a security agreement
supplement in substantially the form of Exhibit D hereto (each a “Security
Agreement Supplement”), such Person shall be referred to as an “Additional
Grantor” and shall be and become a Grantor hereunder, and each reference in this
Agreement and the other Credit Documents to “Grantor” shall also mean and be a
reference to such Additional Grantor, each reference in this Agreement and the
other Secured Debt Agreements to the “Collateral” shall also mean and be a
reference to the Collateral granted by such Additional Grantor and each
reference in this Agreement to a Schedule shall also mean and be a reference to
the schedules attached to such Security Agreement Supplement.

Section 21     Notices, Etc.   Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by fax, as follows: 
(a)in the case of any Grantor, c/o Endeavour International Corporation, 811 Main
Street, Suite 2100, Houston, Texas 77002, Attention: Chief Financial Officer,
Facsimile: (713) 307-8794; (b)in the case of the Collateral Agent, to it at
Credit Suisse, Eleven Madison Avenue, 23rd Floor, New York, NY  10010,
Attn:  Loan Operations – Boutique Management, Telephone No.:  (212) 538‑3525,
Email:  Ops-collateral@credit-suisse.com; (c)in the case of any Lender, at such
address as such Lender shall have specified in the Credit Agreement; (d)in the
case of any Secured Hedge Counterparty, at such address as such Secured Hedge
Counterparty shall have specified in writing to each Grantor and the Collateral
Agent; and (e) in the case of Payee, at such address as Payee shall have
specified in the LC Procurement Agreement.  All notices and other communications
given to any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt if delivered by hand
or overnight courier service or sent by fax (or other electronic communications
pursuant to procedures approved by the Collateral Agent) or on the date five
Business Days after dispatch by certified or registered mail if mailed, in each
case delivered, sent or mailed (properly addressed) to such party as provided in
this Section 21 or in accordance with the latest unrevoked direction from such
party given in accordance with this Section 21.  As agreed to among the
Grantors, the Secured Creditors and the Collateral Agent from time to time,
notices and other communications may also be delivered by e mail to the e mail
address of a representative of the applicable Person provided from time to time
by such Person and shall be deemed to have been given as of the date of receipt
thereof. 

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Section 22.     Continuing Security Interest; Assignments under the Credit
Agreement.  This Agreement shall create a continuing security interest in the
Collateral and shall (a)remain in full force and effect until the later of (i)
the payment in full in cash (it being understood for the purposes of this
Agreement that receipt of Collateral pursuant to a credit bid shall be regarded
as cash) of the Secured Obligations and the termination of the Commitments and
(ii) the termination or expiration of the Secured Hedging Agreements, (b)be
binding upon each Grantor, its successors and assigns and (c)inure, together
with the rights and remedies of the Collateral Agent hereunder, to the benefit
of the Secured Creditors and their respective successors, transferees and
assigns.  Without limiting the generality of the foregoing, any Lender may
assign or otherwise transfer all or any portion of its rights and obligations
under the Credit Agreement (including, without limitation, all or any portion of
its Commitment, the Loans owing to it and the Note or Notes) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lenders herein or otherwise, in each
case as provided in Section 9.04 of the Credit Agreement.

 

Section 23.     Release; Termination.  (a)Upon any sale, lease, transfer or
other disposition of any item of Collateral of any Grantor effected in
accordance with the terms of the Secured Debt Agreements, then the security
interest hereunder shall be released, and the Collateral Agent will, at such
Grantor’s reasonable request and at such Grantor’s sole expense, take all steps
necessary to evidence such release; provided,  however, that at the time of such
request and such release no Default or Event of Default shall have occurred and
be continuing.

 

(a) Upon the later of (i) the payment in full in cash of the Secured Obligations
and the termination of the Commitments and (ii) the termination or expiration of
the Secured Hedging Agreements, the pledge and security interest granted hereby
shall terminate and all rights to the Collateral shall revert to the applicable
Grantor.  Upon any such termination, the Collateral Agent will, at the
applicable Grantor’s expense, execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence such termination.

(ddd) Any Grantor which is designated as an Unrestricted Subsidiary pursuant to
Section 6.08 of the Credit Agreement and 8.08 of the LC Procurement Agreement
shall, upon notification of such designation in writing to the Collateral Agent,
be released as a Grantor hereunder, in which case the Collateral Agent will, at
such Grantor’s reasonable request and at such Grantor’s sole expense, take all
steps necessary to evidence such release.

Section 24.     Security Interest Absolute.  The Obligations of each Grantor
under this Agreement are independent of the Secured Obligations or any other
Obligations of any other Credit Party under or in respect of the Secured Debt
Documents, and a separate action or actions may be brought and prosecuted
against each Grantor to enforce this Agreement, irrespective of whether any
action is brought against such Grantor or any other Credit Party or whether such
Grantor or any other Credit Party is joined in any such action or actions.  All
rights of the Collateral Agent and the other Secured Creditors and the pledge,
assignment and security interest hereunder, and all obligations of each Grantor
hereunder, shall be irrevocable, absolute and unconditional irrespective of, and
each Grantor hereby irrevocably waives (to the maximum extent permitted by
applicable law) any defenses it may now have or may hereafter acquire in any way
relating to, any or all of the following:

 

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(a) any lack of validity or enforceability of any Secured Debt Agreement or any
other agreement or instrument relating thereto;

(eee) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Secured Obligations or any other Obligations of any
other Credit Party under or in respect of the Secured Debt Agreements or any
other amendment or waiver of or any consent to any departure from any Secured
Debt Agreement, including, without limitation, any increase in the Secured
Obligations resulting from the extension of additional credit to any Credit
Party or any of its Subsidiaries or otherwise;

(fff) any taking, exchange, release or non perfection of any Collateral or any
other collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;

(ggg) any manner of application of any Collateral or any other collateral, or
proceeds thereof, to all or any of the Secured Obligations, or any manner of
sale or other disposition of any Collateral or any other collateral for all or
any of the Secured Obligations or any other Obligations of any other Credit
Party under or in respect of the Secured Debt Agreements or any other assets of
any Credit Party or any of its Subsidiaries;

(hhh) any change, restructuring or termination of the corporate structure or
existence of any Credit Party or any of its Subsidiaries;

(iii) any failure of any Secured Creditor to disclose to any Credit Party any
information relating to the business, condition (financial or otherwise),
operations, performance, assets, nature of assets, liabilities or prospects of
any other Credit Party now or hereafter known to such Secured Creditor (each
Grantor waiving any duty on the part of the Secured Creditors to disclose such
information);

(jjj) the failure of any other Person to execute this Agreement or any other
Security Document, guaranty or agreement or the release or reduction of
liability of any Grantor or other grantor or surety with respect to the Secured
Obligations; or

(kkk) any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by any
Secured Creditor that might otherwise constitute a defense available to, or a
discharge of, such Grantor or any other Grantor or a third party grantor of a
security interest.

This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Creditor or by any other Person upon
the insolvency, bankruptcy or reorganization of any Credit Party or otherwise,
all as though such payment had not been made.

 

Section 25.     Execution in Counterparts.  This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of a signature page to this
Agreement by telecopier or other electronic transmission shall be effective as
delivery of an original executed counterpart of this Agreement.

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Section 26.     Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury
Trial.  

 

(a)THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT (INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS
AGREEMENT WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE) SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES
THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE
OF NEW YORK. 

(b)EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY COMPETENT NEW YORK STATE
COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY,
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR LC
PROCUREMENT DOCUMENT TO WHICH ANY GRANTOR IS A PARTY, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT
A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE
SECURED CREDITORS MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR LC PROCUREMENT DOCUMENT TO
WHICH ANY GRANTOR IS A PARTY AGAINST THE GRANTORS OR THEIR PROPERTIES IN THE
COURTS OF ANY JURISDICTION.

(c)EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR LC
PROCUREMENT DOCUMENT TO WHICH ANY GRANTOR IS A PARTY IN ANY NEW YORK STATE OR
FEDERAL COURT.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

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(d)EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 21.  NOTHING IN THIS AGREEMENT, ANY
OTHER CREDIT DOCUMENT OR ANY OTHER LC PROCUREMENT DOCUMENT TO WHICH ANY GRANTOR
IS A PARTY WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.

(e)EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR ANY OTHER LC PROCUREMENT DOCUMENT
TO WHICH ANY GRANTOR IS A PARTY.  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 26.

Section 27.     Acknowledgment of Liens. 

 

(lll) Each Grantor, the Collateral Agent and each Secured Creditor agrees and
acknowledges that (i) the grants of Liens pursuant to the Secured Debt
Agreements constitute three separate and distinct grants of Liens and (ii)
because of, among other things, their differing rights in the Collateral, the
Secured Obligations described in clauses (a), (b) and (c) of Section 2 hereof
are fundamentally different from the Secured Obligations described in the other
clauses (a), (b) and (c) of Section 2 hereof, as applicable, and must be
separately classified in any plan of reorganization proposed or adopted in any
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect.

(mmm) In the event a proceeding under any Debtor Relief Law shall be commenced
by or against any Grantor (a “Bankruptcy Proceeding”), Payee and Secured Hedge
Counterparties shall not, so long as any Secured Obligations of the type
described in Section 2(a) are outstanding, oppose or object to any disposition
of any Collateral free and clear of the Liens of such Secured Creditors or other
claims under Section 363 of the Bankruptcy Code, if the Lender Creditors, or a
representative authorized by the Lender Creditors, shall consent to such
disposition.

(nnn) Notwithstanding anything herein to the contrary, the lien and security
interest granted pursuant to this Agreement and the exercise of any right or
remedy hereunder are subject to the provisions of the Intercreditor Agreement.
In the event of any conflict between the terms of the Intercreditor Agreement
and this Agreement, the terms of the Intercreditor Agreement shall govern and
control.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.

 

 

 

 

 

ENDEAVOUR INTERNATIONAL

 

 

CORPORATION

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

SIGNATURE PAGE TO

U.S. SECURITY AGREEMENT

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ENDEAVOUR OPERATING CORPORATION,

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

SIGNATURE PAGE TO

U.S. SECURITY AGREEMENT

HN\1119607.7

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ENDEAVOUR ENERGY NORTH SEA L.P.,

 

 

 

 

 

 

By:

Endeavour Energy North Sea LLC,

 

 

 

its general partner

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

SIGNATURE PAGE TO

U.S. SECURITY AGREEMENT

HN\1119607.7

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ENDEAVOUR INTERNATIONAL HOLDING

 

B.V.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

SIGNATURE PAGE TO

U.S. SECURITY AGREEMENT

HN\1119607.7

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ENDEAVOUR ENERGY UK LIMITED

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

SIGNATURE PAGE TO

U.S. SECURITY AGREEMENT

HN\1119607.7

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END Finco LLC

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

SIGNATURE PAGE TO

U.S. SECURITY AGREEMENT

HN\1119607.7

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ENDEAVOUR ENERGY NORTH SEA LLC

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

SIGNATURE PAGE TO

U.S. SECURITY AGREEMENT

HN\1119607.7

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Acknowledged and agreed as of the date hereof:

 

 

 

 

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS

 

 

BRANCH, as Collateral Agent

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

SIGNATURE PAGE TO

U.S. SECURITY AGREEMENT

HN\1119607.7

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Schedule I

INVESTMENT PROPERTY

 

Part I

Initial Pledged Equity

Grantor

Issuer

Class of Equity Interest

Par Value

Number of Shares

Certificate Number

Percentage of outstanding shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule I-1

 

HN\1119607.7

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Part II

Pledged Debt

 

 

Schedule I-2

 

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Part III

Other Investment Property

This Schedule I Part III incorporates all Pledged Deposit Accounts as set out in
Schedule II.

 

Grantor

Sort Code

Bank Account Number

Designation

 

 

 

 

 

Schedule I-3

 

HN\1119607.7

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Schedule II

PLEDGED DEPOSIT ACCOUNTS

 

Grantor

Sort Code

Bank Account Number

Designation

Location of
Account

 

 

 

 

 

 

Schedule II-1

 

HN\1119607.7

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Schedule III

INTELLECTUAL PROPERTY

 

Trademarks:

#

Domain Name

Registrant Name

Registrant Organization

Expiration Date

1

 

 

 

 

 

Copyrights:  

 

 

Patents:

 

Schedule III-1

 

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Schedule IV

COMMERCIAL TORT CLAIMS

 

 

Schedule IV-1

 

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Schedule V

LEGAL NAME, LOCATION, CHIEF EXECUTIVE OFFICE, TYPE OF ORGANIZATION, JURISDICTION
OF ORGANIZATION AND ORGANIZATIONAL IDENTIFICATION NUMBER

 

Grantor's Legal Name

Location

Chief Executive
Office

Type of
Organization

Jurisdiction of
Organization

Organizational
I.D. No.

 

 

 

 

 

 

 

Schedule V-1

 

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Schedule VI

CHANGES IN NAME, LOCATION ETC.

 

 

Schedule VI-1

 

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Schedule VII

LOCATIONS OF EQUIPMENT AND INVENTORY

 

 

Schedule VII-1

 

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EXHIBIT A

TO

THE U.S. SECURITY AGREEMENT

FORM OF CONSENT AND AGREEMENT

The undersigned hereby (a)acknowledges notice of, and consents to the terms and
provisions of, the U.S. Security Agreement dated as of January 24, 2014 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Security Agreement”; the terms defined therein being used herein as
therein defined) from ______________ (the “Grantor”) and certain other grantors
from time to time party thereto to Credit Suisse AG, acting through one or more
of its branches and affiliates, as Collateral Agent, for the Secured Creditors,
(b)consents in all respects to the pledge and assignment to the Collateral Agent
of all of the Grantor’s right, title and interest in, to and under the Assigned
Agreement (as defined below) pursuant to the Security Agreement, (c)acknowledges
that the Grantor has provided it with notice of the right of the Collateral
Agent in the exercise of its rights and remedies under the Security Agreement to
make all demands, give all notices, take all actions and exercise all rights of
the Grantor under the Assigned Agreement, and (d)agrees with the Collateral
Agent that:

(1) A true copy of the agreement between the undersigned and the Grantor dated
________ ___, _______ (the “Assigned Agreement”), including, without limitation,
all amendments, modifications, restatements and supplements is attached hereto
as Schedule 1.  The Assigned Agreement is in full force and effect, and the
undersigned is not aware of any default under the Assigned Agreement or any
event that would give any party the right to terminate or rescind the Assigned
Agreement.  No prepayments have been made of any amounts to become due under the
Assigned Agreement.

(2) The undersigned will make all payments to be made by it under or in
connection with the Assigned Agreement directly to a Pledged Deposit Account or
otherwise in accordance with the instructions of the Collateral Agent.

(3) All payments referred to in paragraph (2) above shall be made by the
undersigned irrespective of, and without deduction for, any counterclaim,
defense, recoupment or set off and shall be final, and the undersigned will not
seek to recover from any Secured Creditor for any reason any such payment once
made.

(4) The Collateral Agent or its designee shall be entitled to exercise any and
all rights and remedies of the Grantor under the Assigned Agreement in
accordance with the terms of the Security Agreement, and the undersigned shall
comply in all respects with such exercise.

(5) The undersigned will not, without the prior written consent of the
Collateral Agent, (i)cancel or terminate the Assigned Agreement or consent to or
accept any cancellation or termination thereof, or (ii)amend, amend and restate,
supplement or

Exhibit A-1

HN\1119607.7

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otherwise modify the Assigned Agreement, except, in each case, to the extent
otherwise permitted under the Credit Agreement referred to in the Security
Agreement.

(6) In the event of a default by the Grantor in the performance of any of its
obligations under the Assigned Agreement, or upon the occurrence or
non‑occurrence of any event or condition under the Assigned Agreement which
would immediately or with the passage of any applicable grace period or the
giving of notice, or both, enable the undersigned to terminate or suspend its
obligations under the Assigned Agreement, the undersigned shall not terminate
the Assigned Agreement until it first gives the Collateral Agent written notice
of the default and permits the Collateral Agent to cure the default within a
period of 60 days after the later of (i)notice of default having been given to
the Collateral Agent by the undersigned and (ii)the expiration of the applicable
cure period provided in the Assigned Agreement for the Grantor to cure the
default.

(7) The undersigned shall deliver to the Collateral Agent, concurrently with the
delivery thereof to the Grantor, a copy of each notice, request or demand given
by the undersigned pursuant to the Assigned Agreement.

(8) Except as specifically provided in this Consent and Agreement, neither the
Collateral Agent nor any other Secured Creditor shall have any liability or
obligation under the Assigned Agreement as a result of this Consent and
Agreement, the Security Agreement or otherwise.

(9) Upon the enforcement of the Security Agreement by the Collateral Agent and
the transfer of the Assigned Agreement to a transferee, the undersigned will
recognize the transferee as the counterparty to the Assigned Agreement in the
place and stead of the Grantor.

In order to induce the Lenders to make Loans, the Secured Hedge Counterparties
to enter into Secured Hedging Agreements and the procurement by the Payee of the
issuance of letters of credit pursuant to the LC Issuance Documents, the
undersigned repeats and reaffirms for the benefit of the Secured Creditors the
representations and warranties made by it in the Assigned Agreement.

This Consent and Agreement shall be binding upon the undersigned and its
successors and assigns, and shall inure, together with the rights and remedies
of the Collateral Agent hereunder, to the benefit of the Secured Creditors and
their successors, transferees and assigns.  This Consent and Agreement shall be
governed by and construed in accordance with the laws of the State of New York.

[SIGNATURES ON FOLLOWING PAGE]

Exhibit A-2

HN\1119607.7

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IN WITNESS WHEREOF, the undersigned has duly executed this Consent and Agreement
as of the date set opposite its name below.

 

 

 

 

 

Dated:

_________ ___, 20[__]

 

 

 

 

 

 

 

 

 

 

[NAME OF OBLIGOR]

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

Exhibit A-3

HN\1119607.7

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EXHIBIT B

TO

THE U.S. SECURITY AGREEMENT

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “IP Security
Agreement”) dated ____ __, 201[__], is made by the Persons listed on the
signature pages hereof (collectively, the “Grantors”) in favor of Credit Suisse
AG, acting through one or more of its branches and affiliates, as Collateral
Agent (as defined in the Security Agreement referred to below) for the Secured
Creditors (as defined in the Security Agreement referred to below).

WHEREAS, Endeavour International Corporation, a Nevada corporation, as holdings
(“Holdings”), Endeavour International Holdings B.V., a private limited company
organized under the laws of the Netherlands (“EIH”) and End Finco LLC, a
Delaware limited liability company (“DE Borrower” and, with EIH, each a
“Borrower” and collectively, the “Borrowers”), Credit Suisse AG, as collateral
agent (the “Collateral Agent”), and the lenders from time to time party thereto
(the “Lenders”) have entered into a Credit Agreement, dated as of January 24,
2014 (said agreement, as it may hereafter be amended, amended and restated,
supplemented or otherwise modified from time to time, being the “Credit
Agreement” and the Lenders, the Administrative Agent, the Collateral Agent, the
Arranger and each other Agent thereto being the “Lender Creditors”).

WHEREAS, Holdings, as holdings, Endeavour Energy UK Limited, a private limited
company registered in laws of England and Wales, as payer (“EEUK”), LC Finco S.à
r.l., a private limited liability company (société à responsabilité limitée)
incorporated and existing under the laws of the Grand Duchy of Luxembourg, whose
registered office is 40, Avenue Monterey, L-2163 Luxembourg, Grand Duchy of
Luxembourg, pending registration with the Luxembourg Register of Commerce and
Companies and having a share capital of USD 20,000 (“Payee”), and the Collateral
Agent have entered into that certain LC Procurement Agreement, dated as of
January 24, 2014 (as amended, modified, restated and/or supplemented from time
to time, the “LC Procurement Agreement”), pursuant to which  EEUK has instructed
Payee to enter into LC Issuance Documents (as defined in the LC Procurement
Agreement) with Credit Suisse AG, London Branch (“LC Bank”) and, as applicable,
the Collateral Agent, as of the Closing Date and will instruct Payee to enter
into LC Issuance Documents from time to time thereafter pursuant to which Payee
will instruct the LC Bank to issue letters of credit and (b) EEUK has agreed to
reimburse Payee for certain payments made in connection with such LC Issuance
Documents and to pay Payee certain fees for the procurement of the issuance of
the letters of credit.

WHEREAS, the Grantors may at any time and from time to time enter into one or
more Secured Hedging Agreements with one or more Secured Hedge Counterparties.

Exhibit B-1

HN\1119607.7

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WHEREAS, as a condition precedent to the making of the Loans pursuant to the
Credit Agreement, the entering into of Secured Hedging Agreements by Approved
Hedge Counterparties and the procurement by the Payee of the issuance of letters
of credit pursuant to the LC Issuance Documents, each Grantor has executed and
delivered that certain U.S. Security Agreement dated January 24, 2014 made by
the Grantors to the Collateral Agent (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Security
Agreement”).  Terms defined in the Security Agreement and not otherwise defined
herein are used herein as defined in the Security Agreement.

WHEREAS, under the terms of the Security Agreement, the Grantors have granted to
the Collateral Agent, for the benefit of the Secured Creditors, a security
interest in, among other property, certain intellectual property of the
Grantors, and have agreed therein to execute this IP Security Agreement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities within ten Business Days following the
acquisition of any After‑Acquired Intellectual Property.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Grantor agrees as follows:

Section 1. Grant of Security.  Each Grantor hereby grants to the Collateral
Agent for the benefit of the Secured Creditors a security interest in all of
such Grantor’s right, title and interest in and to the following (the
“Collateral”):

(i) the patents and patent applications set forth in Schedule A hereto (the
“Patents”);

(ii) the trademark and service mark registrations and applications set forth in
Schedule B hereto (provided that no security interest shall be granted in United
States intent‑to‑use trademark applications to the extent that, and solely
during the period in which, the grant of a security interest therein would
impair the validity or enforceability of such intent‑to‑use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby (the “Trademarks”);

(iii) all copyrights, whether registered or unregistered, now owned or hereafter
acquired by such Grantor, including, without limitation, the copyright
registrations and applications and exclusive copyright licenses set forth in
Schedule C hereto (the “Copyrights”);

(iv) all reissues, divisions, continuations, continuations‑in‑part, extensions,
renewals and reexaminations of any of the foregoing, all rights in the foregoing
provided by international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto;

(v) any and all claims for damages and injunctive relief for past, present and
future infringement, dilution, misappropriation, violation, misuse or breach
with respect to any of the foregoing, with the right, but not the obligation, to
sue for and collect, or otherwise recover, such damages; and

Exhibit B-2

HN\1119607.7

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

 

 

(vi) any and all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the Collateral of or arising from any of
the foregoing.

Section 2. Security for Obligations.  The grant of a security interest in, the
Collateral by each Grantor under this IP Security Agreement secures the payment
of all Secured Obligations of such Grantor now or hereafter existing, whether
direct or indirect, absolute or contingent, and whether for principal, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise.  Without limiting the generality of the foregoing, this
IP Security Agreement secures, as to each Grantor, the payment of all amounts
that constitute part of the Secured Obligations and that would be owed by such
Grantor to any Secured Creditor under the Credit Documents but for the fact that
such Secured Obligations are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving any Credit
Party.

Section 3. Recordation.  Each Grantor authorizes and requests that the Register
of Copyrights, the Commissioner for Patents and the Commissioner for Trademarks
and any other applicable government officer record this IP Security Agreement.

Section 4. Execution in Counterparts.  This IP Security Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

Section 5. Grants, Rights and Remedies.  This IP Security Agreement has been
entered into in conjunction with the provisions of the Security Agreement.  Each
Grantor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Collateral Agent with
respect to the Collateral are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated herein by reference as if
fully set forth herein.

Section 6. Governing Law.  This IP Security Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

[Signatures on following page]

Exhibit B-3

HN\1119607.7

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IN WITNESS WHEREOF, each Grantor has caused this IP Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.

 

 

 

 

 

[NAME OF GRANTOR]

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit B-4

HN\1119607.7

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EXHIBIT C

TO

THE U.S. SECURITY AGREEMENT

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT

This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this “IP Security
Agreement Supplement”) dated _____ __, 201[_], is made by the Person listed on
the signature page hereof (the “Grantor”) in favor of Cyan Partners, LP, as
Collateral Agent (such term used herein as defined in the Security Agreement
referred to below); for the Secured Creditors (used herein as defined in the
Security Agreement referred to below).

WHEREAS, Endeavour International Corporation, a Nevada corporation (“Holdings”),
as holdings, Endeavour International Holdings B.V., a private limited company
organized under the laws of the Netherlands (“EIH”) and End Finco LLC, a
Delaware limited liability company (“DE Borrower” and, with EIH, each a
“Borrower” and collectively, the “Borrowers”), Credit Suisse AG, as collateral
agent (the “Collateral Agent”), the lenders from time to time party thereto (the
“Lenders”) have entered into a Credit Agreement, dated as of January 24, 2014
(said agreement, as it may hereafter be amended, amended and restated,
supplemented or otherwise modified from time to time, being the “Credit
Agreement” and the Lenders, the Administrative Agent, the Collateral Agent, the
Arranger and each other Agent thereto being the “Lender Creditors”).

WHEREAS, Holdings, as holdings, Endeavour Energy UK Limited, a private limited
company registered in laws of England and Wales, as payer (“EEUK”), LC Finco S.à
r.l., a private limited liability company (société à responsabilité limitée)
incorporated and existing under the laws of the Grand Duchy of Luxembourg, whose
registered office is 40, Avenue Monterey, L-2163 Luxembourg, Grand Duchy of
Luxembourg, pending registration with the Luxembourg Register of Commerce and
Companies and having a share capital of USD 20,000 (“Payee”), and the Collateral
Agent have entered into that certain LC Procurement Agreement, dated as of
January 24, 2014 (as amended, modified, restated and/or supplemented from time
to time, the “LC Procurement Agreement”), pursuant to which  EEUK has instructed
Payee to enter into LC Issuance Documents (as defined in the LC Procurement
Agreement) with Credit Suisse AG, London Branch (“LC Bank”) and, as applicable,
the Collateral Agent, as of the Closing Date and will instruct Payee to enter
into LC Issuance Documents from time to time thereafter pursuant to which Payee
will instruct the LC Bank to issue letters of credit and (b) EEUK has agreed to
reimburse Payee for certain payments made in connection with such LC Issuance
Documents and to pay Payee certain fees for the procurement of the issuance of
the letters of credit.

WHEREAS, the Grantors may at any time and from time to time enter into one or
more Secured Hedging Agreements with one or more Secured Hedge Counterparties.

 

Exhibit C-1

HN\1119607.7

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WHEREAS, the Grantor and certain other Persons have executed and delivered that
certain Security Agreement dated January 24, 2014 made by the Grantor and such
other Persons to the Collateral Agent (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Security Agreement”)
and that certain Intellectual Property Security Agreement dated as of _____ __,
20[__] (as amended, amended and restated, supplemented or otherwise modified
from time to time, the “IP Security Agreement”).  Terms defined in the Security
Agreement and not otherwise defined herein are used herein as defined in the
Security Agreement.

WHEREAS, under the terms of the Security Agreement, the Grantor has granted to
the Collateral Agent, for the benefit of the Secured Creditors, a security
interest in the Additional Collateral (as defined in Section 1 below) of the
Grantor and has agreed to execute this IP Security Agreement Supplement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Grantor agrees as follows:

Section 1. Grant of Security.  The Grantor hereby grants to the Collateral
Agent, for the benefit of the Secured Creditors, a security interest in all of
the Grantor’s right, title and interest in and to the following (the “Additional
Collateral”):

(i) the patents and patent applications set forth in Schedule A hereto (the
“Patents”);

(ii) the trademark and service mark registrations and applications set forth in
Schedule B hereto (provided that no security interest shall be granted in United
States intent‑to‑use trademark applications to the extent that, and solely
during the period in which, the grant of a security interest therein would
impair the validity or enforceability of such intent‑to‑use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby (the “Trademarks”);

(iii) the copyright registrations and applications and exclusive copyright
licenses set forth in Schedule C hereto (the “Copyrights”);

(iv) all reissues, divisions, continuations, continuations‑in‑part, extensions,
renewals and reexaminations of any of the foregoing, all rights in the foregoing
provided by international treaties or conventions, all rights corresponding
thereto throughout the world and all other rights of any kind whatsoever of such
Grantor accruing thereunder or pertaining thereto;

(v) all any and all claims for damages and injunctive relief for past, present
and future infringement, dilution, misappropriation, violation, misuse or breach
with respect to any of the foregoing, with the right, but not the obligation, to
sue for and collect, or otherwise recover, such damages; and

Exhibit C-2

HN\1119607.7

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(vi) any and all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the foregoing or arising from any of the
foregoing.

Section 2. Security for Obligations.  The grant of a security interest in the
Additional Collateral by the Grantor under this IP Security Agreement Supplement
secures the payment of all Secured Obligations of the Grantor now or hereafter
existing, whether direct or indirect, absolute or contingent, and whether for
principal, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise.  Without limiting the generality
of the foregoing, this IP Security Agreement Supplement and the IP Security
Agreement secures the payment of all amounts that constitute part of the Secured
Obligations and that would be owed by the undersigned to any Secured Creditor
under the Credit Documents but for the fact that such Secured Obligations are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Credit Party

Section 3. Recordation.  The Grantor authorizes and requests that the Register
of Copyrights, the Commissioner for Patents and the Commissioner for Trademarks
and any other applicable government officer to record this IP Security Agreement
Supplement.

Section 4. Grants, Rights and Remedies.  This IP Security Agreement Supplement
has been entered into in conjunction with the provisions of the Security
Agreement.  The Grantor does hereby acknowledge and confirm that the grant of
the security interest hereunder to, and the rights and remedies of, the
Collateral Agent with respect to the Additional Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated herein by reference as if fully set forth herein.

Section 5. Governing Law.  This IP Security Agreement Supplement shall be
governed by, and construed in accordance with, the laws of the State of New
York.

IN WITNESS WHEREOF, the Grantor has caused this IP Security Agreement Supplement
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

 

 

 

 

 

[NAME OF GRANTOR]

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit C-3

HN\1119607.7

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EXHIBIT D

TO

THE U.S. SECURITY AGREEMENT

FORM OF SECURITY AGREEMENT SUPPLEMENT

[DATE]

Credit Suisse, as Collateral Agent for

the Secured Creditors

[   ]

[   ]

Attn: 

 

ENDEAVOUR INTERNATIONAL CORPORATION

Ladies and Gentlemen:

Further reference is made to the U.S. Security Agreement, dated January 24,
2014, made by the Grantors party thereto in favor of the Collateral Agent for
the benefit of the Secured Creditors (used herein as defined in such security
agreement; such security agreement, as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Security
Agreement”).  Terms defined in the Security Agreement and not otherwise defined
herein are used herein as defined in the Security Agreement.

Section 1. Grant of Security.  The undersigned hereby grants to the Collateral
Agent, for the benefit of the Secured Creditors, a security interest in all of
its right, title and interest in and to the following, in each case whether now
owned or hereafter acquired by the undersigned, wherever located and whether now
or hereafter existing or arising (collectively, the undersigned’s
“Collateral”):  all Equipment, Inventory, Receivables, Related Contracts,
Security Collateral (including, without limitation, the shares of stock and
other Equity Interests set forth on Part I of Schedule I hereto, the
indebtedness set forth on Part II of Schedule I hereto and the securities and
securities/deposit accounts set forth on Schedule II hereto), Agreement
Collateral, Account Collateral (including, without limitation, the deposit
accounts set forth on Schedule II hereto), Intellectual Property Collateral,
Commercial Tort Claims Collateral (including, without limitation, the commercial
tort claims described in Schedule IV hereto), all books and records (including,
without limitation, customer lists, credit files, printouts and other computer
output materials and records) of the undersigned pertaining to any of the
undersigned’s Collateral, all general intangibles, and all proceeds of,
collateral for, income, royalties and other payments now or hereafter due and
payable with respect to, and supporting obligations relating to, any and all of
the undersigned’s Collateral (including, without limitation, proceeds,
collateral and supporting obligations that constitute property of the types
described in this Section 1) and, to the extent not otherwise included, all
(A)payments under insurance (whether or not the Collateral Agent is the loss
payee thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing Collateral,
and (B)cash.  Notwithstanding the

Exhibit D-1

HN\1119607.7

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

 

 

foregoing, the Collateral shall not include any Excluded Property until such
time as any property or assets shall no longer constitute Excluded Property. 

Section 2. Security for Obligations.  The grant of a security interest in, the
Collateral by the undersigned under this Security Agreement Supplement and the
Security Agreement secures the payment of all Secured Obligations of the
undersigned now or hereafter existing, whether direct or indirect, absolute or
contingent, and whether for principal, interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or
otherwise.  Without limiting the generality of the foregoing, this Security
Agreement Supplement and the Security Agreement secures the payment of all
amounts that constitute part of the Secured Obligations and that would be owed
by the undersigned to any Secured Creditor under the Secured Debt Agreements but
for the fact that such Secured Obligations are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving any Credit Party.

Section 3. Representations and Warranties.  (a)The undersigned’s exact legal
name, location, chief executive office, type of organization, jurisdiction of
organization and organizational identification number is set forth in Schedule V
hereto.  The undersigned has no trade names other than as listed on Schedule III
hereto.  Within the five years preceding the date hereof, the undersigned has
not changed its name, location, chief executive office, type of organization,
jurisdiction of organization or organizational identification number from those
set forth in Schedule V hereto except as set forth in Schedule VI hereto.

(a) All of the Equipment of the undersigned is located at the places specified
therefor in Schedule VII hereto. Within the five years preceding the date
hereof, the undersigned has not changed the location of its Equipment except as
set forth in Schedule VI hereto.

(b) The undersigned is not a beneficiary or assignee under any letter of credit
other than the letters of credit described in Schedule VIII hereto.

(c) The undersigned hereby makes each other representation and warranty set
forth in Section 6 of the Security Agreement with respect to itself and the
Collateral granted by it.

Section 4. Obligations Under the Security Agreement.  The undersigned hereby
agrees, as of the date first above written, to be bound as a Grantor by all of
the terms and provisions of the Security Agreement to the same extent as each of
the other Grantors.  The undersigned further agrees, as of the date first above
written, that each reference in the Security Agreement to an “Additional
Grantor” or a “Grantor” shall also mean and be a reference to the undersigned,
that each reference to the “Collateral” or any part thereof shall also mean and
be a reference to the undersigned’s Collateral or part thereof, as the case may
be, and that each reference in the Security Agreement to a Schedule shall also
mean and be a reference to the schedules attached hereto.

Section 5.

Exhibit D-2

HN\1119607.7

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Section 1. Governing Law.  This Security Agreement Supplement shall be governed
by, and construed in accordance with, the laws of the State of New York.1 

ADD

 

 

 

 

 

 

 

 

Very truly yours,

 

 

 

 

 

[NAME OF ADDITIONAL GRANTOR]

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1  If the Additional Grantor is not concurrently executing a guaranty or other
Credit Document containing provisions relating to submission to jurisdiction and
jury trial waiver, add the relevant provisions from the Credit Agreement.

 

Exhibit D-3

HN\1119607.7

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ADD

 

 

 

 

 

 

 

 

Acknowledged and agreed as of the date hereof:

 

 

 

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS

 

 

BRANCH

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

Address for Notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit D-4

HN\1119607.7

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Dated 24 January 2014

 

DEBENTURE

 

 

between

 

 

ENDEAVOUR ENERGY UK LIMITED
as the Company

 

and

 

CREDIT SUISSE AG
as the Collateral Agent

 

 

 

TABLE OF CONTENTS

 

 

 

 

 

 

Page

 

 

 

1.

DEFINITIONS, CONSTRUCTION AND INCORPORATION OF TERMS

3 

2.

COVENANTS TO PAY

8 

3.

REPRESENTATIONS

10 

4.

SECURITY

10 

5.

FLOATING CHARGE

11 

6.

FURTHER ASSURANCE

14 

7.

UNDERTAKINGS WITH RESPECT TO THE CHARGED ASSETS

14 

8.

FURTHER UNDERTAKINGS

15 

9.

ACCOUNTS AND RECEIPTS

16 

10.

THE COLLATERAL AGENT

17 

11.

RIGHTS OF THE COLLATERAL AGENT

26 

12.

EXONERATION

28 

13.

APPOINTMENT OF RECEIVER OR ADMINISTRATOR

28 

14.

RECEIVER’S POWERS

29 

15.

PROTECTION OF PURCHASERS

30 

16.

POWER OF ATTORNEY AND DELEGATION

30 

17.

APPLICATION OF MONIES RECEIVED UNDER THIS DEBENTURE

31 

18.

RELEASE OF SECURITY

32 

19.

POWER OF SEVERANCE

32 

20.

NEW ACCOUNTS

32 

21.

SET-OFF

33 

22.

MISCELLANEOUS

33 

23.

NOTICES

37 

24.

CERTIFICATES AND DETERMINATIONS

38 

25.

PARTIAL INVALIDITY

38 

26.

COUNTERPARTS

39 

27.

THIRD PARTIES

39 

28.

GOVERNING LAW

39 

29.

ENFORCEMENT

39 

SCHEDULE 1 FORM OF NOTICES

40 

SCHEDULE 2 PROJECT AGREEMENTS

44 

SCHEDULE 3 PROJECT LICENCES

45 

 

 

 

 

LO\3259731.16

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THIS DEBENTURE is made on 24 January 2014

BETWEEN:

(1)

ENDEAVOUR ENERGY UK LIMITED, a company registered in England and Wales with
registration number 5030838, whose registered office is at 33rd Floor, City
Point, One Ropemaker Street, London EC2Y 9UE (the “Company”); and

(2)

CREDIT SUISSE AG as agent and trustee for itself and each of the other Secured
Parties (as such term is defined below) (the “Collateral Agent”).

IT IS AGREED as follows:

1.

DEFINITIONS, CONSTRUCTION AND INCORPORATION OF TERMS

1.1

Definitions

(a)

Terms defined in the Credit Agreement (as such term is defined below) shall,
unless otherwise defined in this Debenture or unless a contrary intention
appears, bear the same meaning when used in this Debenture and the following
terms shall have the following meanings:

“Account” means any account now or in the future opened or maintained by the
Company with a bank or other financial institution (and any replacement account
or subdivision or subaccount of that account), together with all amounts from
time to time standing to the credit of, or accrued or accruing on, such account
and any monies, proceeds or income paid or payable in respect of such account.

“Administrator” means a person appointed under schedule B1 to the Insolvency Act
1986 to manage the Company’s affairs, business and property.

“Assigned Account” means any Account designated in writing as an Assigned
Account by the Collateral Agent in accordance with Clause 9.3 (Accounts after
Security becomes enforceable).

“BP” means BP Exploration Operating Company Limited.

“Charged Assets” means the assets mortgaged, charged or assigned pursuant to
Clauses 4 (Security) and 5.1 (Creation of floating charge). 

“Charges” means Security from time to time created or expressed to be created
pursuant to this Debenture.

“Collateral Account” means any Account that may from time to time be opened by
the Company with the Collateral Agent pursuant to Clause 9.1(a)(ii) (Accounts
general).

“Confidentiality Undertaking” means a confidentiality undertaking substantially
in a form from time to time recommended by the Loan Market

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Association or in any other form agreed between the Company and the Collateral
Agent.

“Credit Agreement” means that certain credit agreement dated on or about the
date of this Debenture between (among others) Endeavour International Holding
B.V. and End Finco LLC as borrowers, Credit Suisse AG as administrative agent,
and the Collateral Agent (as amended, modified, restated or supplemented from
time to time).

“Credit Document Obligation” has the meaning given to the term “Obligations” in
the Credit Agreement.

“Credit Document Secured Parties” has the meaning given to the term “Secured
Parties” in the Credit Agreement.

“Delegate” means a delegate or sub-delegate appointed directly or indirectly
pursuant to Clause 16.3 (General delegation).

“Enforcement Date” means the date on which a notice is issued by the
Administrative Agent to the Borrowers under article 7 (Events of Default) of the
Credit Agreement upon the occurrence of an Event of Default which has occurred
and is continuing.

“Enoch PLTPA” means the Enoch pipeline liquids transportation and processing
agreement dated 24 February 2006 and made between, among others, the Company and
BP.

“Group” means Holdings and its Subsidiary for the time being.

“Hedging Provider” means any Person that is a party to a Hedging Agreement.

“Indemnified Party” has the meaning given to it in the U.S. Security Agreement.

“Insolvency Event” has the meaning given to it in Clause 10.20(a) (Insolvency
Events).

“Insurances” means any insurances that are required from time to time to be
maintained by, or on behalf of, any Credit Party in respect of the Oil and Gas
Properties and/or any activities related thereto, in each case pursuant to the
Credit Agreement.

 

“LC Procurement Agreement Obligation” has the meaning given to the term
“Obligation” in the LC Procurement Agreement.

“LPA” means the Law of Property Act 1925.

“Party” means a party to this Debenture.

“Payee” has the meaning given to it in the LC Procurement Agreement.

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“Production Payment Security Documents” means:

(i)

the English security agreement entered into between the Company and Cidoval S.à
r.l. originally dated 30 April 2013 and subsequently amended and restated on 21
May 2013;

(ii)

the English share charge entered into between Endeavour Energy North Sea, L.P.
and Cidoval S.à r.l. originally dated 30 April 2013 and subsequently amended and
restated on 21 May 2013;

(iii)

the U.S. security agreement entered into between, amongst others, Endeavour
Energy North Sea, L.P. and Cidoval S.à r.l. dated 30 April 2013 as subsequently
amended;

(iv)

the English security agreement entered into between the Company and Sand Waves
S.à r.l. dated 12 December 2013;

(v)

the English share charge entered into between Endeavour Energy North Sea, L.P.
and Sand Waves S.à r.l. dated 12 December 2013; and

(vi)

the U.S. security agreement entered into between, amongst others, Endeavour
Energy North Sea, L.P. and Sand Waves S.à r.l. dated 12 December 2013 as
subsequently amended. 

“Project Agreements” means:

(i)

each of the contracts, agreements and documents listed in Schedule 2 (Project
Agreements) together with all Related Property Rights and all documents which
are supplemental to, or are expressed to be collateral with, or are entered into
pursuant to or in connection with, any such contracts, agreements and documents;
and

(vii)

any joint operating agreements or unitisation or unit operating agreements, in
each case relating to such petroleum production licences, which are, in each
case, entered into (or in respect of which the Company acquires an interest)
after the date of this Debenture together with all Related Property Rights and
all documents which are supplemental to, or are expressed to be collateral with,
or are entered into pursuant to or in connection with, any such contracts,
agreements and documents.

“Project Documents” means Project Agreements and Project Licences together.

“Project Licences” means:

(i)

each of the documents listed in Schedule 3 (Project Licences) together with all
Related Property Rights and all documents which are supplemental to, or are
expressed to be collateral with, or are entered into pursuant to or in
connection with, any such contracts, agreements and documents; and

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(viii)

any petroleum production licences for material oil and gas reserves of the
Company which are entered into (or in respect of which the Company acquires an
interest) after the date of this Debenture together with all Related Property
Rights and all documents which are supplemental to, or are expressed to be
collateral with, or are entered into pursuant to or in connection with, any such
contracts, agreements and documents,

but excluding each of the Project Agreements.

“Receiver” means any person appointed by the Collateral Agent to be a receiver
or receiver and manager or administrative receiver of any property subject to
the Security created by this Debenture or any part thereof.

 

“Related Property Rights” means, in relation to any property or asset:

(i)

the proceeds of sale and/or other realisation of that property or asset (or any
part thereof or interest therein);

(ii)

all Security, options, agreements, rights, easements, benefits, indemnities,
guarantees, warranties or covenants for title held by the Company in respect of
such property or asset; and

(iii)

all the Company’s rights under any lease, licence or agreement for lease, sale
or use in respect of such property or asset.

“Secured Agreements” means each Credit Document, each Secured Hedging Agreement
and the LC Procurement Agreement, and “Secured Agreement” shall mean any of
those agreements.

“Secured Liabilities” has the meaning given to it in Clause 2 (Covenants to
pay).

“Secured Parties” means each of:

(i)

the Credit Document Secured Parties; and

(ii)

the Payee.

“Security” means a mortgage, charge, pledge, lien or other security interest
securing any obligation of any person or any other agreement or arrangement
having a similar effect.

“Security Period” means the period from the date of this Debenture until the
date on which the Collateral Agent has determined that all of the Secured
Liabilities (whether actual or contingent) have been irrevocably and
unconditionally paid and discharged in full and no further Secured Liabilities
are capable of being outstanding.

(b)

Unless a contrary intention appears, words defined in the Companies Act 2006
have the same meanings in this Debenture.

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1.2

Construction

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

(a)

the “Collateral Agent”,  a “Secured Party”,  a “Credit Party” or the “Company”
shall be construed so as to include its successors in title, permitted assigns
and permitted transferees;

(b)

“assets” includes present and future properties, revenues and rights of every
description;

(c)

“indebtedness” includes any obligation (whether incurred as principal or as
surety) for the payment or repayment of money, whether present or future, actual
or contingent;

(d)

a “person” includes any individual, firm, company, corporation, government,
state or agency of a state or any association, trust, joint venture, consortium
or partnership (whether or not having separate legal personality) or two or more
of the foregoing;

(e)

a “regulation” includes any regulation, rule, official directive, request or
guideline (whether or not having the force of law but, if not having the force
of law, being of a kind that is normally complied with by those to whom it is
addressed) of any governmental, intergovernmental or supranational body, agency,
department or regulatory, self-regulatory or other authority or organisation;

(f)

a “guarantee” includes any form of indemnity or other assurance against
financial loss (including any obligation to pay, purchase or provide funds for
the purchase of any liability) (and the verb “to guarantee” shall be construed
accordingly);

(g)

a provision of law is a reference to that provision as amended or re-enacted;

(h)

any matter “including” specific instances or examples of such matter shall be
construed without limitation to the generality of that matter (and “include”
shall be construed accordingly);

(i)

“losses” includes losses, actions, damages, claims, proceedings, costs, demands,
expenses (including fees) and liabilities (and “loss” shall be construed
accordingly);

(j)

a “modification” includes an amendment, supplement, novation, re-enactment,
restatement, variation, extension, replacement, modification or waiver or the
giving of any waiver, release, consent having the same commercial effect of any
of the foregoing, (and “modify” shall be construed accordingly);

(k)

the “winding-up”, “dissolution” or “administration” of a person shall be
construed so as to include any equivalent or analogous proceedings under the law

7

LO\3259731.16

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of the jurisdiction in which such person is incorporated or established, or any
jurisdiction in which such person carries on business including the seeking of
liquidation, winding-up, reorganisation, dissolution, administration,
arrangement, adjustment, protection or relief of debtors;

(l)

the words “other”, “or otherwise” and “whatsoever” shall not be construed
eiusdem generis or be construed as any limitation upon the generality of any
preceding words or matters specifically referred to;

(m)

any Secured Party, any Credit Party, the Company or the Collateral Agent or any
other person is, where relevant, deemed to be a reference to or to include, as
appropriate, that person’s successors in title, permitted assignees and
transferees and in the case of the Collateral Agent, any person for the time
being appointed as Collateral Agent or Collateral Agents in accordance with the
Secured Agreements; and

(n)

any Secured Agreement or other agreement or instrument is to be construed as a
reference to that agreement or instrument as amended, modified or novated,
including by way of increase of the facilities or other obligations or addition
of new facilities or other obligations made available under them or accession or
retirement of the parties to these agreements but excluding any amendment,
modification or novation made contrary to any provision of any Secured
Agreement.

1.3

Implied covenants for title

The obligations of the Company under this Debenture shall be in addition to the
covenants for title deemed to be included in this Debenture by virtue of Part I
of the Law of Property (Miscellaneous Provisions) Act 1994.

1.4

Effect as a deed

This Debenture is intended to take effect as a deed notwithstanding that the
Collateral Agent may have executed it under hand only.

1.5

Law of Property (Miscellaneous Provisions) Act 1989

To the extent necessary for any agreement for the disposition of the Charged
Assets in this Debenture to be a valid agreement under Section 2(1) of the Law
of Property (Miscellaneous Provisions) Act 1989, the terms of the other Secured
Agreements are incorporated into this Debenture.

1.6

Intercreditor Agreement

Notwithstanding anything herein to the contrary, the lien and security interest
granted to the Collateral Agent pursuant to this Debenture and the exercise of
any right or remedy by the Collateral Agent hereunder are subject to the
provisions of the Intercreditor Agreement.  In the event of any conflict between
the terms of the

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Intercreditor Agreement and this Debenture, the terms of the Intercreditor
Agreement shall govern and control.

1.7

Moratorium

Notwithstanding any other provision of this Debenture, the obtaining of a
moratorium under section 1A of the Insolvency Act 1986, or anything done with a
view to obtaining such a moratorium (including any preliminary decision or
investigation), shall not be an event causing any floating charge created by
this Debenture to crystallise or causing restrictions which would not otherwise
apply to be imposed on the disposal of property by the Company or a ground for
the appointment of a Receiver.

1.8

Incorporation

(a)

Without prejudice to the application of any other provisions of the Credit
Agreement to this Debenture (by reason of this Debenture being a Credit Document
and a Secured Agreement for the purposes of the Credit Agreement), sections 1.03
(Pro Forma Calculations), 2.20 (Tax Gross-Up and Indemnities), 9.06 (Right of
Setoff), 9.08 (Waivers; Amendment), 9.13 (Counterparts) and 9.20 (Judgment
Currency) of the Credit Agreement shall apply to this Debenture, mutatis
mutandis, as if the same had been set out in full herein with references in such
clauses to:

(i)

any “agreement” includes any legally binding arrangement, concession, contract,
deed or franchise (in case whether oral or written);

(ii)

an “amendment” includes any amendment, supplement, variation, novation,
modification, replacement or restatement and “amend”, “amending” and “amended”
shall be construed accordingly;

(iii)

the “Agreement” or “hereunder” being construed as references to this Debenture;

(iv)

the “Credit Documents” and “Secured Agreements” being construed as (A) including
this Debenture, or (B) if the context so requires, as references specifically to
this Debenture; and

(v)

in the context of section 2.20 (Tax Gross-Up and Indemnities) of the Credit
Agreement, the “Administrative Agent” or a “Lender” being, if the context so
requires, construed, in each case, as references to the Collateral Agent and, in
the context of section 9.05 (Expenses; Indemnity) of the Credit Agreement, the
“Administrative Agent” or a “Lender” being construed, in each case, as
references to each Secured Party, Receiver (as defined herein), attorney,
manager, agent or other person as may be appointed by the Collateral Agent under
this Debenture; and

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(b)

a reference to “Secured Liabilities” includes any liabilities which would be
treated as such but for the liquidation or dissolution or similar event
affecting any Credit Party.

2.

COVENANTS TO PAY

2.1

Covenant to pay Secured Liabilities

The Company covenants with the Collateral Agent (for the benefit of itself and
the other Secured Parties) that it shall promptly on demand pay in full to the
Secured Parties, in accordance with the Secured Agreements:

(a)

when due (whether at stated maturity, by acceleration or otherwise) all Credit
Document Obligations (including, without limitation, principal, premium,
interest (including, without limitation, all interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency, reorganisation or similar proceeding of any Credit Party at the rate
provided for in the respective documentation, whether or not a claim for
post-petition interest is allowed in any such proceeding), fees, costs and
indemnities) of any Credit Party whether now existing or incurred after the date
of this Debenture (including, without limitation, any additional indebtedness
incurred by any Credit Party pursuant to any Credit Document) and the due
performance and compliance by each Credit Party with all Credit Document
Obligations and all other terms, conditions and agreements contained in the
Credit Documents;

(b)

when due (whether at stated maturity, by acceleration or otherwise) all LC
Procurement Agreement Obligations (including, without limitation, all interest
that accrues after the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency, reorganisation or similar proceeding of
the Company or Holdings at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding) of each of the Company and Holdings to the Payee whether
now in existence or arising after the date of this Debenture (including, without
limitation, all obligations, liabilities and indebtedness of the Company or
Holdings under any guaranty in respect of the LC Procurement Agreement), and the
due performance and compliance by the Company and Holdings with all LC
Procurement Agreement Obligations and all other terms, conditions and agreements
contained in the LC Procurement Agreement;

(c)

when due (whether at stated maturity, by acceleration or otherwise) all
obligations, liabilities and indebtedness (including, without limitation, all
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency, reorganisation or similar
proceeding of any Credit Party at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding) owing by any Credit Party to a Hedging Provider under any
Secured Hedging Agreement whether now in existence or arising after the date of
this Debenture (including, without limitation, all obligations, liabilities and
indebtedness of any Credit Party

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under any guaranty in respect of any Secured Hedging Agreement), and the due
performance and compliance by each Credit Party with all of the terms,
conditions and agreements contained in each such Secured Hedging Agreement;

(d)

any other Credit Document Obligation, LC Procurement Agreement Obligation or
other money, obligation or liability due, owing or incurred to any Secured Party
by any Credit Party under any Secured Agreement at present or in the future,
whether actual or contingent, whether incurred solely or jointly with any other
person and whether as principal or surety, together with all interest accruing
thereon and all losses incurred by any Secured Party in connection therewith;

(e)

any and all sums advanced by the Collateral Agent in order to preserve the
Collateral or preserve its security interest in the Collateral;

(f)

in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of the Company referred to in Clauses
2.1(a) to 2.1(e) (inclusive) above, on and from the Enforcement Date, the
reasonable expenses of retaking, holding, preparing for sale or lease, selling
or otherwise disposing of or realising on the Collateral, or of any exercise by
the Collateral Agent of its rights under this Debenture or the English Charge
Over Shares, together with reasonable attorneys’ fees and court costs;

(g)

all amounts paid by any Indemnified Party as to which such Indemnified Party has
the right to reimbursement under any Secured Agreement; and

(h)

all amounts owing to any Agent pursuant to any Secured Agreement in its capacity
as such,

collectively the “Secured Liabilities”, it being acknowledged and agreed that
the Secured Liabilities shall include extensions of credit of the types
described above, whether outstanding on the date of this Debenture or extended
from time to time after the date of this Debenture and in each case as such
obligations, liabilities or indebtedness may be actual or contingent, whether
incurred solely or jointly with any other person and whether as principal or
surety.

2.2

Potential invalidity

Neither the covenant to pay in Clause 2.1 (Covenant to pay Secured Liabilities),
nor the Security created by this Debenture shall extend to or include any
liability or sum which would, but for this Clause 2.2, cause such covenant,
obligation or Security to be unlawful under any applicable law or would if it
were so included, cause the infringement of section 678 of the Companies Act
2006.

3.

REPRESENTATIONS

3.1

Agreements and licences

The Company represents and warrants to the Collateral Agent that the Project
Agreements listed in Schedule 2 (Project Agreements) and the Project Licences
listed in

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Schedule 3 (Project Licences) represent all of the agreements and/or licences
(as applicable) to which the Company is a party constituting either:

(a)

petroleum production licences for material oil and gas reserves of the Company;
or

(b)

joint operating agreements or unitisation or unit operating agreements, in each
case relating to such petroleum production licences.

3.2

Assets and security

The Company represents and warrants that:

(a)

subject to the terms of the Intercreditor Agreement, the matters set out in
section 3.11 (Security Documents) of the Credit Agreement, as they relate to
this Debenture, are true and correct; and

(b)

the matters set out in section 3.12 (Properties) of the Credit Agreement, as
they relate to the assets of the Company, are true and correct.

4.

SECURITY

4.1

General

(a)

All the Security created under this Debenture:

(i)

is created in favour of the Collateral Agent; and

(ii)

is security for the payment of all the Secured Liabilities.

(b)

If the Company is not entitled to grant any Security over its rights and/or
interests under any document without the consent of a party to that document:

(i)

the Company must notify the Collateral Agent as soon as it becomes aware of the
same;

(ii)

the Security constituted under this Debenture will include and extend to all
amounts which the Company may receive, or has received, under that document but
shall, until the date on which the relevant consent is obtained by the Company,
not extend to and exclude the document itself and its rights and/or interests
under such document;

(iii)

unless the Collateral Agent otherwise requires, the Company must use reasonable
endeavours to obtain the consent of the relevant party to enable the Company to
grant Security over that document under this Debenture; and

(iv)

on and from the date on which such consent is obtained, the Security constituted
under this Debenture shall extend to and include that document.

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(c)

The Collateral Agent holds the benefit of this Debenture on trust for the
Secured Parties.

4.2

Creation of fixed charge

To the extent that such charge is capable of being effective, taking into
account the provisions of Clause 9.2 (Book and other debts after Security
becomes enforceable), the Company charges to the Collateral Agent by way of
fixed charge with full title guarantee and as a continuing security for the
payment and discharge of the Secured Liabilities all of the Company’s right to
and title and interest both present and future from time to time in:

(a)

each Collateral Account, including all amounts from time to time standing to the
credit of, or accrued or accruing on, such Collateral Accounts and any monies,
proceeds or income paid or payable on such Collateral Accounts; and

(b)

each of the Project Licences together with all Related Property Rights in
respect thereof.

2.1

Assignments

Subject to Clause 4.1(b) (General), the Company assigns absolutely (subject to a
proviso for re-assignment at the end of the Security Period) to the Collateral
Agent with full title guarantee as a continuing security for the payment and
discharge of the Secured Liabilities all of the Company’s rights to and title
and interest from time to time in:

(a)

the Project Agreements; and

(b)

any present or future Insurances, together with any and all proceeds of claim
and Related Property Rights in respect thereof.

5.

FLOATING CHARGE

5.1

Creation of floating charge

(a)

The Company charges to the Collateral Agent by way of first floating charge with
full title guarantee and as a continuing security for the payment and discharge
of the Secured Liabilities all of the Company's rights to and title and interest
from time to time in the whole of its property, assets (including, without
limitation, any Account), undertakings, rights and revenues, whatsoever and
wheresoever, present and future, other than any assets validly and effectively
charged or assigned (whether at law or in equity) pursuant to Clause 4.2
(Creation of fixed charge) or Clause 4.3 (Assignments). 

(b)

Except as otherwise agreed in writing by the Collateral Agent and except as
otherwise provided under the Intercreditor Agreement with respect to relative
ranking of the security created pursuant to the Production Payment Security
Documents, the floating charge hereby created ranks in priority to any Security
which shall subsequently be created or permitted to arise by the Company or any

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Security created by a Receiver appointed under this Debenture and is a
qualifying floating charge to which paragraph 14 of schedule B1 to the
Insolvency Act 1986 applies.

(c)

Without prejudice to Clause 5.1(a), the Collateral Agent reserves any rights it
may have to appoint an administrative receiver on and following the Enforcement
Date in accordance with Sections 72B to H (inclusive) of the Insolvency Act
1986.

5.2

Automatic crystallisation of floating charge

Notwithstanding anything express or implied in this Debenture, and without
prejudice to any law which may have similar effect, if:

(a)

the Company creates or attempts to create any Security over all or any of the
Charged Assets (save as permitted by section 6.06 (Limitation on Liens) of the
Credit Agreement) without the prior consent of the Collateral Agent;

(b)

any person levies or attempts to levy any distress, execution or other process
against any of the Charged Assets;

(c)

a resolution is passed or a petition is presented for the winding-up or
administration in relation to the Company which is not discharged within 14 days
(in the case of a winding-up petition) or 5 days (in the case for an
administration order) or in any event before such petition is heard or an order
is made for the winding-up, dissolution, administration or other reorganisation
of the Company;

(d)

an Administrator or Receiver is appointed in respect of the Company or any step
intended to result in such appointment is taken pursuant to paragraphs 15 or 26
of Schedule B1 of the Insolvency Act 1986 in respect of the Company; or

(e)

any other floating charge created by the Company crystallises for any reason,

then the floating charge created by Clause 5.1 (Creation of floating charge)
will automatically (with immediate effect and without notice) be converted into
a fixed charge as regards all of the assets subject to the floating charge.

5.3

Crystallisation on notice of floating charge

Notwithstanding anything express or implied in this Debenture the Collateral
Agent may at any time:

(a)

on or after the Enforcement Date;

(b)

if it considers in good faith that any of the Charged Assets are in danger of
being seized or sold as a result of any legal process, or are otherwise in
jeopardy; or

(c)

if it reasonably believes that steps likely or intended to lead to the
presentation of a petition for the administration or winding-up of or the
appointment of an Administrator in respect of the Company are being, or have
been, taken,

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by giving notice in writing to that effect to the Company, convert the floating
charge created by Clause 5.1 (Creation of floating charge) into a fixed charge
as regards any assets specified in such notice.  The conversion shall take
effect immediately upon the giving of the notice.

5.4

Fixed and floating security

If for any reason any Security in respect of any asset created or purported to
be created pursuant to this Clause 5 as a fixed charge or assignment does not,
or ceases to, take effect as a fixed charge or assignment, then it shall take
effect as a floating charge in respect of such asset.  However, it is the intent
of the Parties that the Security over other Charged Assets shall remain
unaffected.

5.5

Retention of documents

The Collateral Agent shall be entitled to continue to retain any document
delivered to it under this Debenture relating to a Charged Asset until the
Charges over such Charged Asset are released in accordance with this
Debenture.  If, for any reason, it ceases to hold any such document before such
time, it may by notice to the Company require that the relevant document be
redelivered to it and the Company shall, to the extent that such document has
not already been provided to the collateral agent under the Production Payment
Security Documents, immediately comply with that requirement or procure that it
is complied with.

5.6

Project Documents 

(a)

The Security created by this Debenture in relation to each Project Document
shall, to the extent required by that Project Document, in each case as that
agreement may have been subsequently assigned, transferred or novated, be:

(i)

without prejudice to the provisions of that Project Document;

(ii)

subordinated to the express rights specified under that Project Document of the
parties thereto from time to time (other than the Company); and

(iii)

subject to the liabilities and obligations of the Company relating to the
interest of the Company in and under that Project Document;

provided that, nothing in this Clause 5.6 shall (i) release the Company from any
obligations to fulfil any requisite condition in connection therewith, or (ii)
(subject to Clause 5.6(b)) impose on the Collateral Agent or any Receiver or
Administrator appointed by it an obligation to perform any of the obligations of
the Company under any Project Document or to procure the performance of the
Company of any such obligation.

(b)

The Company and the Collateral Agent acknowledge that:

(i)

in the event of the Collateral Agent exercising any rights created under this
Debenture in respect of the Enoch PLTPA, the Collateral Agent will

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continue to fulfil the obligations of the Company under the Enoch PLTPA; and

(ii)

notwithstanding Clause 27 (Third parties), BP may rely on the undertaking given
by the Collateral Agent under Clause 5.6(b)(i).

5.7

Gas sales agreements

This Debenture shall not create any Security over the Company’s interest in the
Enoch Field Gas Sales Agreement dated 17 January 2006 as such agreement may be
assigned, amended, modified, supplemented or novated from time to time.

6.

FURTHER ASSURANCE

(a)

The Company shall at its own expense promptly upon request by the Collateral
Agent execute (in such form as the Collateral Agent may reasonably require) such
documents (including assignments, transfers, mortgages, charges, notices and
instructions) in favour of the Collateral Agent or its nominees and do all such
assurances and things as the Collateral Agent may otherwise reasonably require
for:

(i)

perfecting and/or protecting (by registration or in any other way) the Security
created or intended to be created by this Debenture;

(ii)

conferring upon the Collateral Agent such Security as it may require over the
assets of the Company outside of England and Wales which if in England or Wales
would form part of or be intended to form part of the Charged Assets;

(iii)

facilitating the realisation of all or any part of the Charged Assets; and/or

(iv)

for exercising all rights, powers, authorities and discretions conferred on the
Collateral Agent or any Receiver pursuant to this Debenture or by law,

including a reaffirmation/confirmation signed by the Company with respect to the
continuing effectiveness of the Security created pursuant to this Debenture
following any increase in the Secured Liabilities from time to time.

(b)

The covenants set out in section 2(1)(b) of the Law of Property (Miscellaneous
Provisions) Act 1994 shall extend to include the obligations set out in this
Clause 6 and Clause 7.6 (Consents and other necessary action).

7.

UNDERTAKINGS WITH RESPECT TO THE CHARGED ASSETS

The Company undertakes to the Collateral Agent with respect to the Charged
Assets that it shall:

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7.1

Negative pledge

except as permitted by section 6.06 (Limitation on Liens) of the Credit
Agreement:

(a)

not create or agree to create or allow to exist any Security on, over, or
affecting, all or any of its assets; and

(b)

procure that no member of the Group creates, agrees to create or allows to exist
any Security on, over, or affecting, any of its assets;

7.2

Disposals

except as permitted by section 6.09 (Merger, Consolidation, or Sale of Assets)
of the Credit Agreement, not, either in a single transaction or in a series of
transactions and whether related or not, sell, transfer, lease, convey or
otherwise dispose of the Charged Assets or any part of them or the right to
receive or to be paid the proceeds arising on disposal of the same, or agree to
attempt to do so;

7.3

Subsequent charge

subject to Clause 7.1 (Negative pledge), procure that any Security created by
the Company after the date of this Debenture (otherwise than in favour of the
Collateral Agent) shall be expressed to be subject to this Debenture;

7.4

Supplemental debenture

at any time, promptly upon request on or after the Enforcement Date, execute
over all or any of the Charged Assets a charge by way of legal mortgage or legal
sub-mortgage or legal assignment, as the case may be, in favour of the
Collateral Agent in such form as the Collateral Agent shall reasonably require;

7.5

Prejudicial action

not do or cause or permit to be done anything which may in any way reduce,
jeopardise or otherwise prejudice the value to the Collateral Agent of the
Charged Assets; and

7.6

Consents and other necessary action

take all such action as is available to it and is reasonably necessary for the
purpose of creating, perfecting or maintaining the Security created or intended
to be created pursuant to this Debenture which shall include, without
limitation, using reasonable endeavours to obtain any necessary consent (in form
and content satisfactory to the Collateral Agent, acting reasonably) to enable
its assets to be charged or assigned pursuant to this Debenture.  Immediately
upon obtaining any necessary consent the asset concerned shall become subject to
the Security created by this Debenture.  The Company shall promptly deliver a
copy of each consent to the Collateral Agent.

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8.

FURTHER UNDERTAKINGS

8.1

Deposit of title documents

Upon request and in accordance with the Credit Agreement, the Company shall, to
the extent that it has not already delivered such documents to the secured party
in accordance with the Production Payment Security Documents, deposit with the
Collateral Agent the deeds and documents of title, or evidencing title, relating
to the Charged Assets including any policies of insurance.

8.2

Calls

The Company shall not, without the consent of the Collateral Agent, acquire any
shares or other securities unless they are fully paid.

8.3

Notices of charge and/or assignment

(a)

The Company shall deliver to the Collateral Agent and serve on any relevant
person (a “Relevant Counterparty”) as required by the Collateral Agent or as set
out in the Credit Agreement:

(i)

notices of assignment in respect of any of the assets assigned pursuant to this
Debenture, and shall use its reasonable endeavours to procure that each such
notice is acknowledged by that Relevant Counterparty; and

(ii)

notice of charge in respect of any of the assets charged pursuant to this
Debenture and shall use its reasonable endeavours to procure that each notice is
acknowledged by that Relevant Counterparty.

(b)

The notices of charge and/or assignment and/or acknowledgement referred to in
Clause 8.3(a) shall be in a form substantially similar to that contained in
Schedule 1 (Form of Notices) hereto or such other form as the Collateral Agent
may reasonably require.

8.4

Further assignments

Subject to the Production Payment Security Documents and the Intercreditor
Agreement, the Company shall, if requested by any of the Collateral Agent, the
Administrative Agent or the Required Lenders (in each case, acting reasonably),
promptly execute any document (including any Additional Security Document) and
do all such acts (including making any filings or registrations or otherwise
recording the interests of the Collateral Agent in any registers relevant to the
Security) as the Collateral Agent, the Administrative Agent or the Required
Lenders may reasonably require:

(a)

for the purposes of granting Security over:

(i)

any Insurances and any proceeds of claim and Related Property Rights in respect
thereof;

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(ii)

any Secured Hedging Agreement to which any Credit Party is a party, together
with all Related Property Rights in respect thereof;

(iii)

any Project Agreement;

(iv)

any Project Licence; or

(v)

otherwise, to give effect to the Security intended to be created by this
Debenture and to section 5.12 (Additional Security; Further Assurances; etc.)
 of the Credit Agreement,

unless such Security has been granted under an existing Security Document;

(b)

to record the interests of the Collateral Agent in any registers relevant to
such Security, including those relating to registered intellectual property
rights;

(c)

for the exercise of any rights, powers and remedies of the Collateral Agent, any
Receiver or the other Secured Parties provided by or pursuant to this Debenture
or by law; and/or

(d)

to facilitate the realisation of the assets which are, or are intended to be,
the subject of the Security created under this Debenture.

9.

ACCOUNTS AND RECEIPTS 

9.1

Accounts general

(a)

The Company will:

(i)

deliver to the Collateral Agent on the date of this Debenture details of each of
its Accounts (and, if any change in such detail (including any renewal or
redesignation of any such Account) occurs after the date of this Debenture or
any new Account is opened, details of such change or new Account on the date of
such change or opening); and

(ii)

open such new Collateral Accounts, as the Collateral Agent shall require (at any
time on or after the Enforcement Date) for the purposes of Clause 9.2 (Book and
other debts after Security becomes enforceable).

(b)

Without prejudice and in addition to Clauses 7.1 (Negative pledge) and 7.2
(Disposals):

(i)

the benefit of each Account shall not be capable of assignment or charge in
whole or in part (save pursuant to this Debenture); and

(ii)

the Company agrees that it will not assign (whether by way of sale or mortgage),
charge or otherwise seek to deal with or dispose of all or any part of any
Collateral Account (save pursuant to this Debenture) without

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the prior written consent of the Collateral Agent (in its capacity as Collateral
Agent under this Debenture).

(c)

The Company shall, subject to Clause 9.3 (Accounts after Security becomes
enforceable) and any restrictions in the Secured Agreements preventing or
regulating withdrawal of the same, be entitled to withdraw any credit amount
from the Accounts (other than the Collateral Account).

9.2

Book and other debts after Security becomes enforceable

If and to the extent that the Collateral Agent so specifies, at any time on or
after the Enforcement Date, the Company shall pay the proceeds of payment or
realisation of such of the Company’s assets comprising temporary and other
investments, book and other debts, royalties, fees and income of like nature or
other monies received by the Company as the Collateral Agent may require into
such Collateral Accounts as the Collateral Agent may from time to time specify
and pending such payment shall hold all such receipts on trust for the
Collateral Agent.

9.3

Accounts after Security becomes enforceable

(a)

Upon the Security becoming enforceable, the Collateral Agent shall be deemed to
have designated in writing all Accounts as Assigned Accounts and at any time
thereafter the Collateral Agent may:

(i)

in relation to such new Assigned Accounts, require the Company to, and the
Company shall immediately on request, serve a notice of assignment (in a form
substantially similar to that contained in Schedule 1 (Form of Notices) hereto
or such other form as the Collateral Agent may reasonably require) on each bank
or other financial institution with which any such Account is maintained and the
Company shall comply with its obligation under Clause 8.3 (Notices of charge
and/or assignment) to obtain an acknowledgement of each such notice of
assignment; and

(ii)

exercise from time to time, all rights, powers and remedies of the Company in
relation to any or all of its Accounts, including to demand and receive all and
any monies standing to the credit of any such Accounts.

(b)

On and from the Enforcement Date, the Company shall not be entitled to be paid,
withdraw or otherwise transfer any credit amount from the Accounts.

10.

THE COLLATERAL AGENT

10.1

The Collateral Agent

(a)

The powers conferred upon the Collateral Agent by the Credit Documents shall be
in addition to any powers which may from time to time be vested in trustees by
the general law.

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(b)

Without prejudice to Clause 1.6 (Intercreditor Agreement), if there is any
conflict between the provisions of this Debenture and any Secured Agreement
(other than the Intercreditor Agreement) with regard to instructions to or the
matters affecting the Collateral Agent, this Debenture will prevail.

10.2

Trust

(a)

The Collateral Agent shall hold the benefit of the Secured Agreements in its
capacity as Collateral Agent on trust for (to the extent such benefits are
capable of being secured in their favour) the Secured Parties.  Save as
expressly specified in any Secured Agreement, the Collateral Agent:

(i)

shall not be liable to any party for any breach by any other party of any
Secured Agreement;

(ii)

shall have only those duties which are expressly specified in the Secured
Agreements;

(iii)

will apply all payments and other benefits received by it under the Secured
Agreements:

(A)

towards the payment of all amounts owing to the Collateral Agent pursuant to the
terms of the Secured Agreements;

(B)

towards the payment in full of the Secured Liabilities on a rateable basis in
accordance with the terms of the applicable Secured Agreement; and

(C)

after payment of all the Secured Liabilities, toward the payment to Holdings,
the Company and the Subsidiary Guarantors or their successors or assigns, as
their interests may appear, or to whosoever may be lawfully entitled to receive
the same, or as a court of competent jurisdiction may direct; and

(iv)

shall exercise its rights, powers and duties under the Secured Agreements and/or
this Debenture for the benefit of the Secured Parties.

(b)

Section 1 of the Trustee Act 2000 shall not apply to any function of the
Collateral Agent under or in connection with the Secured Agreements; provided
that nothing in this Debenture shall exempt the Collateral Agent from any
liability for gross negligence or wilful misconduct (as determined by a court of
competent jurisdiction in a final non-appealable decision).  In performing its
duties, obligations and responsibilities, the Collateral Agent shall be
considered to be acting only in a mechanical and administrative capacity or as
expressly provided in this Debenture, the other Security Documents and the other
Secured Agreements.

(c)

Save as set out in Clause 10.2(a), the Collateral Agent’s duties under the
Secured Agreements are of a mechanical and administrative nature.  Nothing in
the

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Secured Agreements shall constitute a partnership between any Party and the
Collateral Agent.

(d)

The perpetuity period for the security trust established in relation to the
Secured Agreements shall be one hundred and twenty five years from the date of
this Debenture.

10.3

Additional trustees

(a)

The Collateral Agent may appoint and pay any person established or resident in
any jurisdiction (whether a trust corporation or not) to act as a separate
trustee, custodian or nominee or as a co-trustee jointly with it on any terms in
relation to any assets of the trust as the Collateral Agent may determine
including for the purpose of depositing with a custodian this Debenture or any
document relating to the trust created under this Debenture and the Collateral
Agent will not be responsible for any loss, liability, expense, demand, cost,
claim or proceedings incurred by reason of the misconduct, omission or wilful
default on the part of any person appointed by it under this Debenture or be
bound to supervise the proceedings or acts of any person.

(b)

Any such additional trustee, custodian or nominee shall have such trusts,
powers, obligations, authorities and discretions (not exceeding those conferred
on the Collateral Agent by the Secured Agreements) and remuneration as shall be
conferred or imposed by the instrument of appointment.  The Collateral Agent
shall have power in like manner to remove any such person.  The Company shall
indemnify such additional trustee, custodian or nominee as though it were the
Collateral Agent in accordance with Clause 10.4 (Remuneration and
indemnity).  The Collateral Agent shall not be under any obligation to supervise
the proceedings or acts of any such delegate or sub-delegate or be in any way
responsible for any liability incurred by reason of any misconduct or default on
the part of any such delegate or sub-delegate.

10.4

Remuneration and indemnity

(a)

For the benefit of the Collateral Agent, nothing in this Clause 10 shall
prejudice any right of indemnity by law given to trustees.  Any indemnity
provided pursuant to this Clause 10 shall be in addition to and without
prejudice to any other indemnity provided either in the Credit Agreement or any
other Secured Agreement.

(b)

The Company agrees to indemnify, on demand, the Collateral Agent and any
receiver, attorney, agent or other person appointed by the Collateral Agent in
accordance with the Secured Agreements for any and all claims, liabilities,
costs, fees, charges, losses and expenses which may be incurred by or asserted
against the Collateral Agent or any such person in any way relating to or
arising out of:

(i)

its execution or purported execution of any of its trusts, powers, authorities
and discretions under the Secured Agreements;

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(ii)

performing its duties and functions in such capacity; or

(iii)

any action taken or omitted by the Collateral Agent or any such person under the
Secured Agreements,

except to the extent arising directly from the Collateral Agent’s or any such
person’s gross negligence or wilful misconduct (in each case as determined by a
court of competent jurisdiction in a final and non-appealable decision).

(c)

The Collateral Agent may indemnify itself and each other person referred to in
Clause 10.4(b) out of the assets over which Security is granted pursuant to the
Security Documents against all such claims, liabilities, costs, fees, charges,
losses and expenses referred to in Clause 10.4(b).

(d)

The Collateral Agent shall be entitled to such remuneration as it may agree from
time to time with the Company.

(e)

Without prejudice to Clause 10.4(b), each Secured Party shall (in proportion to
its share of the debt owed by each Borrower under the Credit Agreement)
indemnify the Collateral Agent, within three (3) Business Days of demand,
against any cost, loss or liability incurred by the Collateral Agent (otherwise
than by reason of the Collateral Agent's gross negligence or wilful misconduct,
in each case as determined by a court of competent jurisdiction in a final and
non-appealable decision) in acting as Collateral Agent under or in connection
with the Secured Agreements (unless the Collateral Agent has been reimbursed for
the same by any Credit Party).  The Credit Parties shall forthwith on demand
reimburse each Secured Party for any payments made by it under this Clause
10.4(e).

10.5

Exclusion of liability

(a)

Without limiting Clause 10.5(b), neither the Collateral Agent nor any Receiver
or Delegate will be liable for any action taken or not taken by it under or in
connection with any Secured Agreement, nor any shortfall which arises on the
enforcement or realisation of the Collateral, unless directly caused by its
gross negligence or wilful misconduct (in each case as determined by a court of
competent jurisdiction in a final and non-appealable decision).

(b)

No Party (other than the Collateral Agent) may take any proceedings against any
officer, employee or agent of the Collateral Agent, any Receiver or Delegate in
respect of any claim it might have against the Collateral Agent or in respect of
any act or omission of any kind by that officer, employee or agent in relation
to any Secured Agreement and any officer, employee or agent of the Collateral
Agent may rely on this Clause 10.5.

(c)

Neither the Collateral Agent, nor any Receiver or Delegate will be liable for
any delay (or any related consequences) in crediting an account with an amount
required under the Secured Agreements to be paid by the Collateral Agent if the
Collateral Agent has taken all necessary steps as soon as reasonably practicable
to

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comply with the regulations or operating procedures of any recognised clearing
or settlement system used by the Collateral Agent for that purpose.

(d)

Nothing in this Debenture shall oblige the Collateral Agent, any Receiver or
Delegate to carry out any “know your customer” or other checks in relation to
any person on behalf of any Secured Party and each Secured Party confirms to the
Collateral Agent that it is solely responsible for any such checks that it is
required to carry out and that it may not rely on any statement in relation to
such checks made by the Collateral Agent.

(e)

Without prejudice to any provision of any Secured Agreement excluding or
limiting the liability of the Collateral Agent, any Receiver or Delegate, in no
event shall the Collateral Agent, any Receiver or Delegate be liable for any
loss of profits, goodwill, reputation, business opportunity or anticipated
saving, or for special, punitive, indirect or consequential damages, whether or
not the Collateral Agent, Receiver or Delegate (as the case may be) has been
advised of the possibility of such loss or damages.

10.6

Instructions

(a)

Unless a contrary indication appears in the Secured Agreements, the Collateral
Agent shall (i) exercise any right, power, authority or discretion vested in it
as Collateral Agent in accordance with any instructions given to it by the
Required Lenders (or, if so instructed by the Required Lenders, refrain from
exercising any right, power, authority or discretion vested in it as Collateral
Agent), and (ii) not be liable for any act (or omission) if it acts (or refrains
from taking any action) in accordance with an instruction of the Required
Lenders.  This Clause 10.6 shall not require the Collateral Agent to act in
accordance with the instructions of the Required Lenders or any person in
respect of those powers, authorities and discretions granted to the Collateral
Agent pursuant to Clauses 10.3 (Additional trustees), 10.4 (Remuneration and
indemnity), 10.14(a), 10.14(c); 10.14(d) (Collateral Agent’s functions) and
10.15 (Legal restrictions and confidentiality).

(b)

Unless a contrary indication appears in the Secured Agreements, any instructions
given by the Required Lenders shall be binding on all the Secured Parties.

(c)

The Collateral Agent may refrain from acting in accordance with the instructions
of the Required Lenders until it has received such security and/or
indemnification as it may require for any cost, loss or liability (together with
any associated VAT) which it may incur in complying with the instructions.

(d)

In the absence of instructions from the Required Lenders, the Collateral Agent
may act (or refrain from taking action) as it considers to be in the best
interests of the Secured Parties.

(e)

The Collateral Agent is not authorised to act on behalf of a Secured Party
(without first obtaining that Secured Party’s consent in accordance with the
Secured

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Agreements) in any legal or arbitration proceedings relating to any Secured
Agreement.

10.7

Rights and discretions of the Collateral Agent

(a)

The Collateral Agent may:

(i)

rely on any representation, notice or document believed by it to be genuine,
correct and appropriately authorised;

(ii)

rely on any statement made by a director, authorised signatory or employee of
any person regarding any matters which may reasonably be assumed to be within
his knowledge or within his power to verify; and

(iii)

assume that any instructions received by it from any Secured Party are duly
given in accordance with the terms of the Secured Agreements (including
satisfaction of all applicable conditions) and unless it has received notice of
revocation, that those instructions have not been revoked.

(b)

The Collateral Agent may assume (unless it has received notice to the contrary
in its capacity as Collateral Agent) that:

(i)

no Default or Event of Default has occurred (unless it has actual knowledge of
such Default or Event of Default);

(ii)

any right, power, authority or discretion vested in any Party or the Required
Lenders has not been exercised; and

(iii)

any notice or request made by the Company is made on behalf of and with the
consent and knowledge of all the Credit Parties.

(c)

The Collateral Agent may engage, pay for and rely on the advice or services of
any lawyers, accountants, surveyors or other experts.

(d)

The Collateral Agent may act in relation to the Secured Agreements through its
personnel and agents.

10.8

Information

(a)

The Collateral Agent has no duty (in the absence of a specific provision in any
Secured Agreement) to provide any Party with any credit or other information
relating to the business, assets or financial condition of any Credit Party or
any other person whenever coming into its possession.

(b)

Except where a Secured Agreement specifically provides otherwise, the Collateral
Agent is not obliged to check the adequacy, accuracy or completeness of any
document it forwards to another Party.

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(c)

The Collateral Agent shall not be liable or responsible to any other Secured
Party for the adequacy, accuracy and/or completeness of any information (whether
oral or written) supplied by the Collateral Agent, a Credit Party or any other
person given in or in connection with any Secured Agreement.

10.9

Responsibility for documentation

The Collateral Agent shall not be liable or responsible:

(a)

for the legality, validity, effectiveness, adequacy or enforceability of any
Secured Agreement or any other agreement, arrangement or document entered into,
made or executed in anticipation of or in connection with any Secured Agreement;

(b)

for any failure to give notice to any third party or to register, file or record
(or any defect in such registration, filing or recording) any Security created
pursuant to any Security Document, or effect, procure the registration of or
otherwise protect the floating charge or any other such Security created by or
pursuant to the Security Documents under the Land Registration Act 1925 or any
other registration laws in England and Wales or any other jurisdiction;

(c)

to obtain any licence, consent or other authority for the creation of any such
Security;

(d)

for any failure, omission, or defect in perfecting or protecting the Security
constituted by the Security Documents, either in England and Wales or in any
other jurisdiction; or

(e)

for the financial condition of any Credit Party.

10.10

Title

The Collateral Agent may accept without enquiry (and shall not be obliged to
investigate) such title as any Credit Party may have to the property over which
Security is intended to be created by any Security Document.

10.11

Investments

All moneys which are received by the Collateral Agent in its capacity as trustee
or otherwise may be invested in the name of or under the control of the
Collateral Agent in any investment for the time being authorised by English law
for the investment by trustees of trust money or in any other investments which
may be selected by the Collateral Agent.  Additionally, the same may be placed
on deposit in the name of or under the control of the Collateral Agent at such
bank or institution (including the Collateral Agent) and upon such terms as the
Collateral Agent may think fit.

10.12

Tax

The Collateral Agent shall have no responsibility whatsoever to any Secured
Party as regards any deficiency which might arise because the Collateral Agent
is subject

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to any Taxes or withholding from any payment made by it under the Secured
Agreements.

10.13

Receivers’ indemnity

In no circumstances shall the Collateral Agent itself be obliged to give an
indemnity to any Receiver who requires an indemnity as a condition of
appointment.

10.14

Collateral Agent’s functions

(a)

The Collateral Agent shall:

(i)

not be under any obligation to hold any title deeds, Secured Agreements or any
other documents in connection with the assets charged by any Security Document
in its own possession or to take any steps to protect or preserve the same (and
the Collateral Agent may permit the Credit Parties to retain any title deeds and
other documents if it considers such course of action to be appropriate);

(ii)

without prejudice to Clause 10.14(a)(i), be at liberty to hold the Secured
Agreements and any other documents relating thereto or to deposit them in any
part of the world with any bank or company whose business includes undertaking
the safe custody of documents or firm of lawyers considered by the Collateral
Agent to be of good repute and the Collateral Agent shall not be responsible for
or be required to insure against any liability incurred in connection with any
such holding or deposit and may pay all sums required to be paid on account of
or in respect of any such deposit;

(iii)

not be bound to give notice to any person of the execution of any documents
comprised or referred to in the Secured Agreements or of any other matter in any
way relating to the Secured Agreements or to take any steps to ascertain whether
any default under any Secured Agreement has happened or whether any Party has
breached any of its obligations under any Secured Agreement or whether any
right, power, discretion or remedy has or may become exercisable by the
Collateral Agent and the Collateral Agent shall be entitled to assume that no
such default has happened and that each Party is observing and performing all
its obligations under any Secured Agreement and that no such right, power,
discretion or remedy has or may become exercisable;

(iv)

as soon as reasonably practicable following receipt of the same, notify the
Administrative Agent of any request received by it to exercise any power,
authority or discretion under this Debenture or any Secured Agreement or to form
any opinion;

(v)

promptly provide the Administrative Agent with copies of any notice received by
it from any Party (i) describing the occurrence of any Default and (ii) stating
that the circumstance described is a Default; and

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(vi)

be entitled to treat each Secured Party as a Secured Party entitled to payments
under the Credit Agreement unless it has received not less than five (5)
Business Days’ prior notice from that Secured Party to the contrary in
accordance with the terms of this Debenture.

(b)

Any consent or approval given by the Collateral Agent for the purposes of the
Secured Agreements may be given on such terms and subject to such conditions (if
any) as the Collateral Agent thinks fit.

(c)

Any trustee of any Security Document being a lawyer, accountant, broker or other
person engaged in any profession or business shall be entitled to charge and be
paid all usual professional and other charges for business transacted and acts
done by him or his firm in connection with the trusts of the Security Documents
and also his reasonable charges in addition to disbursements for all other work
and business done and all time spent by him or his firm in connection with
matters arising in connection with his trusteeship.

(d)

The Collateral Agent may in the conduct of the trusts instead of acting
personally employ and pay an agent (whether being a lawyer or other professional
person) to transact or conduct, or concur in transacting or conducting, any
business and to do, or concur in doing, all acts required to be done in
connection with the Secured Agreements.  The Collateral Agent shall not be in
any way responsible for any liability incurred by reason of any misconduct or
default on the part of any such agent or be bound to supervise the proceedings
or acts of any such agent.

10.15

Legal restrictions and confidentiality

(a)

Notwithstanding any other provision of any Secured Agreement to the contrary,
the Collateral Agent is not obliged to do or omit to do anything if it would or
might in its reasonable opinion constitute a breach of any law or regulation or
a breach of a fiduciary duty or duty of confidentiality.

(b)

The relevant division or department through which the Collateral Agent acts
shall be treated as a separate entity from any other of the Collateral Agent’s
divisions or departments.

(c)

If information is received by another division or department of the Collateral
Agent, it may be treated as confidential to that relevant division or department
and the Collateral Agent shall not be deemed to have notice of it.

10.16

Credit appraisal by the Secured Parties

Without affecting the responsibility of any Credit Party for information
supplied by it or on its behalf in connection with any Secured Agreement, each
Secured Party confirms to the Collateral Agent that it has been, and will
continue to be, solely responsible for making its own independent appraisal and
investigation of all risks arising under or in connection with any Secured
Agreement including but not limited to:

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(a)

the financial condition, status and nature of each Credit Party and each other
member of the Group;

(b)

the legality, validity, effectiveness, adequacy or enforceability of any Secured
Agreement and any other agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any Secured Agreement;

(c)

whether that Secured Party has recourse, and the nature and extent of that
recourse, against any Party or any of its respective assets under or in
connection with any Secured Agreement, the transactions contemplated by the
Secured Agreements or any other agreement, arrangement or document entered into,
made or executed in anticipation of, under or in connection with any Secured
Agreement; and

(d)

the adequacy, accuracy and/or completeness of any other information provided by
the Collateral Agent, any other party or by any other person under or in
connection with any Secured Agreement, the transactions contemplated by the
Secured Agreements or any other agreement, arrangement or document entered into,
made or executed in anticipation of, under or in connection with any Secured
Agreement.

10.17

Business with the Group

The Collateral Agent may accept deposits from, lend money to and generally
engage in any kind of banking or other business with any Credit Party or any
member of the Group.

10.18

Enforcement

The Secured Parties shall not have any independent power to enforce any of the
Security Documents or to exercise any rights, discretions or powers to grant any
consents or releases under or pursuant to the Security Documents or otherwise
have direct recourse to the Security constituted by any of the Security
Documents except through the Collateral Agent.

10.19

Release of Security

The Collateral Agent may release any Security over any asset which is the
subject of the Security Documents in accordance with the terms of any such
Security Document or if:

(a)

the asset is disposed of in compliance with the Secured Agreements; or

(b)

the asset is disposed of by any receiver or other person in accordance with the
powers granted under the Security Documents.

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10.20

Insolvency Events

(a)

For the purposes of this Debenture, “Insolvency Event” means any the
circumstances or events described in section 7.01(e) (Events of Default) of the
Credit Agreement or any other circumstance or event analogous to any of the
foregoing.

(b)

If any Insolvency Event occurs in relation to any Credit Party, the Collateral
Agent may, and is irrevocably authorised on behalf of the Secured Parties,
subject to the terms of the Secured Agreements, to:

(i)

claim, enforce and prove for the debt owed by, or any other claims against, that
Credit Party;

(ii)

(subject to Clause 10.20(e)) exercise all powers of convening meetings, voting
and representation in respect of the debt owed by that Credit Party and each
Secured Party shall provide all forms of proxy and of representation which may
be required for such purposes;

(iii)

file claims and proofs, give receipts and take all such proceedings and do all
such things as the Collateral Agent sees fit to recover the debt owed by, or any
other claims against, that Credit Party; and

(iv)

receive all distributions on or account of the debt owed by, or any other claims
against, that Credit Party for application:

(A)

towards the payment of all amounts owing to the Collateral Agent pursuant to the
terms of the Secured Agreements;

(B)

towards the payment in full of the Secured Liabilities on a rateable basis in
accordance with the terms of the applicable Secured Agreements; and

(C)

after payment of all the Secured Liabilities, towards the payment to Holdings,
the Company and the Subsidiary Guarantors or their successors or assigns, as
their interests may appear, or to whosoever may be lawfully entitled to receive
the same, or as a court of competent jurisdiction may direct.

(c)

If and to the extent that the Collateral Agent is not entitled to claim,
enforce, prove, file claims or proofs, or take proceedings for the recovery of
any debt owed by the relevant Credit Party, the relevant Secured Party(s) to
whom such debt is owed shall do so in good time as reasonably requested by the
Collateral Agent.

(d)

Save to the extent that it has been requested by the Collateral Agent under
Clause 10.20(b)(iv)(A) to take such action, no Secured Party may take any of the
actions referred to in Clause 10.20(b) without the Collateral Agent’s prior
consent.

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(e)

Nothing in this Clause 10.20 shall limit the rights of the Lenders to convene
meetings, to exercise their voting rights and to issue instructions to the
Collateral Agent, under the Credit Agreement and/or this Debenture.

(f)

If any Insolvency Event occurs in relation to any Credit Party, the trustee in
bankruptcy, liquidator, assignee or other person distributing the assets of that
Credit Party or their proceeds shall be directed to pay distributions on the
debt direct to the Collateral Agent for application:

(i)

towards the payment of all amounts owing to the Collateral Agent pursuant to the
terms of the Secured Agreements;

(ii)

towards the payment in full of the Secured Liabilities on a rateable basis in
accordance with the terms of the applicable Secured Agreements; and

(iii)

after payment of all the Secured Liabilities, towards the payment to Holdings,
the Company and the Subsidiary Guarantors or their successor or assigns, as
their interests may appear, or to whosoever may be lawfully entitled to receive
the same, or as a court of competent jurisdiction may direct.

10.21

No duty to account

The Collateral Agent shall not be bound to account to any other Secured Party
for any sum or the profit element of any sum received by it for its own account.

10.22

Powers supplemental to Trustee Acts

The rights, powers, authorities and discretions given to the Collateral Agent
under or in connection with the Secured Agreements shall be supplemental to the
Trustee Act 1925 and the Trustee Act 2000 and in addition to any which may be
vested in the Collateral Agent by law or regulation or otherwise.

11.

RIGHTS OF THE COLLATERAL AGENT

11.1

Enforcement

At any time on or after the Enforcement Date, the Security created pursuant to
this Debenture shall be immediately enforceable and the Collateral Agent may in
its absolute discretion and without notice to the Company or the prior
authorisation of any court:

(a)

enforce all or any part of the Security created by this Debenture and take
possession of or dispose of all or any of the Charged Assets in each case at
such times and upon such terms as it sees fit; and

(b)

whether or not it has appointed a Receiver, exercise all of the powers,
authorities and discretions:

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(i)

conferred from time to time on mortgagees, receivers or administrative receivers
by the LPA and the Insolvency Act 1986 (as varied or extended by this Debenture)
or by law; and

(ii)

granted to a Receiver by this Debenture or by law.

11.2

Restrictions on consolidation of mortgages

Section 93 of the LPA shall not apply to this Debenture or to any sale made
under it.  The Collateral Agent shall have the right to consolidate all or any
of the Security created by or pursuant to this Debenture with any other Security
in existence at any time.  Such power may be exercised by the Collateral Agent
at any time following the Enforcement Date.

11.3

Restrictions on exercise of power of sale

Section 103 of the LPA shall not apply to this Debenture and the power of sale
arising under the LPA shall arise on the execution of this Debenture (and the
Secured Liabilities shall be deemed to have become due and payable for that
purpose).  The power of sale and other powers conferred by Section 101 of the
LPA as varied or extended by this Debenture and those powers conferred
(expressly or by reference) on a Receiver shall be immediately exercisable by
the Collateral Agent at any time on or after the Enforcement Date.

11.4

Leasing powers

The restrictions contained in Sections 99 to 100 of the LPA shall not apply to
restrict the rights of the Collateral Agent or any Receiver under this
Debenture.  The statutory powers of leasing may be exercised by the Collateral
Agent or any Receiver upon and following the Enforcement Date and the Collateral
Agent and any Receiver may make any lease or agreement for lease and/or accept
any surrenders of leases and/or grant options on such terms as it sees fit
without the need to comply with the aforementioned restrictions.

11.5

No prior notice needed

The rights and powers (a) conferred on mortgagees by the LPA (as varied or
amended by this Debenture), (b) conferred by this Debenture on a Receiver, or
(c) of the Collateral Agent set out in Clauses 11.2 (Restrictions on
consolidation of mortgages) to 11.4 (Leasing powers) (inclusive), may in each
case be exercised by the Collateral Agent without prior notice to the Company,
irrespective of whether the Collateral Agent has taken possession or appointed a
Receiver of the Charged Assets.

11.6

Right of appropriation

(a)

Without prejudice to the other provisions of this Debenture, to the extent that
any of the Charged Assets constitute “financial collateral”, and this Debenture
and the obligations of the Company hereunder constitute a “security financial
collateral

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agreement” (in each case as defined in, and for the purposes of, the Financial
Collateral Arrangements (No. 2) Regulations 2003 (SI 2003/3226) (the
“Regulations”), the Collateral Agent shall at any time on and after the
Enforcement Date have the right to appropriate all or any part of those Charged
Assets in or towards discharge of the Secured Liabilities.  For this purpose,
the Parties agree that the value of any such Charged Assets so appropriated
shall be the market price of such Charged Assets at the time the right of
appropriation is exercised as determined by the Collateral Agent by reference to
such method or source of valuation as the Collateral Agent may select, including
by independent valuation.  The Parties agree that the methods or sources of
valuation provided for in this Clause 11.6 or selected by the Collateral Agent
in accordance with this Clause 11.6 shall constitute a commercially reasonable
method of valuation for the purposes of the Regulations.

(b)

The Collateral Agent shall notify the Company as soon as reasonably practicable
of the exercise of its rights of appropriation as regards such of the Charged
Assets as are specified in such notice.

12.

EXONERATION

12.1

Exoneration

(a)

No Secured Party shall, nor shall any Receiver, by reason of it or the Receiver
entering into possession of the Charged Assets or any part thereof, or the
exercise or the attempted or purported exercise of, or failure to exercise any
of, their respective powers, be liable to account as mortgagee in possession or
be liable for any loss or realisation or for any default or omission for which a
mortgagee in possession might be liable.  Every Receiver duly appointed by the
Collateral Agent under this Debenture shall for all purposes be deemed to be in
the same position as a receiver duly appointed by a mortgagee under the LPA save
to the extent that the provisions of the LPA are varied by or are inconsistent
with the provisions of this Debenture when the provisions of this Debenture
shall prevail and every such Receiver and the Collateral Agent shall in any
event be entitled to all the rights, powers, privileges and immunities conferred
by the LPA on mortgagees and receivers duly appointed under the LPA.

(b)

No Secured Party, nor any Receiver, shall be liable in respect of any of the
Charged Assets or for any loss which arises out of the exercise or the attempted
or purported exercise of, or the failure to exercise any of, their respective
powers under the Secured Agreements; provided that nothing in this Debenture
shall exempt any Secured Party or Receiver from any liability for gross
negligence or wilful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable decision).

12.2

Indemnity

The Collateral Agent and every Receiver, attorney, delegate, manager, agent or
other person appointed by the Collateral Agent hereunder shall be entitled to be

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indemnified out of the Charged Assets or any part thereof in respect of all
losses, liabilities and expenses incurred by it or him in the execution of any
of the powers, authorities or discretions vested in it or him pursuant to this
Debenture and against all actions, proceedings, costs, losses, claims and
demands in respect of any matter or thing done or omitted in any way relating to
the Charged Assets or any part of them other than such liabilities, losses,
expenses, actions, proceedings, costs, claims or demands incurred or suffered as
a result of the fraud or gross negligence (in each case as determined by a court
of competent jurisdiction in a final and non-appealable decision) of the
Collateral Agent or any Receiver, attorney, delegate, manager, agent or other
person appointed by the Collateral Agent.  The Collateral Agent and any such
Receiver may retain and pay all sums in respect of which it is indemnified out
of any monies received by it under the powers conferred by this Debenture.

13.

APPOINTMENT OF RECEIVER OR ADMINISTRATOR

13.1

Appointment

(a)

At any time on or after the Enforcement Date, at the request of the Company or
its directors, the Collateral Agent may, without prior notice to the Company, in
writing (under seal, by deed or otherwise under hand) appoint:

(i)

a Receiver in respect of the Charged Assets or any part thereof and may in like
manner from time to time (and insofar as it is lawfully able to do, including
subject to the provisions of section 45 of the Insolvency Act 1986 in the case
of an administrative receivership) remove any Receiver and appoint another in
his stead; or

(ii)

one or more persons to be an Administrator in accordance with paragraph 14 of
Schedule B1 to the Insolvency Act 1986.

(b)

Nothing in Clause 14.1 (Powers) shall restrict the exercise by any Secured Party
of any one or more rights of a Secured Party under Schedule B1 to the Insolvency
Act 1986 and the rules thereunder or at common law.

(c)

Section 109(1) of the LPA shall not apply to this Debenture.

(d)

The Collateral Agent shall be entitled to appoint a Receiver save to the extent
prohibited by section 72A of the Insolvency Act 1986.

13.2

More than one receiver

Where more than one Receiver is appointed, each joint Receiver shall have the
power to act severally, independently of any other joint Receiver, except to the
extent that the Collateral Agent may specify to the contrary in the appointment.

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13.3

Receiver as agent

A Receiver shall be the agent of the Company which shall be solely responsible
for his acts or defaults and for his remuneration.  No Receiver shall at any
time act as agent of any Secured Party.

13.4

Receiver’s remuneration

Subject to section 36 of the Insolvency Act 1986, a Receiver shall be entitled
to remuneration for his services at a rate to be determined by the Collateral
Agent from time to time (and without being limited to any maximum rate specified
by any statute or statutory instrument).  The Collateral Agent may direct
payment of such remuneration out of moneys accruing to the Receiver but the
Company alone shall be liable for the payment of such remuneration and for all
other costs, charges and expenses of the Receiver.

13.5

Actions of the Administrator

Save as provided for in statute or as otherwise agreed in writing by the
Collateral Agent, the Secured Parties shall have no liability for the acts or
omissions of an Administrator.

14.

RECEIVER’S POWERS

14.1

Powers

A Receiver shall have (and be entitled to exercise) in relation to the Charged
Assets over which he is appointed the following powers (as the same may be
varied or extended by the provisions of this Debenture):

(a)

all of the powers of a receiver or an administrative receiver set out in
Schedule 1 to the Insolvency Act 1986 (whether or not the Receiver is an
administrative receiver) which is deemed incorporated into this Debenture;

(b)

all of the powers conferred from time to time on receivers, mortgagors and
mortgagees in possession by the LPA or any applicable law;

(c)

all the powers and rights of a legal and beneficial owner and the power to do or
omit to do anything which the Company itself could do or omit to do; and

(d)

the power to do all things which, in the opinion of the Receiver, are incidental
to any of the powers, functions, authorities or discretions conferred or vested
in the Receiver pursuant to this Debenture or upon receivers by statute or law
generally (including, without limitation, the bringing or defending of
proceedings in the name of, or on behalf of, the Company, the collection and/or
realisation of the Charged Assets in such manner and on such terms as the
Receiver sees fit; and the execution of documents in the name of the Company
(whether under hand, or by way of deed or by utilisation of the company seal of
the Company)).

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14.2

Powers may be restricted

The powers granted to a Receiver pursuant to this Debenture may be restricted by
the instrument (signed by the Collateral Agent) appointing him but they shall
not be restricted by any winding-up or dissolution of the Company.

15.

PROTECTION OF PURCHASERS

15.1

Absence of enquiry

No person or persons dealing with the Collateral Agent or any Receiver shall be
concerned to enquire whether any event has happened upon which any of the powers
in this Debenture are or may be exercisable or otherwise as to the propriety or
regularity of any exercise of such powers or of any act purporting or intended
to be an exercise of such powers or whether any amount remains secured by this
Debenture or whether the Secured Liabilities have become payable or as to the
application of any money paid to the Collateral Agent or any Receiver,
Administrator or Delegate.  All the protections to purchasers and persons
dealing with receivers contained in sections 104, 107 and 109(4) of the LPA
shall apply to any person purchasing from or dealing with the Collateral Agent
or any such Receiver.

15.2

Receipt: conclusive discharge

The receipt of the Collateral Agent or any Receiver shall be a conclusive
discharge to any purchaser of the Charged Assets.

16.

POWER OF ATTORNEY AND DELEGATION

16.1

Power of attorney: general

The Company hereby irrevocably and by way of security appoints the Collateral
Agent and any Receiver and any Delegate severally to be its attorney in its name
and on its behalf and as its act and deed:

(a)

to execute and deliver any documents or instruments which the Collateral Agent
or such Receiver may require for perfecting the title of the Collateral Agent to
the Charged Assets or for vesting the same in the Collateral Agent, its nominee
or any purchaser,

(b)

to sign, execute, seal and deliver and otherwise perfect any further security
document which the Company is required to enter into pursuant to this Debenture;
and

(c)

otherwise generally to sign, seal, execute and deliver all deeds, assurances,
agreements and documents and to do all acts and things which (i) may be required
for the full exercise of all or any of the powers conferred on the Collateral
Agent or any Receiver under this Debenture, (ii) the Company is required to do
pursuant to this Debenture, or (iii) may be deemed expedient by the Collateral
Agent or a Receiver in connection with (A) any preservation, disposition,
realisation or

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getting in by the Collateral Agent or such Receiver of the Charged Assets or any
part thereof, or (B) any other exercise of any other power under this Debenture.

The Collateral Agent confirms that it will only exercise the rights set out in
this Clause 16.1 following the occurrence of a default or event of default under
a Credit Document.

16.2

Power of attorney: ratification

The Company ratifies and confirms and agrees to ratify and confirm all acts and
things which any attorney mentioned in this Clause 16 does or purports to do in
exercise of the powers granted by this Clause 16.  All moneys expended by any
such attorney shall be deemed to be expenses incurred by the Collateral Agent
under this Debenture.

16.3

General delegation

(a)

The Collateral Agent and any Receiver (acting in good faith) shall have full
power to delegate the powers, authorities and discretions conferred on it or him
by this Debenture (including the power of attorney) on such terms and conditions
as it or he shall see fit which shall not preclude exercise of those powers,
authorities or discretions by it or him or any revocation of the delegation or
any subsequent delegation.

(b)

Any such delegation may be made upon such terms, consistent with the terms of
the Secured Agreements (including power to sub-delegate) as the Collateral Agent
may think fit.

(c)

Save in the case of gross negligence or wilful misconduct (in each case as
determined by a court of competent jurisdiction in a final and non-appealable
decision) by the Collateral Agent in the exercise of its right to delegate, the
Collateral Agent shall not be in any way liable to the Company or any other
person for any losses, liabilities or expenses arising from any act, default,
omission or misconduct on the part of any Delegate.

17.

APPLICATION OF MONIES RECEIVED UNDER THIS DEBENTURE

17.1

Order of application

Any monies received under the powers hereby conferred shall, subject to the
repayment of any claims or debts having priority to this Debenture, be applied
for the following purposes and in the following order of priority:

(a)

towards the payment of all amounts owing to the Collateral Agent pursuant to the
terms of the Secured Agreements;

(b)

towards the payment in full of the Secured Liabilities on a rateable basis in
accordance with the terms of the applicable Secured Agreements; and

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(c)

after payment of all the Secured Liabilities, towards the payment to Holdings,
the Company and the Subsidiary Guarantors or their successors or assigns, as
their interests may appear, or to whosoever may be lawfully entitled to receive
the same, or as a court of competent jurisdiction may direct.

17.2

Suspense account

The Collateral Agent may credit any monies received under this Debenture to or
otherwise on account of the Company’s liability in respect of the Secured
Liabilities, an interest-bearing suspense account for so long and in such manner
as the Collateral Agent may from time to time determine and the Receiver may
retain the same for such period as he and the Collateral Agent consider
appropriate without having to apply all or part of that money in or towards
discharge of the Secured Liabilities, unless such moneys are sufficient to
discharge the Secured Liabilities in full.

17.3

Application against Secured Obligations

Subject to Clause 17.1 (Order of application), any moneys or other value
received or realised by the Collateral Agent from the Company or a Receiver
under this Debenture may be applied by the Collateral Agent to any item of
account or liability or transaction forming part of the Secured Liabilities to
which they may be applicable in any order or manner which the Collateral Agent
may determine.

18.

RELEASE OF SECURITY

18.1

Release

The Collateral Agent shall, at the request and cost of the Company, execute or
procure the execution by its nominee of any documents (in each case in a form
acceptable to the Collateral Agent, acting reasonably) and do all such deeds,
acts and things as are necessary to release the Charged Assets from the Security
created by or in accordance with this Debenture and/or to reassign the Charged
Assets at the end of the Security Period.

18.2

Avoidance of payments

(a)

No amount paid, repaid or credited to a Secured Party shall be deemed to have
been irrevocably paid if the Collateral Agent (acting reasonably) considers that
the payment or credit of such amount is capable of being avoided or reduced
because of any laws applicable on bankruptcy, insolvency, liquidation or any
similar laws.

(b)

If any amount paid, repaid or credited to a Secured Party is avoided or reduced
because of any laws applicable on bankruptcy, insolvency, liquidation or any
similar laws, then any release, discharge or settlement between that Secured
Party and the Company shall be deemed not to have occurred and the Secured
Parties shall be entitled to enforce this Debenture subsequently as if such
release, discharge or settlement had not occurred and any such payment had not
been made.  The Company shall on demand indemnify the Collateral Agent against
any

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funding or other cost, loss, liability or expense incurred by the Collateral
Agent as a result of the Collateral Agent being required for any reason to
refund all or part of any amount received by it in respect of any of the Secured
Liabilities.

19.

POWER OF SEVERANCE

In the exercise of the powers conferred by this Debenture, the Collateral Agent
or any Receiver may sever and sell plant, machinery or other fixtures separately
from the property to which they may be annexed and the Collateral Agent or any
Receiver may apportion any rent or other amount without the consent of the
Company.

20.

NEW ACCOUNTS

If a Secured Party receives notice of any subsequent charge or other interest
affecting any part of the Charged Assets it may, without prejudice to its rights
under this Debenture, open a fresh account or accounts with the Company and
continue any existing account in the name of the Company and may appropriate to
any such fresh account any monies paid in, received or realised for the credit
of the Company after that time without being under any obligation to apply the
same or any part of them in discharge of any of the Secured Liabilities.  If a
Secured Party fails to open a fresh account it will be deemed to have done so
with the effect that any monies received or realised after that time will not
reduce the Secured Liabilities at the time when that Secured Party received
notice.

21.

SET-OFF

21.1

Set-off rights

The Collateral Agent may set off any matured obligation due from any Credit
Party under the Secured Agreements (to the extent beneficially owned by the
Collateral Agent) against any matured obligation owed by the Collateral Agent to
any Credit Party, regardless of the place of payment, booking branch or currency
of either obligation.  If the obligations are in different currencies, the
Collateral Agent may convert either obligation at a market rate of exchange in
its usual course of business for the purpose of the set-off.

21.2

No set-off

The Company will pay all amounts payable under this Debenture without any
set-off, counterclaim or deduction whatsoever unless required by law, in which
event the Company will pay an additional amount to ensure that the recipient
receives the amount which would have been payable had no deduction been required
to have been made.

22.

MISCELLANEOUS

22.1

The Company

This Debenture shall be binding on the successors and assigns of the Company.

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22.2

Assignment and transfer

The Company may not assign or transfer any of its rights or obligations under
this Debenture without the prior consent of each Lender.  The Collateral Agent
may assign and transfer all or any part of its rights and obligations under this
Debenture to any replacement Collateral Agent appointed pursuant to the terms of
the Credit Agreement.

22.3

Disclosure

The Collateral Agent may disclose to any of its Affiliates and any other person:

(a)

which is one of its professional advisers;

(b)

to (or through) whom a Secured Party assigns or transfers (or may potentially
assign or transfer) all or any of its rights and obligations under this
Debenture and/or any Secured Agreement;

(c)

which is a Receiver, prospective Receiver or Administrator;

(d)

(together with professional advisers) who may have an interest in the benefits
arising under this Debenture;

(e)

to whom, and to the extent that, information is required to be disclosed by any
applicable law or regulation; or

(f)

any other person not expressly referred to in sub-paragraphs 22.3(a) to 22.3(e)
(inclusive) but otherwise described in section 9.16 (Confidentiality) of the
Credit Agreement,

any information about the Company, the Secured Agreements or this Debenture as
the Collateral Agent shall consider appropriate if, in relation to Clause
22.3(b), the person to whom the information is to be given has entered into a
Confidentiality Undertaking.

22.4

Property

This Debenture is and will remain the property of the Collateral Agent.

22.5

Continuing Security

(a)

This Debenture shall be a continuing security and shall not be discharged by any
intermediate payment or satisfaction of the whole or any part of the Secured
Liabilities.

(b)

If any purported obligation or liability of any Credit Party to the Secured
Parties which if valid would have been the subject of any obligation or charge
created by this Debenture is or becomes unenforceable, invalid or illegal on any
ground whatsoever whether or not known to any Secured Party, the Company shall
nevertheless be liable in respect of that purported obligation or liability as
if the

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same were fully valid and enforceable and the Company was the principal debtor
in respect thereof.  The Company hereby agrees to keep the Secured Parties fully
indemnified against all damages, losses, costs and expenses arising from any
failure of any Credit Party to carry out any such purported obligation or
liability.

22.6

Waiver of defences

The obligations of the Company under this Debenture will not be affected by an
act, omission, matter or thing (other than a release of this Debenture in
writing pursuant to Clause 18 (Release of Security)) which would reduce, release
or prejudice any of its obligations (without limitation and whether or not known
to it or any Secured Party) including:

(a)

any time, waiver or consent granted to, or composition with, the Company, any
Credit Party or any other person;

(b)

the release of any Credit Party or any other person under the terms of any
composition or arrangement with any creditor of any person;

(c)

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, the Company, any Credit Party or any 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;

(d)

any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of any person;

(e)

any amendment (however fundamental) or replacement of any Secured Agreement or
any other document or security;

(f)

any unenforceability, illegality or invalidity of any obligation of any person
under any Secured Agreement or any other document or security;

(g)

any insolvency or similar proceedings;

(h)

any Secured Party disclosing to the Company any information relating to the
business, assets, financial condition or prospects of any other Credit Party now
or hereafter known to such Secured Party (the Company waiving any duty on the
part of the Secured Parties to discuss such information);

(i)

the existence of any claim, set-off or other right which the Company may at any
time have against the Collateral Agent or any other person; or

(j)

the making or absence of any demand for payment of any Secured Liabilities or
other obligations on the Company or any other person, whether by the Collateral
Agent or any other person.

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22.7

Non-competition

(a)

Until the expiry of the Security Period and unless the Collateral Agent
otherwise directs, the Company will not exercise any rights which it may have by
reason of performance by it of its obligations under this Debenture:

(i)

to be indemnified by any Credit Party (including any rights it may have by way
of subrogation);

(ii)

to claim any contribution from any guarantor of any Credit Party of the
obligations under the Secured Agreements;

(iii)

to take the benefit (in whole or in part and whether by way of subrogation or
otherwise) of any right of the Collateral Agent or any of the other Secured
Parties under any Secured Agreements or of any other guarantee or security taken
pursuant to, or in connection with, the Secured Agreements;

(iv)

to claim, rank, prove or vote as a creditor of any Credit Party or its estate in
competition with the Collateral Agent or any of the other Secured Parties;
and/or

(v)

to receive, claim or have the benefit of any payment, distribution or security
from or on account of any Credit Party, or exercise any right of set-off against
any Credit Party.

(b)

The Company shall hold on trust for and immediately pay or transfer to the
Collateral Agent any payment or distribution or benefit of security received by
it contrary to this Clause 22.7.

22.8

Additional Security

This Debenture shall be in addition to and not be affected by any other Security
or guarantee now or hereafter held by a Secured Party for all or any part of the
Secured Liabilities nor shall any such other Security or guarantee of liability
to a Secured Party of or by any person not a Secured Party be in any way
impaired or discharged by this Debenture nor shall this Debenture in any way
impair or discharge such other Security or guarantee.

22.9

Variation of Security

This Debenture shall not in any way be affected or prejudiced by any Secured
Party now or hereafter dealing with, exchanging, releasing, varying or
abstaining from perfecting or enforcing any Security or guarantee referred to in
Clause 22.8 (Additional Security) or any rights which any Secured Party may now
or hereafter have or giving time for payment or granting any indulgence or
compounding with any person whatsoever.

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22.10

Enforcement of other Security

No Secured Party shall be obliged to enforce any other Security it may hold for,
or exercise any other rights it may have in relation to, the Secured Liabilities
before enforcing any of its rights under this Debenture.

22.11

Redemption of prior Security

The Collateral Agent may redeem or take a transfer of any prior Security over
the Charged Assets and may agree the accounts of any Person entitled to that
prior Security.  An agreed account shall be conclusive and binding on the
Company.  Any amount paid in connection with such redemption or transfer
(including expenses) shall be paid on demand by the Company to the Collateral
Agent and until such payment shall form part of the Secured Liabilities.

22.12

Custody

The Collateral Agent shall be entitled to keep all certificates and documents of
title relating to the Charged Assets in safe custody at any of its branches or
otherwise provide for their safe custody by third parties and shall not be
responsible for any loss or damage occurring to or in respect thereof unless
such loss or damage shall be caused by its own gross negligence or wilful
default (as determined by a court of competent jurisdiction in a final
non-appealable decision).

22.13

Costs and expense

Save to the extent that the same has been recovered pursuant to section 9.05
(Expenses; Indemnity) of the Credit Agreement, the Company shall, within three
(3) Business Days of demand, pay to the Collateral Agent, any Receiver,
attorney, manager, agent or other person appointed by the Collateral Agent under
this Debenture the amount of all costs and expenses (including legal fees)
incurred by that Collateral Agent, Receiver, attorney, manager, agent or other
person (as the case may be) in connection with:

(a)

the perfection, preservation, enforcement or attempted enforcement, of the
Security created by or contemplated by this Debenture; and/or

(b)

the exercise of any rights under this Debenture.

22.14

Cumulative powers

The powers which this Debenture confers on the Collateral Agent, the other
Secured Parties and any Receiver are cumulative, without prejudice to their
respective powers under the general law, and may be exercised as often as the
relevant person thinks appropriate.  The Collateral Agent, the other Secured
Parties or the Receiver may, in connection with the exercise of their powers,
join or concur with any person in any transaction, scheme or arrangement
whatsoever.  The respective powers of the Collateral

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Agent, the other Secured Parties and the Receiver will in no circumstances be
suspended, waived or otherwise prejudiced by anything other than an express
consent or amendment.

22.15

Conversion

All moneys received or held by the Collateral Agent or any Receiver under this
Debenture may be converted into any other currency which the Collateral Agent
considers (in its reasonable opinion) necessary to cover the obligations and
liabilities comprised in the Secured Liabilities in that other currency at the
Collateral Agent’s spot rate of exchange then prevailing for purchasing that
other currency with the existing currency.

22.16

No discharge

No payment to the Collateral Agent (whether under any judgment or court order or
otherwise) shall discharge the obligation or liability of the relevant Credit
Party in respect of which it was made unless and until the Collateral Agent has
received payment in full in the currency in which the obligation or liability is
payable or, if the currency of payment is not specified, was incurred.  To the
extent that the amount of any such payment shall on actual conversion into that
currency fall short of that obligation or liability expressed in that currency,
the Collateral Agent shall have a further separate cause of action against the
relevant Credit Party and shall be entitled to enforce the Security constituted
by this Debenture to recover the amount of the shortfall.

22.17

Stamp duties, etc.

The Company shall timely pay or, at the option of the Collateral Agent, timely
reimburse the Collateral Agent for the payment of any stamp duty, fees,
registration and similar Taxes payable in respect of this Debenture.

23.

NOTICES

23.1

Communications in writing

Any communication to be made under or in connection with this Debenture shall be
made in writing and, unless otherwise stated, may be made by fax or letter.

23.2

Addresses

The address and fax number (and the department or officer, if any, for whose
attention the communication is to be made) of the Company and the Collateral
Agent for any communication or document to be made or delivered under or in
connection with this Debenture is that identified with its name below:

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

 

 

Address:

 

Endeavour Energy UK Limited

 

 

 

 

 

 

 

c/o Vinson & Elkins

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33rd Floor, City Point

 

 

 

 

 

 

 

One Ropemaker Street

 

 

 

 

 

 

 

London

 

 

 

 

 

 

 

 

EC2Y 9UE

 

 

 

 

 

 

 

 

United Kingdom

 

 

 

 

 

 

Fax Number:

 

+1 713 307 8794

 

 

 

 

 

 

Email:

 

cathy.stubbs@endeavourgroup.com

 

 

 

 

 

 

For the Attention of:

Cathy Stubbs

 

 

 

 

 

 

With a copy to:

 

Endeavour International Corporation

 

 

 

 

 

 

 

811 Main Street, Suite 2100

 

 

 

 

 

 

 

Houston, Texas 77002

 

 

 

 

 

Fax Number:

+1 713 307 8794

 

 

 

 

 

Email:

cathy.stubbs@endeavourgroup.com

 

 

 

 

 

For the Attention of:

Cathy Stubbs

 

 

 

 

 

 

Collateral Agent

 

 

 

 

 

 

 

 

Address:

Credit Suisse

 

 

 

 

 

 

 

 

Eleven Madison Avenue

 

 

 

 

 

 

 

23rd Floor

 

 

 

 

 

 

 

 

New York, NY  10010

 

 

 

 

 

For the Attention of:

Loan Operations

– Boutique Management

 

 

 

 

 

Fax Number:

+1 212 322 2291

 

 

 

 

 

Telephone No.

+1 212 538 3525

 

 

 

 

 

Email:

Ops-collateral@credit-suisse.com,

 

or any substitute address, fax number or department or officer as the Company
may notify to the Collateral Agent or, as the case may be, the Collateral Agent
may notify to the Company, in each case by not less than five (5) Business Days’
notice.

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23.3

Delivery

(a)

Any communication or document made or delivered by one person to another under
or in connection with this Debenture will only be effective:

(i) if by way of fax, when received in legible form; or

(ii)

if by way of letter, when it has been left at the relevant address or five (5)
Business Days after being deposited in the post postage prepaid in an envelope
addressed to it at that address,

and, if a particular department or officer is specified as part of its address
details provided under Clause 23.2 (Addresses), if addressed to that department
or officer.

(b)

Any communication or document to be made or delivered to the Collateral Agent
will be effective only when actually received by it and then only if it is
expressly marked for the attention of the department or officer identified with
the Collateral Agent’s name in Clause 23.2 (Addresses) (or any substitute
department or officer as it shall specify for this purpose).

24.

CERTIFICATES AND DETERMINATIONS

Any certificate or determination by the Collateral Agent of a rate or amount
under this Debenture is, in the absence of manifest error, conclusive evidence
of the matters to which it relates.

25.

PARTIAL INVALIDITY

If, at any time, any provision of this Debenture 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.

26.

COUNTERPARTS

This Debenture 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
this Debenture.

27.

THIRD PARTIES

Save as expressly stated in this Debenture, a person who is not a Party has no
right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to
enjoy the benefit of any term of this Debenture.

28.

GOVERNING LAW

This Debenture and any dispute or claim arising out of or in connection with it
or its subject matter, existence, negotiation, validity, termination or
enforceability (including

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any non-contractual disputes or claims) shall be governed by and construed in
accordance with English law.

29.

ENFORCEMENT

29.1

Jurisdiction

(a)

The courts of England have exclusive jurisdiction to settle any dispute or claim
arising out of or in connection with this Debenture (including a dispute
regarding the existence, validity or termination of this Debenture or any
non-contractual disputes or claims arising out of or in connection with this
Debenture) (a “Dispute”).

(b)

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.

(c)

This Clause 29.1 is for the benefit of the Secured Parties only.  As a result,
no Secured Party shall be prevented from taking proceedings relating to a
Dispute in any other courts with jurisdiction.  To the extent allowed by law,
the Secured Parties may take concurrent proceedings in any number of
jurisdictions.

29.2

Waiver of immunity

The Company irrevocably and unconditionally:

(a)

agrees not to claim any immunity from proceedings brought by a Secured Party
against it in relation to a Secured Agreement and to ensure that no such claim
is made on its behalf;

(b)

consents generally to the giving of any relief or the issue of any process in
connection with those proceedings; and

(c)

waives all rights of immunity in respect of it or its assets.

IN WITNESS whereof this Debenture has been duly executed and delivered as a deed
on the date first above written.

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SCEHDULE 1

FORM OF NOTICES

[Headed notepaper of the Company]

BY REGISTERED MAIL

To: [relevant counterparty]

Dated [ ˜ ]

 

Dear Sirs

Notice of [Assignment]/[Charge]

We hereby give you notice that by a debenture dated [ ˜ ] (the “Debenture”) made
between ourselves (the “Company”) and Credit Suisse AG (the “Collateral
Agent”) all of our rights to and title and interest from time to time in the
property described in the Annex to this notice  ([“Assigned
Property”] / [“Charged Property”]) was [assigned] / [charged] by us to the
Collateral Agent in accordance with the provisions of the relevant agreements
(the [“Assignment”] / [“Charge”]).

[The [Assignment] / [Charge] is subject only to the [assignment] / [charge]
created under the [insert details of applicable production payment security
document] (the “Production Payment Security Document”.]1

On behalf of the Collateral Agent, we hereby irrevocably instruct and authorise
you:

1.

on written request from the Collateral Agent to make all payments due to us in
respect of the [Assigned Property] / [Charged Property] to the Collateral Agent
instead at a bank account designated by the Collateral Agent unless and until
the Collateral Agent notifies you otherwise; [and]

2.

to disclose to the Collateral Agent such information regarding the [Assigned
Property] / [Charged Property] as it may from time to time reasonably request
and to send copies of all notices relating to the [Assigned Property] / [Charged
Property] to the Collateral Agent[; and

3.

to pay all proceeds payable under the insurance policies described in the Annex
to this notice into [Insurance Account details to be inserted]]2.

Would you please acknowledge receipt of this Notice by returning to us the copy
of this Notice duly signed by your authorised signatory.

Your acknowledgement will be deemed to confirm in favour of the Collateral Agent
that:

 

 

 

 

1     Delete if not applicable

2     To be included in notices in respect of the Insurances only

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1.

[save in respect of the Production Payment Security Document [and any notices
from MC Admin Co LLC in respect of the Debenture dated 12 April 2012 and the
Deed of Reassignment and Charge dated 15 August 2013 and subsequent notice of
reassignment relating to such documents and dated [ ˜ ] 2014]]3 you have not
received any other notice of the interest of any third party relating to the
[Assigned Property] / [Charged Property];

2.

you are not aware of any dispute between ourselves and yourselves relating to
the [Assigned Property] / [Charged Property]; and

3.

you shall not raise any set off, defence or counter claim against the Collateral
Agent in respect of any payments now or in future expressed to be payable under
the [Assigned Property] / [Charged Property].

This Notice is governed by English law and any dispute or claim arising out of
or in connection with it and/or the Debenture 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.

Yours faithfully

for and on behalf of
Endeavour Energy UK Limited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3     Delete if not applicable

 

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Annex

Description of [Assigned Property] / [Charged Property]

[description]

 

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[On copy of Notice]

To: [Collateral Agent] and [the Company]

Dated [ ˜ ]

 

Dear Sirs

Notice of [Assignment]/[Charge]

We acknowledge receipt of the enclosed Notice of [Assignment]/[Charge].

Yours faithfully

 

 

duly authorised signatory for and on behalf of [relevant counterparty]

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SCHEDULE 2

PROJECT AGREEMENTS

1.

The joint operating agreement for P.592 Block 20/4b dated 2 September 1999;

2.

The Goldeneye unitisation and unit operating agreement dated 15 March 2002;

3.

The joint operating agreement for P.361 Block 29/1b dated 23 November 1988;

4.

The Triton joint facilities operating agreement dated 14 April 2000;

5.

The Bittern unitisation and unit operating agreement dated 23 January 2002;

6.

The Rochelle Field Unitisation and Unit Operating Agreement dated 1 July 2011;

7.

The joint operating agreement for P.213 Block 16/26a (Area A – “Alba Field
Area”) dated 10 October 1990;

8.

The joint operating agreement for P.218 and P.588 Blocks 15/21f and 15/21b dated
13 August 1987 (as it applies to the Ivanhoe Area, the Rob Roy Area and the
Hamish Area by virtue of a Supplemental Agreement dated 31 December 1987);

9.

The joint operating agreement for P.226 Block 15/27 dated 21 January 1998 as it
applies in the manner of a separate contract to Area A – “Renee” (as described
in the agreement entitled “Amendment to the Joint Operating Agreement for United
Kingdom Petroleum Production Licence P.226 for Block 15/27” dated 25 February
2000 (the “Amendment Agreement”));

10.

The joint operating agreement for P.226 Block 15/27 dated 21 January 1998 (as
amended under the terms of the Amendment Agreement) as it applies in the manner
of a separate contract to Area Beta – “Rochelle” (as defined in an agreement
dated 23 December 2009 entitled “Amendment to the Joint Operating Agreements for
United Kingdom Petroleum Production Licence P.226 for Block 15/27 Area B and
United Kingdom Petroleum Production Licence P.226 for Block 15/27 Area C” under
which Areas B and C (each as defined in the Amendment Agreement) were merged and
a new Area Beta was created);

11.

The joint operating agreement for P.339 Block 15/28b (“Rubie Field Area”) dated
26 January 1999;

12.

The joint operating agreement for P.219 Block 16/13a & 16/13e – “Enoch” dated 7
March 1986;

13.

The Enoch unitisation and unit operating agreement dated 1 July 2005;

14.

The Enoch PL Transport and Processing Agreement dated 24 February 2006;

15.

The joint operating agreement for P.1314 Block 23/16f – “Columbus” dated 27
September 2006;

16.

The joint operating agreement for P.255 Block 22/06a North – “Bacchus” dated 15
September 2006; and

17.

The joint operating agreement for P.1615 Block 15/26c dated 17 September 2010.

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SCHEDULE 3

PROJECT LICENCES

1.

The Petroleum Production Licence P.592 dated 4 June 1987;

2.

The Petroleum Production Licence P.361 dated 17 December 1980;

3.

The Petroleum Production Licence P.213 dated 16 March 1972;

4.

The Petroleum Production Licence P.218 dated 16  March 1972;

5.

The Petroleum Production Licence P.588 dated 4 June 1987;  

6.

The Petroleum Production Licence P.226 dated 16 March 1972;

7.

The Petroleum Production Licence P.339 dated 17 December 1980;

8.

The Petroleum Production Licence P.219 dated 16 March 1972;

9.

The Petroleum Production Licence P.1314 dated 22 December 2005;

10.

The Petroleum Production Licence P.255 dated 30 November 1977;

11.

The Seaward Production Licence P.1615 dated 20 June 2009; and

12.

Any licence which is issued in substitution or replacement of any of the
licences referred to in paragraphs 1 to 11 above.

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SIGNED AND DELIVERED AS A DEED

)

for and on behalf of

)

ENDEAVOUR ENERGY UK LIMITED

)

 

)

acting by Catherine Stubbs

)  

a director of

)

ENDEAVOUR ENERGY UK LIMITED

)

 

 

In the presence of:

 

Signature of witness

 

 

 

 

 

…………………………………..

 

 

Name of witness

(in BLOCK CAPITALS)

 

 

……………………………………

 

 

Address of witness

 

 

……………………………………

 

 

……………………………………

 

 

…………………………………

 

 

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SIGNED AND DELIVERED AS A DEED

)

for and on behalf of

)

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

)

 

)

acting by                                                              

)  

 

)

a                                                                          of

)

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

)

 

 

 

 

 

 

SIGNED AND DELIVERED AS A DEED

)

for and on behalf of

)

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

)

 

)

acting by                                                         

)  

 

)

a                                                                       of

)

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

)

 

 

 

In the presence of:

 

Signature of witness

 

 

 

 

 

…………………………………..

 

 

Name of witness

(in BLOCK CAPITALS)

 

 

……………………………………

 

 

Address of witness

 

 

……………………………………

 

 

……………………………………

 

 

…………………………………

 

 

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Dated 24 January 2014

CHARGE OVER SHARES

between

 

ENDEAVOUR ENERGY NORTH SEA, L.P.
as the Company

 

and

 

CREDIT SUISSE AG
as the Collateral Agent

 

 

 

 

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TABLE OF CONTENTS

 

 

 

 

 

 

Page

1.

DEFINITIONS, CONSTRUCTION AND INCORPORATION OF TERMS

1 

2.

COVENANT TO PAY

3 

3.

SECURITY

3 

4.

FURTHER ASSURANCE

4 

5.

REPRESENTATIONS

4 

6.

UNDERTAKINGS WITH RESPECT TO THE SECURITIES

4 

7.

FURTHER UNDERTAKINGS

6 

8.

RIGHTS OF THE COLLATERAL AGENT

9 

9.

EXONERATION

11 

10.

APPOINTMENT OF RECEIVER

11 

11.

RECEIVER’S POWERS

12 

12.

PROTECTION OF PURCHASERS

13 

13.

POWER OF ATTORNEY AND DELEGATION

13 

14.

APPLICATION OF MONIES RECEIVED UNDER THIS DEED

14 

15.

RELEASE OF SECURITY

15 

16.

NEW ACCOUNTS

16 

17.

SET-OFF

16 

18.

MISCELLANEOUS

16 

19.

NOTICES

21 

20.

CERTIFICATES AND DETERMINATIONS

22 

21.

PARTIAL INVALIDITY

22 

22.

COUNTERPARTS

23 

23.

THIRD PARTIES

23 

24.

GOVERNING LAW

23 

25.

ENFORCEMENT

23 

 

 

 

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THIS DEED is made on 24 January 2014

BETWEEN:

(1)

ENDEAVOUR ENERGY NORTH SEA, L.P., a limited partnership formed under the laws of
the state of Delaware, USA with registration number 4591023 whose registered
office is at Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware
19801, United States of America (the “Company”); and

(2)

CREDIT SUISSE AG as agent and trustee for itself and each of the other Secured
Parties (as such term is defined below) (the “Collateral Agent”).

IT IS AGREED as follows:

1.

DEFINITIONS, CONSTRUCTION AND Incorporation of Terms

1.1

Definitions

(a)

Terms defined in the Credit Agreement (as such term is defined below) shall,
unless otherwise defined in this Deed (including pursuant to Clause 1.1(b)) or
unless a contrary intention appears, bear the same meaning when used in this
Deed and the following terms shall have the following meanings:

“Debenture” means the debenture dated on or about the date of this Deed between
Endeavour Energy UK Limited and the Collateral Agent.

“Existing Charge Over Shares” means the amended and restated charge over shares
dated 21 May 2013 between the Company and Cidoval S.À R.L. (as amended,
modified, restated or supplemented from time to time).

“Related Securities Rights” means all accretions, allotments, rights, benefits
and advantages of all kinds (including all voting rights) at any time accruing,
offered or arising in respect of or incidental to the Securities and all money
or property accruing, offered or otherwise derived from or incidental to such
Securities at any time by way of conversion, redemption, bonus, preference,
option, dividend, distribution, interest or otherwise in respect of the
Securities.

“Securities” means all of the Company’s right, title, benefit and interest in
the shares of Endeavour Energy UK Limited, as listed in schedule 3.14
(Subsidiaries) of the Credit Agreement and all other stocks, shares, debentures,
loan stock, certificates of deposits, options, bonds, notes, warrants and other
securities of any kind whatsoever now or in the future legally or beneficially
owned by the Company in Endeavour Energy UK Limited whether in bearer or
registered form and all Related Securities Rights whether the same are held
directly by or to the order of the Company or by any trustee, fiduciary,
clearance system, custody system or custodian on its behalf or whether the same
have been delivered to or to the order of the Collateral Agent or its nominee
including all residual Related Securities Rights, all Related Property Rights
and all rights against any such

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trustee, fiduciary, clearance system or other person holding such to the order
of the Company.

(b)

The following terms shall have the meaning, mutatis mutandis, given to such
terms in the Debenture: “Confidentiality Undertaking”; “Credit Agreement”;
“Enforcement Date”; “Group”; “LPA”; “Receiver”; “Related Property Rights”;
“Secured Liabilities”; “Secured Agreements”; “Secured Parties”; “Security”; and
“Security Period”. 

(c)

Unless a contrary intention appears, words defined in the Companies Act 2006
have the same meanings in this Deed.

1.2

Construction

The Company agrees that the terms of clause 1.2 (Construction) of the Debenture
are incorporated into this Deed as if those terms were set out in full in this
Deed.

1.3

Implied covenants for title

The obligations of the Company under this Deed shall be in addition to the
covenants for title deemed to be included in this Deed by virtue of Part I of
the Law of Property (Miscellaneous Provisions) Act 1994.

1.4

Effect as a deed

This Deed is intended to take effect as a deed notwithstanding that the
Collateral Agent may have executed it under hand only.

1.5

Law of Property (Miscellaneous Provisions) Act 1989

To the extent necessary for any agreement for the disposition of the Securities
in this Deed to be a valid agreement under Section 2(1) of the Law of Property
(Miscellaneous Provisions) Act 1989, the terms of the other Secured Agreements
are incorporated into this Deed.

1.6

Security trust provisions

The Company agrees that the terms of clause 10 (The Collateral Agent) of the
Debenture are incorporated into this Deed as if those terms were set out in full
in this Deed.

1.7

Potential invalidity

Neither the covenant to pay in Clause 2  (Covenant to pay), nor the Security
created by this Deed shall extend to or include any liability or sum which
would, but for this Clause 1.7, cause any covenant, obligation or Security to be
unlawful under any applicable law or would if it were so included, cause the
infringement of section 678 of the Companies Act 2006.

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1.8

Intercreditor Agreement

Notwithstanding anything herein to the contrary, the lien and security interest
granted to the Collateral Agent pursuant to this Deed and the exercise of any
right or remedy by the Collateral Agent hereunder are subject to the provisions
of the Intercreditor Agreement.  In the event of any conflict between the terms
of the Intercreditor Agreement and this Deed, the terms of the Intercreditor
Agreement shall govern and control.

1.9

Incorporation

(a)

Without prejudice to the application of any other provisions of the Credit
Agreement to this Deed (by reason of this Deed being a Credit Document and a
Secured Agreement for the purposes of the Credit Agreement), sections 1.03 (Pro
Forma Calculations), 2.20 (Tax Gross-Up and Indemnities), 9.06 (Right of
Setoff), 9.08 (Waivers; Amendment), 9.13 (Counterparts) and 9.20 (Judgment
Currency) of the Credit Agreement shall apply to this Deed, mutatis mutandis, as
if the same had been set out in full herein with references in such clauses to:

(i)

the “Agreement” or “hereunder” being construed as references to this Deed;

(ii)

the “Credit Documents” and “Secured Agreements” being construed as (A) including
this Deed, or (B) if the context so requires, as references specifically to this
Deed; and

(iii)

in the context of section 2.20 (Tax Gross-Up and Indemnities) of the Credit
Agreement, the “Administrative Agent” or a “Lender” being, if the context so
requires, construed, in each case, as references to the Collateral Agent and, in
the context of section 9.05 (Expenses; Indemnity) of the Credit Agreement, the
“Administrative Agent” or a “Lender” being construed, in each case, as
references to each Secured Party, Receiver, attorney, manager, agent or other
person as may be appointed by the Collateral Agent under this Deed; and

(b)

a reference to “Secured Liabilities” includes any liabilities which would be
treated as such but for the liquidation of, or dissolution of, or similar event
affecting the Borrower.

2.

COVENANT TO PAY

(a)

The Company, as continuing security for the payment of the Secured Liabilities,
covenants with the Collateral Agent (for the benefit of itself and the other
Secured Parties) that it shall, subject to Clause 2(b), promptly on demand pay
to the Secured Parties the Secured Liabilities when they fall due for payment in
accordance with the Secured Agreements.

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(b)

The obligations of the Company pursuant to Clause 2(a) are limited to the
aggregate proceeds realised from the Securities (and shall not extend to any
proceeds realised from any other assets or rights of the Company).

3.

SECURITY

The Company hereby charges to the Collateral Agent by way of first fixed charge
and with full title guarantee as a continuing security for the payment and
discharge of the Secured Liabilities all of the Company’s rights to and title
and interest from time to time in all Securities.

4.

FURTHER ASSURANCE

4.1

General

(a)

The Company shall at its own expense promptly upon request by the Collateral
Agent execute (in such form as the Collateral Agent may reasonably require) such
documents (including assignments, transfers, mortgages, charges, notices and
instructions) in favour of the Collateral Agent or its nominees and do all such
assurances and things (including making any filings or registrations or
otherwise recording the interests of the Collateral Agent in any registers
relevant to the Security) as the Collateral Agent may reasonably require for:

(i)

perfecting and/or protecting (by registration or in any other way) the Security
created or intended to be created by this Deed;

(ii)

conferring upon the Collateral Agent such Security as it may require over the
assets of the Company outside of England and Wales which if in England or Wales
would form part of or be intended to form part of the Securities;

(iii)

facilitating the realisation of all or any part of the Securities; and/or

(iv)

for exercising all rights, powers, authorities and discretions conferred on the
Collateral Agent or any Receiver pursuant to this Deed or by law,

including a reaffirmation/confirmation signed by the Company with respect to the
continuing effectiveness of the Security created pursuant to this Deed following
any increase in the Secured Liabilities from time to time.

(b)

The covenants set out in section 2(1)(b) of the Law of Property (Miscellaneous
Provisions) Act 1994 shall extend to include the obligations set out in this
Clause 4.1 and Clause 6.5  (Consents and other necessary action).

5.

REPRESENTATIONS

The Company represents and warrants that, as at the date of this Deed:

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(a)

subject to the terms of the Intercreditor Agreement, the matters set out in
section 3.11 (Security Documents) of the Credit Agreement, as they relate to
this Deed, are true and correct; and

(b)

the matters set out in section 3.14 (Subsidiaries) of the Credit Agreement, as
they relate to this Deed, are true and correct.

6.

UNDERTAKINGS WITH RESPECT TO THE SECURITIES

The Company undertakes to the Collateral Agent with respect to the Securities
that it shall:

6.1

Negative pledge

except as permitted by section 6.06 (Limitation on Liens) of the Credit
Agreement:

(a)

not create or agree to create or allow to exist any Security over of affecting
all or any of the Securities; and

(b)

procure that no member of the Group creates, agrees to create or allows to exist
any Security on, over, or affecting, any of the Securities;

6.2

Disposals

except as permitted by section 6.09 (Merger, Consolidation, or Sale of
Assets) of the Credit Agreement not, either in a single transaction or in a
series of transactions and whether related or not, sell, transfer, lend or
otherwise dispose of the Securities or any part of them or the right to receive
or to be paid the proceeds arising on disposal of the same, or agree to attempt
to do so;

6.3

Subsequent charge

subject to Clause 6.1  (Negative pledge), procure that any Security created by
the Company after the date of this Deed and relating to the Securities
(otherwise than in favour of the Collateral Agent) or as permitted by section
6.06 (Limitation on Liens) of the Credit Agreement shall be expressed to be
subject to this Deed;

6.4

Prejudicial action

not do or cause or permit to be done anything which may in any way depreciate,
jeopardise or otherwise prejudice the value to the Collateral Agent of the
Securities;

6.5

Consents and other necessary action

at its own expense take all such action as is available to it and is reasonably
necessary for the purpose of creating, perfecting or maintaining the Security
created or intended to be created pursuant to this Deed which shall include,
without limitation using reasonable endeavours to obtain any necessary consent
(in form and content satisfactory to the

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Collateral Agent, acting reasonably) to enable all or any of the Securities to
be mortgaged or charged pursuant to this Deed.  Immediately upon obtaining any
necessary consent the asset concerned shall become subject to the Security
created by this Deed.  The Company shall promptly deliver a copy of each consent
to the Collateral Agent;

6.6

Communications

promptly deliver to the Collateral Agent a copy of every circular, notice,
resolution, minutes or other documents received by it in connection with the
Securities; and

6.7

Nominees

not appoint and has not appointed any nominee to exercise or enjoy all or any of
its rights in relation to the Securities.

7.

FURTHER UNDERTAKINGS

7.1

Deposit of title documents

The Company shall (i) in accordance with section 5.16(e) (Post-Closing
Obligations) of the Credit Agreement, and (ii) within three (3) Business Days of
the date of issuance by Endeavour Energy UK Limited of any additional
Securities, deposit with the Collateral Agent or its nominee:

(a)

all stock and share certificates and documents of, or evidencing, title or the
right to title relating to the Securities;

(b)

duly stamped stock transfer forms or other instruments of transfer duly
completed to the Collateral Agent’s satisfaction; and

(c)

such other documents as the Collateral Agent may require from time to time for
the purpose of perfecting its title to the Securities or for the purpose of
vesting the same in itself, its nominee or any purchaser or presenting the same
for registration at any time,

and any document not so deposited with the Collateral Agent or its nominee or
released by the Collateral Agent (other than a release upon discharge of the
Security constituted by this Deed) shall be held on trust by the Company for the
Collateral Agent.

7.2

Registration of transfers

The Company shall procure that, as and when required by the Collateral Agent
following the Enforcement Date, all Securities which are in registered form are
duly registered in the name of the Collateral Agent or its nominee once a
transfer relating to those Securities is presented for that purpose.

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7.3

Information

The Company undertakes that it shall, promptly following receipt, deliver to the
Collateral Agent a copy of every document received by it or its nominees in
connection with any of the Securities or any issuer of those Securities.

7.4

Calls

(a)

The Company shall duly and promptly pay all calls, instalments or other payments
which may be due and payable in respect of the Securities and, for the avoidance
of doubt, no Secured Party shall incur any liability in respect of any amounts
due from the Company in respect of the Securities.

(b)

If the Company fails to comply with Clause 7.4(a), the Collateral Agent may pay
the calls or other payments on behalf of the Company.  The Company must promptly
on request from the Collateral Agent reimburse the Collateral Agent for any such
payment.

7.5

Dividends

(a)

Before the Enforcement Date, the Company shall be entitled to receive all
declared cash dividends or other monies which may be paid or payable in respect
of the Securities.

(b)

On and after the Enforcement Date, subject to the Intercreditor Agreement, the
Collateral Agent (or its nominee) shall be entitled to complete all instruments
of transfer in relation to the Securities of the Company on behalf of the
Company in favour of itself or such other person it shall elect and otherwise
have any Securities registered in its name or in the name of its nominees and
receive all dividends or other monies which may be paid or payable in respect of
the Securities.

(c)

The Company shall, to the extent that such dividends or other monies have not
been paid directly to the Collateral Agent (or its nominee), take all steps as
may be required to ensure that such dividends or other monies are paid to the
Collateral Agent (or its nominee).  In any event, any such dividends or other
monies received by the Company shall, on and after the Enforcement Date, subject
to the Intercreditor Agreement, be held on trust by the Company for the
Collateral Agent (or its nominee) and shall be paid to the Collateral Agent (or
its nominee).

(d)

If, at any time, any Securities are registered in the name of the Collateral
Agent or its nominee, the Collateral Agent will not be under any duty to ensure
that any dividends, distributions or other moneys payable in respect of those
Securities are duly and promptly paid or received by it or its nominee, or to
verify that the correct amounts are paid or received, or to take any action in
connection with the taking up of any (or any offer of any) stocks, shares,
rights, moneys or other property paid, distributed, accruing or offered at any
time by way of interest,

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dividend, redemption, bonus, rights, preference, option, warrant or otherwise on
or in respect of or in substitution for, any of those Securities.

7.6

Voting rights and other matters

(a)

Prior to the Enforcement Date and save as otherwise provided in this Clause 7.6,
the Company shall be entitled to exercise all voting rights in respect of the
Securities provided that the Company shall not exercise such voting rights in
any manner which, in the reasonable opinion of the Collateral Agent, may
prejudice the interest of the Secured Parties in the Securities or in breach of
any Secured Agreement and may prejudice the value of, or the ability of the
Collateral Agent to realise, the Security over the Securities created pursuant
to this Deed.

(b)

The Company shall not, without the prior written consent of the Collateral
Agent, permit or agree to any variation of the rights attaching to or conferred
by any of the Securities, participate in any rights issue, elect to receive or
vote in favour of receiving any dividends or other distributions other than in
the form of cash or participate in any vote concerning a members voluntary
winding‑up or a compromise or arrangement pursuant to sections 895‑901 of the
Companies Act 2006.

(c)

At any time on or after the Enforcement Date, and subject to the Intercreditor
Agreement, the Collateral Agent may in such manner and on such terms as it sees
fit (in the name of the Company or otherwise and without the need for further
consent from the Company):

(i)

exercise (or refrain from exercising) any voting rights in respect of the
Securities or, as the case may be, require the Company to exercise (or refrain
from exercising) any such voting rights in such manner as it considers fit
(including all powers given to trustees under Part II of the Trustee Act 2000)
in which event, the Company shall comply with all such directions of the
Collateral Agent; and/or

(ii)

complete all instruments of transfer in relation to the Securities of the
Company on behalf of the Company in favour of itself or such other person as it
shall select and otherwise have any Securities registered in its name or the
name of its nominee; and/or

(iii)

apply all dividends and other monies arising from the Securities in accordance
with Clause 14 (Application of monies received under this Deed);  and/or

(iv)

without prejudice to any other provision of this Deed, transfer the Securities
into the name of a nominee or transferee of the Collateral Agent as the
Collateral Agent may require; and/or

(v)

exercise (or refrain from exercising) all or any of the powers and rights
conferred upon or exercisable by the legal or beneficial owner of the

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Securities or as the case may be, require the Company to exercise (or refrain
from exercising) all or any such powers and rights in such manner as it
considers fit in which event, the Company shall comply with all such directions
of the Collateral Agent.

(d)

After the Enforcement Date, the Company shall:

(i)

comply or procure the compliance, with any directions of the Collateral Agent in
respect of the exercise of any rights and powers exercisable in relation to such
Security; and

(ii)

if the Collateral Agent so requests, promptly deliver to the Collateral Agent a
form of proxy or authority (in each case, in such form as the Collateral Agent
shall reasonably require) appointing such person as the Collateral Agent shall
elect to be the proxy of the Company or otherwise enabling such person as the
Collateral Agent shall select to exercise such voting rights and other rights
and powers as shall be specified (whether generally or specifically) in the
relevant notice.

7.7

Redemption

The Company will not redeem or take any step to redeem any redeemable Securities
save to the extent that such redemption would not breach the terms of the
Secured Agreements.

7.8

Liability of the Collateral Agent

The Company agrees with the Collateral Agent that neither the Collateral Agent
nor its nominee will have any liability for:

(a)

failing to present any coupon or other document relating to any of the
Securities;

(b)

accepting or failing to accept any offer relating to any of the Securities;

(c)

failing to attend or vote at any meetings relating to the Securities;

(d)

failing to notify the Company of any matters mentioned in this Clause 7.8 or of
any communication received by the Collateral Agent in relation to the
Securities; or

(e)

any loss arising out of or in connection with the exercise or non‑exercise of
any rights or powers attaching or accruing to the Securities or which may be
exercised by the Collateral Agent or any nominee for the Collateral Agent under
this Deed (whether or not on sale or other realisation of the Securities a
better price could have or might have been obtained by either deferring or
advancing the date of sale or realisation or otherwise).

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8.

RIGHTS OF THE Collateral Agent

8.1

Enforcement

At any time on or after the Enforcement Date, the Security created pursuant to
this Deed shall be immediately enforceable and the Collateral Agent may in its
absolute discretion and without notice to the Company or the prior authorisation
of any court:

(a)

enforce all or any part of the Security created by this Deed and take possession
of or dispose of all or any of the Securities in each case at such times and
upon such terms as it sees fit; and

(b)

whether or not it has appointed a Receiver, exercise all of the powers,
authorities and discretions:

(i)

conferred from time to time on mortgagees, receivers or administrative receivers
by the LPA and the Insolvency Act 1986 (as varied or extended by this Deed) or
by law; and

(ii)

granted to a Receiver by this Deed or by law.

8.2

Restrictions on consolidation of mortgages

Section 93 of the LPA shall not apply to this Deed or to any sale made under
it.  The Collateral Agent shall have the right to consolidate all or any of the
Security created by or pursuant to this Deed with any other Security in
existence at any time.  Such power may be exercised by the Collateral Agent at
any time on or after the Enforcement Date.

8.3

Restrictions on exercise of power of sale

Section 103 of the LPA shall not apply to this Deed and the power of sale
arising under the LPA shall arise on the date of this Deed (and the Secured
Liabilities shall be deemed to have become due and payable for that
purpose).  The power of sale and other powers conferred by Section 101 of the
LPA as varied or extended by this Deed and those powers conferred (expressly or
by reference) on a Receiver shall be immediately exercisable by the Collateral
Agent at any time on or after the Enforcement Date.

8.4

No prior notice needed

The rights and powers (a) conferred on mortgagees by the LPA (as varied or
amended by this Deed or the Debenture), (b) conferred by this Deed or the
Debenture on a Receiver, or (c) of the Collateral Agent set out in Clauses
8.2 (Restrictions on consolidation of mortgages) and 8.3 (Restrictions on
exercise of power of sale), may in each case be exercised by the Collateral
Agent without prior notice to the Company, irrespective of whether the
Collateral Agent has taken possession or appointed a Receiver of the Securities.

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8.5

Right of appropriation

(a)

Without prejudice to the other provisions of this Deed, to the extent that any
of the Securities constitute “financial collateral”, and this Deed and the
obligations of the Company hereunder constitute a “security financial collateral
agreement” (in each case as defined in, and for the purposes of, the Financial
Collateral Arrangements (No. 2) Regulations 2003 (SI 2003/3226) (the
“Regulations”), the Collateral Agent shall at any time on and after the
Enforcement Date have the right to appropriate all or any part of those
Securities in or towards discharge of the Secured Liabilities.  For this
purpose, the Parties agree that the value of any such Securities so appropriated
shall be the market price of such Securities at the time the right of
appropriation is exercised as determined by the Collateral Agent by reference to
such method or source of valuation as the Collateral Agent may select, including
by independent valuation.  The Parties agree that the methods or sources of
valuation provided for in this Clause 8.5 or selected by the Collateral Agent in
accordance with this Clause 8.5 shall constitute a commercially reasonable
method of valuation for the purposes of the Regulations.

(b)

The Collateral Agent shall notify the Company as soon as reasonably practicable
of the exercise of its rights of appropriation as regards such of the Securities
as are specified in such notice.

9.

EXONERATION

9.1

Exoneration

(a)

No Secured Party shall, nor shall any Receiver, by reason of it or the Receiver
entering into possession of the Securities or any part thereof, or the exercise
or the attempted or purported exercise of, or failure to exercise any of, their
respective powers, be liable to account as mortgagee in possession or be liable
for any loss or realisation or for any default or omission for which a mortgagee
in possession might be liable; but every Receiver duly appointed by the
Collateral Agent under this Deed shall for all purposes be deemed to be in the
same position as a receiver duly appointed by a mortgagee under the LPA save to
the extent that the provisions of the LPA are varied by or are inconsistent with
the provisions of this Deed when the provisions hereof shall prevail and every
such Receiver and the Collateral Agent shall in any event be entitled to all the
rights, powers, privileges and immunities conferred by the LPA on mortgagees and
receivers duly appointed under the LPA.

(b)

No Secured Party, nor any Receiver, shall be liable in respect of any of the
Securities or for any loss which arises out of the exercise or the attempted or
purported exercise of, or the failure to exercise any of, their respective
powers under the Secured Agreements, provided that nothing in this Deed shall
exempt any Secured Party, nor any Receiver, from any liability for gross
negligence or willful misconduct (in each case as determined by a court of
competent jurisdiction in a final and non-appealable decision).

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9.2

Indemnity

The Collateral Agent and every Receiver, attorney, delegate, manager, agent or
other person appointed by the Collateral Agent hereunder shall be entitled to be
indemnified out of the Securities or any part thereof in respect of all losses,
liabilities and expenses incurred by it or him in the execution of any of the
powers, authorities or discretions vested in it or him pursuant to this Deed and
against all actions, proceedings, costs, losses, claims and demands in respect
of any matter or thing done or omitted in any way relating to the Securities or
any part of them other than such liabilities, losses, expenses, actions,
proceedings, costs, claims or demands incurred or suffered as a result of the
fraud or gross negligence of the Collateral Agent or any Receiver, attorney,
delegate, manager, agent or other person appointed by the Collateral Agent.  The
Collateral Agent and any such Receiver may retain and pay all sums in respect of
which it is indemnified out of any monies received under the powers conferred by
this Deed.

10.

APPOINTMENT OF RECEIVER 

10.1

Appointment

(a)

At any time on or after the Enforcement Date or at the request of the Company,
the Collateral Agent may, without prior notice to the Company, in writing (under
seal, by deed or otherwise under hand) appoint a Receiver in respect of the
Securities or any part thereof and may in like manner from time to time (and
insofar as it is lawfully able to do, including subject to the provisions of
section 45 of the Insolvency Act 1986 in the case of an administrative
receivership) by notice remove any Receiver and appoint another in his stead.

(b)

Nothing in Clause 11.1  (Powers) shall restrict the exercise by any Secured
Party of any one or more rights of a Secured Party under Schedule B1 to the
Insolvency Act 1986 and the rules thereunder or at common law.

(c)

Section 109(1) of the LPA shall not apply to this Deed.  

(d)

The Collateral Agent shall be entitled to appoint a Receiver save to the extent
prohibited by section 72A of the Insolvency Act 1986.

10.2

More than one Receiver

Where more than one Receiver is appointed, each joint Receiver shall have the
power to act severally, independently of any other joint Receiver, except to the
extent that the Collateral Agent may specify to the contrary in the appointment.

10.3

Receiver as agent

A Receiver shall be the agent of the Company which shall be solely responsible
for his acts or defaults and for his remuneration and expenses.  No Receiver
shall at any time act as agent of any Secured Party.

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10.4

Receiver’s remuneration

Subject to section 36 of the Insolvency Act 1986, a Receiver shall be entitled
to remuneration for his services at a rate to be determined by the Collateral
Agent from time to time (and without being limited to any maximum rate specified
by any statute or statutory instrument).  The Collateral Agent may direct
payment of such remuneration out of moneys accruing to the Receiver but the
Company alone shall be liable for the payment of such remuneration and for all
other costs, charges and expenses of the Receiver.

11.

RECEIVER’S POWERS

11.1

Powers

A Receiver shall have (and be entitled to exercise) in relation to the
Securities over which he is appointed the following powers (as the same may be
varied or extended by the provisions of this Deed):

(a)

all of the powers of a receiver or an administrative receiver set out in
Schedule 1 to the Insolvency Act 1986 (whether or not the Receiver is an
administrative receiver) which is deemed incorporated into this Deed;

(b)

all of the powers conferred from time to time on receivers, mortgagors and
mortgagees in possession by the LPA or any applicable law;

(c)

all the powers and rights of a legal and beneficial owner and the power to do or
omit to do anything which the Company itself could do or omit to do; and

(d)

the power to do all things which, in the opinion of the Receiver, are incidental
to any of the powers, functions, authorities or discretions conferred or vested
in the Receiver pursuant to this Deed or upon receivers by statute or law
generally (including, without limitation, the bringing or defending of
proceedings in the name of, or on behalf of, the Company; the collection and/or
realisation of the Securities in such manner and on such terms as the Receiver
sees fit; and the execution of documents in the name of the Company (whether
under hand, or by way of deed or by utilisation of the company seal of the
Company)).

11.2

Powers may be restricted

The powers granted to a Receiver pursuant to this Deed may be restricted by the
instrument (signed by the Collateral Agent) appointing him but they shall not be
restricted by any winding‑up or dissolution of the Company.

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12.

PROTECTION OF PURCHASERS

12.1

Absence of enquiry

No person or persons dealing with the Collateral Agent or any Receiver appointed
by it shall be concerned to enquire whether any event has happened upon which
any of the powers in this Deed are or may be exercisable or otherwise as to the
propriety or regularity of any exercise of such powers or of any act purporting
or intended to be an exercise of such powers or whether any amount remains
secured by this Deed or whether the Secured Liabilities have become payable or
as to the application of any money paid to the Collateral Agent or any
Receiver.  All the protections to purchasers and persons dealing with receivers
contained in sections 104, 107 and 109(4) of the LPA shall apply to any person
purchasing from or dealing with the Collateral Agent or any such Receiver.

12.2

Receipt: conclusive discharge

The receipt of the Collateral Agent or any Receiver shall be a conclusive
discharge to any purchaser of the Securities.

13.

POWER OF ATTORNEY AND DELEGATION

13.1

Power of attorney: general

The Company hereby irrevocably and by way of security appoints the Collateral
Agent and any Receiver severally to be its attorney in its name and on its
behalf and as its act and deed:

(a)

to execute and deliver any documents or instruments which the Collateral Agent
or such Receiver may require for perfecting the title of the Collateral Agent to
the Securities or for vesting the same in the Collateral Agent, its nominee or
any purchaser;

(b)

to sign, execute, seal and deliver and otherwise perfect any further security
document which the Company is required to enter into pursuant to this Deed; and

(c)

otherwise generally to sign, seal, execute and deliver all deeds, assurances,
agreements and documents and to do all acts and things which (i) may be required
for the full exercise of all or any of the powers conferred on the Collateral
Agent or any Receiver under this Deed, or (ii) the Company is required to do
pursuant to this Deed, or (iii) may be deemed expedient by the Collateral Agent
or a Receiver in connection with (A) any preservation, disposition, realisation
or getting in by the Collateral Agent or such Receiver of the Securities or any
part thereof, or (B) any other exercise of any other power under this Deed.

The Collateral Agent confirms that it will only exercise the rights set out in
this Clause 13.1 following the occurrence of a default or event of default under
the Credit Documents.

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13.2

Power of attorney: ratification

The Company ratifies and confirms and agrees to ratify and confirm all acts and
things which any attorney mentioned in this Clause 13 shall do or purport to do
in exercise of the powers granted by this Clause 13.  All monies expended by any
such attorney shall be deemed to be expenses incurred by the Collateral Agent
under this Deed.

13.3

General delegation

(a)

The Collateral Agent and any Receiver (acting in good faith) shall have full
power to delegate the powers, authorities and discretions conferred on it or him
by this Deed (including the power of attorney) on such terms and conditions as
it or he shall see fit which shall not preclude exercise of those powers,
authorities or discretions by it or him or any revocation of the delegation or
any subsequent delegation.

(b)

Any such delegation may be made upon such terms, consistent with the terms of
the Secured Agreements (including power to sub‑delegate) as the Collateral Agent
may think fit.

(c)

Save in the case of gross negligence or wilful misconduct by the Collateral
Agent (in each case as determined by a court of competent jurisdiction in a
final and non-appealable decision) in the exercise of its right to delegate, the
Collateral Agent shall not be in any way liable to the Company or any other
person for any losses, liabilities or expenses arising from any act, default,
omission or misconduct on the part of any such delegate or sub-delegate.

14.

APPLICATION OF MONIES RECEIVED UNDER THIS DEED

14.1

Order of application

Any monies received under the powers hereby conferred shall, subject to the
repayment of any claims or debts having priority to this Deed, be applied for
the following purposes and in the following order of priority:

(a)

towards the payment of all amounts owing to the Collateral Agent pursuant to the
terms of the Secured Agreements;

(b)

towards the payment in full of the Secured Liabilities on a rateable basis in
accordance with the terms of the applicable Secured Agreements; and

(c)

after payment of all the Secured Liabilities, towards the payment to Holdings,
the Company and the Subsidiary Guarantors or their successors or assigns, as
their interests may appear, or to whosoever may be lawfully entitled to receive
the same, or as a court of competent jurisdiction may direct.

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14.2

Application against Secured Liabilities

Subject to Clause 14.1  (Order of application), any moneys or other value
received or realised by the Collateral Agent from the Company or a Receiver
under this Deed may be applied by the Collateral Agent to any item of account or
liability or transaction forming part of the Secured Liabilities to which they
may be applicable in any order or manner which the Collateral Agent may
determine.

14.3

Suspense account

The Collateral Agent may credit any monies received under this Deed or otherwise
on account of the Company’s liability in respect of the Secured Liabilities, to
an interest bearing suspense account for so long and in such manner as the
Collateral Agent may from time to time determine and the Receiver may retain the
same for such period as he and the Collateral Agent consider appropriate without
having to apply all or part of that money in or towards discharge of the Secured
Liabilities.

15.

RELEASE OF SECURITY

15.1

Release

The Collateral Agent shall, at the request and cost of the Company, execute or
procure the execution by its nominee of any documents (in each case in a form
acceptable to the Collateral Agent) and do all such deeds, acts and things as
are necessary to release the Securities from the Security created by or in
accordance with this Deed at the end of the Security Period.

15.2

Avoidance of payments

(a)

No amount paid, repaid or credited to a Secured Party shall be deemed to have
been irrevocably paid if the Collateral Agent (acting reasonably) considers that
the payment or credit of such amount is capable of being avoided or reduced by
virtue of any laws applicable on bankruptcy, insolvency, liquidation or similar
laws.

(b)

If any amount paid, repaid or credited to a Secured Party is avoided or reduced
by virtue of any laws applicable on bankruptcy, insolvency, liquidation or
similar laws, then any release, discharge or settlement between that Secured
Party and the Company shall be deemed not to have occurred and the Secured
Parties shall be entitled to enforce this Deed subsequently as if such release,
discharge or settlement had not occurred and any such payment had not been
made.  The Company shall on demand indemnify the Collateral Agent against any
funding or other cost, loss, liability or expense incurred by the Collateral
Agent as a result of the Collateral Agent being required for any reason to
refund all or part of any amount received by it in respect of any of the Secured
Liabilities.

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16.

NEW ACCOUNTS

If a Secured Party receives notice of any subsequent charge or other interest
affecting any part of the Securities it may, without prejudice to its rights
under this Deed, open a fresh account or fresh accounts with the Company and
continue any existing account in the name of the Company and may appropriate to
any such fresh account any monies thereafter paid in, received or realised for
the credit of the Company without being under any obligation to apply the same
or any part of them in discharge of any of the Secured Liabilities.  If a
Secured Party shall fail to open such a fresh account it shall be deemed to have
done so with the effect that the said monies shall not operate to reduce the
Secured Liabilities at the time when that Secured Party received notice.

17.

SET-OFF

17.1

Set-off rights

The Collateral Agent may set off any matured obligation due from any Credit
Party under the Secured Agreements (to the extent beneficially owned by the
Collateral Agent) against any matured obligation owed by the Collateral Agent to
any Credit Party, regardless of the place of payment, booking branch or currency
of either obligation.  If the obligations are in different currencies, the
Collateral Agent may convert either obligation at a market rate of exchange in
its usual course of business for the purpose of the set-off.

17.2

No set-off

The Company will pay all amounts payable under this Deed without any set-off,
counterclaim or deduction whatsoever unless required by law, in which event the
Company will pay an additional amount to ensure that the recipient receives the
amount which would have been payable had no deduction been required to have been
made.

18.

MISCELLANEOUS

18.1

The Company

This Deed shall be binding on the successors and assigns of the Company.

18.2

Assignment and transfer

The Company may not assign or transfer any of its rights or obligations under
this Deed without the prior consent of each Lender.  The Collateral Agent may
assign and transfer all or any part of its rights and obligations under this
Deed to a replacement collateral agent appointed pursuant to the terms of the
Credit Agreement.

18.3

Disclosure

The Collateral Agent may disclose to any of its Affiliates and any other person:

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(a)

which is one of its professional advisers;

(b)

to (or through) whom a Secured Party assigns or transfers (or may potentially
assign or transfer) all or any of its rights and obligations under this Deed
and/or the Credit Agreement;

(c)

which is a Receiver or prospective Receiver;

(d)

(together with professional advisers) who may have an interest in the benefits
arising under this Deed;

(e)

to whom, and to the extent that, information is required to be disclosed by any
applicable law or regulation; or

(f)

any other person not expressly referred to in sub-paragraphs 18.3(a) to 18.3(e)
but otherwise described in section 9.16 (Confidentiality) of the Credit
Agreement,

any information about the Company, the Secured Agreements or this Deed as the
Collateral Agent shall consider appropriate if, in relation to Clause 18.3(b),
the person to whom the information is to be given has entered into a
Confidentiality Undertaking.

18.4

Property

This Deed is and will remain the property of the Collateral Agent.

18.5

Continuing Security

(a)

This Deed shall be a continuing security and shall not be discharged by any
intermediate payment or satisfaction of the whole or any part of the Secured
Liabilities.

(b)

If any purported obligation or liability of any Credit Party to the Secured
Parties which if valid would have been the subject of any obligation or charge
created by this Deed is or becomes unenforceable, invalid or illegal on any
ground whatsoever whether or not known to any Secured Party, the Company shall
nevertheless be liable in respect of that purported obligation or liability as
if the same were fully valid and enforceable and the Company was the principal
debtor in respect thereof.  The Company hereby agrees to keep the Secured
Parties fully indemnified against all damages, losses, costs and expenses
arising from any failure of any Credit Party to carry out any such purported
obligation or liability.

18.6

Waiver of defences

The obligations of the Company under this Deed will not be affected by an act,
omission, matter or thing which, but for this Clause 18.6, would reduce, release
or prejudice any of its obligations under this Deed (without limitation and
whether or not known to any Secured Party) including:

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(a)

any time, waiver or consent granted to, or composition with, the Company, any
Credit Party or other person;

(b)

the release of any Credit Party or any other person under the terms of any
composition or arrangement with any creditor of any person;

(c)

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, the Company, any Credit Party or any 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;

(d)

any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of the Company, any Credit Party
or any other person;

(e)

any amendment (however fundamental) or replacement of any Secured Agreement or
any other document or security;

(f)

any unenforceability, illegality or invalidity of any obligation of any person
under any Secured Agreement or any other document or security;

(g)

any insolvency or similar proceedings;

(h)

any Secured Party disclosing to the Company any information relating to the
business, assets, financial condition or prospects of any other Credit Party now
or hereafter known to such Secured Party (the Company waiving any duty on the
part of the Secured Parties to discuss such information);

(i)

the existence of any claim, set‑off or other right which the Company may at any
time have against the Collateral Agent or any other person; or

(j)

the making or absence of any demand for payment of any Secured Liabilities or
other obligations on the Company or any other person, whether by the Collateral
Agent or any other person.

18.7

Non‑competition

(a)

Until the Security Period has ended and unless the Collateral Agent otherwise
directs, the Company will not exercise any rights which it may have by reason of
performance by it of its obligations under this Deed:

(i)

to be indemnified by any Credit Party (including any rights it may have by way
of subrogation);

(ii)

to claim any contribution from any guarantor of any Credit Party of the
obligations under the Secured Agreements;

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(iii)

to take the benefit (in whole or in part and whether by way of subrogation or
otherwise) of any right of the Collateral Agent or any of the other Secured
Parties under any Secured Agreement or of any other guarantee or security taken
pursuant to, or in connection with, the Secured Agreements;

(iv)

to claim, rank, prove or vote as a creditor of any Credit Party or its estate in
competition with the Collateral Agent or any of the other Secured Parties;
and/or

(v)

receive, claim or have the benefit of any payment, distribution or security from
or on account of any Credit Party, or exercise any right of set‑off against any
Credit Party.

(b)

The Company shall hold on trust for and immediately pay or transfer to the
Collateral Agent any payment or distribution or benefit of security received by
it contrary to this Clause 18.7.

18.8

Additional Security

This Deed shall be in addition to and not be affected by any other Security or
guarantee now or hereafter held by any Secured Party for all or any part of the
Secured Liabilities nor shall any such other Security or guarantee of liability
to any Secured Party of or by any person not a Secured Party be in any way
impaired or discharged by this Deed nor shall this Deed in any way impair or
discharge such other Security or guarantee.

18.9

Variation of Security

This Deed shall not in any way be affected or prejudiced by any Secured Party
now or hereafter dealing with, exchanging, releasing, varying or abstaining from
perfecting or enforcing any security or guarantee referred to in
Clause 18.8 (Additional Security) or any rights which any Secured Party may now
or hereafter have or giving time for payment or granting any indulgence or
compounding with any person whatsoever.

18.10

Enforcement of other Security

No Secured Party shall be obliged to enforce any other Security it may hold for,
or exercise any other rights it may have in relation to, the Secured Liabilities
before enforcing any of its rights under this Deed.

18.11

Perpetuity period

If applicable, the perpetuity period under the rule against perpetuities shall
be 125 years from the date of this Deed.

18.12

Redemption of prior Security

The Collateral Agent may redeem or take a transfer of any prior Security over
the Securities and may agree the accounts of any person entitled to that prior
Security.  Such

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agreed accounts shall be conclusive and binding on the Company.  Any amount paid
in connection with such redemption or transfer (including expenses) shall be
paid on demand by the Company to the Collateral Agent and until such payment
shall form part of the Secured Liabilities.

18.13

Custody

The Collateral Agent shall be entitled to keep all certificates and documents of
title relating to the Securities in safe custody at any of its branches or
otherwise provide for their safe custody by third parties and shall not be
responsible for any loss or damage occurring to or in respect thereof unless
such loss or damage shall be caused by its own gross negligence or wilful
default (in each case as determined by a court of competent jurisdiction in a
final and non-appealable decision).

18.14

Costs and expense

Save to the extent that the same has been recovered pursuant to section 9.05
(Expenses; Indemnity) of the Credit Agreement, the Company shall, within three
(3) Business Days of demand, pay to the Collateral Agent, any Receiver,
attorney, manager, agent or other person appointed by the Collateral Agent under
this Deed the amount of all costs and expenses (including legal fees) incurred
by that Collateral Agent, Receiver, attorney, manager, agent or other person (as
the case may be) in connection with (a) the perfection, preservation,
enforcement or attempted enforcement, of the Security created by or contemplated
by this Deed; and/or (b) the exercise of any rights under this Deed.

18.15

Cumulative Powers

The powers which this Deed confers on the Collateral Agent, the other Secured
Parties and any Receiver are cumulative, without prejudice to their respective
powers under the general law, and may be exercised as often as the relevant
person thinks appropriate.  The Collateral Agent, the other Secured Parties or
the Receiver may, in connection with the exercise of their powers, join or
concur with any person in any transaction, scheme or arrangement
whatsoever.  The respective powers of the Collateral Agent, the other Secured
Parties and the Receiver will in no circumstances be suspended, waived or
otherwise prejudiced by anything other than an express consent or amendment.

18.16

Conversion

All moneys received or held by the Collateral Agent or any Receiver under this
Deed may be converted into any other currency which the Collateral Agent
considers necessary to cover the obligations and liabilities comprised in the
Secured Liabilities in that other currency at the Collateral Agent’s spot rate
of exchange then prevailing for purchasing that other currency with the existing
currency.

18.17

No discharge

No payment to the Collateral Agent (whether under any judgment or court order or
otherwise) shall discharge the obligation or liability of the relevant Credit
Party in respect

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of which it was made unless and until the Collateral Agent has received payment
in full in the currency in which the obligation or liability is payable or, if
the currency of payment is not specified, was incurred.  To the extent that the
amount of any such payment shall on actual conversion into that currency fall
short of that obligation or liability expressed in that currency, the Collateral
Agent shall have a further separate cause of action against the relevant Credit
Party and shall be entitled to enforce the Security constituted by this Deed to
recover the amount of the shortfall.

18.18

Stamp duties, etc.

The Company shall timely pay or, at the option of the Collateral Agent, timely
reimburse the Collateral Agent for the payment of any stamp duty, fees,
registration and similar Taxes payable in respect of this Deed.

19.

Notices

19.1

Communications in writing

Any communication to be made under or in connection with this Deed shall be made
in writing and, unless otherwise stated, may be made by fax or letter.

19.2

Addresses

The address and fax number (and the department or officer, if any, for whose
attention the communication is to be made) of the Company and the Collateral
Agent for any communication or document to be made or delivered under or in
connection with this Deed is that identified with its name below:

Company

Address:Endeavour Energy North Sea, L.P.
c/o Corporation Trust Company
1209 Orange Street
Wilmington
Delaware 19801
United States of America

For the Attention of:Catherine Stubbs

With a copy to:Endeavour Energy North Sea, L.P.
c/o Endeavour International Corporation
811 Main Street, Suite 2100
Houston,  Texas 77002
United States of America

For the Attention of:Cathy Stubbs

Fax Number:+1 713 307 8794

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Email:Cathy.Stubbs@endeavourcorp.com

Collateral Agent

Address: Credit Suisse

Eleven Madison Avenue

23rd Floor

New York, NY  10010

For the Attention of: Loan Operations – Boutique Management,

Fax Number: +1 212 322 2291

Telephone No.:  +1 212 538 3525

Email:  Ops-collateral@credit-suisse.com,

or any substitute address, fax number or department or officer as the Company
may notify to the Collateral Agent or, as the case may be, the Collateral Agent
may notify to the Company, in each case by not less than five (5) Business Days’
notice.

19.3

Delivery

(a)

Any communication or document made or delivered by one person to another under
or in connection with this Deed will only be effective:

(i)

if by way of fax, when received in legible form; or

(ii)

if by way of letter, when it has been left at the relevant address or five (5)
Business Days after being deposited in the post postage prepaid in an envelope
addressed to it at that address,

and, if a particular department or officer is specified as part of its address
details provided under Clause 19.2  (Addresses), if addressed to that department
or officer.

(b)

Any communication or document to be made or delivered to the Collateral Agent
will be effective only when actually received by it and then only if it is
expressly marked for the attention of the department or officer identified with
the Collateral Agent’s name in Clause 19.2  (Addresses) (or any substitute
department or officer as it shall specify for this purpose).

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20.

Certificates AND Determinations

Any certificate or determination by the Collateral Agent of a rate or amount
under this Deed is, in the absence of manifest error, conclusive evidence of the
matters to which it relates.

21.

Partial Invalidity

If, at any time, any provision of this Deed 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.

22.

Counterparts

This Deed 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 this
Deed.

23.

THIRD PARTIES

Save as expressly stated in this Deed, a person who is not a Party to this Deed
has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce
or to enjoy the benefit of any term of this Deed.

24.

GOVERNING LAW

This Deed 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.

25.

ENFORCEMENT 

25.1

Jurisdiction

(a)

The courts of England have exclusive jurisdiction to settle any dispute arising
out of or in connection with this Deed (including a dispute regarding the
existence, validity or termination of this Deed or any non‑contractual
obligation arising out of or in connection with this Deed) (a “Dispute”).

(b)

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.

(c)

This Clause 25.1 is for the benefit of the Secured Parties only.  As a result,
no Secured Party shall be prevented from taking proceedings relating to a
Dispute in

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any other courts with jurisdiction.  To the extent allowed by law, the Secured
Party may take concurrent proceedings in any number of jurisdictions.

25.2

SERVICE OF PROCESS

Without prejudice to any other mode of service allowed under any relevant law,
the Company:

(a)

irrevocably appoints Endeavour Energy UK Limited as its agent for service of
process in relation to any proceedings before the English courts in connection
with this Deed; and

(b)

agrees that failure by the agent for service of process to notify the Company of
the process will not invalidate the proceedings concerned.

25.3

Waiver of immunity

The Company irrevocably and unconditionally:

(a)

agrees not to claim any immunity from proceedings brought by a Secured Party
against it in relation to a Secured Agreement and to ensure that no such claim
is made on its behalf;

(b)

consents generally to the giving of any relief or the issue of any process in
connection with those proceedings; and

(c)

waives all rights of immunity in respect of it or its assets.

IN WITNESS whereof this Deed has been duly executed as a deed on the date first
above written.

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SIGNED AND DELIVERED AS A DEED by)

 

 

SIGNED AND DELIVERED AS A DEED by

)

ENDEAVOUR ENERGY NORTH SEA, L.P.

)

 

)

acting by

)

 

)

Endeavour Energy North Sea LLC, as sole general

)

partner

)

 

)

 

 

 

 

 

In the presence of:

 

Signature of witness

 

 

 

 

..........................................................

 

 

Name of witness

(in BLOCK CAPITALS)

 

 

...................................................

 

 

Address of witness

 

 

....................................................

 

 

....................................................

 

 

....................................................

 

 

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SIGNED AND DELIVERED AS A DEED

)

for and on behalf of

)

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

)

 

)

acting by _______________________________

)  

 

)

a ___________________________________ of

)

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

)

 

 

 

 

 

 

SIGNED AND DELIVERED AS A DEED

)

for and on behalf of

)

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

)

 

)

acting by _______________________________

)  

 

)

a ___________________________________ of

)

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

)

 

 

 

In the presence of:

 

Signature of witness

 

 

 

 

…………………………………..

 

 

Name of witness

(in BLOCK CAPITALS)

 

 

...................................................

 

 

Address of witness

 

 

……………………………………

 

 

……………………………………

 

 

……………………………………

 

 

27

LO\3297205.8

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January 24, 2014

 

Each of the Addressees Listed in
the Attached Schedule I

Re:LC Procurement Agreement

Ladies and Gentlemen:

We have acted as counsel to Endeavour International Corporation, a Nevada
corporation (“Holdings”), in connection with the transactions contemplated by
the Opinion Documents (as such term is defined below).  This opinion letter is
furnished to you pursuant to Section 5.01(a)(A) of the Agreement (as defined
below). Unless otherwise defined in the body of this opinion letter, capitalized
terms used herein shall have the meanings assigned to such terms in the
Agreement.  Other terms that are defined in the Uniform Commercial Code as in
effect in the State of New York (the “NY UCC”) have the same meaning when used
herein unless otherwise indicated by the context in which such terms are so
used.  In addition, as used herein:

(a) the term “Opinion Parties” means, collectively, (i) End Finco LLC, a
Delaware limited liability company (“Finco”); (ii) Endeavour Operating
Corporation, a Delaware corporation (“EOC”); (iii) Endeavour Energy North Sea
LLC, a  Delaware limited liability company (“Endeavour North Sea LLC”); and (iv)
Endeavour Energy North Sea, L.P., a Delaware limited partnership (“Endeavour
North Sea L.P.”);

(b) the term “U.S. Credit Parties” means, collectively, the Opinion Parties and
Holdings;

(c) the term “Payee” means LC Finco S.à r.l., a private limited liability
company (société à responsabilité limitée) incorporated and existing under the
laws of Luxembourg; and

(d) the term “Credit Parties” means, collectively, the U.S. Credit Parties, the
Payee, Endeavour Energy UK Limited, a private limited company registered in
England and Wales (the “Payer”), Endeavour International Holdings B.V., a
besloten vennootschap organized under the laws of the Netherlands (“EIH”), and
Endeavour Energy Luxembourg S.à r.l., a private limited liability company
(société à responsabilité limitée) incorporated and existing under the laws of
Luxembourg (“EEL”).

In rendering the opinions set forth below, we have reviewed an execution copy of
the following documents and instruments:

 

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January 24, 2014    Page 2

 

(i) the LC Procurement Agreement (the “Agreement”) dated as of January 24, 2014
(the “Closing Date”), among Holdings, the Payer, the Payee and Credit Suisse AG,
acting through one or more of its branches or affiliates, as collateral agent
(the “Collateral Agent”);

(ii) the U.S. Security Agreement dated as of the Closing Date (the “U.S.
Security Agreement”), among Holdings, EOC, Endeavour North Sea LLC, Endeavour
North Sea L.P., Finco, EIH and EEUK (with the foregoing entities collectively
referred to herein as the “Grantors”), and the Collateral Agent;

(iii) the Credit Party Guaranty dated as of the Closing Date, among Holdings,
EIH, EOC, Endeavour North Sea L.P., Endeavour North Sea LLC, EEUK and Finco in
favor of the Collateral Agent;

(iv) the Subordination Agreement dated as of the Closing Date, among EOC, EEUK,
EIH, EEL, the Collateral Agent, and Credit Suisse AG, acting through one or more
of its branches or affiliates, as administrative agent under the Term A Credit
Agreement;

(v) the English Charge Over Shares dated as of the Closing Date (the “Share
Charge”), between Endeavour North Sea L.P. and the Collateral Agent;

(vi) the English Debenture dated as of the Closing Date (the “Debenture”),
between EEUK and the Collateral Agent;

(vii) each of the agreements listed on Schedule II hereto (the “Applicable
Contracts”);

(viii) each Opinion Party’s constitutive documents and resolutions listed on
Schedule III hereto (the “Organizational Documents”); and

(ix) unfiled copies of the UCC-1 Financing Statements listed Schedule IV hereto
(the “Financing Statements”), which Financing Statements relate to the Article 9
Collateral (as defined in paragraph 8 below).

The documents listed in clause (i) through (iv) above are referred to herein as
the “Opinion Documents”; the Share Charge and the Debenture are referred to
herein as the “Designated Documents”; and the Opinion Documents, the Designated
Documents, and the Organizational Documents are herein referred to as the
“Transaction Documents”.   Additionally, in rendering the opinions set forth
below, we have reviewed such other records, certificates and documents as we
have deemed appropriate for the purposes of such opinions.  As to any facts
material to our opinion, we have made no independent investigation of such facts
and have relied, to the extent that we deem such reliance proper, upon
statements of public officials and officers or other representatives of the
Credit Parties and on the

 

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January 24, 2014    Page 3

 

representations and warranties relating to factual matters set forth in the
Transaction Documents.

In rendering the opinions expressed below, we have assumed the legal capacity of
all natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to authentic original
documents of all documents submitted to us as copies, which assumptions we have
not independently verified.   In addition, with your permission and without
independent investigation, we have made the following assumptions:

(i) Each party to the Transaction Documents other than the Opinion Parties (each
such party other than the Opinion Parties, a “Transaction Party”) is a
corporation, partnership, limited liability company or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization;

(x) Each Transaction Party has full power and authority (corporate, partnership,
limited liability company or otherwise) to execute, deliver and perform its
obligations under the Transaction Documents to which it is a party;

(xi) Each Transaction Document has been duly executed and delivered by each
Transaction Party that is a party thereto;

(xii) The execution, delivery and performance by each Transaction Party of the
Transaction Documents to which it is a party have been duly authorized by all
necessary entity action (corporate, partnership, limited liability company or
otherwise) and do not contravene the constituent documents of such Transaction
Party;

(xiii) The execution, delivery and performance by each Transaction Party and
each Opinion Party of the Transaction Documents to which it is a party do not
conflict with or result in the breach of any document or instrument binding on
it (except that we have not made such assumption with respect to the
Organizational Documents or Applicable Contracts, to the extent of our opinion
in paragraphs 5 and 6(b) below);

(xiv) The execution, delivery and performance by each Transaction Party and each
Opinion Party of the Transaction Documents to which it is a party do not
contravene any provision of any law, rule, regulation, order, validation, writ,
judgment, injunction, decree, determination or award applicable to any of them
(except that we have not made such assumption with respect to Applicable Laws
(as defined in paragraph 6 below) applicable to each Credit Party, to the extent
of our opinion in paragraph 6(a) below);

 

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January 24, 2014    Page 4

 

(xv) No authorization, approval, consent, order, validation, license, franchise,
permit or other action by, and no notice to or filing, recording or registration
with, any Governmental Authority or any other third party is required for the
due execution, delivery and performance by each Transaction Party and each
Opinion Party of the Transaction Documents to which it is a party that has not
been duly obtained or made and that is not in full force and effect (except that
we have not made such assumption with respect to Governmental Approvals (as
defined in paragraph 7 below) required to be obtained or taken by each Credit
Party as to which we express our opinion in paragraph 7 below);

(xvi) The Transaction Documents constitute the valid, binding and enforceable
obligations of each party thereto (except that we have not made such assumptions
with respect to the validity, binding effect and enforceability of the Opinion
Documents as against the Credit Parties to the extent of our opinions in
paragraph 4 below); and

(xvii) The laws of any jurisdiction other than the laws that are the subject of
this opinion letter do not affect the opinions rendered herein or the terms of
the Transaction Documents.

Based upon the foregoing, and subject to the assumptions, qualifications,
exceptions and limitations set forth herein, it is our opinion that:

1.

Each Opinion Party is a corporation, limited liability company or limited
partnership (as the case may be) validly existing and in good standing under the
laws of the State of Delaware.  Holdings is duly qualified to do business in,
and is in good standing as a foreign entity under the laws of, the State or
States set forth opposite Holdings’ name on Schedule V hereto.

2.

Each Opinion Party has the corporate, limited liability company or limited
partnership power and authority (as the case may be) to execute and deliver each
Opinion Document and each Designated Document to which it is a party and to
perform its obligations thereunder.  The execution and delivery by each Opinion
Party of each Opinion Document and each Designated Document to which it is a
party and the performance by such Opinion Party of its obligations thereunder
have been duly authorized by all requisite corporate, limited liability company
or limited partnership action (as the case may be) on the part of such Opinion
Party.

3.

Each Opinion Document and each Designated Document to which any Opinion Party is
a party has been duly executed and delivered by such Opinion Party.

 

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January 24, 2014    Page 5

 

4.

Under the laws of the State of New York, each Opinion Document to which any
Credit Party is a party constitutes the valid and binding obligation of such
Credit Party enforceable against such Credit Party in accordance with its terms.

5.

The execution and delivery by each Opinion Party of each Opinion Document and
each Designated Document to which it is a party do not, and the performance by
such Opinion Party of its obligations thereunder will not, violate such Opinion
Party’s Organizational Documents.

6.

The execution and delivery by each Credit Party of each Opinion Document and
each Designated Document to which it is a party do not, and the performance by
such Credit Party of its obligations thereunder will not:  (a) result in any
violation by the Credit Party of any Applicable Law (as defined below); (b)
breach or result in a default under any Applicable Contract; or (c) result in
the creation or imposition of any lien on any properties of the Credit Party
pursuant to any Applicable Contract, other than as may be contemplated by the
Opinion Documents and the Designated Documents.

“Applicable Laws” means, collectively, (a) with respect to the Opinion Parties,
the General Corporation Law of the State of Delaware (the “Delaware Corporation
Law”), the Limited Liability Company Act of the State of Delaware (the “Delaware
LLC Act”), the Revised Uniform Limited Partnership Act of the State of Delaware
(the “Delaware LP Act”, collectively the “Delaware Statutes”) (all as published
in the Corporation Service Company compilation entitled Delaware Laws Governing
Business Entities (Fall 2012 Edition)),  and (b) with respect to the Credit
Parties, those laws of the States of New York and Texas and the United States of
America and the rules and regulations adopted thereunder that, in our
experience, are normally applicable to transactions of the type contemplated by
the Opinion Documents.  Furthermore, the term “Applicable Laws” does not
include, and we express no opinion with regard to (i) any state or federal laws,
rules or regulations relating to: (A) pollution or protection of the
environment; (B) zoning, land use, building or construction; (C) occupational,
safety and health or other similar matters; (D) labor and employee rights and
benefits, including, without limitation, the Employee Retirement Income Security
Act of 1974, as amended; (E) the regulation of utilities; (F) antitrust and
trade regulation; (G) tax; (H) except as specifically set forth in paragraph 11
below, securities, including without limitation, the Investment Company Act of
1940, as amended; (I) corrupt practices, including, without limitation, the
Foreign Corrupt Practices Act of 1977; (J) copyrights, patents and trademarks;
(K) communication, telecommunication or similar matters; (L) the USA Patriot Act
of 2001 and the rules, regulations and policies promulgated thereunder, or any
foreign assets control regulations of the United States Treasury Department or
any enabling legislation or orders relating thereto; and (M) the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010; and (ii) any laws, rules or
regulations of any

 

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January 24, 2014    Page 6

 

county, municipality or similar political subdivision or any agency or
instrumentality thereof.

7.

No Governmental Approval (as defined below) that has not been obtained or taken
and is not in full force and effect, is required to be obtained or taken by any
Credit Party to authorize, or is required in connection with, the execution and
delivery by such Credit Party of each Opinion Document and each Designated
Document to which it is a party or the performance by such Credit Party of its
obligations thereunder, the grant of security interests by such Credit Party
under such Opinion Documents and Designated Documents, or the legality,
validity, binding effect or enforceability of any such Opinion Document or
Designated Document as against such Credit Party, except: (a) the filing of the
Financing Statements in the filing offices set forth in paragraph 9 below; and
(b) Governmental Approvals not required to consummate the transactions occurring
on the date hereof but required to be obtained or made after the date of this
opinion letter to enable such Credit Party to comply with requirements of
Applicable Law including those required to maintain existence and good standing
of such Credit Party.

“Governmental Approvals” means any consent, approval, license or authorization
of, or filing, recording or registration with, any Governmental Authority
pursuant to any Applicable Laws (as defined in paragraph 6 above).

8.

Under the laws of the State of New York, the provisions of the U.S. Security
Agreement are effective to create in favor of the Collateral Agent (for the
benefit of the Secured Creditors as such term is defined in the U.S. Security
Agreement, herein referred to as the “Secured Creditors”) to secure the Secured
Obligations (as defined therein), a valid security interest in all of each
Grantor’s right, title and interest in and to that portion of the Collateral (as
defined therein) in which a security interest may be created under Article 9 of
the NY UCC (the “Article 9 Collateral”).

9.

To the extent that the filing of a financing statement can be effective to
perfect a security interest in the Article 9 Collateral of each Grantor under
the Uniform Commercial Code as in effect in the State of Delaware (the “Delaware
UCC”), the security interest in favor of the Collateral Agent in that portion of
the Article 9 Collateral described in the Financing Statements will be perfected
upon the proper filing of the Financing Statements in office of the Secretary of
State of the State of Delaware. The Financing Statements are in proper form for
filing with the Secretary of State of the State of Delaware under the Delaware
UCC.

10.

Under the laws of the State of New York, with respect to that portion of the
Article 9 Collateral consisting of Certificated Securities (within the meaning

 

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January 24, 2014    Page 7

 

of Section 8-102 of the NY UCC, herein referred to as the “Certificated
Securities”), upon the Collateral Agent taking possession in the State of New
York of certificates evidencing such Certificated Securities which are in
registered form, issued or indorsed in the name of the Collateral Agent or in
blank by an effective indorsement or accompanied by undated stock powers with
respect thereto duly indorsed in blank by an effective endorsement, the security
interest of the Collateral Agent therein is perfected by “control” (within the
meaning of Section 8-106 of the NY UCC) to the extent that the NY UCC is
applicable thereto.  Under Section 8-303 of the NY UCC, the Collateral Agent
(for the benefit of the Secured Creditors) will obtain its security interest in
such Certificated Securities free of any adverse claim (as such term is defined
in Section 8-102 of the NY UCC) if (a) the Collateral Agent perfects its
security interest in the Certificated  Securities by “control” as described in
the preceding sentence, and (b) neither the Collateral Agent nor any other
Secured Creditor has notice of any adverse claim (within the meaning of Section
8-102 of the NY UCC) to any of such Certificated Securities.

11.

No Credit Party is an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

12.

 We call to your attention the fact that the Opinion Documents select the
internal laws of the State of New York as the governing law.  It is our opinion
that a federal or state court sitting in Texas and applying Texas choice-of-law
statutes and principles would honor the parties’ choice of the internal laws of
the State of New York as the law applicable to the Opinion Documents to the
extent set forth in such Opinion Documents.

In rendering the foregoing opinions, we have also assumed, with your permission,
and without independent investigation on our part, the following: 

A. With respect to our opinions set forth in paragraphs 8  through 10 above, we
have assumed that each relevant Grantor has, or has the power to transfer,
rights in the properties in which it is purporting to grant a security interest
sufficient for attachment of such security interest within the meaning of
Section 9-203 of the NY UCC and Section 9-203 of the Delaware UCC.

B. With respect to our opinions set forth in paragraphs 8 through 10 above, we
have assumed that the Collateral Agent has acquired its interests in the Article
9  Collateral for value within the meaning of Section 9-203 of the NY UCC and
Section 9-203 of the Delaware UCC.

C. With respect to our opinions set forth in paragraphs 8 through 10 above, we
have assumed the descriptions of collateral contained in or attached as

 

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January 24, 2014    Page 8

 

schedules to, the U.S. Security Agreement and the Financing Statements
sufficiently describe (for the purposes of the attachment and perfection of
security interests) the collateral intended to be covered thereby; provided that
the foregoing assumption does not apply with respect to (i) collateral that is
described in the U.S. Security Agreement or the Financing Statements by a “type”
of collateral defined in Article 9 of the NY UCC or Article 9 of the Delaware
UCC, and (ii) as to the Financing Statements only, the following descriptions of
collateral:  “all assets” or “all personal property”.

D. With respect to our opinion set forth in paragraph 9 above, we have relied on
the Organizational Documents as the basis for determining that (i) the correct
legal name of each Grantor is as set forth on the Financing Statements, and (ii)
each Grantor is solely organized under the laws of the State of Delaware.

E. With respect to our opinion set forth in paragraph 10 above, we have assumed
that the certificates evidencing the Certificated Securities will at all times
be held by the Collateral Agent in the State of New York.

The opinions set forth above are subject to the following qualifications and
exceptions:

(a) The opinions in the first sentence of paragraph 1 above and in paragraphs 2,
3 and 5 above are limited in all respects to the Delaware Statutes.  The
opinions in paragraph 1 above to the extent they relate to the existence and
good standing of Opinion Parties in the State of Delaware are based solely on
the certificates listed on Schedule V hereto.  The opinions in paragraph 1 above
to the extent they relate to the due qualification of Holdings to do business
in, and the good standing of Holdings as a foreign entity under the laws of, the
State or States set forth on Schedule V hereto are based solely on the
certificates listed on Schedule V hereto.

(b) The enforceability of each Opinion Document and the provisions thereof may
be limited by bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other laws now or hereafter in effect relating to or affecting
enforcement of creditors’ rights generally and by general principles of equity
(including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether such enforcement is considered in
a proceeding in equity or at law.

(c) With respect to our opinions set forth in paragraphs 4 and 6(a) above, we
express no opinion with respect to the validity or enforceability of the
following provisions to the extent that they are contained in the Opinion
Documents:  (i) provisions purporting to release, exculpate, hold harmless, or
exempt any person or entity from, or to require indemnification or

 

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January 24, 2014    Page 9

 

contribution of or by any person or entity for, liability for any matter to the
extent that the same are inconsistent with applicable law (including case law)
or with public policy; (ii) provisions purporting to waive, subordinate or not
give effect to rights to notice, demands, legal defenses or other rights or
benefits that cannot be waived, subordinated or rendered ineffective under
applicable law; (iii) provisions purporting to provide remedies inconsistent
with applicable law; (iv) provisions purporting to render void and of no effect
any transfers of the Credit Parties’ rights in any collateral in violation of
the terms of the Opinion Documents; (v) other than with respect to our opinions
set forth in paragraphs 8 through 10 above, provisions relating to the creation,
attachment, perfection or enforceability of any security interest; (vi)
provisions relating to powers of attorney, severability or set-offs; (vii)
provisions stating that a guarantee will not be affected by a modification of
the obligation guaranteed in cases in which that modification materially changes
the nature or amount of such obligation; (viii) provisions that limit the
obligation of a guarantor, co-borrower or co-obligor (or provide for any rights
of contribution as against another guarantor or, co-borrower or co-obligor or
any other party) based upon the potential unenforceability, invalidity, or
voidability of a guarantee or joint obligation under any applicable law,
including, without limitation, any state or federal fraudulent transfer or
fraudulent conveyance laws; (ix) provisions restricting access to courts or
purporting to affect the jurisdiction or venue of courts (other than the courts
of the State of New York with respect to Opinion Documents governed by the laws
of the State of New York); (x) provisions setting out methods for service of
process; (xi) provisions purporting to exclude all conflicts-of-law rules; (xii)
provisions pursuant to which a party agrees that a judgment rendered by a court
or other tribunal in one jurisdiction may be enforced in any other jurisdiction;
(xiii) provisions providing that decisions by a party are conclusive or may be
made in its sole discretion; (xiv) provisions providing for liquidated damages
or any “make whole”, “yield maintenance” or “premium amount” to the extent that
they may be deemed a penalty; (xv) provisions of an Opinion Document that
require any Credit Party to indemnify any other party to such Opinion Document
against loss in obtaining the currency due under such Opinion Document from a
court judgment in another currency; or (xvi) any guaranty provided by, or any
joint and several liability imposed upon, any person or entity that is not an
“eligible contract participant” within the meaning of section 1a(18) of the
Commodity Exchange Act, insofar as such guaranty or such joint and several
liability covers an agreement, contract or transaction (herein collectively
referred to as the “Excluded Swap Obligations”) that constitutes a “swap” within
the meaning of section 1a(47) of the Commodity Exchange Act, provided that this
clause (xvi) does not apply to and shall not qualify any of our opinions
relating to any guaranty or joint and several liability in respect of any
obligations (other

 

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January 24, 2014    Page 10

 

than Excluded Swap Obligations) of the Opinion Parties under the Agreement and
the other Opinion Documents.  Additionally, with respect to our opinion set
forth in paragraph 4 above, such opinion is subject to possible judicial action
giving effect to governmental actions or foreign laws affecting creditors’
rights. Our opinions are based solely on our reading of the Opinion
Documents.  We note that enforceability of the Opinion Documents may be affected
by the parties’ course of dealing, or by waivers, modifications or amendments
(whether made in writing, orally, or by course of conduct), and we express no
opinion on the effect of the foregoing on the enforceability of the Opinion
Documents.

(d) Insofar as our opinion set forth in paragraph 4 above relates to the
enforceability under New York law of the provisions of the Opinion Documents
choosing New York law as the governing law thereof, such opinion is rendered
solely in reliance upon the Act of July 19, 1984, ch. 421, 1984 McKinney’s Sess.
Law of N.Y. 1406 (codified at N.Y. Gen. Oblig. Law §§5-1401 (McKinney 1989))
(the “Act”) and is subject to the qualifications that such enforceability (i) as
specified in the Act, does not apply to the extent provided to the contrary in
subsection two of Section 1-105 of the NY UCC, (ii) may be limited by public
policy considerations of any jurisdiction in which enforcement of such
provisions is sought, and (iii) is subject to any U.S. Constitutional
requirement under the Full Faith and Credit Clause or the Due Process Clause
thereof or the exercise of any applicable judicial discretion in favor of
another jurisdiction.

(e) As to our opinion set forth in paragraph 12 above as to the enforceability
under Texas law of the provisions of the Opinion Documents choosing New York law
as the governing law thereof, such opinion is rendered solely in reliance upon
Title 9, Chapter 271 of the Texas Business and Commerce Code (“Chapter 271”),
which applies to transactions in which a party pays or receives, or is obligated
to pay or entitled to receive, consideration in excess of $1,000,000, and is
subject to the qualifications that such enforceability (i) as specified in
Chapter 271, does not apply to an issue that another Texas statute (such as
Section 1.301(b) of the Uniform Commercial Code as currently in effect in the
State of Texas), or a federal statute, provides is governed by the law of a
particular jurisdiction, (ii) may be limited by public policy considerations of
any jurisdiction in which enforcement of such provisions is sought, and (iii) is
subject to any U.S. Constitutional requirement under the Full Faith and Credit
Clause or the Due Process Clause thereof or the exercise of any applicable
judicial discretion in favor of another jurisdiction.  In rendering our opinion
in paragraph 12 above, with your permission and without independent
investigation, we have assumed that the Collateral Agent has its place of
business or, if it has more

 

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January 24, 2014    Page 11

 

than one place of business, its chief executive office or an office from which
it has conducted a substantial part of the negotiations relating to the
transaction evidenced by the Opinion Documents, in the State of New York. 

Our opinion in paragraph 6(a) above states, among other things, that the
execution and delivery by each Credit Party of each Opinion Document to which it
is a party do not, and the performance of its obligations thereunder will not,
result in any violation by such Credit Party of any Applicable Law, which
Applicable Law includes, among other things, certain laws, rules and regulations
of the State of Texas.  We note that such opinion in paragraph 6(a) as to those
Opinion Documents governed by New York law is based, in part, upon Chapter 271,
which is discussed in the preceding paragraph.  To the extent that, in rendering
such opinion in paragraph 6(a) as to the Opinion Documents governed by New York
law, we have relied upon Chapter 271, such opinion in paragraph 6(a) is also
subject to the qualifications set forth in the immediately preceding paragraph.

(f) Certain of the remedial provisions with respect to the Article 9  Collateral
(including waivers with respect to the exercise of remedies against the
collateral) contained in the U.S. Security Agreement may be unenforceable in
whole or in part, but the inclusion of such provisions does not affect the
validity of the U.S. Security Agreement, taken as a whole, and the U.S. Security
Agreement, taken as a whole, together with applicable law, contain adequate
provisions for the practical realization of the benefits intended to be provided
thereby (it being understood that we express no opinion as to the adequacy of
such provisions to the extent it is necessary to seek execution or enforcement
of rights or remedies under the laws of any jurisdiction outside the State of
New York).  Additionally, we note that the remedies under the U.S. Security
Agreement to sell or offer for sale the Article 9  Collateral are subject to
compliance with applicable state and federal securities laws.

(g) In the case of property which becomes Article 9  Collateral after the date
hereof, our opinions in paragraph 8 above, as to the creation and validity of
the security interests therein described, is subject to the effect of Section
552 of the Federal Bankruptcy Code, which limits the extent to which property
acquired by a debtor after the commencement of a case under the Federal
Bankruptcy Code may be subject to such security interest arising from a security
agreement entered into by the debtor before the commencement of such case.

(h) We express no opinion as to Article 9  Collateral that is subject to a state
statute or a statute, regulation or treaty of the United States referred

 

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January 24, 2014    Page 12

 

to in Section 9-311(a) of the NY UCC or Section 9-311(a) of the Delaware UCC.

(i) With respect to our opinions set forth in paragraphs 8 through 10 above, we
express no opinion as to Article 9 Collateral consisting of commercial tort
claims.

(j) With respect to our opinions in paragraph 9 above, we express no opinion as
to the perfection of a security interest in any items of collateral that are or
are to become fixtures, as-extracted collateral or timber to be cut.

(k) Other than the filing of the Financing Statements in the filing offices set
forth in our opinion in paragraph 9 above, we express no opinion as to any other
actions (including any filings or registrations) that may be necessary under any
applicable law in connection with perfection of a security interest in Article 9
Collateral consisting of patents, trademarks, copyrights or other intellectual
property rights.

(l) With respect to our opinions set forth in paragraphs 8 through 10 above, (i)
we express no opinion as to the priority of any security interest (except to the
extent of our opinion regarding Section 8-303 of the NY UCC in the last sentence
of paragraph 10 above, to the extent that the same relates to the priority of
the Collateral Agent’s security interests), and (ii) we express no opinion as to
the perfection of any lien or security interest granted in the Opinion Documents
by Holdings.

(m) We express no opinion herein regarding the enforceability of any provision
in an Opinion Document that purports to prohibit, restrict or condition the
assignment of any Credit Party’s rights or obligations under such Opinion
Document to the extent that such restriction on assignability is governed by
Sections 9-406 through 9-409 of the NY UCC.

(n) With respect to our opinions set forth in paragraphs 8 through 10 above, the
attachment and perfection of the Collateral Agent’s security interest in
proceeds is limited to the extent set forth in Section 9-315 of the NY UCC or
Section 9-315 of the Delaware UCC.

(o) We express no opinion as to any actions that may be required to be taken
periodically under the NY UCC or the Delaware UCC or under any other applicable
law in order for the effectiveness of the Financing Statements or perfection of
any security interest to be maintained.

(p) In rendering the opinions above related to security interests in Article 9
Collateral, we call to your attention that security interests may not

 

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January 24, 2014    Page 13

 

attach or become enforceable or be perfected as to Article 9 Collateral that is
not assignable pursuant to a rule of law, statute or regulation, or is not
assignable by its terms, or is assignable only with the consent of another
person or entity which has not been obtained, except to the extent such
restrictions are rendered ineffective under Sections 9-406, 9-407, 9-408 or
9-409 of the NY UCC or other applicable law.  In addition in rendering such
opinions, we call to your attention that even though the NY UCC renders certain
anti-assignment provisions ineffective for purposes of creation, attachment or
perfection of a security interest pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the NY UCC, nonetheless, in certain cases, the grantee of such security
interest may have limited rights to enforce its security interest in collateral
against an account debtor, the holder of a promissory note, or other Person
named in the foregoing Sections, who did not consent to the transfer.

(q) With respect to the equity securities and other investment property that is
subject to the security interests granted under the U.S. Security Agreement, we
note that certain of such equity securities and other investment property have
been issued by entities that are organized under the laws of foreign
jurisdictions outside of the United States, and we express no opinion as to the
effect of the laws of such foreign jurisdictions on the opinions herein
stated.  Our opinions with respect to the security interests of the Collateral
Agent in any such equity securities and other investment property is limited in
all respect to the NY UCC, and we note that the laws of the jurisdiction of an
issuer of pledged securities may affect, among other things, whether the
securities are characterized as certificated securities, the exercise of
remedies with respect to such securities and the exercise of voting or other
rights with respect to such securities.

(r) In rendering the opinions expressed in paragraphs 6(b) and 6(c) above: (i)
we have not reviewed, and express no opinion with respect to, documents other
than the Applicable Contracts, irrespective of whether they secure, support or
otherwise relate to or are referred to in the Applicable Contracts or might
under certain circumstances result in an event of default or require early
payment under any of the Applicable Contracts; (ii) we have made no examination
of, and express no opinion with respect to, any financial, accounting or similar
covenant or provision contained in the Applicable Contracts to the extent that
any such covenant or provision would require a determination as to any financial
or accounting matters; (iii) we express no opinion as to any breach of any
confidentiality provision contained in any Applicable Contract caused by any
Opinion Document or any Credit Party’s actions pursuant thereto or in
contemplation thereof; and (iv) our opinions in paragraphs 6(b) and 6(c) above
are limited to the laws of the State

 

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January 24, 2014    Page 14

 

of New York regardless of the law that governs the Applicable Contracts.  In
every case, we have assumed that a court would enforce the Applicable Contracts
as written and we have limited our opinion to matters readily ascertainable from
the face of the Applicable Contracts.

We express no opinion as to the laws of any jurisdiction other than: (i)
Applicable Laws; and (ii) with respect to our opinion set forth in paragraph 9
above, the Delaware UCC.  As to our opinions set forth herein regarding the
Delaware Statutes and Article 9 of the Delaware UCC, we have based such opinions
solely on our review of the generally available compilations of the Delaware
Statutes and of Article 9 of the Delaware UCC as in effect on the date hereof,
and we have not reviewed any other laws of the State of Delaware or retained or
relied on any opinion or advice of Delaware counsel.    

This opinion has been prepared in accordance with the customary practice of
lawyers who regularly give and lawyers who regularly advise recipients regarding
opinions of this kind.

This opinion letter is rendered as of the date set forth above.  We expressly
disclaim any obligation to update this letter after such date.

This opinion letter is given solely for your benefit and the benefit of the
Payee in  connection with the transactions contemplated by the Opinion Documents
and may not be furnished to, or relied upon by, any other person or for any
other purpose without our prior written consent.  Notwithstanding the foregoing,
at your request, we hereby consent to:

(i)reliance hereon by any future assignee of the Payee interests in the
Agreement pursuant to an assignment that is made and consented to in accordance
with the express provisions of Section 11.04 of the Agreement, and

(ii) your furnishing to, but not reliance upon in any manner by, (A) your legal
counsel and independent auditors who need to know such information and are
informed of the confidential nature of this opinion, (B) any regulatory
authority having jurisdiction over you upon the request or demand of such
regulatory authority, (C) any Person to the extent required pursuant to the
order of any court or administrative agency or in any pending legal or
administrative proceeding or as otherwise required by applicable law or
compulsory legal process, provided that you take reasonable steps to procure
that such Person maintains the confidentiality of this opinion (to the extent
permitted by applicable law), (D) any Person that subsequently becomes the
Collateral Agent in accordance with Section 10.05 of the Agreement, (E) any
Person that proposes to become an assignee of or successor to the rights of the
Payee or the Collateral Agent under the Agreement, and (F) any Person that
proposes to become or becomes a Secured Party under a Secured Hedging

 

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January 24, 2014    Page 15

 

Agreement, in each case, in compliance with the requirements of the Agreement,

in each case on the condition and understanding that (a) this letter speaks only
as of the date hereof, (b) we have no responsibility or obligation to update
this letter, to consider its applicability or correctness to any person other
than its addressee(s), or to take into account changes in law, facts or any
other developments of which we may later become aware, and (c) any such reliance
by a future assignee must be actual and reasonable under the circumstances
existing at the time of assignment, including any changes in law, facts or any
other developments known to or reasonably knowable by the assignee at such time.

Very truly yours,

 

 

VINSON & ELKINS LLP

 

 

 

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SCHEDULE I TO OPINION LETTER

 

 

 

Addressees

 

 

Credit Suisse AG, acting through one or more of its branches or affiliates,

as the Collateral Agent

 

LC Finco S.à r.l.,

as the Payee under the Agreement

 

 

 

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SCHEDULE II TO OPINION LETTER

 

 

Applicable Contracts

 

 

 

1.Trust Deed dated January 24, 2008 by and among Endeavour International
Corporation, Endeavour Energy Luxembourg S.a.r.l. and BNY Corporate Trustee
Services Limited, as trustee

 

2.Indenture dated as of July 22, 2011 among Endeavour International Corporation,
the guarantors named therein and Well Fargo Bank, National Association, as
trustee

 

3.First Priority Indenture dated as of February 23, 2012, among Endeavour
International Corporation, the guarantors named therein, and Wells Fargo Bank,
National Association, as collateral agent and trustee

 

4.Second Priority Indenture dated as of February 23, 2012, among Endeavour
International Corporation, the guarantors named therein, Wilmington Trust,
National Association, as trustee, and Wells Fargo Bank, National Association, as
collateral agent

 

5.Note Agreement, dated November 17, 2009, relating to 12% Senior Subordinated
Notes due 2014 issued by Endeavour International Corporation, between Endeavour
International Corporation, the guarantors party thereto, and the initial
noteholders party thereto, as amended by the Amendment to the Note Agreement
dated as of March 10, 2010 (the “Note Agreement”)

 

6.Deed of Grant of a Production Payment in respect of United Kingdom Continental
Shelf Seaward Production Licence P.213 (Block 16/26a A-ALBA) (the Alba Field)
and Seaward Production Licence P.255 (Blocks 22/6c A and 22/6s A) (the Bacchus
Field)

 

7.Deed of Grant of a Production Payment in respect of United Kingdom Continental
Shelf Seaward Production Licence P.1615 (Block 15/26c) and Seaward Production
Licence P.226 (Block 15/27 Area E) (the Rochelle Field)

 

 

 

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SCHEDULE III TO OPINION LETTER

 

 

Organizational Documents

 

 

End Finco LLC

 

1.

Certificate of Formation of End Finco LLC, and all amendments thereto, as
certified by the Secretary of State of Delaware;

2.

Limited Liability Company Agreement of End Finco LLC, certified as being true
and correct by an officer of Endeavour International Holdings B.V., the sole
member of End Finco LLC; and

3.

Resolutions adopted by written consent of the sole member of End Finco LLC.

 

Endeavour Operating Corporation

 

1.

Certificate of Incorporation of CSOR Acquisition Corp., and all amendments
thereto, as certified by the Secretary of State of Delaware;

2.

Certificate of Merger, merging NSNV, Inc., a Texas corporation, with and into
CSOR Acquisition Corp., under the name of Endeavour Operating Corporation, a
Delaware corporation, as certified by the Secretary of State of Delaware;

3.

Bylaws of Endeavour Operating Corporation, and all amendments thereto, certified
as being true and correct by an officer of Endeavour Operating Corporation; and

4.

Resolutions adopted by written consent of the Board of Directors of Endeavour
Operating Corporation.

 

Endeavour Energy North Sea, L.P.

 

1.

Certificate of Limited Partnership of Endeavour Energy North Sea, L.P., and all
amendments thereto, as certified by the Secretary of State of Delaware;

2.

Agreement of Limited Partnership of Endeavour Energy North Sea, L.P., and all
amendments thereto, certified as being true and correct by an officer of
Endeavour Energy North Sea LLC, as general partner of Endeavour Energy North
Sea, L.P.; and

3.

Resolutions adopted by written consent of the Board of Managers of Endeavour
Energy North Sea LLC, as general partner of Endeavour Energy North Sea, L.P., as
certified by an officer of Endeavour Energy North Sea LLC.

 

Endeavour Energy North Sea LLC

 

1.

Certificate of Formation of Endeavour Energy North Sea LLC, and all amendments
thereto, as certified by the Secretary of State of Delaware;

2.

Limited Liability Company Agreement of Endeavour Energy North Sea LLC, and all
amendments thereto, certified as being true and correct by an officer of
Endeavour Energy North Sea LLC; and

 

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

 

 

 

3.

Resolutions adopted by written consent of the Board of Managers of Endeavour
Energy North Sea LLC.

 

 

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SCHEDULE IV TO OPINION LETTER

 

 

Financing Statements

 

 

The following financing statements on form UCC-1, which (a) name the Person
listed below as debtor and the Collateral Agent as secured party for the benefit
of the Secured Creditors, (b) cover the Article 9 Collateral (as defined in
paragraph 8 of the foregoing opinion), and (c) are to be filed in the office
listed opposite the name of such debtor:

Name of Debtor

         Filing Office

Endeavour Operating Corporation

Delaware

Endeavour Energy North Sea, L.P.

Delaware

Endeavour Energy North Sea LLC

Delaware

End Finco LLC

Delaware

 

 

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SCHEDULE V TO OPINION LETTER

 

 

Existence, Foreign Qualification, and Good Standing Certificates

 

Foreign Qualification

 

 

Opinion Party

State(s)

Endeavour International Corporation

Texas

 

 

Foreign Qualification Certificates

1.

Certificate of foreign qualification of Endeavour International Corporation, as
issued on January 23, 2014, by the Secretary of State of Texas.

2.

Statement of Franchise Tax Account Status dated as of January 23, 2014, obtained
through the website of the Office of the Comptroller of Public Accounts of
Texas, which statement indicates that, as of the date thereof, Endeavour
International Corporation’s right to transact business in Texas is “active”.

 

Existence and Good Standing Certificates

1.

Certificate of Existence of Endeavour Operating Corporation, as issued on
January 22, 2014 by the Secretary of State of Delaware;

2.

Certificate of Existence of Endeavour Energy North Sea, L.P., as issued on
January 22, 2014, by the Secretary of State of Delaware; and

3.

Certificate of Existence of Endeavour Energy North Sea LLC, as issued on January
22, 2014, by the Secretary of State of Delaware.

4.

Certificate of Existence of End Finco LLC, as issued on January 23, 2014, by the
Secretary of State of Delaware.

 

 

 

 

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24 January 2014

 

Credit Suisse AG (as Administrative Agent under the Term B Credit Agreement)

(the “Addressee”)

 

Dear Sirs

Re: ENDEAVOUR ENERGY UK LIMITED (“Company”)

We have acted as counsel to the Company on matters of English law in connection
with a an agreement for the procurement of certain letters of credit entered
into between, amongst others, the Company, Credit Suisse AG (as collateral
agent) and LC Finco S.à r.l.) and the Addressee, dated 24 January 2014 (the “LC
Procurement Agreement”) (the “Transaction”).

1.

DOCUMENTS

1.1

For the purposes of giving this opinion, we have only examined copies of the
executed documents listed below and have relied upon the statements as to
factual matters (and assumed such statements are correct) contained in or made
pursuant to each of them:

(a)

the certificate of incorporation and memorandum and articles of association of
the Company; 

(b)

a certificate of a director of the Company dated 24 January 2014 (the “Directors
Certificate”); and

(c)

the LC Procurement Agreement.

For the purposes of this opinion, the document listed in (c) above is the
“Document”.

1.2

Except as mentioned above, we have not examined any agreements, instruments,
records or other documents whatsoever relating to the Document or any of the
parties to it and have not made any other enquiries or investigations concerning
the Document or any of the parties to it in connection with the giving of this
opinion.

1.3

Unless a contrary intention appears, capitalised terms used in this opinion
shall have the meaning given to them in the LC Procurement Agreement.

2.

OPINION LIMITED TO THE LAWS OF ENGLAND

2.1

The opinion set out herein relates only to the laws of England as the same are
in force at the date hereof.  We do not (and do not purport to) give any opinion
as to the laws of any other jurisdiction, including, but not limited to, the
laws of the State of New York, the laws of the State of Delaware, the laws of
the State of Nevada, the laws of the Netherlands or the laws of the Grand Duchy
of Luxembourg.  To the extent that such

 

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24 January 2014 Page 2

 

laws may be relevant, we have made no independent investigation of such laws,
and this opinion is subject to the effect of such laws including the matters
contained in the opinions of:

(a)

Woodburn and Wedge as to Nevada law;

(b)

Allen & Overy LLP (Netherlands) as to Dutch law;

(c)

Allen & Overy LLP (Luxembourg) as to Luxembourg law; and

(d)

Vinson & Elkins LLP as to New York law.

We express no views on the validity of the matters set out in such opinions.

2.2

This opinion is limited to those facts and circumstances which are known to us
and which are subsisting at the date hereof.

2.3

We express no opinion as to matters of fact and our opinion is to be construed
in accordance with and is governed by the laws of England.

2.4

We have not considered whether the Transaction as described in the Document
complies with anti-trust, competition or state aid laws, nor whether any filings
or clearances are required under such laws.

2.5

We do not (and do not purport to) give any opinion on tax, insolvency and
regulatory issues, including as to English law.

3.

ASSUMPTIONS

In rendering the opinions expressed below, we have (with your consent and
without any further enquiry) assumed:

3.1

the genuineness of all signatures and seals on the Document and the completeness
and the conformity to original documents, of all copies (including faxed copies)
submitted to us and the authenticity of all documents submitted to us as
originals;

3.2

the due authorisation, execution and delivery by the parties thereto (other than
the Company) of the Document;

3.3

that each of the statements contained in the Directors Certificate is true and
correct as at the date hereof;

3.4

that the Document has not been amended, modified, assigned, novated,
supplemented or terminated nor has any provision thereof or right thereunder
been waived since the date of its execution referred to above and that the
Document is not affected in any way by any relevant provisions of any other
document or agreement or any course of dealings between the parties thereto;

 

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24 January 2014 Page 3

 

3.5

that, other than the Company, the parties to the Document constitute, and
constituted at the time the Document was entered into or will constitute at such
time as the Document is entered into, duly organised and existing legal entities
and that each of the parties entered into the Document lawfully, with full
capacity, on arm’s length terms and in good faith for the purposes of its
business and will derive material benefit from the transactions comprised
therein and in executing and performing the obligations under the Document,
were, are and will be, acting within their corporate or constitutional capacity
and legal authority and in compliance with the law and their constitutional
documents and rights;

3.6

that the obligations described in the Document and all other documents entered
into, or to be entered into, pursuant thereto (in each case, including, without
limitation, all transfers, novations, assignments, assumptions and accessions
thereof) create and constitute the valid, legally binding and enforceable
obligations of each of the parties thereto under the laws of incorporation of
such party (other than, in respect of the Company, English law) and that each
such party is and was at the times the Document was entered into, a validly
organised and existing legal entity in good standing under the laws of its
jurisdiction of incorporation;

3.7

the due compliance with all matters (including, without limitation, the
obtaining of all necessary (internal and external) consents, licenses, approvals
and authorities, the making of all necessary filings, registrations and
notifications and the payment of all necessary documentary taxes and charges)
under the laws of any jurisdiction (other than England) as they may relate to
the Document, any other documents entered into (or to be entered into) pursuant
thereto, (i) by each of the parties to any of the foregoing, (ii) by any other
persons affected thereby or (iii) in connection with the performance or
enforcement by or against any such party or other person of their respective
obligations or rights thereunder;

3.8

that, as at the time of execution of the Document, no party to the Document was
unable to pay its debts as they fell due or will, as a result of such execution,
become unable to pay its debts as they fall due;

3.9

that there are no laws of any jurisdiction outside England which would be
contravened by the execution, delivery or performance of the Document or any
other documents entered into (or to be entered into) in connection therewith by
each of the parties thereto respectively, or by the enforcement thereof by or
against any of such parties;

3.10

that no law of any jurisdiction other than England has any bearing on the
opinions contained in paragraph 4;

3.11

the Document is not (wholly or in part) void, voidable, unenforceable,
ineffective, or otherwise capable of being affected as a result of any vitiating
matter (such as mutual mistake, misrepresentation, duress, undue influence,
fraud, breach of director’s duties or public policy) that is not evident from
the terms of the Document, the Directors Certificate or the documents referred
to in paragraph 1.1(a) above;

 

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24 January 2014 Page 4

 

3.12

that the Document has been delivered by the parties and is not subject to any
escrow or other similar arrangement and that all conditions precedent contained
in the Document have been satisfied and the Document is unconditional in all
respects;

3.13

that the representations and warranties by the respective parties in the
Document in each case (other than as to matters of law on which we opine in this
opinion) are or were, as applicable, true, correct, accurate and complete in all
respects on the date such representations and warranties were expressed to be
made and that the terms of the Document have been and will be observed and
performed by the parties thereto;

3.14

that the parties have complied (and will continue to comply) with all applicable
anti-bribery, anti-terrorism, anti-corruption, anti-money laundering, sanctions
and human rights laws and regulations, and that performance and enforcement of
the Document is, and will continue to be, consistent with all such laws and
regulations;

3.15

that the information revealed by our search on 24 January 2014 at 9 am of the
public documents of the Company kept at Companies House in Cardiff (the “Company
Search”) (a) was accurate in all respects and has not since the time of such
searches been altered, and (b) was complete and included any and all relevant
information which had been properly submitted to the Registrar of Companies;

3.16

that the information revealed by our oral enquiry on

3.17

of the Central Registry of Winding up Petitions (the “Winding up Enquiry”) was
accurate in all respects and has not since the time of such enquiry been
altered.

4.

OPINION

On the basis of the foregoing and subject to (i) the assumptions in paragraph 3
above, (ii) the qualifications set out below and (iii) any matters of fact of
which we are unaware, we are of the opinion that, under the laws of England
which are in force at the date of this opinion,

4.1

the Company has been duly incorporated in Great Britain and registered in
England, and:

(a)

the Company Search revealed no order or resolution for the winding up of the
Company and no notice of appointment of a liquidator, receiver, administrative
receiver or administrator in respect of the Company; and

(b)

the Winding up Enquiry indicated that no petition for the winding up of the
Company has been presented;

4.2

the Company has the requisite corporate capacity to enter into the Document and
to perform its obligations under it;

4.3

the execution and performance of the Document has been duly authorised by all
necessary corporate action on the part of the Company, and the Document has been
duly executed by the Company;

 

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24 January 2014 Page 5

 

4.4

the execution, delivery and performance by the Company of the Document (in
accordance with the terms of such Document) do not and will not of themselves
result in any violation by the Company of any term of its memorandum or articles
of association or any law or regulation having the force of law in England and
applicable to the Company as to performance; and

4.5

no authorisation, consent or approval of, or filing, registration, qualification
or recording with any governmental entity having jurisdiction in England is
required in connection with the execution, delivery or performance of the
Document by the Company.

5.

QUALIFICATIONS AND RESERVATIONS

Our opinions are subject in all respects to the following qualifications,
exceptions, assumptions and limitations:

5.1

The Company Search is not capable of revealing conclusively whether or not:

(a)

a winding up order has been made or a resolution passed for the winding up of a
company; or

(b)

an administration order has been made; or

(c)

a receiver, administrative receiver, administrator or liquidator has been
appointed,

since notice of these matters may not be filed with the Registrar of Companies
immediately and, when filed, may not be entered on the public database or
recorded on the public microfiches of the relevant company immediately.  In
addition, the Company Search is not capable of revealing, prior to the making of
the relevant order, whether or not a winding up petition or a petition for an
administration order has been presented.

5.2

The Winding up Enquiry relates only to the presentation at the High Court of
Justice in London of (a) a petition for the making of a winding up order or the
making of a winding up order by the Court, (b) an application for the making of
an administration order and the making by such court of an administration order
and (c) a notice of intention to appoint an administrator or a notice of
appointment of an administrator. It is not capable of revealing conclusively
whether or not such a winding up petition, application for an administration
order, notice of intention or notice of appointment has been presented or
winding up or administration order granted as:

(a)

details of a winding up petition or application for an administration order may
not have been entered on the records of the Central Registry of Winding-up
Petitions immediately;

(b)

in the case of an application for the making of an administration order and such
order and the presentation of a notice of intention to appoint or notice of
appointment, if such application is made to, order made by or notice filed with,
a Court other than the High Court of Justice in London, no record of such

 

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24 January 2014 Page 6

 

application, order or notice will be kept by the Central Registry of Winding-up
Petitions;

(c)

a winding up order or administration order may be made before the relevant
petition or application has been entered on the records of the Central Registry
of Winding-up Petitions and the making of such order may not have been entered
on the records immediately;

(d)

details of a notice of intention to appoint an administrator or a notice of
appointment of an administrator under paragraphs 14 and 22 of Schedule B1 of the
Insolvency Act may not be entered on the records immediately (or, in the case of
a notice of intention to appoint, at all); and

(e)

with regard to winding up petitions, the Central Registry of Winding-up
Petitions may not have records of winding up petitions issued prior to1994.

5.3

Except to the extent expressly set out in the opinions given in this opinion, we
express no opinion as to whether the Company has obtained any of the operational
licences, permits and consents which it may require for the purpose of carrying
on its business (including the Transaction);

5.4

We express no opinion as to any matter other than as expressly set forth above,
and no opinion is to or may be inferred or implied herefrom.  Without prejudice
to the generality of the foregoing, we express no opinion with respect to:

(a)

questions of taxation or tax treatment in the United Kingdom or elsewhere; or

(b)

any laws, rules, regulations, directives (or anything else having a similar
effect) regulating banks, financial institutions (including hedge funds) or the
conduct of their business that may relate to the Document or the transactions
contemplated thereby.

6.

LIMITATION

6.1

This opinion is:

(a)

given only as of the date hereof; and

(b)

strictly limited to the matters stated herein and is not to be read as extending
by implication to any other matter. In particular, we express no opinion on the
accuracy of the assumptions contained in paragraph 3.  Each statement which has
the effect of limiting our opinion is independent of any other such statement
and is not to be impliedly restricted by it.  Paragraph headings are to be
ignored when construing this opinion.

6.2

In giving this opinion we assume no obligation to supplement or update it.

 

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24 January 2014 Page 7

 

6.3

This opinion is given on condition that it is governed by and shall be construed
in accordance with the laws of England and on condition that any action arising
out of it is subject to the exclusive jurisdiction of the English Courts.

7.

BENEFIT

7.1

This opinion is addressed to the Addressee only and is solely for your own
benefit in relation to the Transaction.  Subject to paragraph 7.2 below, this
opinion may not be disclosed to, or relied upon by you for any other purpose,
save that this opinion may, subject to paragraph 6.2 above, be relied on
(through the Addressee)  by persons who become Lenders under the Term B Credit
Agreement pursuant to an assignment that is made and consented to in accordance
with the express provisions of Section 9.04 of the Term B Credit Agreement,
within six months after the date of this opinion and on the basis that any claim
in connection with this opinion may only be brought by the Addressee and any
such reliance by a future assignee must be actual and reasonable under the
circumstances existing at the time of assignment, including any changes in law,
facts or any other developments known to or reasonably knowable by the assignee
at such time.

7.2

A copy of this opinion may be disclosed on a non-reliance basis and for
information purposes only to: (a) the legal counsel of the Addressee and
independent auditors who need to know such information and are informed of the
confidential nature of this opinion, (b) any regulatory authority having
jurisdiction over you upon the request or demand of such regulatory authority,
(c) any Person to the extent required pursuant to the order of any court or
administrative agency or in any pending legal or administrative proceeding or as
otherwise required by applicable law or compulsory legal process, provided that
you take reasonable steps to procure that such Person maintains the
confidentiality of this opinion, (d) any Person that succeeds into the role of
the “Administrative Agent” or “Collateral Agent” in accordance with Section 8.06
of the Term B Credit Agreement, and (e) any Person that proposes to become a
Lender under the Term B Credit Agreement, in each case, in compliance with the
requirements of the Term A Credit Agreement and the U.S. Security Agreement.

8.

CONFLICTS OF INTERESTS

We have not advised you on the content of the Document or assisted you in any
way in relation to its negotiation; on those matters you have been separately
advised by your counsel.  We accept a duty of care to you in relation to the
matters opined on in this opinion, but the giving of this opinion is not to be
taken as implying that we owe you any wider duty of care in relation to the
Transaction or the content of the Document and their commercial and financial
implications.  Notwithstanding the provision of this opinion, we expressly
reserve the right to represent our client (if it so requests) in relation to any
matters affecting the Document at any time in the future (whether or not you
retain separate advisers on any such matter), and the fact that we have provided
this opinion to you shall not be deemed to have caused us to have any conflict
of interest in relation to the giving of any such advice.  We shall have no
obligation to advise you on any of the

 

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24 January 2014 Page 8

 

matters referred to in this opinion.  The provision of this opinion to you does
not create or give rise to any client relationship between this firm and you.

Yours faithfully,

 

 

Vinson & Elkins R.L.L.P.

 

 

 

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January 24, 2014

 

 

 

LC Finco S.à r.l., as Payee and 

Credit Suisse AG

 as Collateral Agent

 under the LC Agreement (each as defined below)

Eleven Madison Avenue

23rd Floor

New York, New York 10010

 

 

Re:Endeavour International Corporation, a Nevada corporation.

 

Ladies and Gentlemen:

We have acted as special Nevada counsel to Endeavour International Corporation,
a Nevada corporation (the “Company”), in connection with the LC Procurement
Agreement, dated as of January 24, 2014 (the “LC Agreement”), by and among the
Company, Endeavour Energy UK Limited, as Payer (the “Payer”), LC Finco S.à r.l.,
as Payee (the “Payee”) and Credit Suisse AG, acting through one or more of its
branches or affiliates, as collateral agent (the “Collateral Agent”).  This
opinion is being furnished with respect to the Company pursuant to Section
5.01(a)(B) of the LC Agreement.  All capitalized terms used in this letter
without definition have the meanings assigned to them in the LC Agreement.

 

In connection with the opinions set forth herein, we have examined executed
originals or copies certified or otherwise identified to our satisfaction, each
of which is dated the date hereof unless otherwise noted:

A.

the LC Agreement;

B.

the Credit Party Guaranty;

C.

the U.S. Security Agreement (and together with the LC Agreement and Credit Party
Guaranty, the “Transaction Documents.”);

D.

Articles of Incorporation of the Company, as amended (the “Articles of
Incorporation”);

 

 

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Januray 24, 2014

Page 2

 

E.

Amended and Restated Bylaws of the Company, as currently in effect (the
“Bylaws”);

F.

Resolutions of the Board of Directors of the Company adopted on January 21,
2014, regarding the Transaction Documents and the transaction contemplated
therein;

G.

Certificate of Existence for the Company dated January 22, 2014, issued by the
Secretary of State of Nevada confirming the corporate existence and good
standing of the Company as a Nevada corporation; and

H.

A UCC-1 Financing Statement naming the Company, as debtor, and the Collateral
Agent, as the secured party, for filing in the office of the Nevada Secretary of
State (the “Financing Statement”) pursuant to Article 9 of Nevada’s Uniform
Commercial Code (the “NV UCC’).

In connection with the opinions set forth herein, we have relied on the
certificates of officers of the Company, certificates of public officials and
such other documents, records, public filings and information as we have deemed
necessary or appropriate and as to matters of fact upon the representations and
warranties set forth in the Transaction Documents.  We have assumed that all
signatures are genuine; that all documents submitted to us as originals are
authentic; that all documents submitted to us as copies conform to the
originals; and that the facts stated in all such documents are true and
correct.  In rendering this opinion, we have not made any independent
investigation as to accuracy or completeness of any facts or representations,
warranties, data or other information, whether written or oral, that may have
been made by or on behalf of the parties, except as specifically set forth
herein.  We have further assumed that the LC Agreement is the valid and binding
obligation of the Payer, Payee and Collateral Agent.

We note that the Transaction Documents provide that they shall be governed by
and construed in accordance with the laws of the State of New York.  Therefore,
we assume that the Transaction Documents are each enforceable under the laws of
the State of New York.

 

Based upon the foregoing and subject to the qualifications set forth
hereinafter, we are of the opinion that:

 

1. The Company is duly incorporated and validly existing as a corporation in
good standing under the laws of the State of Nevada.  The Company has corporate
power and corporate authority to enter into the Transaction Documents, to
perform its obligations thereunder and to consummate the transactions
contemplated by each of the Transaction Documents to which it is a party.  The
Company has the corporate power and authority to own its property and assets and
to transact the business in which it is engaged as described in the Company’s
Form 10-K filed with the Securities and Exchange Commission on March 18, 2013. 

2. The execution and delivery of the Transaction Documents by the Company and
the performance by the Company of its obligations thereunder have been duly
authorized by all necessary corporate action on the part of the Company.

 

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Januray 24, 2014

Page 3

 

3. To the extent that Nevada law governs such issues, each of the Transaction
Documents has been duly and validly executed and delivered by the Company. 

4. The execution, delivery and performance of the Transaction Documents, the
consummation of the transactions contemplated therein and the performance by the
Company of its obligations thereunder do not and will not result in any
violation of the provisions of the Articles of Incorporation or Bylaws of the
Company or any statute, rule or regulation of the State of Nevada.

5. No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any Nevada court or Nevada
governmental authority or agency, is necessary or required in connection with
the due authorization, execution and delivery by the Company of the Transaction
Documents, the performance by the Company of its obligations thereunder or the
consummation by the Company of the transactions contemplated thereby, except (i)
such as those which have already been obtained or made, and (ii) the filing of
the Financing Statement in the filing office set forth in paragraph 6 hereof.

6. The Financing Statement is in the appropriate form for filing in the office
of the Secretary of State of the State of Nevada. To the extent that the filing
of a financing statement can be effective under the NV UCC to perfect a security
interest in the Collateral, as defined in the U.S. Security Agreement, the
security interest in favor of the Collateral Agent in the Collateral described
in the Financing Statement will be perfected upon the filing of the Financing
Statement in the office of the Secretary of State of the State of Nevada.

 

The opinions and other matters in this letter are qualified in their entirety
and subject to the following additional assumptions, qualification and
limitations:

I.Our opinions expressed in paragraph 6, above, are subject to the following
additional assumptions, qualifications and limitations:

 

i.We assume that the security interest in the Collateral granted to the
Collateral Agent in the U.S. Security Agreement has attached under the
applicable Uniform Commercial Code.  We express no opinion with respect to the
perfection of a security interest in or transfer of any Collateral with respect
to which a security interest or transfer cannot be perfected by the filing of a
financing statement pursuant Section 104.9311 of the NV UCC.  The generic
description of the Collateral set forth in the Financing Statement as “all
assets of the Debtor” is permissible under the NV UCC; however, upon filing of
the Financing Statement in the office of the Nevada Secretary of State,
perfection of the Collateral Agent’s security interest by such filing will only
occur as to those items and types of Collateral described in the U.S. Security
Agreement in which a security interest may be perfected by filing in the office
of the Nevada Secretary of State. 

 

ii.We express no opinion as to the priority of any security interest created, or
purported to be created, by any of the Transaction Documents.

 

iii.We call to your attention that Section 552 of the United States Bankruptcy
Code limits the extent to which property acquired by a debtor after the
commencement of a case

 

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Januray 24, 2014

Page 4

 

under the United States Bankruptcy Code may be subject to a security interest
arising from a security agreement entered into by such debtor before the
commencement of such case.

 

iv.We express no opinion as to any actions that may be required to be taken
periodically under the NV UCC or other applicable law in order for the
effectiveness of the Financing Statement, or the validity or perfection of any
security interest, to be maintained.  We note that a financing statement filed
in the State of Nevada is generally effective for a period of five years from
the date of filing.  However, Nevada Revised Statutes Section 104.9515 requires
the filing of continuation statements within the period of six months before the
expiration of five years from the date of the filing of the original financing
statement or the filing of any continuation statements in order to maintain the
effectiveness of the financing statement.  Upon lapse of the five year period
and without the proper filing of a continuation statement the security interest
becomes unperfected (unless the security interest is perfected without filing)
and any priority is lost.

 

v.We do not express any opinion with respect to the perfection of a security
interest in the Collateral or the proceeds thereof that constitutes cash or cash
equivalents, except to the extent that they constitute proceeds under Nevada
Revised Statutes Section 104.9315, during any period of time when they are not
held by the Lenders or their agent.

 

vi.Perfection of a security interest in proceeds of any Collateral may be
limited as provided in Nevada Revised Statutes Section 104.9315.

 

vii.We call to your attention that the security interest of the Collateral Agent
in any of the Collateral which constitutes accounts under the NV UCC may be
subject to the rights of account debtors claims and defenses of such account
debtors and the terms of agreements with such account debtors.

 

viii.The rights of the Company to assign any Collateral consisting of claims
against any government or governmental agency (including, without limitation,
the United States of America or any state thereof or any agency or department
thereof or of any state) may be limited by the Federal Assignment of Claims Act
or similar state or local statute.

 

ix.We call to your attention (i) that perfection of any security interest in the
Collateral by filing will lapse (x) four months after the Company changes its
location to another jurisdiction or (y) one year after the Company transfers
such of the Collateral to a person who thereby becomes a debtor under the U.S.
Security Agreement and who is located in another jurisdiction, unless, in either
case, appropriate steps are taken to perfect such security interest in such
other jurisdiction before the expiration of such four-month or one-year period,
as applicable.

 

x.If the Company changes its name so as to make the Financing Statement filed
against it seriously misleading, then perfection will lapse as to any of the
Collateral acquired by such party more than four months after such change unless
a new appropriate financing statement indicating the new name of the Company is
properly filed before the expiration of such four-month period.

 

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Januray 24, 2014

Page 5

 

II.The foregoing opinions are limited to the matters expressly set forth herein
and no opinion may be implied or inferred beyond the matters expressly
stated.  We disclaim any obligation to update this letter for events occurring
after the date of this letter, or as a result of knowledge acquired by us after
that date, including changes in any of the statutory or decisional law after the
date of this letter.  We are members of the bar of the State of Nevada.  We
express no opinion as to the effect and application of any United States federal
law, rule or regulation or any securities or blue-sky laws of any state,
including the State of Nevada.  We are not opining on, and assume no
responsibility as to the applicability to or the effect on any of the matters
covered herein of the laws of any other jurisdiction other than the laws of
Nevada as presently in effect. 

 

The opinions rendered herein are for the sole benefit of, and may only be relied
upon by the addressees and any Person that subsequently becomes a Lender in
accordance with Section 9.04(b) of the Credit Agreement as if it were addressed
to such Person and delivered on the date hereof, and the opinions herein
expressed are not to be used, circulated or otherwise referred to in connection
with any transaction other than those contemplated by the Transaction Documents,
provided that the law firm of Vinson & Elkins LLP may rely upon and refer to
this opinion in connection with the opinion to be rendered by them pursuant to
Section 5.01(a) of the LC Agreement, provided further, that this opinion may be
furnished by you to, but may not be relied upon in any manner by, (1) your legal
counsel and independent auditors who need to know such information and are
informed of the confidential nature of this opinion, (2) any regulatory
authority having jurisdiction over you upon the request or demand of such
regulatory authority, (3) any Person to the extent required pursuant to the
order of any court or administrative agency or in any pending legal or
administrative proceeding or as otherwise required by applicable law or
compulsory legal process, provided that you take reasonable steps (to the extent
permitted by applicable law) to procure that such Person maintains the
confidentiality of this opinion, (4) any Person that subsequently becomes the
Collateral Agent in accordance with Section 10.05 of the LC Agreement, (5) any
Person that proposes to become a Lender under the Credit Agreement, and (6) any
Person that proposes to become or becomes a successor Payee in compliance with
the requirements of the LC Agreement. 

 

 

 

 

 

Very truly yours,

 

 

 

 

 

WOODBURN and WEDGE

 

 

 

 

 

 

 

 

By:

 

 

 

Gregg P. Barnard

 

 

 

 

 

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London E14 4QJ
United Kingdom

 

 

 

 

 

Addressees and each an Addressee)

 

 

 

 

 

 

+352 4444 55 1

+352 44 44 55 556

 

 

Credit Suisse AG

One Cabot Square
London E14 4QJ
United Kingdom

in its capacity as Collateral Agent

 

Credit Suisse (USA) LLC

in its capacity as Lead Arranger

 

(together, the Addressees and each an Addressee)

 

Allen & Overy

société en commandite simple, inscrite au barreau de Luxembourg

33 avenue J.F. Kennedy  L-1855  Luxembourg

Boîte postale 5017  L-1050  Luxembourg

 

Tel+352 4444 55 1

Personal fax+352 44 44 55 556

frank.mausen@allenovery.com

 

 

 

 

Luxembourg,  24 January 2014

Our refFM/0105088-0000005 LU:7050017.8

 

 

LC Finco S.à r.l.

Dear Sirs,

1.

We have acted as legal advisers in the Grand Duchy of Luxembourg (Luxembourg) to
Endeavour Energy (UK) Limited (Endeavour) in connection with the entry by LC
Finco S.à r.l., a private limited liability company (société à responsabilité
limitée) incorporated under the laws of Luxembourg and in the process of
registration with the Luxembourg trade and companies register (Registre de
commerce et des sociétés, Luxembourg) (the Register) (the Company) into various
Agreements (as defined below).

This legal opinion addresses certain matters of Luxembourg law and has been
addressed to the Addressees in connection with these matters. In this regard, we
note that we have not advised the Addressees on the contents of the Agreements
(as defined below) and we have not assisted the Addressees in any way in
relation to the negotiation of the Agreements or the transactions contemplated
thereby. This legal opinion will therefore not necessarily address all the
concerns or interests of the Addressees. We exceptionally accept addressing this
legal opinion to the Addressees solely in relation to the matters opined on
herein, but the giving of this legal opinion is not to be taken as implying that
we owe the Addressees any duty of care (other than in respect of the accuracy of
the opinions expressly provided herein) in relation to the Agreements, the
transactions contemplated by the Agreements or their commercial or financial
implications. Notwithstanding the provision of this legal opinion, we expressly
reserve the right to represent and advise Endeavour (if Endeavour so requests)
in relation to any matters affecting the Agreements at any time now or in the
future (whether or not separate legal advisors are retained on any such matters
by the Addressees) and the fact that we have provided this legal opinion to the
Addressees shall not cause us any conflict of interests in relation to the
giving of any such advice. We shall have no obligation to advise the Addressees
in the future on any of the matters referred to in this legal opinion.

 

 

Allen & Overy, société en commandite simple, is an affiliated office of Allen &
Overy LLP. Allen & Overy LLP or an affiliated undertaking has an office in each
of: Abu Dhabi, Amsterdam, Antwerp, Athens, Bangkok, Beijing, Belfast,
Bratislava, Brussels, Bucharest (associated office), Budapest, Casablanca, Doha,
Dubai, Düsseldorf, Frankfurt, Hamburg, Hanoi, Ho Chi Minh City, Hong Kong,
Istanbul, Jakarta (associated office), London, Luxembourg, Madrid, Mannheim,
Milan, Moscow, Munich, New York, Paris, Perth, Prague, Riyadh (associated
office), Rome, São Paulo, Shanghai, Singapore, Sydney, Tokyo, Warsaw and
Washington, D.C., Yangon

 

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2.

We have examined, to the exclusion of any other document, copies of the
documents listed below:

2.1

a copy of the articles of incorporation (statuts) of the Company as at 14
January 2014 (the Articles);

2.2

a scanned copy of the resolutions taken by the sole manager of the Company on 23
January 2014 (the Resolutions);

2.3

an e-mailed scanned copy of a certificat de coutume in respect of the Company
dated 21 January 2014 (the Certificat de Coutume);

2.4

an e-mailed scanned copy of an officer certificate in respect of the Company
dated 24 January 2014 (the Officer Certificate and, together with the Certificat
de Coutume, the Certificates);

2.5

an e-mailed scanned copy of an English law governed letter of credit issuance
agreement dated 24 January 2014 and made between the Company and Credit Suisse
(the LC Issuance Agreement);

2.6

an e-mailed scanned copy of a New York law governed credit agreement dated 24
January 2014 and made between, amongst others, the Company and LC Finco US LLC
as borrowers, the lenders named therein and Credit Suisse AG  (Credit Suisse),
as administrative agent and as collateral agent (the Credit Agreement);

2.7

an e-mailed scanned signed copy of a collateral assignment agreement dated 24
January 2014 and made between the Company and Credit Suisse as collateral agent
(the Collateral Assignment Agreement);

2.8

an e-mailed scanned copy of a New York law governed LC procurement agreement
dated 24 January 2014 and made between, amongst others, the Company, as payee,
Endeavour as payer and Credit Suisse, as collateral agent (the Procurement
Agreement);  

2.9

an e-mailed scanned signed copy of a Luxembourg law governed pledge over shares
agreement  dated 24 January 2014 and made between Credit Suisse as collateral
agent, the Company and Stiching LC Finco as pledgor (the Luxembourg Share Pledge
Agreement); and

2.10

an e-mailed scanned signed copy of a Luxembourg law governed account pledge
agreement dated 24 January 2014 and made between the Company as pledgor and
Credit Suisse as collateral agent (the Luxembourg Account Pledge Agreement and,
together with the Luxembourg Share Pledge Agreement, the Luxembourg Pledge
Agreements).

The documents listed in paragraphs 2.5 to 2.10 (inclusive) above are herein
collectively referred to as Agreements. The terms "Agreements", "Luxembourg
Share Pledge Agreement", "Luxembourg Account Pledge Agreement", "LC Issuance
Agreement" and "Luxembourg Pledge Agreements" include, for the purposes of
paragraphs 3. and 5. below, any document in connection therewith.

3.

In giving this legal opinion, we have assumed, and we have not verified
independently:

3.1

the genuineness of all signatures, stamps and seals, the completeness and
conformity to the originals of all the documents submitted to us as certified,
photostatic, faxed, scanned or e-mailed

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copies or specimens and the authenticity of the originals of such documents and
that the individuals purported to have signed have in fact signed (and had the
general legal capacity to sign) these documents;

3.2

the due authorisation, execution and delivery of the Agreements by all the
parties thereto (other than the Company) as well as the capacity, power,
authority and legal right of all the parties thereto (other than the Company) to
enter into, execute, deliver and perform their respective obligations
thereunder, and the compliance with all internal authorisation procedures by
each party (other than the Company) for the execution by it of the Agreements to
which it is expressed to be a party;

3.3

that all factual matters (including the factual matters set forth in the
Resolutions) and statements relied upon or assumed herein were, are and will be
(as the case may be) true, complete and accurate on the date of execution of the
Agreements;

3.4

that all authorisations, approvals and consents under any applicable law (other
than Luxembourg law) which may be required in connection with the execution,
delivery and performance of the Agreements have been or will be obtained;

3.5

the due compliance with all matters (including without limitation, the obtaining
of necessary consents and approvals and the making of necessary filings and
registrations) required in connection with the Agreements (other than the
Luxembourg Pledge Agreements) to render them enforceable in all relevant
jurisdictions and the due compliance with all matters (including without
limitation, the obtaining of necessary consents and approvals and the making of
necessary filings and registrations) under any applicable law, other than
Luxembourg law, required in connection with the Luxembourg Pledge Agreements to
render them enforceable in all relevant jurisdictions (other than Luxembourg);

3.6

that the place of the central administration (siège de l'administration
centrale), the principal place of business (principal établissement) and the
centre of main interests (as referred to in Council Regulation (EC) No 1346/2000
of 29 May 2000 on insolvency proceedings, as amended (the EU Insolvency
Regulation)) of the Company are located at the place of its registered office
(siège statutaire) in Luxembourg and that the Company has no establishment (as
such term is defined in the EU Insolvency Regulation) outside Luxembourg;

3.7

that the Company complies with the provisions of the Luxembourg act dated 31 May
1999 concerning the domiciliation of companies, as amended;

3.8

that the Company does not carry out an activity in the financial sector on a
professional basis, as referred to in the Luxembourg act dated 5 April 1993
regarding the financial sector, as amended. This assumption does not
specifically affect the entry into and the performance by the Company of the
Agreements. In this respect, we refer to the Certificates;

3.9

that the Company does not carry out an activity requesting the granting of a
business licence under the Luxembourg act dated 2 September 2011 relating to the
establishment of certain businesses and business licences. This assumption does
not specifically affect the entry into and the performance by the Company of the
Agreements. In this respect, we refer to the Certificates;

3.10

that the entry into and performance of the Agreements are for the corporate
benefit (intérêt social) of the Company;

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3.11

that all the parties to the Agreements (other than the Company) are companies
duly organised, incorporated and existing in accordance with the laws of the
jurisdiction of their respective incorporation and/or their registered office
and/or the place of effective management, having a corporate existence; that in
respect of all the parties to the Agreements, no steps have been taken pursuant
to any insolvency, bankruptcy, liquidation or equivalent or analogous
proceedings to appoint an administrator, bankruptcy receiver, insolvency officer
or liquidator over the respective parties or their assets and that no voluntary
or judicial winding-up or liquidation of such parties has been resolved or
become effective at the date hereof. In respect of the Company, we refer to the
Certificates;

3.12

that there are no provisions of the laws of any jurisdiction outside Luxembourg
which would adversely affect, or otherwise have any negative impact on, the
opinions expressed in this legal opinion;

3.13

that the Agreements (other than the Luxembourg Pledge Agreements) are legally
valid, binding and enforceable under their governing law (other than Luxembourg
law to the extent opined herein), that the choices of such governing law and of
the jurisdiction clauses are valid (as a matter of such governing law) as the
choices of the governing law and the submission to the jurisdiction of the
chosen courts for the Agreements (other than the Luxembourg Pledge Agreements); 

3.14

that the obligations assumed by all the parties under the Agreements constitute
legally valid, binding and enforceable obligations in accordance with their
terms under the respective governing laws of such obligations (other than the
laws of Luxembourg to the extent opined herein);

3.15

that the Agreements are entered into and performed by the parties thereto in
good faith and without any intention of fraud or intention to deprive of any
legal benefit any persons (including for the avoidance of doubt third parties)
or to circumvent any applicable mandatory laws or regulations of any
jurisdiction (including without limitation any tax laws);

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3.16

that the assets, rights, title and interest of Stichting LC Finco and the
Company, respectively, over which a security interest is granted or created
under the Luxembourg Pledge Agreements have been validly transferred to, or
otherwise acquired by Stichting LC Finco and the Company, respectively, free
from any security interest under applicable laws, that such assets, rights,
title and interests are not subject to any prior or pari passu contractual
security interest and that Stichting LC Finco and the Company, respectively,
have and, where future assets or rights are concerned, shall have valid legal
title over, and the right to dispose of, such assets or rights under applicable
laws; 

3.17

that ING Luxembourg, société anonyme (ING) will waive all its rights of pledge,
lien, set-off or rights of retention in respect of the pledged accounts under
the Luxembourg Account Pledge Agreement, contained in ING's general terms and
conditions or any contractual arrangements or applicable law;

3.18

that the assets to be transferred to, or standing to the credit of, the pledged
accounts under the Luxembourg Account Pledge Agreement consist exclusively of
cash (créances de sommes d'argent));

3.19

that the Articles have not been modified since the date referred to in paragraph
2.1 above;

3.20

that all payments and transfers made by, on behalf of, in favour of, or for the
account of, the Company under the Agreements, are made on an arm’s length basis
and are in accordance with market practice; and

3.21

that the Resolutions have not been amended, rescinded, revoked or declared void
and that the sole manager of the Company has carefully considered the entry into
and performance by the Company of the Agreements before signing Resolutions.

4.

OPINION

Based upon, and subject to, the assumptions made above and the qualifications
set out below and subject to any matters not disclosed to us, we are of the
opinion that, under the laws of Luxembourg in effect, as construed and applied
by the Luxembourg courts in published Luxembourg court decisions, on the date
hereof:

 

4.1

Status

The Company is a private limited liability company (société à responsabilité
limitée) formed for an unlimited duration and legally existing under the laws of
Luxembourg.

4.2

Power and authority and authorisation

The Company has the corporate power and authority to enter into, execute, and
perform its obligations under, the Agreements and has taken all necessary
corporate actions to authorise the execution and the performance of the
Agreements.

4.3

Legal validity

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The Luxembourg Pledge Agreements are legally valid and binding under Luxembourg
law and create valid first ranking pledges in favour of Credit Suisse.

4.4

Enforceability

The pledges under the Luxembourg Pledge Agreements are enforceable under
Luxembourg law. The obligations expressed to be assumed by the Company under the
Luxembourg Pledge Agreements would be enforceable against the Company in the
Luxembourg courts in accordance with their express terms.

4.5

Execution

The Agreements have been duly executed on behalf of the Company.

4.6

Perfection of Luxembourg Pledge Agreements

The pledge under the Luxembourg Share Pledge Agreement is validly perfected. 

The pledge under the Luxembourg Account Pledge Agreement will be validly created
and perfected provided that the pledge under the Luxembourg Account Pledge
Agreement is accepted by ING.

4.7

Non-conflict

The execution, delivery and performance by the Company of the Agreements, and
the compliance by the Company with the terms, of the Agreements do not violate
the Articles, any applicable law of Luxembourg relating to private limited
liability companies generally and any Luxembourg laws in relation to the
capacity of the Company.

4.8

No consents

No authorisations, approvals or consents of governmental, judicial and public
bodies and authorities of or in Luxembourg are required under statute in
connection with the entry into or performance by the Company of the Agreements.
It is not necessary in order to ensure the enforceability or admissibility in
evidence of the Luxembourg Pledge Agreements, that any of them be notarised or
subject to any other formality or be filed, recorded, registered or enrolled
with any court or official authority in Luxembourg.

Application of governing law

The choice of New York law as the governing law of the Agreements (other than
the Luxembourg Pledge Agreements and the LC Issuance Agreement) would be upheld
as a valid choice of law by the courts of Luxembourg and applied by those courts
in proceedings in relation to the Agreements (other than the Luxembourg Pledge
Agreements and the LC Issuance Agreement) as the governing law thereof. 

The choice of English law as the governing law of the LC Issuance Agreement
would be upheld as a valid choice of law by the courts of Luxembourg and applied
by those courts in proceedings in relation to the LC Issuance Agreement as the
governing law thereof. 

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The choice of Luxembourg law as the governing law of the Luxembourg Pledge
Agreements would be upheld as a valid choice of law by the courts of Luxembourg
and applied by those courts in proceedings in relation to the Luxembourg Pledge
Agreements as the governing law thereof.

If any non-contractual obligations arising out of or in connection with the
Agreements (other than the Pledge Agreements) were sued upon before a court in
Luxembourg (if having jurisdiction), such court would recognise and give effect
to the provisions in the Agreements (other than the Pledge Agreements) whereby
any non-contractual obligations arising out of or in connection therewith are
expressed to be governed by New York law or English law (as the case may be),
subject to and in accordance with Regulation (EC) No 864/2007 of 11 July 2007 on
the law applicable to non-contractual obligations (Rome II) and provided that
the relevant non-contractual obligation is within the scope of, and the parties'
choice is permitted by, Rome II.

Submission to jurisdiction

The submission to the jurisdiction of the courts of Luxembourg-City contained in
the Luxembourg Pledge Agreements constitutes from a Luxembourg perspective an
effective submission to the jurisdiction of the Luxembourg courts.

The submission to the jurisdiction of the courts of Luxembourg-City by the
Company contained in the Luxembourg Pledge Agreements constitutes an effective
submission by the Company to the jurisdiction of the Luxembourg courts.

The submission to the jurisdiction of the New York courts by the Company
contained in the Agreements (other than the Luxembourg Pledge Agreements and the
LC Issuance Agreement) constitutes an effective submission by the Company to the
jurisdiction of such courts. 

The submission to the jurisdiction of the English courts by the Company
contained in the LC Issuance Agreement constitutes an effective submission by
the Company to the jurisdiction of such courts, pursuant to the Council
Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the
recognition and enforcement of judgments in civil and commercial matters, as
amended (the Council Regulation 44/2001).

Enforcement of judgments

A final and conclusive judgment in respect of the Agreements (other than the
Luxembourg Pledge Agreements and the LC Issuance Agreement) obtained against the
Company in a New York court would be recognised and enforced by the Luxembourg
courts subject to the applicable enforcement procedure (as set out in the
relevant provisions of the Luxembourg New Civil Procedure Code).

Pursuant to Luxembourg case law, the enforcement of such judgment is subject to
the following requirements:

the foreign judgment must be enforceable in the country of origin,

the court of origin must have had jurisdiction both according to its own laws
and to the Luxembourg conflict of jurisdictions rules,

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the foreign proceedings must have been regular in light of the laws of the
country of origin,

the rights of defence must not have been violated,

the foreign court must have applied the law which is designated by the
Luxembourg conflict of laws rules, or, at least, the judgment must not
contravene the principles underlying these rules,

the considerations of the foreign judgment as well as the judgment as such must
not contravene Luxembourg international public policy,

the foreign judgment must not have been rendered as a result of or in connection
with an evasion of Luxembourg law ("fraude à la loi").

A final and conclusive judgment in respect of the LC Issuance Agreement obtained
against the Company in an English court would be enforced by the Luxembourg
courts without re-examination of the merits of the case subject to the
applicable enforcement procedure and conditions of the Council Regulation
44/2001 or, as the case may be, of the Council Regulation 805/2004 of 21 April
2004 creating a European enforcement order for uncontested claims.

Any judgment awarded in the courts of Luxembourg may be expressed in a currency
other than the euro. However, any obligation to pay a sum of money would be
enforceable in Luxembourg in terms of the euro only.

Registration duties

There are no stamp, registration or similar taxes, duties or charges under the
laws of Luxembourg payable in connection with the execution, performance, and
enforcement by the relevant parties of the Luxembourg Pledge Agreements.

Residency

It is not necessary that any non Luxembourg Addressee be authorised or qualified
to carry on business in Luxembourg (i) by reason only of the execution or
performance by them or any of them of the Agreements and (ii) in order to enable
them to enforce their rights under the Agreements in Luxembourg.

Withholding tax

Any interest payable under, or with respect to, the Credit Agreement may be made
free and clear of, and without withholding or deduction for or on account of,
withholding tax in Luxembourg.

5.

QUALIFICATIONS

The above opinions are subject to the following qualifications:

The legal validity, performance and enforceability of, and the rights and
obligations of the parties under, the Agreements are subject to, and may be
affected or limited by, the provisions of any applicable bankruptcy (faillite),
insolvency, liquidation, reprieve from payment (sursis de paiement), controlled
management (gestion contrôlée), composition with creditors (concordat

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préventif de la faillite), reorganisation proceedings or similar Luxembourg or
foreign law proceedings or regimes affecting the rights of creditors generally.

Any certificate or determination which would by contract be deemed to be
conclusive may not be upheld by the Luxembourg courts.

Certain obligations may not be the subject of specific performance pursuant to
court orders, but may result in damages only. Accordingly, Luxembourg courts may
issue an award of damages where specific performance is deemed impracticable or
an award of damages is determined adequate.

Notwithstanding a foreign jurisdiction clause or an arbitration clause, the
Luxembourg courts would, in principle, have jurisdiction to order provisional
measures in connection with assets or persons located in Luxembourg and such
measures would most likely be governed by Luxembourg law.

Penalty clauses (clauses pénales), and similar clauses on damages or liquidated
damages, as governed by article 1152 and articles 1226 et seq. of the Luxembourg
Civil Code are allowed to the extent that they provide for a reasonable level of
damages. The judge has however the right to reduce (or increase) the amount
thereof if it is unreasonably high (or low). The provisions of article 1152 and
articles 1226 et seq. of the Luxembourg Civil Code are generally considered to
be a point of public policy under Luxembourg law. It is possible that a
Luxembourg court would hold them to be a point of international public policy
that would set aside the relevant foreign governing law.

International public policy means the fundamental concepts of Luxembourg law
that the Luxembourg courts may deem to be of such significance so as to exclude
the application of an (otherwise applicable) foreign law (deemed to be contrary
in its results to such concepts). International public policy is a matter which
is constantly evolving on the basis of the position of Luxembourg courts with
respect to cases they hear. Accordingly, there are uncertainties as to what is
considered as international public policy under Luxembourg law.

Interest may not accrue on interest that is due on principal, unless such
interest has been due for at least one year (article 1154 of the Luxembourg
Civil Code). The right to compound interest is limited to cases where (i) the
interest has been due for at least one year and (ii) the parties have
specifically provided in an agreement (to be made after that interest has become
due for at least one year) that such interest may be compounded (or absent such
agreement, the creditor may file an appropriate request with the relevant
court). The provisions of article 1154 of the Luxembourg Civil Code are
generally considered to be a point of public policy under Luxembourg law. It is
possible, although it is highly unlikely, that a Luxembourg court would hold
these provisions to be a point of international public policy that would set
aside the relevant foreign governing law.

The registration of the Agreements with the Administration de l'Enregistrement
et des Domaines in Luxembourg may be required in the case of legal proceedings
being brought before the Luxembourg courts or, in the case that the Agreements
must be produced before an official Luxembourg authority or, in the case that
the Agreements are referred to in a public deed, in which case either a nominal
registration duty or an ad valorem duty (of, for instance, 0.24 (zero point
twenty four) per cent. of the amount of the payment obligation mentioned in the
document so registered) will be payable depending on the nature of the document
to be registered. If registration is so required, the Luxembourg courts or the
official Luxembourg authority may

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require that the Agreements and/or any judgment obtained in a foreign court must
be translated into French or German.

Claims may become barred under statutory limitation period rules and may be
subject to defences of set-off or counter-claims.

No opinion is expressed as to the validity and enforceability of provisions
whereby interest on overdue amounts or other payment obligations shall continue
to accrue or subsist after judgment.

Where any obligations are to be performed or observed or are based upon a matter
arising in a jurisdiction outside Luxembourg, they may not be enforceable under
Luxembourg law if and to the extent that such performance or observance would be
unlawful, unenforceable, or contrary to public policy under the laws of such
jurisdiction.

With respect to the opinion expressed in paragraph 4.9 above, the Luxembourg
courts might not apply a chosen foreign law if that choice was not made bona
fide and/or:

if it were not pleaded and proved; or

if such foreign law would be contrary to the mandatory provisions (lois
impératives) or overriding mandatory provisions (lois de police) of Luxembourg
law or manifestly incompatible with Luxembourg public policy; or

to the extent that relevant contractual obligations or matters fall outside of
the scope of Regulation (EC) No 593/2008 of the European Parliament and the
Council of 17 June 2008 on the law applicable to contractual obligations (Rome
I); or

if all other elements relevant to the situation are located in a country other
than the jurisdiction of the chosen governing law, in which case the Luxembourg
courts may apply the applicable mandatory provisions of such country; or

where the chosen governing law is not the law of an EU Member State, if all
other elements relevant to the situation are located in one or several EU Member
States, in which case the Luxembourg courts may apply applicable mandatory EU
law provisions (as implemented in Luxembourg); or

where contractual obligations are to be or have been performed in another
country where such performance is prohibited by overriding mandatory provisions;
or

if a party is subject to insolvency proceedings, in which case the Luxembourg
courts would apply the law of the jurisdiction where such insolvency proceedings
have been duly opened (lex concursus) to the effects of such insolvency
proceedings without prejudice to the exceptions provided for in the EU
Insolvency Regulation.

Clauses that grant to the debtor of an obligation the power to determine, in its
absolute discretion, if, and if so, under which conditions its obligation will
be performed may be declared void by a Luxembourg court (if competent) on the
basis of articles 1170 and 1174 of the Luxembourg Civil Code (condition purement
potestative, one-sided clause). It is possible that a Luxembourg court would
hold articles 1170 and 1174 of the Luxembourg Civil Code to be a point of
international public policy that would set aside the relevant foreign governing
law.

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Any indemnity provision entitling one party to recover its legal and other
enforcement costs and expenses from another party may be limited in terms of
items or amounts as a Luxembourg court (if competent) deems appropriate.

We express no opinion in respect of the effectiveness of clauses which provide
that amendments to an agreement can only be made, and waivers can only be
granted, in writing.

We express no opinion on the validity or enforceability of waivers granted for
future rights.

Under the laws of Luxembourg, unless otherwise provided, a power of attorney or
agency (mandat), whether or not irrevocable, will terminate by force of law, and
without notice, upon the occurrence of insolvency events affecting the principal
or the agent. A power of attorney or agency (mandat) might become ineffective
upon the principal entering into controlled management (gestion contrôlée) or
reprieve from payment (sursis de paiement). The designation of a service of
process agent may constitute (or may be deemed to constitute) a power of
attorney or agency (mandat).

We express no opinion on the effectiveness or ineffectiveness of a purported
revocation, or the consequences of such revocation by the principal of a power
of attorney or agency (mandat) expressed to be irrevocable.

We express no opinion on the validity or enforceability under Luxembourg law of
a power of attorney granted in the exclusive interest of the attorney or a third
party.

Unless a Luxembourg company expressly accepts and confirms, for the purposes of
article 1281 and article 1278 of the Luxembourg Civil Code, that notwithstanding
any assignment, transfer and/or novation made pursuant to such agreement, the
guarantee given by it guarantees all obligations of the relevant obligors
(including without limitation, all obligations with respect to all rights and/or
obligations so assigned, transferred or novated) and any security interest
created under said agreement shall be preserved for the benefit of any new
lender, respectively such guarantee or security interest automatically lapses.
In this respect, we refer to clause 15.9 of the Luxembourg Share Pledge
Agreement and clause 14.9 of the Luxembourg Account Pledge Agreement.

Article 1275 of the Luxembourg Civil Code states that in the case of
substitution of debtor (by way of novation), the creditor must expressly consent
(animus novandi) to the substitution and expressly agree that upon the new
debtor assuming all the rights and obligations of the original debtor as fully
and effectively as though it had been the original debtor, the original debtor
is released from its liabilities. If such express consent is not given, the
original debtor is not released from its liabilities and the creditor would have
two debtors, namely the original debtor and the new debtor.

The perfection of the security created under and in pursuance of the Luxembourg
Pledge Agreements does not necessarily prevent third party creditors of the
relevant pledgors from seeking attachment or enforcement against the assets
which are subject to the Luxembourg Pledge Agreements to satisfy their unpaid
claims against such pledgors. It cannot be totally excluded that, depending on
the circumstances, a third party creditor might be able to seek the forced sale
of the assets of the pledgor which are subject to the Luxembourg Pledge
Agreements through court proceedings, although the beneficiaries thereunder will
in principle remain entitled

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to a right of retention over the assets and, as the case may be, to priority
over the proceeds of such sale (subject to the preferred rights of certain
creditors deriving from laws of general application).

As of today, the Articles of the Company do not appear to have been published in
the Luxembourg official gazette (Mémorial C, Recueil des Sociétés et
Associations) (the Official Gazette). This does not affect the existence and
legal personality of the Company. However, any court action brought by the
Company before it has been registered with the Register and its Articles have
been published in the Official Gazette will in principle not be admissible.
Also, any corporate documents (including the articles of association) are in
principle not effective (opposable) vis-à-vis bona fide third parties prior to
their publication in the Official Gazette. We note that the Company has been
formed by a notary's deed dated 14 January 2014. The Luxembourg notary is
legally required to proceed to register the Company with the Register. The
Register will arrange for the publication of the Articles in the Official
Gazette. The publication of the Articles may take several months.

We have noted that the appointment of the sole manager of the Company has at
this date not yet been published in the Official Gazette. Although managers
whose appointment has not yet been published may validly bind the Company, any
corporate documents (including manager appointments) are in principle not
effective (opposable) vis-à-vis bona fide third parties prior to their
publication in the Official Gazette.

A Luxembourg court might not give effect to a clause purporting to determine the
date on which notice is deemed to have been made.

The discretion of a party would have to be exercised in good faith.

Except with respect to opinions 4.12 and 4.14, we express no tax opinion
whatsoever in respect of the Company or the tax consequences of the transactions
contemplated by the Agreements.

We express no opinion as to whether the performance of the Agreements would
cause any borrowing limits, debt/equity or other ratios possibly agreed with the
tax authorities to be exceeded nor as to the consequences thereof.

We express no opinion whatsoever on matters of fact or on matters other than
those expressly set forth in this legal opinion, and no opinion is, or may be,
implied or inferred herefrom.

We have not made any enquiry regarding, and no opinion is expressed or implied
in relation to, the accuracy of any representation or warranty given by, or
concerning, any of the parties to the Agreements or whether such parties or any
of them have complied with or will comply with any covenant or undertaking given
by them or the terms and conditions of any obligations binding upon them, save
as expressly provided herein.

The rights and obligations of the parties under the Agreements may be limited by
the effects of criminal measures, including without limitation criminal freezing
orders.

Payments made, as well as other transactions (listed in the pertinent section of
the Luxembourg Commercial Code) concluded or performed, during the suspect
period (période suspecte) which is fixed by the Luxembourg court and dates back
not more than six months as from the date on which the Luxembourg court formally
adjudicates a person bankrupt, and, as for specific payments and transactions,
during an additional period of ten days before the commencement of

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such period, are subject to cancellation by the Luxembourg court upon
proceedings instituted by the Luxembourg insolvency receiver.

In particular,

article 445 of the Luxembourg Commercial Code sets out that specific
transactions entered into during the suspect period and an additional period of
ten days preceding the suspect period fixed by the court (e.g., the granting of
a security interest for antecedent debts; the payment of debts which have not
fallen due, whether payment is made in cash or by way of assignment, sale,
set-off or by any other means; the payment of debts which have fallen due by any
other means than in cash or by bill of exchange; transactions without
consideration or for materially inadequate consideration) must be set aside or
declared void, as the case may be, if so requested by the insolvency receiver;

article 446 of the Luxembourg Commercial Code states that payments made for
matured debts as well as other transactions concluded for consideration during
the suspect period are subject to cancellation by the court upon proceedings
instituted by the insolvency receiver if they were concluded with the knowledge
of the bankrupt's cessation of payments; and

regardless of the suspect period, article 448 of the Luxembourg Commercial Code
and article 1167 of the Luxembourg Civil Code (actio pauliana) give the creditor
the right to challenge any fraudulent payments and transactions made prior to
the bankruptcy, without limitation of time.

The safe harbour provisions of the Luxembourg act of 5 August 2005 on financial
collateral arrangements, as amended (the Collateral Act 2005), protect any
financial collateral arrangement (contrat de garantie financière) falling within
its scope (such as, the Luxembourg Pledge Agreements) against the negative
impact of any clawback provisions, which would for instance include the action
provided for under article 445 of the Luxembourg Commercial Code.

There are rights of preference (such as, for example, for tax payments, social
security charges and wages) existing by operation of law and ranking prior to
the ranking of security rights.

A search at Register is not capable of conclusively revealing whether a
winding-up resolution or petition, or an order adjudicating or declaring a, or a
petition or filing for, bankruptcy or reprieve from payment (sursis de
paiement), controlled management (gestion contrôlée), composition with creditors
(concordat préventif de la faillite) or judicial liquidation (liquidation
judiciaire) or similar action has been adopted or made. 

With respect to any pledge in respect of any future pledged accounts (as defined
in the relevant Luxembourg Account Pledge Agreement), any pledge over future
security assets standing to the credit of any future pledged accounts will not
be considered as legally valid, binding and enforceable against third parties
(including the account bank) if the relevant account bank has not acknowledged
such pledge and has not waived all its rights of pledge, lien, set-off or rights
of retention in respect of the future pledged accounts under the Luxembourg
Account Pledge Agreement, contained in the relevant account bank’s general terms
and conditions or any contractual arrangements or applicable law for the
purposes of the Collateral Act 2005. Furthermore, any pledge over future
security assets standing to the credit of any future pledged accounts will not
be considered as legally valid, binding and enforceable against third parties

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(including the account bank) if at the moment of the perfection of the pledges
over the future pledged accounts (that is, the moment on which the account bank
has acknowledged such pledge and has waived all its rights of pledge, lien,
set-off or rights of retention in respect of the future pledged accounts under
the Luxembourg Account Pledge Agreement, contained in the account bank’s general
terms and conditions or any contractual arrangements or applicable law for the
purposes of the Collateral Act 2005), the pledgor has already been declared
bankrupt or subject to any insolvency or reorganisation proceedings or measures.

Contractual security arrangements which are not expressly recognised under
Luxembourg law, such as the assignment for security purposes of rights or assets
other than those expressly covered by the Collateral Act 2005, might not be
recognised or enforced by the Luxembourg courts, in particular where the
Luxembourg security grantor becomes subject to Luxembourg insolvency proceedings
(without prejudice to the creditor protective provisions of the EU Insolvency
Regulation) or where the Luxembourg courts have otherwise jurisdiction because
of the actual or deemed location of the relevant rights or assets.

The corporate documents of, and relevant court orders affecting, a Luxembourg
company (including, but not limited to, the notice of a winding-up order or
resolution, notice of the appointment of a receiver or similar officer) may not
be held at the Register immediately and there is generally a delay in the
relevant document appearing on the files regarding the company concerned.
Furthermore, it cannot be ruled out that the required filing of documents has
not occurred or that documents filed with the Register may have been mislaid or
lost. In accordance with Luxembourg company law, changes or amendments to
corporate documents to be filed at the Register will be effective (opposable)
vis-à-vis third parties only as of the day of their publication in the Official
Gazette unless the company proves that the relevant third parties had prior
knowledge thereof.

As used in this legal opinion, the term enforceable means that the relevant
rights and obligations are of a type which the Luxembourg courts do normally
enforce. It does not mean that these obligations will necessarily be enforced in
all circumstances in accordance with their respective terms, enforcement being
subject to, inter alia, the nature of the remedies available in the Luxembourg
courts, the acceptance by such court of jurisdiction, the discretion of the
courts (within the limits of Luxembourg law), the power of such courts to stay
proceedings, to grant grace periods, the provisions of Luxembourg procedure
rules regarding remedies, enforcement measures available under Luxembourg law,
mandatory provisions of Luxembourg law or principles of Luxembourg international
public policy from time to time in force and the general principles of
Luxembourg law in particular, the general principle of good faith performance.

We do not express or imply any opinion in respect of a withholding tax that may
become due or payable pursuant to (i) the Luxembourg laws of 21 June 2005
implementing the Council Directive 2003/48/EC of 3 June 2003 on taxation of
savings income in the form of interest payments and ratifying the treaties
entered into by Luxembourg and certain dependent and associated territories of
EU Member States, or (ii) the Luxembourg law of 23 December 2005 as amended
introducing a withholding tax of 10% on payments of interest or similar income
made or ascribed by a paying agent established in Luxembourg to or for the
benefit of an individual beneficial owner who is resident of Luxembourg.

The question as to whether or not any provision of an agreement which may be
invalid on account of illegality may be severed from the other provisions
thereof in order to save those other provisions would be determined by the
Luxembourg courts in their discretion.

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Actions in Luxembourg courts must, in principle, be brought in the name of the
principal not in the name of an agent of the principal.

Contractual limitations of liability are unenforceable in case of gross
negligence (faute lourde) or wilful misconduct (faute dolosive).

We express no view on clause 12.2 (Retention of Security) of the Luxembourg
Share Pledge Agreement.

We express no view on clause 11.2 (Retention of Security) of the Luxembourg
Account Pledge Agreement.

This legal opinion is as of this date and we undertake no obligation to update
it or advise of changes hereafter occurring. We express no opinion as to any
matters other than those expressly set forth herein, and no opinion is, or may
be, implied or inferred herefrom. We express no opinion on any economic,
financial or statistical information (including formulas determining payments to
be made) contained in the Agreements (or any document in connection therewith).

This legal opinion is given on the express basis, accepted by each person who is
entitled to rely on it, that this legal opinion and all rights, obligations or
liability in relation to it are governed by, and shall be construed in
accordance with, Luxembourg law and that any action or claim in relation to it
can only be brought exclusively before the courts of Luxembourg.

The Addressees and any other person who are entitled to, and do, rely on this
opinion agree, by so relying, that, to the fullest extent permitted by law and
regulation (and except in the case of wilful misconduct or fraud) there is no
assumption of personal duty of care by, and such person will not bring any claim
against, any individual who is a partner of, member of, employee of or
consultant to Allen & Overy, société en commandite simple, Allen & Overy LLP or
any other member of the group of Allen & Overy undertakings and that such person
will instead confine any claim to Allen & Overy, société en commandite simple,
Allen & Overy LLP or any other member of the group of Allen & Overy undertakings
(and for this purpose "claim" means (save only where law and regulation applies
otherwise) any claim, whether in contract, tort (including negligence), for
breach of statutory duty, or otherwise).

Luxembourg legal concepts are expressed in English terms and not in their
original French or German terms. The concepts concerned may not be identical to
the concepts described by the same English terms as they exist under the laws of
other jurisdictions. It should be noted that there are always irreconcilable
differences between languages making it impossible to guarantee a totally
accurate translation or interpretation. In particular, there are always some
legal concepts which exist in one jurisdiction and not in another, and in those
cases it is bound to be difficult to provide a completely satisfactory
translation or interpretation because the vocabulary is missing from the
language. We accept no responsibility for omissions or inaccuracies to the
extent that they are attributable to such factors.

This legal opinion is given for the sole benefit of (i) the Addresses in
connection with the entry by the Company into the Agreements and (ii) any person
that becomes a Lender (as defined in the Credit Agreement) under the Credit
Agreement on, and within six months of, the date of the Credit Agreement. This
legal opinion may not be disclosed to anyone else except that it may be
disclosed by the Addressees to the extent required by any governmental or
competent regulatory authority or if required by court, provided that no such
party to whom this legal opinion is disclosed may rely, directly or indirectly,
on this legal opinion without our prior written permission.

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Yours faithfully,

 

 

Allen & Overy

Frank Mausen*

Partner

Avocat à la Cour

* This document is signed on behalf of Allen & Overy, a société en commandite
simple, registered on list V of the Luxembourg bar. The individual signing this
document is a qualified lawyer representing this entity.

 

 

 

 

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COLLATERAL ASSIGNMENT AGREEMENT

THIS COLLATERAL ASSIGNMENT AGREEMENT (as amended, amended and restated or
otherwise modified from time to time, this “Agreement”) is executed as of
January 24, 2014, between LC FINCO S.À R.L., a private limited liability company
(société à responsabilité limitée) incorporated and existing under the laws of
Luxembourg with its registered office at 40 avenue Monterey, L-2163 Luxembourg,
Grand Duchy of Luxembourg, pending registration with the Luxembourg Register of
Commerce and Companies and having a share capital of USD 20,000 (“LuxCo”), and
CREDIT SUISSE AG, in its capacity as Collateral Agent under the Credit Agreement
referred to below (in such capacity, “Collateral Agent”).

RECITALS

A. LuxCo, LC Finco US LLC, a Delaware limited liability company and a
wholly-owned subsidiary of LuxCo (“USCo” and, together with LuxCo, the
“Borrowers”), Credit Suisse AG, as administrative agent (in such capacity,
“Administrative Agent”), Collateral Agent and the lenders party thereto have
entered into that certain Credit Agreement dated as of even date herewith (as
amended, amended and restated or otherwise modified from time to time, the
“Credit Agreement”; capitalized terms used, but not defined, herein having the
meanings assigned to such terms in the Credit Agreement), pursuant to which the
Lenders have agreed to make term loans in the aggregate principal amount of
$130,000,000 to the Borrowers.

B. As a condition to the Credit Agreement, LuxCo, Endeavour International
Corporation, a Nevada corporation (“Holdings”), Endeavour Energy UK Limited, a
private limited company organized under the laws of England and Wales (“EEUK”),
and Credit Suisse AG, as collateral agent, have entered in that certain LC
Procurement Agreement of even date herewith (the “LC Procurement Agreement”).

C. Administrative Agent and Lenders have agreed to enter into the Credit
Agreement, subject to, among other conditions, the collateral assignment and
pledge to Collateral Agent, for the benefit of the Lenders, of all of LuxCo's
right, title, and interest under the LC Procurement Agreement and the other LC
Procurement Documents and in the other Collateral described below.

AGREEMENTS

NOW, THEREFORE, for the premises considered and for valuable consideration, the
receipt and sufficiency of which are acknowledged, Collateral Agent and LuxCo
agree as follows:

1. Defined Terms. The following terms when used in this Agreement, including its
preamble and recitals, shall have the following meanings (such definitions to be
equally applicable to the singular and plural forms thereof):

“Administrative Agent” has the meaning specified in the recitals hereto.

“Agreement” has the meaning specified in the preamble hereto.

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“Borrowers” has the meaning specified in the recitals hereto.

“Collateral” has the meaning specified in Section 2 hereof.

“Collateral Agent” has the meaning specified in the preamble hereto.

“Credit Agreement” has the meaning specified in the recitals hereto.

“EEUK” has the meaning specified in the recitals hereto.

“Endeavour Parties” has the meaning specified in the Section 3(a) hereof.

“Holdings” has the meaning specified in the recitals hereto.

“Instrument” has the meaning specified in Article 9 of the UCC.

“LC Bank” means Credit Suisse AG, London Branch.

“LC Issuance Agreement” means the LC Issuance Agreement of even date herewith
between LuxCo and the LC Bank.

“LC Procurement Agreement” has the meaning specified in the recitals hereto.

“LC Procurement Documents” has the meaning specified in the LC Procurement
Agreement.

“LuxCo” has the meaning specified in the preamble hereto.

“Proceeds” means “Proceeds” as defined in Article 9 of the UCC, including
without limitation all principal, interest and other payments and distributions
of cash or other property with respect to the Collateral (including, without
limitation, payments at maturity or upon redemption and any interest with
respect to the Collateral), and all rights, privileges and other securities of
every kind distributed with respect thereto or in exchange or substitution
therefor, upon conversion or otherwise.

“Related Rights” means, with respect to the LC Procurement Documents:

(a) all rights of LuxCo to receive any and all performance and payments due and
owing by EEUK or Holdings to LuxCo under the LC Procurement Agreement;

(b) all rights of LuxCo to compel EEUK’s or Holdings’ performance under and
pursuant to the LC Procurement Agreement;

(c) all rights of LuxCo to (i) modify the LC Procurement Agreement or (ii) waive
or release any right of LuxCo or obligation of EEUK or Holdings under the LC
Procurement Agreement; and

(d) all rights of LuxCo to exercise any and all rights and remedies with respect
to the LC Procurement Documents, including, without limitation, any rights to
terminate

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any LC Procurement Document and/or to receive damages arising out of or for
breach or default by EEUK or Holdings under any LC Procurement Document and any
rights of the types described in clauses (a) through (c) above.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York.

“USCo” has the meaning specified in the recitals hereto.

2. Grant. In order to secure the payment and performance of the Obligations
evidenced by or secured by the Credit Documents, LuxCo grants, transfers and
assigns to Collateral Agent, for the benefit of the Secured Parties, and pledges
to and grants a security interest to the Collateral Agent, for the benefit of
the Secured Parties, in, all of the rights, title and interest of LuxCo in, to
and under (a) the LC Procurement Documents (including, without limitation, the
Related Rights), (b) the LC Issuance Agreement, (c) any other “investment
property” and “general intangibles” (each as defined in Article 9 of the UCC),
and (d) all Proceeds of the foregoing, in each case, whether now owned by LuxCo
or hereafter acquired and whether now existing or hereafter coming into
existence, and wherever located (collectively, the “Collateral”) subject to the
terms and conditions of this Agreement.

3. Covenants and Warranties. LuxCo represents, covenants, warrants and agrees
with Collateral Agent with respect to each of the LC Procurement Documents and
all other rights, titles, and interests comprising the Collateral, that:

(a) Ownership. LuxCo holds all of its rights, title and interest in, to and
under the Collateral free from any lien, security interest, encumbrance,
assignment or other agreement, except the assignments and security interests
under this Agreement, and no financing statement covering the Collateral has
been executed or is on file in any public office except the financing
statement(s) relating to the collateral assignments and security interests
hereunder. LuxCo shall defend the rights of Collateral Agent in the Collateral
hereunder against all claims and demands of all persons at any time claiming the
same or any interest therein adverse to Collateral Agent or the Secured Parties,
and shall keep its rights, titles, and interests in the Collateral free from all
other liens, collateral assignments and security interests. There are no
defenses, counterclaims or setoffs to the obligations of Holdings, EEUK and each
subsidiary of Holdings that is a party to the LC Procurement Documents (all such
Persons, collectively, the “Endeavour Parties”) under or otherwise with respect
to the Collateral.

(b) Defense of Actions. While any Event of Default (which term shall include any
default under this Agreement) exists, Collateral Agent, without obligation so to
do, without notice to or demand on LuxCo, and without releasing LuxCo from any
obligation herein, may, without limiting its general powers, (1) appear in and
defend any action purporting to affect (A) the Collateral, or (B) the rights or
powers of Collateral Agent under this Agreement, and (2) perform any obligation
and exercise any right or power of LuxCo under or otherwise with respect to the
Collateral and in exercising any such powers, pay necessary costs and expenses,
employ counsel and incur and pay reasonable attorneys’ fees, and LuxCo will pay
immediately upon demand all sums expended by Collateral Agent under the
authority hereof, which amounts shall be secured hereby and by the Credit
Documents.

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(c) No Defaults. (1) LuxCo has not executed any prior assignment or pledge of
the Collateral, (2) there is no default by LuxCo or any Endeavour Party under or
otherwise with respect to the Collateral, and (3) the Collateral is in full
force and effect and has not been modified.

(d) Acknowledgement of Notice of Assignment. Concurrent with the execution of
this Agreement, LuxCo shall cause each of the Endeavour Parties to execute and
deliver an original of the Acknowledgement of Notice of Assignment in the form
attached as Exhibit A.

4. Rights and Powers of Collateral Agent. Collateral Agent shall have the
following rights and powers under this Agreement:

(a) General. While any Event of Default exists, Collateral Agent may, in its
discretion: (1) without liability to LuxCo, obtain from any person information
regarding LuxCo or LuxCo's business, which information any such person also may
furnish without liability to LuxCo; (2) require LuxCo or any Endeavour Party to
give possession or control of any Collateral to Collateral Agent; (3) take
control of proceeds from the Collateral; (4) take control of funds generated by
the Collateral and use same to reduce any part of the Term Loans and exercise
all other rights which LuxCo may exercise; (5) at any time transfer any of the
Collateral or evidence thereof into its own name or that of its nominee; or (6)
demand, collect, convert, redeem, settle, compromise, adjust, sue for, foreclose
or realize upon any of the Collateral, in its own name or in the name of LuxCo,
as Collateral Agent may determine.

(b) Remedies of Collateral Agent upon Default. While any Event of Default
exists, Collateral Agent may exercise any and all of the rights and remedies
provided by the UCC, as well as all other rights and remedies of Collateral
Agent under this Agreement and the other Credit Documents or otherwise available
at law or in equity. Collateral Agent will give LuxCo reasonable notice (which
in no event shall be deemed to exceed ten days) of the time and place of any
public sale of Collateral or of the time after which any private sale or any
other intended disposition of Collateral is to be made. Expenses of retaking,
holding, preparing for sale, selling, leasing or the like shall include, but
shall not be limited to, the reasonable attorneys’ fees and expenses of
Collateral Agent. Collateral Agent shall be entitled to immediate possession of
all books and records pertaining to the Collateral (except for any books and
records to be held by LuxCo or at LuxCo’s registered office according to
applicable law) and shall have permission from LuxCo to enter upon any premises
upon which the same may be situated and remove the same therefrom.

(c) Power of Attorney. LuxCo hereby irrevocably appoints Collateral Agent as the
attorney-in-fact for LuxCo, which appointment is coupled with an interest, with
full power of substitution, and in the name of LuxCo or Collateral Agent or any
nominee of Collateral Agent, to do every act with respect to the Collateral
which LuxCo may do. While any Event of Default exists, Collateral Agent, at its
option, without notice to LuxCo, without regard to the adequacy of security for
the Term Loan, either in person or by its agent and with or without bringing any
action or proceeding, or by its receiver to be appointed by a court, may
exercise any rights or remedies under or otherwise with respect to the
Collateral, on its own behalf or on behalf of LuxCo, as Collateral Agent may
determine.

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(d) Indemnity. Collateral Agent shall not be obligated to perform or discharge
any obligation under or otherwise with respect to the Collateral or under or by
reason of this Agreement and LuxCo hereby agrees to indemnify, defend and hold
Collateral Agent harmless from and against any and all liability, loss, claim or
damage which Collateral Agent may or might incur under or otherwise with respect
to the Collateral or this Agreement, and of and from any and all claims and
demands whatsoever which may be asserted against Collateral Agent by reason of
any alleged obligation or undertaking on Collateral Agent’s part to perform or
discharge any of the terms of the Collateral; however, LuxCo shall not be liable
under such indemnification to the extent a court of competent jurisdiction
determines in a final and non-appealable judgment that such loss, liability,
damage, claim, cost or expense results solely from Collateral Agent's gross
negligence, bad faith or willful misconduct. Should Collateral Agent incur any
such liability, loss or damage under or otherwise with respect to the
Collateral, or under or by reason of this Agreement, or in defense against any
such claims or demands, the amount thereof, including, without limitation,
costs, expenses and attorneys’ fees, shall be secured hereby, and LuxCo shall
reimburse Collateral Agent therefor immediately upon demand.

5. Miscellaneous. The following provisions shall govern and pertain to this
Agreement:

(a) Information and Inspection. To the extent required in the Credit Documents,
LuxCo shall furnish Collateral Agent any information with respect to the
Collateral requested by Collateral Agent, and LuxCo shall allow Collateral Agent
to inspect and copy, or furnish Collateral Agent with copies of, all records
relating to the Collateral.

(b) Additional Documents. LuxCo shall execute any papers furnished by Collateral
Agent which are necessary in the judgment of Collateral Agent to obtain,
maintain and perfect the security interests hereunder.

(c) Parties Liable on Collateral. LuxCo will preserve the liability under the
Collateral of the Endeavour Parties under the LC Procurement Documents.
Collateral Agent shall not have any duty or obligation to preserve such
liability, but it may do so.

(d) Right of Collateral Agent to Notify the Counterparty. While any Event of
Default exists, Collateral Agent shall have the right to notify the Endeavour
Parties to make payments directly to Collateral Agent, and Collateral Agent may
take control of any and all proceeds of the LC Procurement Documents and apply
the same in accordance with the terms of the Credit Documents.

(e) Amendments, Etc. No amendment or waiver of any provision of this Agreement,
nor consent to any departure by Collateral Agent or LuxCo therefrom, shall in
any event be effective unless the same shall be in writing, approved and signed
by Collateral Agent and LuxCo, and then any such waiver or consent shall only be
effective in the specific instance and for the specific purpose for which it is
expressly given.

(f) No Waiver; Remedies. No failure or delay on the part of Collateral Agent to
exercise or in exercising any right hereunder shall operate as a waiver thereof;
nor shall any

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single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative, may be exercised singly or concurrently, and are not
exclusive of any remedies provided by law or equity or under any of the Credit
Documents. Failure by Collateral Agent at any time or times hereafter to require
strict performance by LuxCo or any other person or entity of any of the
provisions, warranties, terms or conditions contained in any of the Credit
Documents now or at any time or times hereafter executed by LuxCo or any such
other person or entity and delivered to Collateral Agent shall not waive, affect
or diminish any right of Collateral Agent at any time or times hereafter to
demand strict performance thereof, and such right shall not be deemed to have
been modified or waived by any course of conduct or knowledge of Collateral
Agent, or any agent, officer or employee of Collateral Agent.

(g) Successors and Assigns. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the permitted
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of LuxCo, or Collateral Agent that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns. LuxCo shall not assign or delegate any of its rights or duties
hereunder without the prior written consent of the Administrative Agent and each
Lender, and any attempted assignment without such consent shall be null and
void.

In case of assignment, transfer or novation by a Lender to a new lender or a
participant of all or any part of its rights and obligations under this
Agreement or any of the other Credit Documents, the Lenders and the new lender
or participant shall agree that, for the purposes of Article 1278 and/or Article
1281 of the Luxembourg Civil Code (to the extent applicable), any assignment,
amendment, transfer and/or novation of any kind permitted under, and made in
accordance with the provisions of this Agreement or any agreement referred to
herein to which Luxco is a party, any security created in relation to the
agreement hereunder shall be preserved and continue in full force and effect to
the benefit of the new lender or participant.

(h) Severability. In the event any one or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.

(i) Expenses. LuxCo agrees to pay (i) all reasonable out-of-pocket expenses
incurred by Collateral Agent in connection with the preparation and
administration of this Agreement or in connection with any amendments,
modifications or waivers of the provisions hereof, including the reasonable and
documented fees, charges and disbursements of Latham & Watkins LLP, counsel for
Collateral Agent (and, if necessary, by a firm of local counsel in each
appropriate jurisdiction and in the case of an actual conflict of interest, one
additional firm of counsel to the affected Lenders), or (ii) all out-of-pocket
expenses incurred by Collateral Agent in connection with the enforcement or
protection of its rights in connection with this Agreement,

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and, in connection with any such enforcement or protection, the reasonable fees,
charges and disbursements of any other counsel for Collateral Agent.

(j) Notices. Except as otherwise provided herein, whenever it is provided herein
that any notice, demand, request, consent, approval declaration or other
communication shall or may be given to or served upon any of the parties by
another, or whenever any of the parties desires to give or serve upon another
any communication with respect to this Agreement, each such notice, demand,
request, consent, approval declaration or other communication shall be provided
in accordance with Section 9.01 of the Credit Agreement.

(k) Financing Statement. A carbon, photographic, or other reproduction of this
Agreement or any financing statement covering the LC Procurement Documents and
the other Collateral shall be sufficient as a financing statement.

(l) Release. Upon payment in full of the Term Loans and all other Obligations
(other than any indemnities which are not then due and payable and for which no
claim has been made) and performance of all of the obligations under the Credit
Documents, this Agreement shall terminate (other than LuxCo’s indemnification
obligations hereunder, all of which shall expressly survive any such
termination), and thereafter, at the request and sole cost and expense of LuxCo,
Collateral Agent shall execute and deliver to LuxCo a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement
(including, without limitation, appropriate UCC-3 termination statements
terminating any financing statements as may have been filed by Collateral Agent
to perfect its security interest in the Collateral) and shall duly assign,
transfer and deliver to LuxCo, without recourse and without any representation
or warranty, express or implied, the Collateral that may be in the possession of
Collateral Agent.

(m) Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT (INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR
RELATING TO THIS AGREEMENT WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR
OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER
THAN THE LAW OF THE STATE OF NEW YORK.

(n) Jurisdiction; Consent to Service of Process.  (a) EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
EXCLUSIVE JURISDICTION OF ANY COMPETENT NEW YORK STATE COURT OR FEDERAL COURT OF
THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.

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EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT THE COLLATERAL AGENT OR ANY LENDER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
AGAINST THE BORROWERS OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(b)EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS IN
ANY NEW YORK STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

(c)EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 5(j). NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.

(o) Counterparts. This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract. Delivery of an executed signature page to this Agreement by
facsimile or other electronic transmission shall be as effective as delivery of
a manually signed counterpart of this Agreement.

(p) Entire Agreement. This Agreement, the other Credit Documents and any written
agreement regarding the payment of Fees constitute the entire contract between
the parties relative to the subject matter hereof. Any other previous agreement
among the parties with respect to the subject matter hereof is superseded by
this Agreement and the other Credit Documents. Nothing in this Agreement or in
the other Credit Documents, expressed or implied, is intended to confer upon any
Person (other than the parties hereto and thereto, their respective successors
and assigns permitted hereunder and as expressly provided in Section 5(q) below)
any rights, remedies, obligations or liabilities under or by reason of this
Agreement or the other Credit Documents.

(q) Inconsistency with the Credit Agreement. If there shall be any
inconsistencies between the terms, covenants, conditions and provisions set
forth in this Agreement and the terms, covenants, conditions and provisions set
forth in the Credit Documents, then, unless this Agreement expressly provides
otherwise, the terms, covenants, conditions and provisions of the Credit
Documents shall prevail, provided that no provisions of the Credit Documents
shall prevail as to any rights or obligations of EEUK or Holdings pursuant to
Section 5(q) below.

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(r) Reliance by EEUK and Holdings. In consideration of the execution and
delivery of an Acknowledgement of Notice of Assignment by EEUK and Holdings
pursuant to Section 3(d) above, LuxCo agrees that (a) EEUK and Holdings shall be
entitled to conclusively rely (without any independent investigation) on any
notice or instructions from Collateral Agent delivered to EEUK or Holdings
pursuant to this Agreement, and (b) EEUK and Holdings shall be held harmless,
and shall be fully indemnified, by LuxCo, from and against any and all claims,
other than those arising out of the gross negligence or willful misconduct of
EEUK and Holdings, and from and against any damages, penalties, judgments,
liabilities, losses or expenses (including reasonable attorney’s fees and
disbursements) reasonably incurred by EEUK and Holdings as a result of the
assertion of any claim, in each case, by any person or entity, arising out of,
or otherwise related to, any actions taken or omitted to be taken by EEUK and
Holdings in reliance upon any such instructions or notice provided by Collateral
Agent.

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Executed as of the date first written above.

 

 

 

 

 

 

 

LC FINCO S.À R.L.

 

 

 

 

 

 

 

 

By: Lux Business Management S.à r.l, its sole manager

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

[REMAINING SIGNATURE ON FOLLOWING PAGE]

 

 

[Signature Page to Collateral Assignment Agreement]

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS

 

 

 

BRANCH

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

[Signature Page to Collateral Assignment Agreement]

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EXHIBIT A

ACKNOWLEDGEMENT OF NOTICE OF ASSIGNMENT

January 24, 2014

Credit Suisse AG

Eleven Madison Avenue

23rd Floor

New York, NY 10010

Re:LC Procurement Agreement (the “LC Procurement Agreement”) dated as of January
24, 2014 among Endeavour International Corporation, a Nevada corporation
(“Holdings”), Endeavour Energy UK Limited, a private limited company organized
under the laws of England and Wales (“EEUK”), LC Finco S.à r.l., a private
limited liability company (société à responsabilité limitée) incorporated and
existing under the laws of Luxembourg with its registered office at 40 avenue
Monterey, L-2163 Luxembourg, Grand Duchy of Luxembourg, pending registration
with the Luxembourg Register of Commerce and Companies and having a share
capital of USD 20,000 (“LuxCo”) and Credit Suisse AG, as collateral agent

Ladies and Gentlemen:

We acknowledge receipt of a duplicate original Collateral Assignment Agreement
dated effective as of January 24, 2014, executed by LuxCo and Credit Suisse AG
(“Collateral Agent” or (“you”) for your benefit (the “Collateral Assignment
Agreement”). As of the date hereof, our records do not disclose any liens,
security interests or claims of any kind against any LC Procurement Document.

We agree that, upon written notification from you that an event of default
exists under the Credit Documents (as defined in the Collateral Assignment
Agreement), (A) all payments under the LC Procurement Agreement or any other LC
Procurement Document shall be made directly to you, (B) you may, in your sole
discretion, elect to continue, assign (subject to our “know your customer” and
account opening procedures), or liquidate any LC Procurement Document and
receive all proceeds therefrom, and (C) you may exercise all of your rights and
remedies as set forth in the LC Procurement Documents, at law and in equity. We
shall be entitled (and required) to rely upon the statements contained in the
above-captioned letter or certificate and will have no obligation to verify any
statements contained therein.

We agree not to amend, modify, cancel or terminate the LC Procurement Agreement
or any other LC Procurement Document without first obtaining your prior written
consent, provided that we may terminate the LC Procurement Agreement as provided
thereunder.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

 

Exhibit A

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Endeavour Energy UK Limited

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Endeavour International Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Endeavour Operating Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Endeavour Energy North Sea, L.P

 

 

 

 

 

 

 

 

By:

Endeavour Energy North Sea LLC, its general partner

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Endeavour Energy North Sea LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

Signature Page to Acknowledgement of Notice of Assignment

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Endeavour International Holding B.V.

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End Finco LLC

 

 

 

 

 

 

 

 

By:

Endeavour International Holding B.V., its sole member

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

Signature Page to Acknowledgement of Notice of Assignment

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SUBORDINATION AGREEMENT

 

This SUBORDINATION AGREEMENT (this “Agreement”), dated as of January 24, 2014,
among ENDEAVOUR OPERATING CORPORATION (“EOC”), ENDEAVOUR ENERGY UK LIMITED
(“EEUK”), ENDEAVOUR ENERGY LUXEMBOURG S.À R.L. (“EE LUX” and, together with EOC,
collectively the “Subordinated Lenders” and, each a “Subordinated Lender”),
ENDEAVOUR INTERNATIONAL HOLDING B.V. (“EIH” and, together with EEUK, the
“Subordinated Borrowers” and, each a “Subordinated Borrower”) and CREDIT SUISSE
AG, acting through one or more of its branches and affiliates, as administrative
agent under the Term A Credit Agreement (as defined below) (in such capacity,
“Administrative Agent”) and collateral agent under each of the Term A Credit
Agreement and the LC Procurement Agreement (as defined below) (in such capacity,
the “Collateral Agent”).

Reference is made to (i) that certain Credit Agreement (as amended, restated,
modified and/or supplemented from time to time, the “Term A Credit Agreement”),
dated as of January 24, 2014, among Endeavour International Corporation
(“Holdings”), EIH and End Finco LLC (“End Finco” and together with EIH, the
“Term A Borrowers”), as borrowers, the lenders party thereto from time to time,
the Administrative Agent and the Collateral Agent, (ii) that certain LC
Procurement Agreement (as amended, restated, modified and/or supplemented from
time to time, the “LC Procurement Agreement”, and together with the Term A
Credit Agreement, the “Senior Agreements”), dated as of January 24, 2014, among
Holdings, EEUK, as payer, LC Finco S.à r.l. (“LuxCo”) as payee, and the
Collateral Agent, (iii) that certain Inter-Company Loan Agreement, dated as of
May 31, 2012 (as amended, restated, modified and/or supplemented from time to
time, the “2012 Intercompany Loan Agreement”) between EEUK, as borrower, and
EOC, as lender and (iv) that certain revolving loan facility agreement dated
January 23, 2008  (as amended, restated, modified and/or supplemented from time
to time the “2008 Intercompany Loan Agreement” and, collectively with the 2012
Intercompany Loan Agreement, the “Intercompany Loan Agreements” and, each an
“Intercompany Loan Agreement”), between EIH, as borrower and EE LUX, as lender.

Section 1.Subordination of Liabilities. 

(a) EOC, for itself and its successors and assigns, covenants and agrees, and
EEUK by its acceptance hereof likewise covenants and agrees, that the payment of
the principal of, and interest on, and all other amounts owing in respect of,
the 2012 Intercompany Loan Agreement (the “2012 Intercompany Loan Subordinated
Obligations”); and

(b) EE LUX, for itself and its successors and assigns, covenants and agrees, and
EIH by its acceptance hereof likewise covenants and agrees, that the payment of
the principal of, and interest on, and all other amounts owing in respect of,
the 2008 Intercompany Loan Agreement (the “2008 Intercompany Loan Subordinated
Obligations” and, collectively with the 2012 Intercompany Loan Subordinated
Obligations, the “Subordinated Obligations”);

is hereby expressly subordinated, to the extent and in the manner hereinafter
set forth, to the prior payment in full in cash of all Senior Obligations (as
defined below).  The provisions of this Agreement shall constitute a continuing
offer to the Senior Creditors (as defined below) and all persons or other
entities who, in reliance upon such provisions, become

 

 

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Page 2

 

holders of, or continue to hold, the Senior Obligations, and such provisions are
made for the benefit of the Senior Creditors, and the Senior Creditors are
hereby made beneficiaries hereunder as if their names were written herein as
such, and they and/or each of them may proceed to enforce the provisions of this
Agreement as if they and/or each of them were a party hereto.

Section 2.No Payments with Respect to Subordinated Obligations in Certain
Circumstances. 

(a)(i) Upon the maturity of any Senior Obligations (including, without
limitation, interest thereon or fees or any other amounts owing in respect
thereof), whether at stated maturity, by acceleration or otherwise, all such
Senior Obligations then due and owing in respect thereof (other than unasserted
contingent indemnification obligations) shall first be paid in full in cash
before any payment of any kind or character (whether in cash, property,
securities or otherwise) is made on account of the Subordinated Obligations and
(ii) no Subordinated Borrower shall, nor shall any person or other entity on its
behalf, make any payment of or otherwise with respect to Subordinated
Obligations, or acquire any Subordinated Obligations for cash, property,
securities or otherwise until all Senior Obligations then due and owing (other
than unasserted contingent indemnification obligations) have been paid in full
in cash.  The foregoing notwithstanding, each Subordinated Borrower (or any
person or other entity on its behalf) may make interest and principal payments
under the applicable Intercompany Loan Agreement from time to time and at any
time prior to the maturity of the Senior Obligations; provided, that (A) no
default or event of default under any Senior Document shall have occurred and be
continuing or would result therefrom and (B) such payment does not obligate
Holdings or any subsidiary of Holdings to make or offer to make any payment on
or redeem any other Indebtedness.  Each Subordinated Lender hereby agrees that,
except as expressly permitted by this clause (a), it will not ask, demand, sue
for, or otherwise take, accept or receive, any amounts owing in respect of the
Subordinated Obligations. 

(b)In the event that, notwithstanding the provisions of the preceding subsection
(a) of this Section 2, any payment shall be made on account of the Subordinated
Obligations at a time when  payment is not permitted by any Intercompany Loan
Agreement or by such subsection (a), such payment shall be held by the
applicable Subordinated Lender in trust for the benefit of, and shall be paid
forthwith over and delivered to, the Senior Creditors or their representative or
representatives under the agreements pursuant to which the Senior Obligations
may have been issued, as their respective interests may appear, for application
pro rata to the payment of all Senior Obligations (after giving effect to the
relative priorities of such Senior Obligations pursuant to the terms thereof or
otherwise) remaining unpaid to the extent necessary to pay all such Senior
Obligations in full in cash in accordance with the terms of such Senior
Obligations, after giving effect to any concurrent payment or distribution to or
for the Senior Creditors.  Without in any way modifying the provisions of this
Agreement or affecting the subordination effected hereby if such notice is not
given, the applicable Subordinated Borower shall give the
applicable  Subordinated Lender prompt written notice of maturity of the Senior
Obligations after which such Senior Obligations remain unsatisfied.

Section 3.Subordination to Prior Payment of All Senior Obligations on
Dissolution, Liquidation or Reorganization of any Subordinated Borrower. 

 

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(a)Upon any distribution of assets of any Subordinated Borrower or upon any
dissolution, winding up, liquidation or reorganization of such Subordinated
Borrower (whether in bankruptcy, insolvency or receivership proceedings or upon
an assignment for the benefit of creditors, marshalling of assets or otherwise
and whether voluntary or involuntary):

(i)the Senior Creditors shall first be entitled to receive payment in full in
cash of all Senior Obligations (including, without limitation, interest that is
paid-in-kind and post-petition interest at the rate provided in the
documentation with respect to the Senior Obligations, whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before any Subordinated Lender is entitled to receive any
payment of any kind or character on account of the Subordinated Obligations;

(ii)any payment or distribution of assets of any Subordinated Borrower of any
kind or character, whether in cash, property or securities, to which any
Subordinated Lender would be entitled except for the provisions of this
Agreement, shall be paid by the liquidating trustee or agent or other person or
entity making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or other trustee or agent, directly to the
Collateral Agent to the extent necessary to make payment in full in cash of all
Senior Obligations remaining unpaid (other than unasserted contingent
indemnification obligations), after giving effect to any concurrent payment or
distribution to the Senior Creditors; and

(iii)in the event that, notwithstanding the foregoing provisions of this
Section 3, any payment or distribution of assets of any Subordinated Borrower of
any kind or character, whether in cash, property or securities, shall be
received by any Subordinated Lender on account of the Subordinated Obligations
before all Senior Obligations are paid in full in cash, such payment or
distribution shall be received and held in trust for and shall forthwith be paid
over to the Collateral Agent for the benefit of the Senior Creditors for any
Senior Obligations remaining unpaid or their representative or representatives
under the agreements pursuant to which the Senior Obligations may have been
issued, for application to the payment of such Senior Obligations until all such
Senior Obligations shall have been paid in full in cash (other than unasserted
contingent indemnification obligations), after giving effect to any concurrent
payment or distribution to the Senior Creditors.

(b)To the extent any payment of the Senior Obligations (whether by or on behalf
of any Subordinated Borrower, as applicable, as proceeds of security or
enforcement of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar person, the Senior
Obligations or part thereof originally intended to be satisfied shall be deemed
to be reinstated and outstanding as if such payment has not occurred.

 

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(c)If any Subordinated Lender does not file a proper claim or proof of debt in
the form required in any proceeding or other action referred to in the
introductory paragraph of this Section 3 prior to 30 days before the expiration
of the time to file such claim or claims, then the Administrative Agent, the
Collateral Agent or any of their respective representatives is hereby authorized
to file an appropriate claim for and on behalf of the applicable Subordinated
Lender.

(d)Without in any way modifying the provisions of this Agreement or affecting
the subordination effected hereby if such notice is not given, each Subordinated
Borrower shall give prompt written notice to the Subordinated Lender under the
applicable Intercompany Loan Agreement of any dissolution, winding up,
liquidation or reorganization of such Subordinated Borrower (whether in
bankruptcy, insolvency or receivership proceedings or upon assignment for the
benefit of creditors or otherwise).

Section 4.Subrogation.  Subject to the prior payment in full in cash of the
Senior Obligations (other than unasserted contingent indemnification
obligations), each Subordinated Lender shall be subrogated to the rights of the
Senior Creditors to receive payments or distributions of assets of any
Subordinated Borrower applicable to the Senior Obligations until all amounts
owing on the Subordinated Obligations (other than unasserted contingent
indemnification obligations) shall be paid in full, and for the purpose of such
subrogation no payments or distributions to the Senior Creditors by or on behalf
of any Subordinated Borrower by virtue of this Agreement which otherwise would
have been made to the applicable Subordinated Lender shall, as between the
applicable Subordinated Borrower, its creditors other than the Senior Creditors,
and the applicable Subordinated Lender, be deemed to be payment by such
Subordinated Borrower to or on account of the Senior Obligations, it being
understood that the provisions of this Agreement are and are intended solely for
the purpose of defining the relative rights of such Subordinated Lender, on the
one hand, and the Senior Creditors, on the other hand.

Section 5.Obligation of Subordinated Borrowers Unconditional.  Nothing contained
in this Agreement or in the Intercompany Loan Agreement is intended to or shall
impair, as between any Subordinated Borrower and any Subordinated Lender, the
obligation of such Subordinated Borrower, which is absolute and unconditional,
to pay to such Subordinated Lender the principal of and interest on the
Subordinated Obligations in accordance with the terms of the Intercompany Loan
Agreement, or is intended to or shall affect the relative rights of such
Subordinated Lender and creditors of such Subordinated Borrower, other than the
Senior Creditors, nor shall anything herein or therein, except as expressly
provided herein, prevent such Subordinated Lender from exercising all remedies
otherwise permitted by applicable law, subject to the rights, if any, under this
Agreement of the Senior Creditors in respect of cash, property, or securities of
such Subordinated Borrower received upon the exercise of any such remedy.  Upon
any distribution of assets of such Subordinated Borrower referred to in this
Agreement, such Subordinated Lender shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other person or entity making
any distribution to such Subordinated Lender, for the purpose of ascertaining
the persons or entities entitled to participate in such distribution, the Senior
Creditors and other

 

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indebtedness of such Subordinated Borrower, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Agreement.

Section 6.Subordination Rights Not Impaired by Acts or Omissions of Subordinated
Borrowers or Senior Creditors.  No right of any present or future Senior
Creditor to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by: (a) any act or failure to act on the part of
any Subordinated Lender or any Subordinated Borrower, or by any noncompliance by
any Subordinated Lender or any Subordinated Borrower with the terms and
provisions of this Agreement, regardless of any knowledge thereof with which
any  Subordinated Lender or any Subordinated Borrower may have or be otherwise
charged; (b) any lack of validity or enforceability of either Senior Agreement
or any other Senior Document; (c) the failure of the Administrative Agent or
Collateral Agent to give notice to any Subordinated Lender or any Subordinated
Borrower of a default or event of default under any Senior Document or of any
act or omission of the Term A Borrowers or any Subordinated Borrower in regard
to any Senior Document; or (d) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Term A Borrowers or
any Subordinated Borrower in respect of any Senior Obligations, except for the
payment in full in cash of the Senior Obligations (other than unasserted
contingent indemnification obligations).

Section 7.No Waiver of Subordination Provisions. Without in any way limiting the
generality of the foregoing, the Senior Creditors may, at any time and from time
to time, without the consent of or notice to any Subordinated Lender or any
Subordinated Borrower, without incurring responsibility to any Subordinated
Lender or any Subordinated Borrower and without impairing or releasing the
subordination provided in Section 2 or the obligations hereunder of any
Subordinated Lender or any Subordinated Borrower to the Senior Creditors, do any
one or more of the following: (a) change the amount, manner, place, terms of
payment or interest rate, change or extend the time of payment of, or renew or
alter, any of the Senior Obligations, or amend or supplement or waive any of the
terms of any Senior Document; (b) sell, exchange, release, surrender, relend,
realize upon or otherwise deal with any manner and in any order any property (or
the income, revenues, profits or proceeds therefrom) by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, any Senior Obligations;
(c) release any person liable in any manner for the payment or collection of the
Senior Obligations; (d) exercise or refrain from exercising any rights and
remedies against either Term A Borrower, any Subordinated Borrower or any other
person or entity or otherwise act or refrain from acting or, for any reason fail
to file, record or otherwise perfect any security interest in or lien on any
property of either Term A Borrower, any Subordinated Borrower or any other
person or entity; or (e) apply any sums received by the Senior Creditors, by
whomsoever paid and however realized, to payment of the Senior Obligations in
such manner as the Senior Creditors, in their sole discretion, may deem
appropriate.

Section 8.Certain Defined Terms.  For purposes of this Agreement:

 

(a)the term “Senior Creditors” shall mean the Administrative Agent, the
Collateral Agent, the Arranger and each of the Lenders, each as defined in the
Term A Credit Agreement, and LuxCo as payee and the Collateral Agent under the
LC Procurement Agreement.

 

 

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(b)the term “Senior Documents” shall mean the Senior Agreements and each of the
other Credit Documents and LC Procurement Documents; and

 

(c)the term “Senior Obligations” shall mean (i) all Obligations (as such term is
defined in the Term A Credit Agreement) of the Term A Borrowers and the other
Credit Parties under the Term A Credit Agreement and each other Credit Document
(as defined in the Term A Credit Agreement); and (ii) all Obligations (as such
term is defined in the LC Procurement Agreement) of EEUK and Holdings under the
LC Procurement and each other LC Procurement Document (as such term is defined
in the LC Procurement Agreement), in the case of clauses (i) and (ii), any
renewal, extension, restatement, refinancing or refunding of any thereof.

 

Section 9.Specific Performance.  The Administrative Agent is hereby authorized
to demand specific performance of this Agreement, at any time when any
Subordinated Lender or any Subordinated Borrower shall have failed to comply
with any of the provisions of this Agreement applicable to it.  Each
Subordinated Lender, on behalf of itself and its successors and assigns,
irrevocably waives any defense based on the adequacy of a remedy at law, which
might be asserted as a bar to such remedy of specific performance.

Section 10.GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT (INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF
OR RELATING TO THIS AGREEMENT WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR
OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER
THAN THE LAW OF THE STATE OF NEW YORK.

 

Section 11.WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS OR LC
PROCUREMENT DOCUMENTS.  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND LC
PROCUREMENT DOCUMENTS TO WHICH IT IS A PARTY, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.

 

Section 12.Jurisdiction; Consent to Service of Process. 

 

(a)EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR ITSELF
AND ITS PROPERTY, TO THE

 

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EXCLUSIVE JURISDICTION OF ANY COMPETENT NEW YORK STATE COURT OR FEDERAL COURT OF
THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER CREDIT DOCUMENTS OR LC PROCUREMENT DOCUMENTS, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR,
TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT SHALL AFFECT ANY
RIGHT THAT ADMINISTRATIVE AGENT, COLLATERAL AGENT OR ANY LENDER MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE OTHER
CREDIT DOCUMENTS OR LC PROCUREMENT DOCUMENTS AGAINST THE TERM A BORROWERS OR
THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(b)EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS OR LC
PROCUREMENT DOCUMENTS IN ANY NEW YORK STATE OR FEDERAL COURT.  EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.

 

(c)EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE MANNER PROVIDED FOR NOTICES IN SECTION 13.  NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.

 

Section 13.Notices.  Notices and other communications provided for herein shall
be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by fax, as follows:

 

(i)if to EOC, to it at 811 Main Street, Suite 2100 Houston, TX, Houston, TX
77002, Attention: Chief Financial Officer, Fax No. 713-583-1256, Email:
cathy.stubbs@endeavourcorp.com;

 

(ii)if to EEUK, to it at 21-31 Woodfield Road, London, W9 2BA, England,
Attention: Chief Financial Officer, Fax No. 44 20 7451 2351, with a copy to
Holdings at

 

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Page 8

 

811 Main Street, Suite 2100 Houston, TX, Houston, TX 77002, Attention: Chief
Financial Officer, Fax No. 713-583-1256, Email: cathy.stubbs@endeavourcorp.com;

 

(iii) if to EE LUX, to it at 40 Avenue Monterey, L-2163  Luxembourg, Attention:
Chief Financial Officer, Fax No. 44 20 7451 2351, Email:
cathy.stubbs@endeavourcorp.com;

 

(iv)if to EIH, to it at 811 Main Street, Suite 2100 Houston, TX, 77002,
Attention: Chief Financial Officer, Fax No. 713-583-1256, Email:
cathy.stubbs@endeavourcorp.com;

 

(v)if to the Administrative Agent, to Credit Suisse, Agency Manager, Eleven
Madison Avenue, New York, NY  10010, Fax No. 212-322 2291,
Email:  agency.loanops@credit-suisse.com; and

 

(vi)if to the Collateral Agent, to it at Credit Suisse, Eleven Madison Avenue,
23rd Floor, New York, NY  10010, Attn:  Loan Operations - Boutique Management,
Telephone No.:  (212) 538 3525, Email:  Ops-collateral@credit-suisse.com.

 

All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by fax
(or other electronic communication pursuant to procedures approved by the
Administrative Agent) or on the date five Business Days (as defined in the Term
A Credit Agreement) after dispatch by certified or registered mail if mailed, in
each case delivered, sent or mailed (properly addressed) to such party as
provided in this Section 13 or in accordance with the latest unrevoked direction
from such party given in accordance with this Section 13.  As agreed to among
the parties hereto, from time to time, notices and other communications may also
be delivered by e‑mail to the e‑mail address of a representative of the
applicable party provided from time to time by such party and shall be deemed to
have been given as of the date of receipt thereof.

Section 14.Miscellaneous. 

 

(a)This Agreement shall terminate upon the payment in full in cash all of the
Senior Obligations (other than any indemnities which are not then due and
payable and for which no claim has been made); provided that if, at any time,
all or part of any payment with respect to Senior Obligations theretofore made
by any Subordinated Borrower or any other person or entity is rescinded or must
otherwise be returned by the Senior Creditors for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or reorganization of
any Subordinated Borrower or such other person or entity), the subordination
provisions set forth herein shall continue to be effective or be reinstated, as
the case may be, all as though such payment had not been made. 

 

(b)This Agreement shall not be amended, modified or supplemented without the
written consent of the Administrative Agent, the Collateral Agent and the
Required Lenders (as defined in the Term A Credit Agreement. 

 

 

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(c)This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which shall constitute one
instrument.  Delivery of an executed signature page to this Agreement by
facsimile or other electronic transmission or as a “.pdf” shall be as effective
as delivery of a manually signed counterpart of this Agreement. 

 

(d)In the event that any provision of this Agreement shall prove to be invalid
or unenforceable, such provision shall be deemed to be severable from the other
provisions of this Agreement which shall remain binding on all parties hereto. 

 

(e)This Agreement and the Senior Documents constitute the entire contract
between the parties relative to the subject matter hereof.  Any other previous
agreement among the parties with respect to the subject matter hereof is
superseded by this Agreement and the Senior Documents. 

 

(f)Nothing in this Agreement or in the Senior Documents, expressed or implied,
is intended to confer upon any person or entity (other than the parties hereto
and thereto, their respective permitted successors and assigns) any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
Senior Documents.

 

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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first above written.

 

 

 

 

 

ENDEAVOUR ENERGY UK LIMITED

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

ENDEAVOUR OPERATING CORPORATION

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

Signature Page to Subordination Agreement

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

 

 

 

 

 

 

 

 

 

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as Administrative Agent and Collateral
Agent

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

ENDEAVOUR OPERATING CORPORATION

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

Signature Page to Subordination Agreement

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nter

 

 

 

 

 

 

 

 

ENDEAVOUR INTERNATIONAL HOLDING

 

B.V.

 

 

 

 

 

 

 

By:

 

 

 

 

Name: Andrew Sheu

 

 

 

Title: Managing Director A

 

 

 

 

 

 

ENDEAVOUR OPERATING CORPORATION

 

 

 

 

 

By:

 

 

 

 

Name: Franciscus Jacobus Joannes Lucassen

 

 

Title: Managing Director B

 

 

Signature Page to Subordination Agreement

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nter

 

 

 

 

 

 

 

 

ENDEAVOUR ENERGY LUXEMBOURG

 

S.À R.L.

 

 

 

 

 

 

By:

 

 

 

 

Name: Andrew Sheu

 

 

 

Title: Manager

 

 

 

 

 

 

ENDEAVOUR OPERATING CORPORATION

 

 

 

 

 

By:

 

 

 

 

Name: Onno Bouwmeister

 

 

Title: Manager

 

 

 

Signature Page to Subordination Agreement

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