exv10w3






Exhibit 10.3









CONFORMED COPY




25 July 2011




ENDEAVOUR INTERNATIONAL CORPORATION

as the Parent




ENDEAVOUR ENERGY UK LIMITED

as the Company




THE SUBSIDIARIES OF THE PARENT LISTED IN SCHEDULE 1 HERETO

as the Original Guarantors




and



COMMONWEALTH BANK OF AUSTRALIA

as the Bank



 





LETTER OF CREDIT

FACILITY AGREEMENT



 





Herbert Smith LLP




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CONTENTS



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






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






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





	(1)	 	ENDEAVOUR INTERNATIONAL CORPORATION (a corporation incorporated under the laws of the State
of Nevada) whose principal place of business is 1001 Fannin Street, Suite 1600, Houston,
Texas, 77002, USA (the “Parent”);
	 
	(2)	 	ENDEAVOUR ENERGY UK LIMITED (a company registered in England and Wales with registration
number 5030838) whose registered office is at 33rd Floor, City Point, One Ropemaker
Street, London EC2Y 9UE (the “Company”);
	 
	(3)	 	THE SUBSIDIARIES OF THE PARENT listed in Schedule 1 (Original Guarantors) as guarantors
(together with the Parent the “Original Guarantors”); and
	 
	(4)	 	COMMONWEALTH BANK OF AUSTRALIA (a company registered in England and Wales under company
number FC016009 and with UK Establishment number BR000250) whose UK Registered Establishment
is at Senator House, 85 Queen Victoria Street, London EC4V 4HA (the “Bank”).





BACKGROUND:





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




IT IS AGREED as follows:





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




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






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






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






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






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






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




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






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






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




3









 






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






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





4









 






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






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






	 	 	“Change of Control” means:






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




5









 






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






	 	 	“Class C Convertible Preferred Stock” means the Parent’s Series C Preferred Stock with the
terms set forth in the Certificate of Designation of Series C Preferred Stock originally
filed with the Nevada Secretary of State on 30 October 2006.
	 
	 	 	“Collateral” means all property with respect to which any Security has been granted (or
purported to be granted) pursuant to any Security Document, including, without limitation,
all Collateral under and as defined in each Security Document.
	 
	 	 	“Collateral Agent” means the collateral agent appointed in respect of the Cyan Security
Documents in accordance with the terms of the Intercreditor Agreement.
	 
	 	 	“Commitment” means £20,600,000 as at the date of this Agreement.
	 
	 	 	“Commodity Hedging Agreement” means a commodity price risk management agreement or similar
arrangement (including commodity price swap agreements, forward agreements or contracts of
sale which provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities).
	 
	 	 	“Company Asset Transfer” means the transfer of one or more of the Oil and Gas Properties
owned by the Company as at the date of this Agreement or acquired by the Company after the
date of this Agreement to another member of the Group in accordance with the terms of this
Agreement.
	 
	 	 	“Company Shareholder” means:






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






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






	 	(A)	 	without giving effect to:






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




6









 






	 	(iv)	 	interest income; and






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






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






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






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





7









 






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






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






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






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






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






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






	 	 	“Contingent Hedge” means any Commodity Hedging Agreement other than a put option, floor or
any other arrangement under which a member of the Group acquires a right and has (and will
have) no contingent liability.
	 
	 	 	“Contingent Obligation” means, as to any person, any obligation of such person guaranteeing
or intended to guarantee any Indebtedness, leases, dividends or other obligations (“primary
obligations”) of any other person (the “primary obligor”) in any manner, whether directly
or indirectly, including, without limitation, any obligation of such person, whether or not
contingent:





8









 






	 	(A)	 	to purchase any such primary obligation or any property constituting direct
or indirect security therefore;
	 
	 	(B)	 	to advance or supply funds:






	 	(i)	 	for the purchase or payment of any such primary obligation;
or
	 
	 	(ii)	 	to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor;






	 	(C)	 	to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation; or
	 
	 	(D)	 	otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or collection in
the ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the lower of:






	 	(i)	 	the maximum amount of such Contingent Obligation pursuant
to the agreement or instrument under which such Contingent Obligation is
created; and
	 
	 	(ii)	 	the stated or determinable amount of the primary obligation
in respect of which such Contingent Obligation is made or, if not stated or
determinable,






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




9









 






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






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






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






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






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






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






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




10









 






	 	 	Company has an interest or otherwise owned, occupied or used by the Company.
	 
	 	 	“Environmental Law” means any applicable UK, U.S. Federal, state, local or other non-U.S.
law (including common law), rule, regulation, ordinance, code, directive, judgment or order
now or hereafter in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, relating to the protection of the Environment or of
human health and safety (to the extent such health and safety relate to exposure to
Hazardous Materials), or to the presence, Release or threatened Release, or the
manufacture, use, transportation, treatment, storage, disposal or recycling of Hazardous
Materials, or the arrangement for any such activities.
	 
	 	 	“Event of Default” means any event or circumstance specified as such in Clause 22 (Events
of Default).
	 
	 	 	“Equity Interests” means:






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






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




11









 






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






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






	 	 	“GAAP” means generally accepted accounting principles in the United States, provided, that
to the extent the term “GAAP” is used in reference to the financial statements of the
Company and any other Subsidiary of the Company incorporated in the United Kingdom, “GAAP”
shall mean generally accepted accounting principles in the United Kingdom.
	 
	 	 	“Governmental Authority” means the government of the United Kingdom, the United States, the
European Union and any other nation or any political subdivision thereof, whether state,
provincial or local and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or function of or pertaining to government.
	 
	 	 	“Group” means the Parent and its Subsidiaries from time to time.
	 
	 	 	“Guarantors” means the Original Guarantors and any Additional Guarantor.
	 
	 	 	“Hazardous Materials” means any waste or other natural or artificial substance (whether in
solid or liquid form or in the form of a gas or vapour and whether alone or in combination
with any such other substance) that is capable of causing harm to the Environment or
damaging the Environment or human health and safety and/or is listed, defined, designated
or classified as, or otherwise regulated as, hazardous or toxic or a pollutant or
contaminant under or pursuant to any Environmental Law, including any




12









 






	 	 	petroleum, Hydrocarbons and all derivatives thereof or synthetic substitutes therefor and
asbestos or asbestos-containing materials.
	 
	 	 	“Hedging Agreement” means any Commodity Hedging Agreement, Interest Rate Hedging Agreement
or foreign currency exchange agreement or other currency exchange rate hedging agreement.
	 
	 	 	“Hedging Counterparty” means a counterparty to any Hedging Agreement.
	 
	 	 	“Hess Contracts” means the Abandonment and Security Agreements between Hess Limited and the
Company relating to the IVRR/Rob Roy/Hamish, Renee Area A and Rubie Area A, each dated 26
October 2006.
	 
	 	 	“Hydrocarbons” means oil, gas, casinghead gas, condensate, distillate, liquid hydrocarbons,
gaseous hydrocarbons, all products directly or indirectly refined, separated, settled and
dehydrated therefrom, including kerosene, liquefied petroleum gas, refined lubricating
oils, diesel fuel, drip gasoline, natural gasoline, helium, sulphur and all other minerals.
	 
	 	 	“Hydrocarbon Interests” means all rights, titles, interests and estates now owned or
hereafter acquired in and to oil and gas leases, leasehold interests and licences, oil, gas
and mineral leases, leasehold interests and licences, or other liquid or gaseous
hydrocarbon licences, leases, fee mineral interests, term mineral interests, subleases,
farm-outs, royalties, overriding royalty and royalty interests, non-consent interests
arising out of or pursuant to Oil and Gas Contracts, net profit interests, net revenue
interests, oil payments, production payments, production payment interests and similar
interests and estates, including all reserved or residual interest of whatever nature and
all reversionary or carried interests relating to any of the foregoing.
	 
	 	 	“Immaterial Subsidiary” means any Subsidiary of the Parent (other than a Relevant Holding
Company) that did not, as of the last day of the most recently ended Test Period, have
assets with a book value in excess of 2.5% of the consolidated total assets of the Parent
and its Subsidiaries; provided that if at any time the aggregate amount of consolidated
total assets attributable to Immaterial Subsidiaries would otherwise exceed 5% of the
consolidated total assets of the Parent and it Subsidiaries, then Subsidiaries that would
otherwise constitute Immaterial Subsidiaries pursuant to this definition (without giving
effect to this proviso) shall be deemed not to constitute Immaterial Subsidiaries to the
extent necessary so that the percentage limitation in this proviso is not exceeded.
	 
	 	 	For the purposes of calculations of the book value of assets of a Subsidiary pursuant to
this definition:






	 	(A)	 	the value of the loan evidenced by that certain revolving loan facility
agreement dated January 23, 2008 (as amended, supplemented or modified from time to
time) between Endeavour International Holding B.V. and Endeavour Energy Luxembourg
S.a.r.l.;
	 
	 	(B)	 	the value of other loans and receivables in an aggregate amount not in excess
of $5,000,000 owed to such Subsidiary by the Parent or any other Subsidiary of the
Parent,






	 	 	in each case shall be disregarded.




13









 












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






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






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




14









 






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






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






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






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






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




15









 






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






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






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






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




16









 






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






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






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




17









 






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






	 	 	“Oil and Gas Business” means:






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






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






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






	 	(i)	 	unitisation agreements, orders or other arrangements;
	 
	 	(ii)	 	pooling orders, agreements or other arrangements; and
	 
	 	(iii)	 	declarations of pooled units and the units created thereby
(including all units created under orders, regulations and rules of any
Governmental Authority having jurisdiction) which may affect all or any
portion of the Hydrocarbon Interests;






	 	(D)	 	all pipelines, gathering lines, compression facilities, tanks and processing
plants;




18









 






	 	(E)	 	all interests held in royalty trusts whether currently existing or hereafter
created;
	 
	 	(F)	 	all Hydrocarbons in and under and which may be produced, saved, processed or
attributable to the Hydrocarbon Interests, the lands covered thereby and all
Hydrocarbons in pipelines, gathering lines, tanks and processing plants and all rents,
issues, profits, proceeds, products, revenues and other incomes from or attributable
to the Hydrocarbon Interests;
	 
	 	(G)	 	all tenements, hereditaments, appurtenances, interests and properties in any
way appertaining, belonging, affixed or incidental to the Hydrocarbon Interests, and
all rights, titles, interests and estates described or referred to above (including:






	 	(i)	 	any and all Real Property, now owned or hereafter acquired,
leased or subleased or otherwise used or held for use in connection with the
operating, working or development of any such Hydrocarbon Interests or
property; and
	 
	 	(ii)	 	any and all surface leases, subleases, rights-of-way,
easements and servitudes together with all additions, substitutions,
replacements, accessions and attachments to any and all of the foregoing);






	 	(H)	 	all production units, drilling and spacing units (and the properties covered
thereby) which may affect all or any portion of the other Oil and Gas Properties and
any units created by agreement or designation or under orders, regulations, rules or
other official acts of any Governmental Authority having jurisdiction; and
	 
	 	(I)	 	all operating agreements, contracts and other agreements, including
production sharing contracts and agreements, which relate to any of the Hydrocarbon
Interests or the production, sale, purchase, exchange or processing of Hydrocarbons
from or attributable to such Hydrocarbon Interests.






	 	 	“Original Post-Cyan Security Documents” means:






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






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






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






	 	 	to




19









 












	 	(B)	 	Consolidated Net Secured Indebtedness on such date.






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






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






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






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






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





20









 






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






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






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




21









 






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






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






	 	(i)	 	 






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






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






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






22











 






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






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






	 	 	“Preferred Equity Interests” of any person means any Equity Interests of such person that
have preferential rights to any other Equity Interests with respect to dividends or
redemptions or upon liquidation, and shall include any Qualified Preferred Stock.
	 
	 	 	“Probable Reserves” means the estimated quantities of crude oil, natural gas, and natural
gas liquids that geological and engineering data suggests are more likely than not to be
recoverable with presently available technology at an economically viable cost (as
determined in accordance with the guidelines of the Society of Petroleum Engineers).
	 
	 	 	“Probable Reserve Value” means, as of any date of determination, 50% of the present value
of future cash flow from Probable Reserves on the Parent’s and each of its Subsidiaries’
Oil and Gas Properties as set forth in the most recent Reserve Report delivered pursuant to
Clause 21.1.4 (Reserve Report), utilising:






	 	(A)	 	in the case of any Oil and Gas Properties located in the United States or any
of its territories or possessions (including U.S. Federal waters in the Gulf of
Mexico), the Three-Year Strip Price for crude oil (WTI Cushing) and natural gas (Henry
Hub), quoted on the New York Mercantile Exchange (or its successor);
	 
	 	(B)	 	in the case of any Oil and Gas Properties located in the North Sea, the
Three-Year Strip Price for crude oil (North Sea Brent) and natural gas (UK National
Balancing Point), in each case quoted on the International Petroleum Exchange (or its
successor); and
	 
	 	(C)	 	in the case of any Oil and Gas Properties located in any other jurisdiction,
the




23









 












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






	 	 	in the case of each of paragraphs (A), (B) and (C) above, as of the date as of which the
information set forth in such Reserve Report is provided (as adjusted for basis
differentials) and utilizing a 10% discount rate. For the purposes of calculating Probable
Reserve Value, any future cash flow calculations set forth in any Reserve Report and made
in any currency other than Dollars shall be converted into Dollars based on the Exchange
Rate on the date as of which the information set forth in such Reserve Report is provided.
	 
	 	 	“Pro Forma Basis” means, in connection with any calculation of compliance with any
financial covenant or financial term, the calculation thereof after giving effect on a pro
forma basis to:






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






	 	(i)	 	all Indebtedness:






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




24









 






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






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






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






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






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






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




25









 












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






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






	 	(A)	 	in the case of any Oil and Gas Properties located in the United States or any
of its territories or possessions (including U.S. Federal waters in the Gulf of
Mexico), the Three-Year Strip Price for crude oil (WTI Cushing) and natural gas (Henry
Hub), quoted on the New York Mercantile Exchange (or its successor);
	 
	 	(B)	 	in the case of any Oil and Gas Properties located in the North Sea, the
Three-Year Strip Price for crude oil (North Sea Brent) and natural gas (UK National
Balancing Point), in each case quoted on the International Petroleum Exchange (or its
successor); and
	 
	 	(C)	 	in the case of any Oil and Gas Properties located in any other jurisdiction,
the Three-Year Strip Price for crude oil and natural gas, in each case quoted on any
commodities exchange or other price quotation source generally recognised in the oil
and gas industry in such jurisdiction and reasonably acceptable to the Bank,






	 	 	in the case of each of paragraphs (A), (B) and (C) above, as of the date as of which the
information set forth in such Reserve Report is provided (as adjusted for basis
differentials) and utilising a 10% discount rate. For the purposes of calculating PV-10
Value, any future cash flow calculations set forth in any Reserve Report and made in any
currency other than Dollars shall be converted into Dollars based on the Exchange Rate on
the date as of which the information set forth in such Reserve Report is provided.






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






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




26









 






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






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






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






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






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






	 	 	“Refinanced Debt” has the meaning given to it in Clause 21.20.1(B)(1)
(Indebtedness).
	 
	 	 	“Refinancing Debt” has the meaning given to it in Clause 21.20.1(B)
(Indebtedness).
	 
	 	 	“Release” means actively or passively disposing, discharging, injecting, spilling, pumping,
leaking, leaching, dumping, emitting, escaping, emptying, pouring, seeping or migrating
into or upon any land or water or air, or otherwise entering into the Environment
	 
	 	 	“Relevant Holding Company” means the Parent and any Subsidiary of the Parent which has an
Equity Interest (directly or indirectly) of the Company.
	 
	 	 	“Renewal Letter of Credit” means a Letter of Credit issued in accordance with the
requirements of Clause 5.4 (Renewal of a Letter of Credit).
	 
	 	 	“Repeating Representations” means each of the representations set out in Clauses
20.1 (Company status), 20.2 (Binding obligations), 20.3
(Power and authority), 20.4 (Non-conflict with other obligations),
20.5 (Approvals), 20.6 (Governing law and enforcement) and
20.14 (Security Documents).
	 
	 	 	“Reserve Coverage Ratio” means, or any date of determination, the ratio of:






	 	(A)	 	the sum of:






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






	 	 	to:






	 	(B)	 	Consolidated Net Secured Indebtedness.




27









 












	 	 	“Reserve Report” means:






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






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






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






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






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






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






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




28









 






	 	 	of the Group and the Bank.






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






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






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






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






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






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






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






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






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




29









 






	 	 	 	owners (as opposed to lessees) of like property.






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






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






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






	 	(A)	 	for the 36-month period commencing with the month immediately following the
month in which the date of determination occurs, the monthly futures contract prices
for crude oil and natural gas for the 36 succeeding months as quoted on the applicable
commodities exchange or other price quotation source as contemplated in the
definitions of “PV-10 Value” and “Probable Reserve Value”; and
	 
	 	(B)	 	for periods after such 36-month period, the average of such quoted prices for
the period from and including the 25th month in such 36-month period through the 36th
month in such period.






	 	 	“Total Leverage Ratio” means, on any date of determination, the ratio of:






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






	 	 	to




30









 













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






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






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






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






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






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




31









 












	 	1.2.4	 	“assets” includes present and future properties, revenues and rights of
every description;
	 
	 	1.2.5	 	a “Finance Document” or any other agreement or instrument is a reference to
that Finance Document or other agreement or instrument as amended, novated,
supplemented, extended or restated;
	 
	 	1.2.6	 	“indebtedness” includes any obligation (whether incurred as principal or as
surety) for the payment or repayment of money, whether present or future, actual or
contingent;
	 
	 	1.2.7	 	a “person” includes any individual, firm, company, corporation, government,
state or agency of a state or any association, trust, joint venture, consortium or
partnership (whether or not having separate legal personality);
	 
	 	1.2.8	 	a “regulation” includes any regulation, rule, official directive, request or
guideline (whether or not having the force of law) of any governmental,
intergovernmental or supranational body, agency, department or of any regulatory,
self-regulatory or other authority or organisation;
	 
	 	1.2.9	 	an amount borrowed includes any amount utilised by way of Letter of Credit;
	 
	 	1.2.10	 	amounts outstanding under this Agreement include amounts outstanding under or in
respect of any Letter of Credit;
	 
	 	1.2.11	 	an outstanding amount of a Letter of Credit at any time is the maximum amount that
is or may be payable by the Company in respect of that Letter of Credit at that time
(without regard to any cash cover provided in relation to such Letter of Credit);
	 
	 	1.2.12	 	the Company “repaying” or “prepaying” a Letter of Credit means:






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






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






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






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




32









 












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






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






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




33









 












	5.2	 	Completion of a Utilisation Request for a Letter of Credit






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






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






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






	5.3	 	Currency and amount






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






	5.4	 	Renewal of a Letter of Credit






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






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




34









 












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






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






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






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






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






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




35









 






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






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






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






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




36









 












	5.8	 	Cash-out of Letters of Credit






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






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




37









 







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






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






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






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






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






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




38









 






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






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






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






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






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






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




39









 












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






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






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






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






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






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




40









 












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






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





9.3     Voluntary prepayment of Utilisations





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






	9.4	 	Restrictions






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






	10.	 	DEFAULT INTEREST
	 
	10.1	 	Default interest






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




41









 












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






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






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






	11.2	 	Commitment fee






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






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




42









 












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






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






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






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






	 	12.4.1	 	All amounts set out or expressed in a Finance Document to be payable by an Obligor
to the Bank which (in whole or in part) constitute the consideration for a supply or
supplies for VAT purposes shall be deemed to be exclusive of any VAT which is
chargeable on any such supply or supplies, and accordingly, if VAT is or becomes
chargeable on any supply made by Bank to the applicable Obligor under a Finance
Document, that party shall pay to the Bank (in addition to and at the




43









 






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






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






	13.	 	INCREASED COSTS
	 
	13.1	 	Increased costs






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






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






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






	13.2	 	Exceptions






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






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




44









 












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






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






	14.	 	OTHER INDEMNITIES
	 
	14.1	 	Currency indemnity






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






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






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






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






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






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




45









 












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






	15.	 	MITIGATION BY THE BANK
	 
	15.1	 	Mitigation






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






	15.2	 	Limitation of liability






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




46









 












	16.	 	COSTS AND EXPENSES
	 
	16.1	 	Transaction expenses






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






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






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






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






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






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






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






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




47









 






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






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






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




48









 












	 	 	confidential information.






	18.2	 	The Bank may:






	 	18.2.1	 	disclose Confidential Information in circumstances where:






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






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






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






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






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




49









 












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






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






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






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






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




50









 












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






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






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






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






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




51









 






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






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






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






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






	 	20.1.1	 	is a Business duly incorporated or formed, as applicable, and validly existing under
the laws of its jurisdiction of incorporation or formation, as applicable;
	 
	 	20.1.2	 	has the power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage; and




52









 












	 	20.1.3	 	is duly qualified and is authorised to do business in each jurisdiction where the
ownership, leasing or operation of its property or the conduct of its business
requires such qualifications except for failures to be so qualified or authorised
which, either individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect, and
	 
	 	20.1.4	 	no certifications by any Governmental Authority are required for operation of its
business that are not in place, except for such certifications or agreements, the
absence of which could not reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect.






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






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






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






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






		 	or result in any breach of any of the terms, covenants, conditions or provision of, or
constitute a default under or result in the creation or imposition of (or the obligation to
create or impose) any Security (except pursuant to the Security Documents) upon any of the
property or assets of any Obligor or any Subsidiary of an Obligor pursuant to the terms of
any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other
material agreement, contract or instrument, in each case to which any Obligor or any
Subsidiary of an Obligor is a party or by which it or any of its property or assets is
bound or to which it may be subject.




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






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






	20.6	 	Governing law and enforcement






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






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






	 	20.9.1	 	The:






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






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




54









 






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






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






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




55









 












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






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






	20.12	 	True and Complete Disclosure
	 
	 	 	All factual information (taken as a whole) furnished by or on behalf of any Obligor to the
Bank (including, without limitation, all information contained in the Finance Documents)
for the purposes of or in connection with this Agreement, the other Finance Documents or
any transaction contemplated herein or therein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of any Obligor in writing to the
Bank will be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any fact
necessary to make such information (taken as a whole) not misleading in any material
respect at such time in light of the circumstances under which such information was
provided, it being understood and agreed that for purposes of this Clause 20.12,
such factual information shall not include the Projections or any pro forma financial
information.
	 
	20.13	 	Tax Returns and Payments






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






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






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




56









 












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






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






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






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






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






	 	20.15.2	 	Each member of the Group, as applicable, has good and defensible (from the
perspective of a reasonably prudent investor in the Oil and Gas Business) title to all
of the Oil and Gas Properties included in the most recent Reserve Report delivered
pursuant to Part I of Schedule 2 (Conditions Precedent) or Clause 21.1.4
(Reserve Report), as the case may be, free from all Security, claims and title
imperfections, except for:






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






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




57









 












	 	(A)	 	are or will be complete and accurate in all material respects as
of the date of such Reserve Report; and there are no “back-in” or “reversionary”
interests held by third parties which could reduce the interest (working, net
revenue or otherwise) of the Group in such Oil and Gas Properties in any
material respect, except as expressly set forth or given effect to in such
Reserve Report; and
	 
	 	(B)	 	except for obligations to contribute a proportionate share of the
costs of defaulting or non-consenting co-owners or as otherwise expressly set
forth in the most recent Reserve Report, no member of the Group is obligated to
bear any percentage share of the costs and expenses relating to the drilling,
development and production of the Oil and Gas Properties in excess of its
working interests.






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






	 	(A)	 	term mineral interests in their respective Oil and Gas Properties
and all such licences, leases, subleases and term mineral interests are valid,
subsisting and in full force and effect, and no member of the Group has
knowledge that a default exists under any of the terms or provisions, express or
implied, of any of such licences, leases, subleases or interests or under any
agreement to which the same are subject, except to the extent any inaccuracy in
the foregoing could not reasonably be expected to result in a Material Adverse
Effect;
	 
	 	(B)	 	all of the Oil and Gas Contracts and obligations of such member
of the Group that relate to the Oil and Gas Properties are in full force and
effect and constitute legal, valid and binding obligations of such member of the
Group (as applicable), except to the extent any inaccuracy in the foregoing
could not reasonably be expected to result in a Material Adverse Effect;
	 
	 	(C)	 	no member of the Group or, to the knowledge of any member of the
Group, any other party to any licences, leases, subleases or term mineral
interests in the Oil and Gas Properties or any Oil and Gas Contract (i) is in
breach of or default, or with the lapse of time or the giving of notice, or
both, would be in breach or default, with respect to any obligations thereunder,
whether express or implied, except such that could not reasonably be expected to
result in a Material Adverse Effect or (ii) has given or threatened to give
notice of any default under or inquiry into any possible default under, or
action to alter, terminate, rescind or procure a judicial reformation of, any
licences or lease in the Oil and Gas Properties or any Oil and Gas Contract; and
	 
	 	(D)	 	each member of the Group enjoys peaceful and undisturbed
possession under all such licences, leases, subleases and term mineral
interests.






	 	20.15.5	 	Each member of the Group has complied with all obligations under all
Authorisations, and to the best knowledge of the Obligors, no steps have been taken
for the revocation, variation or refusal of any Authorisation, except to the extent
any non-compliance with such obligations or any such revocation, variation or refusal
could not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.




58









 












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






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






	20.17	 	Subsidiaries






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






	20.18	 	Compliance with Statutes, etc.






	 	20.18.1	 	Each member of the Group is qualified under and is in compliance with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, and has obtained all required Authorisations from, all Governmental
Authorities in respect of the conduct of its business and the ownership of its
property (including statutes, regulations, orders and restrictions applicable to the
Oil and Gas Business and applicable statutes, regulations, orders and restrictions
relating to environmental standards and controls, except such statutes, regulations,
orders and restrictions that are expressly addressed in Clause 20.19
(Environmental Matters), except such non-compliances as could not, either




59









 






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






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






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






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






	20.20	 	Employment and Labour Relations
	 
	 	 	No labour disputes which could reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect have been started or (to the best of each
Obligor’s knowledge and belief) threatened against any member of the Group, nor are there
any circumstances likely to give rise to any such disputes.
	 
	20.21	 	Intellectual Property, etc.
	 
	 	 	Each member of the Group owns or has the right to use all the patents, trademarks, permits,
domain names, service marks, trade names, copyrights, licences, franchises, inventions,
trade secrets, proprietary information and know-how of any type, whether or not written
(including, but not limited to, rights in computer programs and databases) and formulas, or
rights with respect to the foregoing, and has obtained assignments of all leases, licences
and other rights of whatever nature, necessary for the present conduct of its business,
without any known conflict with the rights of others which, or the failure to own or have
which, as the case may be, could reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect.




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






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






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






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






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




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






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






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






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






	 	(A)	 	the consolidated balance sheet of the Parent as at the
end of such quarterly accounting period and the related consolidated
statements of income and retained earnings and consolidated statement of
cash flows for such quarterly accounting period and for the elapsed portion
of the fiscal year ended with the last day of such quarterly accounting
period, in each case setting forth comparative figures for all such
financial information for the corresponding quarterly accounting period in
the prior fiscal year; and
	 
	 	(B)	 	management’s discussion and analysis of the important
operational and financial developments during such quarterly accounting
period,
	 
	 	 	 	certified by an Authorised Officer of the Parent that they fairly present in all
material respects in accordance with GAAP the consolidated financial condition of
the Parent as of the dates indicated and the consolidated results of operations
for the periods indicated, subject to normal year-end audit adjustments and the
absence of footnotes;






	 	21.1.3	 	Annual Financial Statements
	 
	 	 	 	within:




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	 	(A)	 	90 days after the close of each fiscal year of the
Parent, the consolidated balance sheet of the Parent as at the end of such
fiscal year and the related consolidated statements of income and retained
earnings and consolidated statements of cash flows for such fiscal year,
setting forth comparative figures for the preceding fiscal year, and
certified by KPMG LLP or another independent certified public accountants of
recognised national standing reasonably acceptable to the Bank, accompanied
by an opinion of such accounting firm (which opinion shall be without a
“going concern” or like qualification or exception and without any
qualification or exception as to scope of audit); and
	 
	 	(B)	 	274 days after the close of each fiscal year of the
Company, the audited consolidated balance sheet of the Company as at the end
of such fiscal year,






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






	21.1.4	 	Reserve Report






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






	 	(A)	 	a Reserve Report (which shall be:






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






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






	 	 	 	all in accordance with the guidelines published by the SEC (but
utilizing the pricing parameters set forth in the definition of
the term PV-10 Value (and, in the case of an annual Reserve
Report, in addition to such pricing parameters those specified in
such SEC guidelines) and utilising such operating cost and other
assumptions as proposed by the Company); and




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	 	(B)	 	a certificate of an Authorised Officer showing any
additions to or deletions from the Oil and Gas Properties made by each
member of the Group and in Proved Reserves and Probable Reserves
attributable to such Oil and Gas Properties since the date of the most
recently delivered previous Reserve Report;






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






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






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




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






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






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






	 	21.1.9	 	Environmental Matters
	 
	 	 	 	promptly after any officer of any member of the Group obtains knowledge thereof,
notice of one or more of the following environmental matters, but only to the
extent that such environmental matters, either individually or when aggregated
with all other such environmental matters, could reasonably be expected to have a
Material Adverse Effect:




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	 	(A)	 	any pending or threatened Environmental Claim,
proceeding, investigation or notice of breach issued under or pursuant to
any Environmental Law against any member of the Group or any Real Property,
facility or Oil and Gas Property owned, leased or operated by any member of
the Group;
	 
	 	(B)	 	any condition or occurrence on or arising from any Real
Property, facility or Oil and Gas Property owned, leased or operated by any
member of the Group that could reasonably be expected to form the basis of
an Environmental Claim, proceeding, investigation, action or notice of
breach against any member of the Group or any such Real Property or facility
under any Environmental Law;
	 
	 	(C)	 	issuance under any Environmental Law of any liens or
restrictions on the ownership, lease, occupancy, use or transferability by
any member of the Group of any Real Property, facility or Oil and Gas
Property owned, operated or leased by any member of the Group; and
	 
	 	(D)	 	the taking of any removal or remedial action as required
by any Environmental Law or any Governmental Authority in response to the
actual or alleged presence, Release or threatened Release of any Hazardous
Material on any Real Property, facility or Oil and Gas Property owned,
leased, used or operated by any member of the Group;






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






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






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




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






	 	(A)	 	to visit and inspect, under guidance of officers of such
member of the Group, any of the properties of such member of the Group; and
	 
	 	(B)	 	to examine the books of account of such member of the
Group and discuss the affairs, finances and accounts of such member of the
Group with, and be advised as to the same by, its and their officers and
independent accountants, all upon reasonable prior notice and at such
reasonable times and intervals and to such reasonable extent as the Bank may
reasonably request.






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






	21.3	 	“Know your customer” checks






	 	21.3.1	 	If:






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






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






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




67









 






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






	21.4	 	Maintenance of Property Insurance






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






	 	(A)	 	keep all property necessary to the business of the
Company in good working order and condition, ordinary wear and tear excepted
and subject to the occurrence of casualty events;
	 
	 	(B)	 	maintain with financially sound and reputable insurance
companies insurance on all such property and against all such risks as is
consistent and in accordance with industry practice for companies similarly
situated owning similar properties and engaged in similar businesses as the
Group; and
	 
	 	(C)	 	furnish to the Bank, upon its request therefor, full
information as to the insurance carried. Such insurance shall include
physical damage insurance on all real and personal property, including,
without limitation, on Oil and Gas Properties (whether now owned or
hereafter acquired) on an all risk basis.






	 	 	 	The provisions of this Clause 21.4 shall be deemed supplemental to, but
not duplicative of, the provisions of any Security Documents that require the
maintenance of insurance.






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






	21.5	 	Existence; Franchises; Oil and Gas Properties






	 	21.5.1	 	Prior to the Cash Collateral Discharge Date, the Parent will, and will cause each
other member of the Group to, do or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material rights, franchises,
licences, permits, copyrights, trademarks and patents and pay all royalties when due;
provided, however, that nothing in this Clause 21.5 shall prevent:




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	 	(A)	 	sales of assets and other transactions by any member of
the Group in accordance with Clause 21.18 (Consolidation, Merger,
Purchase or Sale of Assets, etc.); or
	 
	 	(B)	 	the withdrawal by any Obligor of its qualification as a
Business in any jurisdiction other than the United States or any State
thereof or the United Kingdom if such withdrawal could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.






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






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






	21.6	 	Compliance with Statutes, etc.






	 	21.6.1	 	The Parent will, and will cause each other member of the Group to, comply with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all Governmental Authorities in respect of the conduct of its business and
the ownership of its property (including applicable statutes, regulations, orders and
restrictions relating to environmental standards and controls other than such
statutes, regulations, orders and restrictions that are expressly addressed in Clause
21.7 (Compliance with Environmental Laws)), except such non-compliances as
could not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
	 
	 	21.6.2	 	The Parent will, and will cause each other member of the Group to, maintain and
comply with the terms and conditions of any material Authorisation required under any
law or regulation (including Environmental Law):




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






	 	 	 	except, in the case of preceding paragraph (B) only, such failure to maintain or
non-compliance as could not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.






	21.7	 	Compliance with Environmental Laws






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






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






	 	21.7.2	 	Upon:






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




70









 






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






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






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






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






	21.9	 	Performance of Obligations
	 
	 	 	The Parent will, and will cause each other member of the Group to, perform all of its
obligations under the terms of each mortgage, indenture, security agreement, loan agreement
or credit agreement and each other agreement, contract or instrument by which it is bound,
except such non-performances as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
	 
	21.10	 	Payment of Taxes
	 
	 	 	The Parent will pay and discharge, and will cause each other member of the Group to pay and
discharge, all Taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, would become a
Security or charge upon any properties of any member of the Group not otherwise permitted
under Clause 21.17.3(C) (Negative Pledge); provided that no member of the Group
shall be required to pay any such Tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings if it has maintained adequate reserves
with respect thereto in accordance with GAAP.
	 
	21.11	 	Further assurances






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




71









 






	 	 	 	such other Obligor acquired subsequent to the first Utilisation Date) as are not
covered by the original Security Documents and as may be reasonably requested from
time to time by the Bank (collectively, the “Additional Security Documents”). All
such security interests and Mortgages shall be granted pursuant to documentation
satisfactory in form and substance to the Collateral Agent and shall constitute
valid and enforceable perfected security interests, hypothecations and Mortgages
superior to and prior to the rights of all third parties and enforceable against
third parties and subject to no other Security except for Permitted Security. The
Additional Security Documents or instruments related thereto shall have been duly
recorded or filed in such manner and in such places as are required by law to
establish, perfect, preserve and protect the Security in favour of the Collateral
Agent required to be granted pursuant to the Additional Security Documents and all
taxes, fees and other charges payable in connection therewith shall have been paid
in full. It is understood and agreed that, notwithstanding anything to the
contrary above in this Clause 21.11.1, neither the Parent nor any of
its Subsidiaries will be required pursuant to this Clause 21.11.1 to:






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






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






	 	21.11.2	 	Each Obligor will, at the expense of the Obligors, make, execute, endorse,
acknowledge, file and/or deliver to the Bank from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, real property surveys,
reports, landlord lien waivers, collateral access agreements, bailee agreements,
control agreements and other assurances or instruments and take such further steps
relating to the Collateral covered by any of the Security Documents as the Bank may
reasonably require. Furthermore, the Obligors will deliver to the Bank such opinions
of counsel, title insurance and other related documents as may be reasonably requested
by the Bank to assure itself that this Clause 21.11 has been complied with.
	 
	 	21.11.3	 	The Obligors agree that each action required under this Clause 21.11
shall be completed as soon as possible, but in no event later than 60 days after such
action is requested to be taken by the Bank; provided that, in no event will any
Obligor be required to take any action, other than using its commercially reasonable
efforts, to obtain consents from third parties with respect to its compliance with
this Clause 21.11.




72









 












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






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






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




73









 






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






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






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




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






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






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






	 	21.16.1	 	exercise such votes and other rights as it may have under the Project Documents
with a view to ensuring (so far as able) that each Oil and Gas Property in which any
member of the Group has an interest is at all times exploited and operated in a
reasonable and prudent manner and in accordance with good industry practice, all
applicable laws and regulations and the provisions of the Project Documents;
	 
	 	21.16.2	 	not concur in, and shall vote against, any proposal or decision to abandon all or
any material part of any of Oil and Gas Properties in which any Obligor has an
interest unless the Bank has granted its prior written consent;
	 
	 	21.16.3	 	not exercise its rights on any operating or similar committee in a manner that
would be materially prejudicial to the interests of any Obligor or the Bank; and
	 
	 	21.16.4	 	maintain full and proper technical and financial records in relation to each Oil
and Gas Property in which any member of the Group has an interest and ensure (so far
as it is able) that the Bank (and/or any person nominated by it) is afforded
reasonable access to each Oil and Gas Property in which it has an interest and all
such records during normal business hours on reasonable notice.






	21.17	 	Negative Pledge






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




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






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






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






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






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






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




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	 	 	 	(F)






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






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






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






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






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






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




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






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






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




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






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






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




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






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






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






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






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






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






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




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






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






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






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






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






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




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






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






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




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






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






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






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






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




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






	21.19	 	Dividends






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






	21.20	 	Indebtedness






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






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






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




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






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






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






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






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




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






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






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






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






	 	(A)	 	other than:






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




86









 






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






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






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




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






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






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




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	21.23	 	Capital Expenditures






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





	 	 	 	 	 
	Fiscal Year Ending	 	Amount
	December 31, 2011

	 	$	224,014,928	 
	December 31, 2012

	 	$	350,000,000	 
	December 31, 2013

	 	$	175,000,000	 







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






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






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




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






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





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







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





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






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	21.26	 	Minimum Asset Coverage Ratios






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






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






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






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






	 	(A)	 	have any material liabilities other than:






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






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






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






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




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	21.29	 	Limitation on Creation of Subsidiaries






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






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






	21.30	 	Limitation on Commodity Hedging






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






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






	22.1	 	Payments






	 	22.1.1	 	Any Obligor:






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






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




92









 












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






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






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






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






	22.4	 	Default Under Other Agreements






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






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






	 	22.4.2	 	Prior to the Cash Collateral Discharge Date, any Indebtedness (other than the
Obligations) of any Obligor is declared to be (or becomes) due and payable, or
required to be prepaid other than by a regularly scheduled required prepayment, prior
to the stated maturity thereof; provided that, it shall not be a Default or an Event
of Default under this 22.4 unless the aggregate principal amount of all




93









 













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






	22.5	 	Insolvency






	 	 	 	22.5.1






	 	(A)	 	The Parent or any of its Subsidiaries (other than any Immaterial
Subsidiary) commences a voluntary case concerning itself under Title 11 of the
United States Code entitled “Bankruptcy,” as now or hereafter in effect, or any
successor thereto (the “Bankruptcy Code”); or
	 
	 	(B)	 	an involuntary case is commenced against the Parent or any of its
Subsidiaries (other than any Immaterial Subsidiary), and the petition is not
controverted within 10 days, or is not dismissed within 60 days after the filing
thereof; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of the Parent or any
of its Subsidiaries (other than any Immaterial Subsidiary), to operate all or
any substantial portion of the business of the Parent or any of its Subsidiaries
(other than any Immaterial Subsidiary).






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






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






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






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




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






	 	22.5.4	 	Clause 22.5.3 does not apply to:






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






	22.6	 	Security Documents






	 	22.6.1	 	Any of the Security Documents ceases to be in full force and effect, or ceases to
give the Bank or (as applicable) the Collateral Agent the Security, rights, powers and
privileges purported to be created thereby (including, without limitation, a perfected
security interest in, and Security on, all of the Collateral (other than any
immaterial portion thereof), in favour of the Bank or (as applicable) the Collateral
Agent, subject to no other Security (except Permitted Security).
	 
	 	22.6.2	 	Any Obligor defaults in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to any such Security
Document and such default shall continue beyond the period of grace, if any,
specifically applicable thereto pursuant to the terms of such Security Document.
	 
	 	22.6.3	 	Upon and following the Cash Collateral Discharge Date (but subject at all times to
Clause 7.4) this Clause 22.6 shall apply only to the Cash
Collateral Agreement.






	22.7	 	Creditors’ process
	 
	 	 	Any expropriation, attachment, sequestration, distress or execution affects any asset or
assets of any Obligor.
	 
	22.8	 	Repudiation
	 
	 	 	An Obligor or the Company Shareholder rescinds or repudiates a Finance Document or
evidences an intention to rescind or repudiate a Finance Document.
	 
	22.9	 	Judgments
	 
	 	 	One or more judgments or decrees is entered against the Parent or any Subsidiary of the
Parent involving in the aggregate for the Parent and its Subsidiaries a liability (to the
extent not paid or not covered by a reputable and solvent insurance company pursuant to
which the insurer has accepted liability therefor in writing) and such judgments and
decrees either shall be final and non-appealable or shall not be vacated, discharged or
stayed or bonded pending appeal for any period of 30 consecutive days, and the aggregate
amount of all such judgments equals or exceeds $7,500,000.




95









 












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






	 	22.10.1	 	nationalised, expropriated, compulsorily acquired or seized by any Governmental
Authority; or
	 
	 	22.10.2	 	any such Governmental Authority takes, or officially announces it will take, any
step with a view to any of the foregoing and in either case such action is reasonably
likely to result in a Material Adverse Effect.






	22.11	 	Project Documents






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






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






	 	22.14.1	 	declare the Commitment terminated, whereupon the Commitment shall forthwith
terminate immediately without any other notice of any kind;
	 
	 	22.14.2	 	declare the principal of and any accrued interest in respect of all Obligations
owing under the Finance Documents to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by each Obligor;




96









 












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






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






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






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




97









 












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





	 	 	 	 	 

	 

	 	Attention:
	 	Mike Kirksey
	 

	 	 	 	Mike.kirksey@endeavourcorp.com
	 
	 	 	 	 
	 

	 	Address:
	 	Endeavour Energy UK Limited
	 

	 	 	 	114 St. Martin’s Lane, London WC2N 4BE, UK
	 
	 	 	 	 
	 

	 	Telephone:
	 	+44 (0) 207 451 2350
	 

	 	Fax number
	 	+44 (0) 207 451 2352
	 
	 	 	 	 
	 

	 	Copy to:	 	 
	 
	 	 	 	 
	 

	 	Attention:
	 	Cathy Stubbs
	 

	 	 	 	Cathy.stubbs@endeavourcorp.com
	 
	 	 	 	 
	 

	 	 	 	Mike Kirksey
	 

	 	 	 	Mike.kirksey@endeavourcorp.com
	 
	 	 	 	 
	 

	 	Address:
	 	Endeavour International Corporation
	 

	 	 	 	1001 Fannin, Suite 1600, Houston, TX 77002, USA
	 
	 	 	 	 
	 

	 	Telephone:
	 	+1 713-307-8788
	 

	 	Fax number:
	 	+1 713-307-8794
	 
	 	 	 	 
	 

	 	THE BANK:	 	 
	 
	 	 	 	 
	 

	 	Attention:
	 	Roy Nasse / Jimmy Smailes
	 
	 	 	 	 
	 

	 	Address:
	 	Senator House, 85 Queen Victoria Street, EC4V 4HA
	 
	 	 	 	 
	 

	 	Telephone:
	 	+44 (0) 20 7710 3930/ +44 (0) 20 7710 3969
	 
	 	 	 	 
	 

	 	Fax number:
	 	+44 (0) 20 7739 6611
	 
	 	 	 	 
	 

	 	Copy to:
	 	Alaster Long
	 
	 	 	 	 
	 

	 	Telephone:
	 	+44 (0) 20 7710 3938






98









 






	 	 	 	 	 

	 

	 	Fax number:
	 	+44 (0) 20 7739 6611







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




99









 






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






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






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






	 	 	and the Company hereby accepts its appointment by each Obligor.




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










100









 








SCHEDULE 1




ORIGINAL GUARANTORS




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






101











 




SCHEDULE 2


CONDITIONS PRECEDENT


PART I — INITIAL CONDITIONS PRECEDENT



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






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






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






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






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





102









 






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




103









 





PART II


CONDITIONS PRECEDENT REQUIRED TO BE DELIVERED BY

AN ADDITIONAL GUARANTOR




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






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






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




104









 






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






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






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






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






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






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




105









 






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






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




106









 





SCHEDULE 3


FORM OF UTILISATION REQUEST 


To:


[•] 2011


Dear Sirs


Facility Agreement dated [     ] between among others;

Endeavour Energy UK Limited and Commonwealth Bank of Australia
(the “Agreement”)]



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





	 	 	 

	Proposed Utilisation Date:

	 	[       ] (or if that is not a Business Day, the next Business Day)
	Amount:

	 	[       ]
	Expiry Date:

	 	[       ]
	Beneficiary:

	 	[       ]







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





Yours sincerely




	 	 	 

	 

For and on behalf of

	 	 
	ENDEAVOUR ENERGY UK LIMITED
	 	 






107









 





SCHEDULE 4


FORM OF LETTER OF CREDIT


To: Hess Limited



			
	 	 	 
	     (the “Beneficiary”)
	 	[Date]






Dear Sirs,




Irrevocable Standby Letter of Credit no. [     ]



For the account and at the request of Endeavour Energy UK Limited, we Commonwealth Bank of
Australia (the “Issuing Bank”) hereby issue this irrevocable standby letter of credit (“Letter of
Credit”) [     ] in your favour on the following terms and conditions:





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




108









 






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




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





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





Yours faithfully




	 	 	 

	 

For and on behalf of

	 	 
	COMMONWEALTH BANK OF AUSTRALIA
	 	 






109









 





SCHEDULE 5


OIL AND GAS PROPERTIES


Endeavour International Corporation


List of Properties



			
	Source:	 	December 31, 2009 Reserve Report (Strip Pricing)

plus January 2010 reserve adds





Property Name




UK:




	 	 	 

	Alba

	 	*
	Bacchus

	 	*
	Bittern

	 	*
	Columbus

	 	*
	Enoch

	 	*
	Goldeneye

	 	*
	IVRRH

	 	*
	Renee

	 	*
	Rochelle

	 	*
	Rubie

	 	*






US:




	 	 	 	 	 	 	 

	Austin 21 #1

	 	De Soto
	 	Louisiana
	 	*
	Batchelor 3-1H

	 	Red River
	 	Louisiana
	 	*
	Bazer, M L 20 #1D

	 	De Soto
	 	Louisiana
	 	*
	Bazer, M L 20 #1D PNP

	 	De Soto
	 	Louisiana
	 	*
	Bonomo Investment Co LLC 35 #1

	 	Caddo
	 	Louisiana
	 	*
	Chiggero ETAL 14 #1-H

	 	Caddo
	 	Louisiana
	 	*
	Davis 15 #1

	 	Red River
	 	Louisiana
	 	*
	Desoto LP 17 #1

	 	De Soto
	 	Louisiana
	 	*
	Dixie Farm 11-1H

	 	Red River
	 	Louisiana
	 	*
	Fielder, Cyrus 15 #1

	 	Caddo
	 	Louisiana
	 	*
	Fortson 3 #2

	 	De Soto
	 	Louisiana
	 	*
	Indigo Minerals 3-1H

	 	Red River
	 	Louisiana
	 	*
	International Paper 21 #1

	 	De Soto
	 	Louisiana
	 	*
	Johnson, A S ET AL 10 #1

	 	De Soto
	 	Louisiana
	 	*
	Jones, G C 22 #1

	 	De Soto
	 	Louisiana
	 	*
	Jones, G C 22 #2

	 	De Soto
	 	Louisiana
	 	*
	Jones, G C 23 #3

	 	De Soto
	 	Louisiana
	 	*
	Little 11 #1

	 	Red River & Bienville
	 	Louisiana
	 	*
	Madison, Clarence 2 #1

	 	Red River
	 	Louisiana
	 	*
	Marks, Roy Est 10 #1

	 	Red River
	 	Louisiana
	 	*
	McCoy 23 #1

	 	De Soto
	 	Louisiana
	 	*
	Metcalf HNSVL 14 #5H

	 	Caddo
	 	Louisiana
	 	*
	Russell, Mary 3 #1

	 	Red River
	 	Louisiana
	 	*
	Smith, Lillie22 #1

	 	De Soto
	 	Louisiana
	 	*
	Tracy 3 #1

	 	De Soto
	 	Louisiana
	 	*
	Moore Cowbell

	 	Lea
	 	New Mexico
	 	*





110









 






	 	 	 	 	 	 	 

	Lucky Penny

	 	Lea
	 	New Mexico
	 	*
	Pardee & Curtain Lumber Co. C-4

	 	Cameron
	 	Pennsylvania
	 	*1
	Pardee & Curtain Lumber Co. C-5

	 	Cameron
	 	Pennsylvania
	 	*1
	Pardee & Curtain Lumber Co. C-7H

	 	Cameron
	 	Pennsylvania
	 	*1
	Pardee & Curtain Lumber Co. C-9H

	 	Cameron
	 	Pennsylvania
	 	*1
	Pardee & Curtain Lumber Co. C-10-H

	 	Cameron
	 	Pennsylvania
	 	*1
	Cochran 1 (Garwood)

	 	Colorado
	 	Texas
	 	*
	Cochran 2 (Garwood)

	 	Colorado
	 	Texas
	 	*
	Cochran 3 (Garwood)

	 	Colorado
	 	Texas
	 	*
	Cochran 4 (Garwood)

	 	Colorado
	 	Texas
	 	*
	Cochran 5 (Garwood)

	 	Colorado
	 	Texas
	 	*
	Cochran 6 (Garwood)

	 	Colorado
	 	Texas
	 	*
	Tuttle #6H - 6 Stages

	 	Gregg
	 	Texas
	 	*
	Tuttle #8H - 6 Stages

	 	Gregg
	 	Texas
	 	*
	Tuttle AJ Gas Unit #5

	 	Gregg
	 	Texas
	 	*
	Tuttle, A J #7H

	 	Gregg
	 	Texas
	 	*
	Williams #3

	 	Gregg
	 	Texas
	 	*
	Armour Runnels 1

	 	Matagorda
	 	Texas
	 	*








 




			
	*	 	Mortgaged property
	 
	1	 	Acquired after December 31, 2009



111









 





SCHEDULE 6


PART I — SUBSIDIARIES



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Percentage
	 	 	 	 	Class of	 	 	 	 	 	 	 	 	 	 	 	of
	 	 	 	 	Equity	 	Par	 	Number	 	Certificate	 	outstanding
	Owner	 	Issuer	 	Interest	 	Value	 	of Shares	 	Number	 	shares
	Endeavour International Corporation
	 	Endeavour OperatingCorporation	 	Common	 	$	0.001	 	 	 	100	 	 	2	 	 	100	 
	Endeavour Operating Corporation
	 	Endeavour International Holding B.V.	 	Ordinary	 	€	100	 	 	 	180	 	 	Uncertificated	 	 	100	 
	Endeavour Operating Corporation
	 	Endeavour Energy New Ventures Inc.	 	Common	 	$	0.01	 	 	 	1,000	 	 	1	 	 	100	 
	Endeavour Operating Corporation
	 	END Management Company	 	Common	 	$	0.01	 	 	 	1,000	 	 	1	 	 	100	 
	Endeavour International Holding B.V.
	 	Endeavour Energy North Sea, L.P.	 	Limited Partnership Interest	 	 	N/A	 	 	 	N/A	 	 	Uncertificated	 	 	99.9	 
	Endeavour International Holding B.V.
	 	Endeavour Energy Netherlands B.V.	 	Ordinary	 	€	100	 	 	 	180	 	 	Uncertificated	 	 	100	 
	Endeavour International Holding B.V.
	 	Endeavour Energy Luxembourg S.a.r.l.	 	Ordinary	 	 	N/A	 	 	 	500	 	 	Uncertificated	 	 	100	 
	Endeavour Energy UK Limited
	 	Endeavour North Sea Limited	 	Ordinary	 	 	31	 	 	 	44,250,002	 	 	5	 	 	100	 
	Endeavour Energy Netherlands B.V.
	 	Endeavour Energy North Sea LLC	 	Membership Interest	 	 	N/A	 	 	 	N/A	 	 	Uncertificated	 	 	100	 






112









 






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





113









 





PART II — GROUP STRUCTURE CHART





114











 






SCHEDULE 7




EXISTING INDEBTEDNESS





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






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






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






	4.	 	Series C Preferred Stock, issued by Parent, with the terms set forth in the Certificate of
Designation of Series C Preferred Stock originally filed with the Nevada Secretary of State on
October 30, 2006, as amended.






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





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







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




115









 











SCHEDULE 8




INSURANCES









116









 








Financial Services Limits Graphic

 







117











 







Coverage Summary




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Policy Period	 	Policy No.	 	Coverage	 	Limits/ Amounts	 	Carrier
	11/01/I0-11	 	61SBARS0904	 	Property – Houston	 	Business Personal Property	 	Hartford Lioyds Insurance 
Company (Direct)
	 
	 	 	 	 	 	$	200,000	 	 	Replacement Cost	 	 
	 	 	 	 	 	 	Money and Securities	 	 
	 
	 	 	 	 	 	$	10,000	 	 	Inside the Premises	 	 
	 
	 	 	 	 	 	$	5,000	 	 	Outside the Premises	 	 
	 	 	 	 	 	 	Computers and Media	 	 
	 
	 	 	 	 	 	$	350,000	 	 	12 Hour Waiting Period,        $250 Deductible	 	 
	 	 	 	 	 	 	Deductibles:	 	 
	 
	 	 	 	 	 	$	1,000	 	 	Per Occurrence	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	11/01/10-11	 	6ISBAZK7082	 	Property— Denver	 	Business Personal Property	 	Hartford Lioyds Insurance 
Company (Direct)
	 
	 	 	 	 	 	$	120,000	 	 	Replacement Cost	 	 
	 	 	 	 	 	 	Money and Securities	 	 
	 
	 	 	 	 	 	$	10,000	 	 	Inside the Premises	 	 
	 
	 	 	 	 	 	$	5,000	 	 	Outside        the Premises	 	 
	 	 	 	 	 	 	Computers and Media	 	 
	 
	 	 	 	 	 	$	50,000	 	 	12 Hour Waiting Period, $250 Deductible	 	 
	 	 	 	 	 	 	Deductibles:	 	 
	 
	 	 	 	 	 	$	1,000	 	 	Per Occurrence	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	11/01/10-11
	 	MU05541831	 	USA - General Liability	 	$	2,000,000	 	 	General Aggregate	 	St. Paul Surplus Lines Insurance Company (through J.H. Blades)
	 
	 	 	 	 	 	$	1,000,000	 	 	Products-Completed Operations Aggregate Limit	 	 
	 
	 	 	 	 	 	$	1,000,000	 	 	Personal and Advertising Injury Limit	 	 
	 
	 	 	 	 	 	$	1,000,000	 	 	Each Occurence Limit	 	 
	 
	 	 	 	 	 	$	1,000,000	 	 	Hired and Non-Owned Auto Liability	 	 
	 
	 	 	 	 	 	$	100,000	 	 	Damage To Premises Rented To You Limit (Any One Premise)	 	 
	 
	 	 	 	 	 	$	5,000	 	 	Medical Expenses Limit (Any One Person)	 	 
	 	 	 	 	 	 	Deductibles:	 	 
	 
	 	 	 	 	 	$	Nil	 	 	Each Event	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	11/01/10-11
	 	MU05578905	 	USA - Umbrella Liability	 	$	25,000,000	 	 	General Aggregate	 	St. Paul Surplus Lines Insurance Company (through J.H. Blades)
	 
	 	 	 	 	 	$	25,000,000	 	 	Products-Completed Operations Aggregate Limit	 	 
	 
	 	 	 	 	 	$	25,000,000	 	 	Personal and Advertising Injury Limit	 	 
	 
	 	 	 	 	 	$	25,000,000	 	 	Each Occurrence Limit	 	 
	 	 	 	 	 	 	Deductibles:	 	 
	 
	 	 	 	 	 	$	10,000	 	 	Deductible (SIR)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	11/01/10-11	 	HU PI6 1699588 (12)	 	London/ Aberdeen Office

Package / Computer	 	Property Section:	 	Hiscox Insurance Company Limited (through Castle Cairn Insurance Brokers Ltd.)
	 
	 	 	 	 	 	£	150,000	 	 	Office Contents (excluding computers)	 	 
	 
	 	 	 	 	 	£	100,000	 	 	Aberdeen Contents (excluding computers)	 	 
	 
	 	 	 	 	 	£	10,000	 	 	Documents	 	 
	 
	 	 	 	 	 	£	5,000	 	 	Goods in Transit	 	 
	 
	 	 	 	 	 	£	5,000	 	 	Exhibitions in UK	 	 
	 
	 	 	 	 	 	£	1,000	 	 	Replacement Locks	 	 
	 
	 	 	 	 	 	£	500	 	 	Personal effects (per person)	 	 
	 
	 	 	 	 	 	£	5,000	 	 	Pictures, Works of Art, etc (£500 AOI)	 	 
	 
	 	 	 	 	 	£	5,000	 	 	Computers system records	 	 
	 
	 	 	 	 	 	£	5,000	 	 	Loss of Metered Water	 	 
	 	 	 	 	 	 	Business Interruption Section:	 	 
	 
	 	 	 	 	 	£	250,000	 	 	Loss of Revenue and Increased Costs of Working	 	 
	 
	 	 	 	 	 	£	5,000	 	 	Book Debts	 	 
	 
	 	 	 	 	 	 	12 Months	 	 	Indemnity Period	 	 
	 	 	 	 	 	 	Money Section:	 	 
	 
	 	 	 	 	 	£	250,000	 	 	Loss of Money due to Crossed cheques	 	 
	 
	 	 	 	 	 	£	1,500	 	 	Money In Safe out of Business  Hours	 	 
	 
	 	 	 	 	 	£	500	 	 	Money in the Private Dwelling of Partners, Directors or Employees	 	 
	 
	 	 	 	 	 	£	5,000	 	 	Money Any other loss	 	 
	 
	 	 	 	 		£	10,000/£100 pw	 	 	Personal Injury following robbery or holdup	 	 







118











 





Coverage Summary




	 	 	 	 	 	 	 	 	 	 	 
	Policy period	 	Policy No.	 	Coverage	 	Limits/ Amounts	 	Carrier
	11/01/10-11	 	HU PI6 1699588(12)	 	London/Aberdeen Office

Package/	 	Legal Liability for Injury to Persons of damage to third party Property:	 	 
	 

	 	 	 	 Computer
	 	£10,000,000
	 	Injury to Employees	 	 
	 

	 	 	 	(Cont.)
	 	£2,000,000
	 	Injury to the Public and damage to Property	 	 
	 	 	 	 	 	 	Commercial Legal Expenses Section:	 	 
	 

	 	 	 	 	 	£50,000
	 	Limit per Insured Incident	 	 
	 

	 	 	 	 	 	£50,000
	 	Annual Limit for Compensation Awards	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Computer Section	 	 
	 

	 	 	 	 	 	£250,000
	 	Computer and ancillary equipment (London) Including Portable Equipment Value £20,000	 	 
	 

	 	 	 	 	 	£113,000
	 	Computer and ancillary equipment (Aberdeen) Including Portable Equipment Value £20,000	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	5/06/11-4/5/13

	 	BM1103303
	 	Third Party Liability
	 	£25,000,000
	 	Any one Accident of Occurrence
	 	Zurich Global Energy
	 	 	 	 	 	 	Deductibles:	 	(Zurich Insurance plc 

UK Branch
	 

	 	 	 	 	 	£150,000
	 	Any one Accident of Occurrence
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	5/06/11-4/5/13	 	BM1103302	 	Builder’s Risk	 	Up to a maximum Estimated Final Contract Value of £158,872,332 (100%)	 	 
	 

	 	 	 	 	 	Schedule A:
	 	£198,590,415 (representing 125% of the estimated final contract Value.
	 	Lloyd’s and Various
	 

	 	 	 	 	 	Schedule B:
	 	To be agreed Slip Leader, Agreement Parties and Lloyd’s Syndicate 33 only by 15 June 2011.
	 	Companies
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Sub-Limits any one accident of occurrence & in the aggregate for the duration of the project:	 	 
	 

	 	 	 	 	 	£5,000,000
	 	Offshore Cancellation	 	 
	 

	 	 	 	 	 	£5,000,000
	 	Expediting Expenses	 	 
	 

	 	 	 	 	 	£5,000,000
	 	Forwarding Charges	 	 
	 

	 	 	 	 	 	£5,000,000
	 	Evacuation Expenses	 	 
	 

	 	 	 	 	 	£5,000,000
	 	Stand-by Charges	 	 
	 

	 	 	 	 	 	£5,000,000
	 	Test Leak Damage Search Costs	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Above Sub-Limits are subject to an overall aggregate Limit of £ 10,000,000 for the duration of the Project.
Mobilisation and Demobilisation costs limited to the originally contracted amounts	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Deductibles:	 	 
	 

	 	 	 	 	 	£150,000
	 	any one accident or occurrence in respect of onshore procurement and fabrication risks and all onshore works including transits.	 	 
	 

	 	 	 	 	 	£250,000
	 	any one accident or occurrence in respect of marine transit/ transportation including loading, lifting and unloading other than as specified below.	 	 
	 

	 	 	 	 	 	£500,000
	 	any one accident or occurrence in respect of installation of surface facilities and maintained associated therewith.	 	 
	 

	 	 	 	 	 	£750,000
	 	any one accident or occurrence in respect of subsea works (other than pipeline) including maintenance associated therewith.	 	 
	 

	 	 	 	 	 	£1,250,000
	 	any one accident or occurrence in respect of o” – 17.9” diameter pipeline installations from commencement of lay operation until completion including
maintenance associated therewith.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	5/06/11-4/5/13

	 	BM1103310
	 	$50Mxs $25M Third Party

Liability
	 	£50,000,000

Excess of:
£25,000,000
	 	any one accident or occurrence




any one accident of occurrence
	 	33%- Arch Insurance Co

35% Liberty Mutual Ins

32%Loyd’s Syndicate

1919 (thru Starr
	 
	 	 	 	 	 	 	 	 	 	 
	5/06/11-4/5/13

	 	BM1103347
	 	$25Mxs $75M Third Party

Liability
	 	£25,000,000

Excess of:
£75,000,000
	 	any one accident or occurrence




any one accident of occurrence
	 	40% — Zurich Global


Energy (Zurich Ins plc UK Branch) 


25%- Lloyd’d 2007 thru 


Novae)


35%- Loyd’s 1036 (then O’ Farrell







119











 





Coverage Summary




	 	 	 	 	 	 	 	 	 
	Policy Period	 	Policy No.	 	Coverage	 	Limits/Amounts	 	Carrier
	11/01/10-11

	 	BM1002642
	 	Energy Package
	 	Section 1 (A) & (B) — Onshore & Offshore
 Property (Platform and Pipelines)
	 	Lloyds of London & Other
 Companies (through JLT 
Agnew Higgins)
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	$67,157,750 FI value, as per worksheets attached to policy, any one
 accident or occurrence sub-limited to $7,500,000 any one accident or occurrence in respect of data
 reacquisition, reconstruction or reconstitution costs.


Plus additional 25% each item separately in respect of Sue and Labour expense,
General Average and Salvage Charges, Removal of Week / Debris and Expediting Expense but not exceeding 50% in all.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Section 1(C) & (D) — Crude Oil / Cargo.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	$8,500,000 each section any one shipment / loction.	 	 
	 

	 	 	 	 	 	Section 2 — Operators Extra Expense	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	In respect of the UK Sector of the North Sea:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	$125,000,000 Combined Single Limit any one accident or occurrence.	 	 
	 

	 	 	 	 	 	$2,500,000 Sub-limit of any one accident or occurrence in respect of Care, Custody & Control.	 	 
	 

	 	 	 	 	 	$250,000,000 any one occurrence in respect of OPOL.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	In respect of Wells scheduled in the USA.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	$20,000,000 Combined Single Limit any one accident or occurrence in respect of all wells except
Exploratory and Development Drilling Wells with dry hole cost in excess of $8,000,000 (100%)
or Total Measured Depth of more than 17,500 feet where the Combined Single Limit is increase to	 	 
	 

	 	 	 	 	 	$30,000,000 any one accident or occurrence, as scheduled. Any additional onshore wells in excess of 17,500’
TMD (100%) or AFE in excess of $8,000,000 (100%) to be agreed prior to spud. Slip Leader and Agreement Parties.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	$2,500,000 Sub-limit of any one accident or occurrence in respect of Care, Custody and Control.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Section 3 — Liabilities	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	In respect of the UK Sector of the North Sea:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	$125,000,000 any one accident or occurrence combined single limit over sub-section A (onshore) and sub-section B (offshore).	 	 
	 

	 	 	 	 	 	Section 4 — War and Terrorism	 	 
	 

	 	 	 	 	 	Values and limits as Sections 1,2,3 and 5	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Section 5 — Loss of Production Income	 	 
	 

	 	 	 	 	 	$25,661,325 per occurrence as per worksheet attached to policy as scheduled in respect of the Insured’s interest in Goldeneye fields including coverage in respect of dependency premises.


Standard Period: 180 Days.	 	 
	 

	 	 	 	 	 	Maximum Recovery Period: 730 days.	 	 
	 

	 	 	 	 	 	Deductibles (100%):	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Section 1 (A) & (B) & (C)-Onshore & Offshore Property (Platform and Pipelines & Oil in Store)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	$1,500,000 any one accident or occurrence except on Increased Value / Total Loss Only which shall be nil.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	$100,000 any one accident or occurrence in respect of Data Reacquisition, Reconstruction or Reconstitution Costs.	 	 
	 

	 	 	 	 	 	Section 1 (D) — Cargo (Excluding oil in Store)	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	$100,000 any one accident or occurrence any location / shipment but 0.5% of values any one accident or occurrence in respect of shortage.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Section 2 — Operator’s Extra Expense — (Excess)	 	 
	 

	 	 	 	 	 	Offshore:	 	 







120











 

\



 Coverage Summary




	 	 	 	 	 	 	 	 	 
	Policy Period	 	Policy No.	 	Coverage	 	Limits/Amounts	 	Carrier
	11/01/10-11

	 	BM1002642
	 	Energy Package(Cont’d)
	 	$1,500,000 Combined Single Excess any one accident or occurrence.	 	 
	 

	 	 	 	 	 	$1,500,000 any one accident or occurrence in respect of Care, Custody and Control.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Subject to Offshore Pollution Liability
Association (OPOL) stepdown as is necessary for OPOL excess / deductible not to
exceed $1,500,000 (or currency equivalent ) any one accident or occurrence.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Onshore:	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	$250,000 Combined Single Excess any one accident or occurrence.	 	 
	 

	 	 	 	 	 	$100,000 any one accident or occurrence in respect of Care, Custody and Control.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Section 3 — Liabilities — (Excess) 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	$150,000 any one accident or occurrence offshore and onshore except:


Sub-section B (offshore) only, where an excess in respect 

of Charters Liability of $50,000 any one accident or occurrence 

event shall apply, except that cargo claims shall be subject to a 

single
of $12,500 each single voyage.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Underlying amounts nil, but subject to minimum underlyings of $5,000,000(or to be agred Slip Leader) in respect of statutory Employers Liability/ Automobile Liability/ non-owned Aviation Liability.	 	 
	 

	 	 	 	 	 	Section 4 — War and Terrorism 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	As applicable to Section 1,2,3 and 5, all offshore only.	 	 
	 

	 	 	 	 	 	 Section 5 — Loss of Production Income- (Excess) 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	45 days waiting period any one occurrence.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	In the event of an accident or occurrence invoking more than one Section (excluding Sections 3 & 5), then only the single highest deductible to apply.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Nil deductible to apply in respect of Constructive / Actual Total Losses, General Average/Salvage Charges and War ,except for Section 3 & 5 where above deductibles to apply.	 	 







121











 





NAMED INSUREDS




	 	 	 
	Named Insureds	 	Description of Operations
	Endeavour International Corporation

	 	Public Holding Company
	 
	 	 
	Endeavour Operating Corporation

	 	Holding Company
	 
	 	 
	Endeavour Energy UK Limited

	 	Acquiring, exploring for and
developing of natural gas and oil
properties
	 
	 	 
	Endeavour Energy New Ventures Inc.


Endeavour Energy New Ventures I, Ltd


Endeavour Energy North Sea L.P.


Endeavour Energy North Sea LLC

	 	New Ventures Holding Company


Inactive New Ventures Company


Investment Holding Partnership


General Partner of the LP
	 
	 	 
	END Management Company

	 	Payroll management company
	 
	 	 
	Endeavour International Holding B.V.

	 	Holding Company
	 
	 	 
	Endeavour Energy Netherlands B.V.

	 	Acquiring, exploring for and
developing of natural gas and oil
properties
	 
	 	 
	Endeavour North Sea Limited

	 	Acquiring, exploring for and
developing of natural gas and oil
properties
	 
	 	 
	Endeavour Energy Luxembourg S.a.r.l.

	 	Financing Company





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









122









 








SCHEDULE 9




FORM OF COMPLIANCE CERTIFICATE



To: Commonwealth Bank of Australia (the “Bank”)



Date:



Dear Sirs,





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






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




123









 






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




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






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





124









 





	 	 	 

	Signed
                                                    

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

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






Schedule 1




OIL AND GAS PROPERTIES



	 	 	 	 	 	 	 	 	 
	Owner	 	Property Description	 	Value





Schedule 2




REAL PROPERTY



	 	 	 	 	 	 	 	 	 
	Owner	 	Property Description	 	Value





125









 






SCHEDULE 10




INVESTMENTS



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








126









 








SCHEDULE 11




EXISTING SECURITY



	 	 	 	 	 	 	 	 	 	 	 
	Secured	 	 	 	 	 	 	 	Location of	 	 
	Party	 	Debtor	 	File Number	 	File Date	 	Filing	 	Collateral
	Dell Financial
Services L.L.C.

	 	Endeavour

International

Corporation
	 	2010013574-3
	 	05/28/2010
	 	Secretary of State
of Nevada
	 	Computer Equipment
	 
	 	 	 	 	 	 	 	 	 	 
	Independent 

Television News 

Limited

	 	Endeavour Energy UK

Limited
	 	525752/13
	 	06/20/2005
	 	Companies House UK
	 	Funds in Secured
Party’s deposit
account
specifically
designated to
secure rent owing
to landlord
pursuant to London
office lease











127









 








SCHEDULE 12




FORM OF ACCESSION LETTER




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




Dated:



Dear Sirs




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





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






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






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




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




	 	 	 

	[Company]

	 	[Subsidiary]






128









 






SCHEDULE 13




FORM OF AMENDED AND RESTATED TERMS


For the purposes of the amended and restated terms contained in this Schedule 13, the following
terms shall be defined as follows:



“Company Indebtedness” means, at any time, the sum of (without duplication):





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




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





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






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




less:





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




“Intercompany Loan” means a loan made by one member of the Group to another member of the Group.



“PV-10 UK PDP” means, as of any date of determination, the present value of future cash flows from
PDP on the Company’s and any Additional Post-Cyan Obligor’s Oil and Gas Properties in the North Sea
as set forth in the most recent Reserve Report delivered pursuant to Clause 21.1.4 (Reserve
Report), utilising the Three-Year Strip Price for crude oil (North Sea Brent) and natural gas (UK
National Balancing Point), in each case quoted on the International Petroleum Exchange (or its
successor), as of the date as of which the information set forth in such Reserve Report is provided
(as adjusted for basis differentials) and utilising a 10% discount rate. For the purposes of
calculating PV-10 UK PDP, any future cash flow calculations set forth in any Reserve Report and
made in any currency other than Dollars shall be converted into Dollars based on the Exchange Rate
on the date as of which the information set forth in such Reserve Report is provided.



“PV-10 UK PDP Coverage Ratio” means, on the date of any determination, the ratio of:








129









 









	(A)	 	PV-10 UK PDP on such date




to:





	(B)	 	Company Net Secured Indebtedness on such date.




“PV-10 UK Proved” means, as of any date of determination, the present value of future cash flows
from Proved Reserves on the Company’s and any Additional Post-Cyan Obligor’s Oil and Gas Properties
in the North Sea as set forth in the most recent Reserve Report delivered pursuant to Clause
21.1.4 (Reserve Report), utilising the Three-Year Strip Price for crude oil (North Sea Brent) and
natural gas (UK National Balancing Point), in each case quoted on the International Petroleum
Exchange (or its successor), as of the date as of which the information set forth in such Reserve
Report is provided (as adjusted for basis differentials) and utilising a 10% discount rate. For
the purposes of calculating PV-10 UK Proved, any future cash flow calculations set forth in any
Reserve Report and made in any currency other than Dollars shall be converted into Dollars based on
the Exchange Rate on the date as of which the information set forth in such Reserve Report is
provided.



“PV-10 UK Proved Coverage Ratio” means, on the date of any determination, the ratio of:





	(A)	 	PV-10 UK Proved on such date




to:





	(B)	 	Company Net Secured Indebtedness on such date.




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





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






	 	20.1.1	 	is a Business duly incorporated or formed, as applicable, and validly existing under
the laws of its jurisdiction of incorporation or formation, as applicable;
	 
	 	20.1.2	 	has the power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage; and
	 
	 	20.1.3	 	is duly qualified and is authorised to do business in each jurisdiction where the
ownership, leasing or operation of its property or the conduct of its business
requires such qualifications except for failures to be so qualified or authorised
which, either individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect, and
	 
	 	20.1.4	 	no certifications by any Governmental Authority are required for operation of its
business that are not in place, except for such certifications or agreements, the




130









 






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






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






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






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






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






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




131









 






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






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






	20.6	 	Governing law and enforcement






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






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






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




132









 






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






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






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






	 	(A)	 	the consolidated balance sheet of the Parent as at the
end of such quarterly accounting period and the related consolidated
statements of income and retained earnings and consolidated statement of
cash flows for such quarterly accounting period and for the elapsed portion
of the fiscal year ended with the last day of such quarterly accounting
period, in each case setting forth comparative figures for all such
financial information for the corresponding quarterly accounting period in
the prior fiscal year; and
	 
	 	(B)	 	management’s discussion and analysis of the important
operational and financial developments during such quarterly accounting
period,






	 	 	 	certified by an Authorised Officer of the Parent that they fairly present in all
material respects in accordance with GAAP the consolidated financial condition of
the Parent as of the dates indicated and the consolidated results of operations
for the periods indicated, subject to normal year-end audit adjustments and the
absence of footnotes;
	 
	 	21.1.3	 	Annual Financial Statements
	 
	 	 	 	within:






	 	(A)	 	90 days after the close of each fiscal year of the
Parent, the consolidated balance sheet of the Parent as at the end of such
fiscal year and the related consolidated statements of income and retained
earnings and consolidated statements of cash flows for such fiscal year,
setting forth comparative figures for the preceding fiscal year, and
certified by KPMG LLP or another independent certified public accountants of
recognised national standing reasonably acceptable to the Bank, accompanied
by an opinion of such accounting firm (which opinion shall be without a
“going concern” or like qualification or exception and without any
qualification or exception as to scope of audit); and
	 
	 	(B)	 	274 days after the close of each fiscal year of each of
the Company and any Additional Post-Cyan Obligor, the audited consolidated
balance sheet of the Company and each Additional Post-Cyan Obligor as at the
end of such fiscal year,





133









 






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






	 	(A)	 	a Reserve Report (which shall be:






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






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






	 	 	 	all in accordance with the guidelines published by the SEC (but
utilizing the pricing parameters set forth in the definition of
the term PV-10 Value (and, in the case of an annual Reserve
Report, in addition to such pricing parameters those specified in
such SEC guidelines) and utilising such operating cost and other
assumptions as proposed by the Company); and






	 	(B)	 	a certificate of an Authorised Officer showing any additions to
or deletions from the Oil and Gas Properties made by each member of the Group
and in Proved Reserves and Probable Reserves attributable to such Oil and Gas
Properties since the date of the most recently delivered previous Reserve
Report;






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




134









 







	 	 	 	year to the Final Discharge Date, in each case setting forth, with appropriate
discussion, the principal assumptions upon which such projections are based (the
“Projections”);
	 
	 	21.1.6	 	Compliance Certificate
	 
	 	 	 	at the time of the delivery of the financial statements provided for in Clauses
21.1.2 (Quarterly Financial Statements) and 21.1.3 (Annual Financial
Statements), compliance certificates from the chief financial officer of,
respectively, the Company (and any Additional Post-Cyan Obligor) and the Parent in
the form of Schedule 9 (Form of Compliance Certificate) (a “Compliance
Certificate”) certifying on behalf of the Company, any Additional Post-Cyan
Obligor or (as applicable) the Parent that, to such officer’s knowledge after due
inquiry, no Default or Event of Default has occurred and is continuing or, if any
Default or Event of Default has occurred and is continuing, specifying the nature
and extent thereof, and, prior to the Cash Collateral Discharge Date, each
Compliance Certificate shall also:






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






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






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






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






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






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






	 	(A)	 	publicly file with the SEC; or




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






	 	21.1.9	 	Environmental Matters
	 
	 	 	 	promptly after any officer of any member of the Group obtains knowledge thereof,
notice of one or more of the following environmental matters, but only to the
extent that such environmental matters, either individually or when aggregated
with all other such environmental matters, could reasonably be expected to have a
Material Adverse Effect:






	 	(A)	 	any pending or threatened Environmental Claim, proceeding,
investigation or notice of breach issued under or pursuant to any Environmental
Law against any member of the Group or any Real Property, facility or Oil and
Gas Property owned, leased or operated by any member of the Group;
	 
	 	(B)	 	any condition or occurrence on or arising from any Real Property,
facility or Oil and Gas Property owned, leased or operated by any member of the
Group that could reasonably be expected to form the basis of an Environmental
Claim, proceeding, investigation, action or notice of breach against any member
of the Group or any such Real Property or facility under any Environmental Law;
	 
	 	(C)	 	issuance under any Environmental Law of any liens or restrictions
on the ownership, lease, occupancy, use or transferability by any member of the
Group of any Real Property, facility or Oil and Gas Property owned, operated or
leased by any member of the Group; and
	 
	 	(D)	 	the taking of any removal or remedial action as required by any
Environmental Law or any Governmental Authority in response to the actual or
alleged presence, Release or threatened Release of any Hazardous Material on any
Real Property, facility or Oil and Gas Property owned, leased, used or operated
by any member of the Group.






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






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






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




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






	 	21.2.1	 	The Parent will, and will cause each other member of the Group to, keep proper books
of record and accounts in which full, true and correct entries in conformity with GAAP
and all requirements of law shall be made of all dealings and transactions in relation
to its business and activities. The Parent will, and will cause each other member of
the Group to, permit officers and designated representatives of the Bank:






	 	(A)	 	to visit and inspect, under guidance of officers of such member
of the Group, any of the properties of such member of the Group; and
	 
	 	(B)	 	to examine the books of account of such member of the Group and
discuss the affairs, finances and accounts of such member of the Group with, and
be advised as to the same by, its and their officers and independent
accountants, all upon reasonable prior notice and at such reasonable times and
intervals and to such reasonable extent as the Bank may reasonably request.






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






	21.3	 	“Know your customer” checks






	 	21.3.1	 	If:






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






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




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






	21.4	 	Maintenance of Property; Insurance






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






	 	(A)	 	keep all property necessary to the business of the Group in good
working order and condition, ordinary wear and tear excepted and subject to the
occurrence of casualty events:
	 
	 	(B)	 	maintain with financially sound and reputable insurance companies
insurance on all such property and against all such risks as is consistent and
in accordance with industry practice for companies similarly situated owning
similar properties and engaged in similar businesses as the Group; and
	 
	 	(C)	 	furnish to the Bank, upon its request therefor, full information
as to the insurance carried. Such insurance shall include physical damage
insurance on all real and personal property, including, without limitation, on
Oil and Gas Properties (whether now owned or hereafter acquired) on an all risk
basis.






	 	 	 	The provisions of this Clause 21.4 shall be deemed supplemental to, but not
duplicative of, the provisions of any Security Documents that require the
maintenance of insurance.
	 
	 	21.4.2	 	The Company (and any Additional Post-Cyan Obligor) will at all times keep its
property insured in favour of the Bank (in its capacity as Collateral Agent), and all
policies or certificates (or certified copies thereof) with respect to such insurance:






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




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






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






	21.5	 	Existence; Franchises; Oil and Gas Properties






	 	21.5.1	 	Prior to the Cash Collateral Discharge Date, the Company (and any Additional
Post-Cyan Obligor) will do or cause to be done, all things necessary to preserve and
keep in full force and effect its existence and its material rights, franchises,
licences, permits, copyrights, trademarks and patents and pay all royalties when due;
provided, however, that nothing in this Clause 21.5 shall prevent:






	 	(A)	 	sales of assets and other transactions by the Company (or any
Additional Post-Cyan Obligor) in accordance with Clause 21.18 (Consolidation,
Merger, Purchase or Sale of Assets, etc.); or
	 
	 	(B)	 	the withdrawal by any Post-Cyan Obligor of its qualification as a
Business in any jurisdiction other than the United States or any State thereof
or the United Kingdom if such withdrawal could not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.






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






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






	21.6	 	Compliance with Statutes, etc.






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




139









 






	 	 	 	applicable restrictions imposed by, all Governmental Authorities in respect of the
conduct of its business and the ownership of its property (including applicable
statutes, regulations, orders and restrictions relating to environmental standards
and controls other than such statutes, regulations, orders and restrictions that
are expressly addressed in Clause 21.7 (Compliance with Environmental Law)),
except such non-compliances as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
	 
	 	21.6.2	 	Each Post-Cyan Obligor will, and the Parent will cause the Company Shareholder to,
maintain and comply with the terms and conditions of any material Authorisation
required under any law or regulation (including Environmental Law):






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






	 	 	 	except, in the case of preceding paragraph (B) only, such failure to maintain or
non-compliance as could not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.






	21.7	 	Compliance with Environmental Laws






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






	 	(A)	 	comply, with all Environmental Law and permits applicable to, or
required by, the ownership, lease or operation of Real Property, facilities and
Oil and Gas Property now or hereafter owned, leased or operated by any Post-Cyan
Obligor, except such non-compliances as could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;
	 
	 	(B)	 	promptly pay or cause to be paid all costs and expenses for which
any member of the Group is legally obligated that are incurred in connection
with such compliance;
	 
	 	(C)	 	keep or cause to be kept all such Real Property, facilities and
Oil and Gas Properties free and clear of any Security imposed pursuant to such
Environmental Law;
	 
	 	(D)	 	to generate, use, treat, store, Release and dispose of, and cause
the generation, use, treatment, storage, Release and disposal of Hazardous
Materials on any Real Property, facilities or Oil and Gas Properties now or
hereafter owned, leased or operated by any member of the Group, and transport or
cause the transportation of Hazardous Materials to or from any such Real
Property, facilities or Oil and Gas Properties in compliance with all applicable
Environmental Laws, except for such Hazardous Materials generated, used,
treated, stored, Released and disposed of at any such Real Properties,
facilities or Oil and Gas Properties in connection with or arising out of the
business or operations of any member of the Group as would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.





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	 	21.7.2	 	Upon:






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






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






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






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






	 	 	provided that nothing in this Clause 21.8 shall prohibit any Subsidiary of the Parent from
maintaining a tax year that does not end on December 31.
	 
	21.9	 	Performance of Obligations
	 
	 	 	The Parent will, and will cause each other member of the Group to, perform all of its
obligations under the terms of each mortgage, indenture, security agreement, loan agreement
or credit agreement and each other agreement, contract or instrument by which it is bound,
except such non-performances as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
	 
	21.10	 	Payment of Taxes
	 
	 	 	The Parent will pay and discharge, and will cause each other member of the Group to pay and
discharge, all Taxes, assessments and governmental charges or levies imposed upon it




141









 






	 	 	or upon its income or profits or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, would become a
Security or charge upon any properties of any member of the Group not otherwise permitted
under Clause 21.17.3(C) (Negative Pledge); provided that no member of the Group shall be
required to pay any such Tax, assessment, charge, levy or claim which is being contested in
good faith and by proper proceedings if it has maintained adequate reserves with respect
thereto in accordance with GAAP.
	 
	21.11	 	Further assurances






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






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






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






	 	21.11.2	 	Each Post-Cyan Obligor will, at the expense of the Post-Cyan Obligors, make,
execute, endorse, acknowledge, file and/or deliver to the Bank from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real property
surveys, reports, landlord lien waivers, collateral access agreements,




142









 






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






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






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






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




143









 






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






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




144









 






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






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






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






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






	 	21.16.1	 	exercise such votes and other rights as it may have under the Project Documents to
which it is a party with a view to ensuring (so far as able) that each Oil and Gas
Property in which the Company or the applicable Additional Post-Cyan Obligor has an
interest is at all times exploited and operated in a reasonable and prudent manner and
in accordance with good industry practice, all applicable laws and regulations and the
provisions of the Project Documents;
	 
	 	21.16.2	 	not concur in, and shall vote against, any proposal or decision to abandon all or
any material part of any of Oil and Gas Properties in which the Company or the




145









 






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






	21.17	 	Negative Pledge






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






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






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






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




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






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






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






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






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






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






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




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






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






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




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






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






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




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






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






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






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






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






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




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






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






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






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






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





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






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






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






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





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






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






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




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






	21.20	 	Indebtedness






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






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






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






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




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






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






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






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






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






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




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






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






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






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






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




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





157









 






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






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






	21.23	 	Minimum Asset Coverage Ratios






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






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






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




158









 












	21.25	 	Business






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






	 	(A)	 	have any material liabilities other than:






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






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






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






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






	21.26	 	Limitation on Creation of Subsidiaries






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






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




159









 












	21.27	 	Limitation on Commodity Hedging






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






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






	 	22.1.1	 	Any Post-Cyan Obligor:






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






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






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






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




160









 







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






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






	22.4	 	Default Under Other Agreements






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






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






	 	22.4.2	 	Prior to the Cash Collateral Discharge Date, any Indebtedness (other than the
Obligations) of any Post-Cyan Obligor is declared to be (or becomes) due and payable,
or required to be prepaid other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof; provided that, it shall not be a Default or an
Event of Default under this 22.4 unless the aggregate principal amount of all
Indebtedness as described in preceding Clauses 22.4.1(A) 22.4.1(A)and 22.4.1(B) is
at least $10,000,000.






	22.5	 	Insolvency





22.5.1


	 	(A)	 	Any Post-Cyan Obligor or Relevant Holding Company commences a
voluntary case concerning itself under Title 11 of the United States Code
entitled “Bankruptcy,” as now or hereafter in effect, or any successor thereto
(the “Bankruptcy Code”); or
	 
	 	(B)	 	an involuntary case is commenced against a Post-Cyan Obligor or a
Relevant Holding Company, and the petition is not controverted within 10 days,
or is not dismissed within 60 days after the filing thereof; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of any Post-Cyan Obligor or any Relevant




161









 






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






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






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






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






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






	 	22.5.4	 	Clause 22.5.3 does not apply to:






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






	22.6	 	Security Documents






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




162









 






	 	 	 	immaterial portion thereof), in favour of the Bank or (as applicable) the
Collateral Agent, subject to no other Security (except Permitted Security).
	 
	 	22.6.2	 	Any Post-Cyan Obligor or the Company Shareholder defaults in the due performance or
observance of any term, covenant or agreement on its part to be performed or observed
pursuant to any such Security Document and such default shall continue beyond the
period of grace, if any, specifically applicable thereto pursuant to the terms of such
Security Document.
	 
	 	22.6.3	 	Upon and following the Cash Collateral Discharge Date (but subject at all times to
Clause 7.4) this Clause 22.6 shall apply only to the Cash Collateral Agreement.






	22.7	 	Creditors’ process
	 
	 	 	Any expropriation, attachment, sequestration, distress or execution affects any asset or
assets of any Post-Cyan Obligor or the Company Shareholder.
	 
	22.8	 	Repudiation
	 
	 	 	A Post-Cyan Obligor or the Company Shareholder rescinds or repudiates a Finance Document or
evidences an intention to rescind or repudiate a Finance Document.
	 
	22.9	 	Judgments
	 
	 	 	One or more judgments or decrees is entered against the Parent or any Subsidiary of the
Parent involving in the aggregate for the Parent and its Subsidiaries a liability (to the
extent not paid or not covered by a reputable and solvent insurance company pursuant to
which the insurer has accepted liability therefor in writing) and such judgments and
decrees either shall be final and non-appealable or shall not be vacated, discharged or
stayed or bonded pending appeal for any period of 30 consecutive days, and the aggregate
amount of all such judgments equals or exceeds $7,500,000.
	 
	22.10	 	Nationalisation
	 
	 	 	Prior to the Cash Collateral Discharge Date, all or any part of the interest of the Company
or any Additional Post-Cyan Obligor in any Oil and Gas Property (or any Hydrocarbons or
revenues or other monies arising in respect of it) is:






	 	22.10.1	 	nationalised, expropriated, compulsorily acquired or seized by any Governmental
Authority; or
	 
	 	22.10.2	 	any such Governmental Authority takes, or officially announces it will take, any
step with a view to any of the foregoing and in either case such action is reasonably
likely to result in a Material Adverse Effect.






	22.11	 	Project Documents







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





163









 






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






	22.12	 	Change of Control
	 
	 	 	A Change of Control occurs.

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






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





164









 







SIGNATURE PAGES



The Company 




	 	 	 	 	 	 	 

	SIGNED BY

	 	 	)	 	 	 
	on behalf of

	 	 	)	 	 	 
	ENDEAVOUR ENERGY

	 	 	)	 	 	CATHERINE STUBBS
	UK LIMITED

	 	 	)	 	 	 
	 

	 	 	 	 	 	Name: Catherine Stubbs
	 

	 	 	 	 	 	Title: Authorised Signatory
	 
	 	 	 	 	 	 
	The
Original Guarantors
	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	on behalf of

	 	 	)	 	 	 
	ENDEAVOUR INTERNATIONAL

	 	 	)	 	 	CATHERINE STUBBS
	CORPORATION

	 	 	)	 	 	

	 

	 	 	 	 	 	Name: Catherine Stubbs
	 
	 	 	 	 	 	Title: Authorised Signatory
	SIGNED BY

	 	 	)	 	 	
	on behalf of

	 	 	)	 	 	 
	ENDEAVOUR ENERGY NORTH

	 	 	)	 	 	CATHERINE STUBBS
	SEA LLC

	 	 	)	 	 	 
	 

	 	 	 	 	 	Name: Catherine Stubbs
	 

	 	 	 	 	 	Title: Authorised Signatory and Director
	 
	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	on behalf of

	 	 	)	 	 	 
	ENDEAVOUR ENERGY NORTH

	 	 	)	 	 	CATHERINE STUBBS
	SEA L.P.

	 	 	)	 	 	
	 

	 	 	 	 	 	Name: Catherine Stubbs
	 
	 	 	 	 	 	Title: Authorised Signatory and Director
	SIGNED BY

	 	 	)	 	 	

	on behalf of

	 	 	)	 	 	 
	ENDEAVOUR OPERATING

	 	 	)	 	 	CATHERINE STUBBS
	CORPORATION

	 	 	)	 	 	 
	 

	 	 	 	 	 	Name: Catherine Stubbs
	 

	 	 	 	 	 	Title: Authorised Signatory
	 
	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	as attorney for

	 	 	)	 	 	 
	ENDEAVOUR INTERNATIONAL

	 	 	)	 	 	CATHERINE STUBBS
	HOLDING B.V.

	 	 	)	 	 	 
	under a power of attorney

	 	 	)	 	 	Name: Catherine Stubbs
	dated 22 June 2011

	 	 	)	 	 	Title:Attorney for Endeavour International Holding B.V.
















 






	 	 	 	 	 	 	 

	SIGNED BY

	 	 	)	 	 	 
	as attorney for

	 	 	)	 	 	 
	ENDEAVOUR ENERGY

	 	 	)	 	 	CATHERINE STUBBS
	NETHERLANDS B.V.

	 	 	)	 	 	 
	under a power of attorney

	 	 	)	 	 	Name: Catherine Stubbs
	dated 22 June 2011

	 	 	)	 	 	Title:Attorney for Endeavour Energy Netherlands B.V.
	 
	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	on behalf of

	 	 	)	 	 	 
	ENDEAVOUR ENERGY NEW

	 	 	)	 	 	CATHERINE STUBBS
	VENTURES INC.

	 	 	)	 	 	 
	 

	 	 	 	 	 	Name: Catherine Stubbs
	 

	 	 	 	 	 	Title: Authorised Signatory
	 
	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	on behalf of

	 	 	)	 	 	CATHERINE STUBBS
	END MANAGEMENT COMPANY

	 	 	)	 	 	 
	 

	 	 	 	 	 	Name: Catherine Stubbs
	 

	 	 	 	 	 	Title: Authorised Signatory
	 
	 	 	 	 	 	 
	The
Bank
	 	 	 	 	 	 
	SIGNED BY

	 	 	)	 	 	 
	on behalf of

	 	 	)	 	 	 
	COMMONWEALTH BANK OF

	 	 	)	 	 	JONATHAN VERLANDER
	AUSTRALIA

	 	 	)	 	 	

	 

	 	 	 	 	 	Name: Jonathan Verlander
	 

	 	 	 	 	 	Title: Head of Oil & Gas, Europe