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Registration Rights Agreement - ENDEAVOUR INTERNATIONAL CORP - 3-30-2004

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Registration Rights Agreement - ENDEAVOUR INTERNATIONAL CORP - 3-30-2004 Powered By Docstoc
					EXHIBIT 10.26 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "AGREEMENT") is made and entered into as of February 26, 2004 (the "EFFECTIVE DATE") among Continental Southern Resources, Inc., a Nevada corporation (the "COMPANY"), the parties set forth Exhibit A hereto (each, a "PURCHASER" and collectively, the "PURCHASERS"), and the parties set forth on the signature page. R E C I T A L S: A. The Purchasers have purchased shares of the Company's Common Stock (as defined below) pursuant to Subscription Agreements (each, a "SUBSCRIPTION AGREEMENT" and collectively, the "SUBSCRIPTION AGREEMENTS") by and between the Company and each Purchaser. B. The Company has issued a warrant (the "WARRANT") to purchase shares of the Company's Common Stock to Sanders Morris Harris Inc., a Texas corporation ("SMH"). C. Lancer Offshore, Inc., an international business company organized under the laws of the British Virgin Islands, and Lancer Partners, LP, a Connecticut limited partnership (together, "LANCER"), own shares of the Company's Common Stock. D. The Company, the Purchasers, SMH, and Lancer desire to set forth the registration rights to be granted by the Company to the Purchasers, SMH, and Lancer. NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants, and conditions set forth herein, in the Subscription Agreements, or otherwise, the parties mutually agree as follows: A G R E E M E N T: 1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: "Blackout Period" means, with respect to a registration, a period in each case commencing on the day immediately after the Company notifies the Purchasers, SMH, and Lancer that they are required, pursuant to Section 4(f), to suspend offers and sales of Registrable Securities during which the Company, in the good faith judgment of its Board of Directors, determines (because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or the unavailability for reasons beyond the Company's control of any required financial statements, disclosure of information which is in its best interest not to publicly disclose, or any other event or condition of similar significance to the Company) that the registration and distribution of the Registrable Securities to be covered by such registration statement, if any, would be seriously detrimental to the Company and its shareholders and ending on the earlier of (1) the date upon which the material non-public information commencing the Blackout Period is disclosed to the public or ceases to be material and (2) such time as the Company notifies the selling Holders that the Company will no longer

delay such filing of the Registration Statement, recommence taking steps to make such Registration Statement effective, or allow sales pursuant to such Registration Statement to resume; provided, however, that (a) the Company shall limit its use of Blackout Periods, in the aggregate, to 60 Trading Days in any 12-month period and (b) no Blackout Period may commence sooner than 60 days after the end of a prior Blackout Period. "Business Day" means any day of the year, other than a Saturday, Sunday, or other day on which the Commission is required or authorized to close. "Closing Date" means February 26, 2004, or such other time as is mutually agreed between the Company and the Purchasers for the closing of the sale referred to in Recital A above. "Commission" means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Common Stock" means the common stock, par value $.001 per share, of the Company and any and all shares of capital stock or other equity securities of: (i) the Company which are added to or exchanged or substituted for the Common Stock by reason of the declaration of any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of the Company; and (ii) any other corporation, now or hereafter organized under the laws of any state or other governmental authority, with which the Company is merged, which results from any consolidation or reorganization to which the Company is a party, or to which is sold all or substantially all of the shares or assets of the Company, if immediately after such merger, consolidation, reorganization or sale, the Company or the stockholders of the Company own equity securities having in the aggregate more than 50% of the total voting power of such other corporation. "Equity Securities" means (i) any Common Stock, (ii) any security convertible, with or without consideration, into any Common Stock (including any option to purchase such a convertible security), (iii) any security carrying any warrant or right to subscribe to or purchase any Common Stock, or (iv) any such warrant or right. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Family Member" means (a) with respect to any individual, such individual's spouse, any descendants (whether natural or adopted), any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals together with any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any such individual, and any corporation, association, partnership or limited liability company all of the equity interests of which are owned by those above described individuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial interests of such trust. 2

"Form S-1" means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the Commission, which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the Commission. "Form S-3" means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the Commission, which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the Commission. "Holder" means each Purchaser, SMH, Lancer, or any successor or Permitted Assignee of a Purchaser, SMH, or Lancer who acquire rights in accordance with this Agreement with respect to the Registrable Securities directly or indirectly from a Purchaser, SMH, or Lancer, including from any Permitted Assignee. "Inspector" means any attorney, accountant, or other agent retained by a Purchaser for the purposes provided in Section 4(j). "Offering Price" means the Offering Price set forth in the Placement Agent Agreement dated January 23, 2004, between the Company and SMH. "Permitted Assignee" means (a) with respect to a partnership, its partners or former partners in accordance with their partnership interests, (b) with respect to a corporation, its shareholders in accordance with their interest in the corporation, (c) with respect to a limited liability company, its members or former members in accordance with their interest in the limited liability company, (d) with respect to an individual party, any Family Member of such party, (e) an entity that is controlled by, controls, or is under common control with a transferor, or (f) a party to this Agreement. The terms "register," "registered," and "registration" refers to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Registrable Securities" means (i) shares of Common Stock issued to each Purchaser pursuant to the Subscription Agreements (ii) shares of Common Stock issued or issuable to SMH pursuant to the Warrant, and (ii) 2,000,000 shares of Common Stock owned by Lancer, but in each case excluding (A) any Registrable Securities that have been publicly sold or may be publicly sold immediately without registration under the Securities Act either pursuant to Rule 144 of the Securities Act or otherwise; (B) any Registrable Securities sold by a person in a transaction pursuant to a registration statement filed under the Securities Act or (C) any Registrable Securities that are at the time subject to an effective registration statement under the Securities Act. "Registration Statement" means the registration statement required to be filed by the Company pursuant to Section 3(a). 3

"Securities Act" means the Securities Act of 1933, as amended, or any similar federal statute promulgated in replacement thereof, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "SEC Effective Date" means the date the Registration Statement is declared effective by the Commission. "Trading Day" means a day on whichever (a) the national securities exchange, (b) the Nasdaq Stock Market, or (c) such other securities market, in any such case which at the time constitutes the principal securities market for the Common Stock, is open for general trading of securities. 2. Term. This Agreement shall continue in full force and effect for a period of two (2) years from the Effective Date, unless terminated sooner hereunder. 3. Registration. (a) Registration on Form S-1 or S-3. As promptly as reasonably practicable after the date hereof, but in any event not later than 180 days after the Closing Date (the "REGISTRATION FILING DATE"), the Company shall file with the Commission a shelf registration statement on Form S-1 or, if the Company is eligible to use such form, Form S-3 relating to the resale by the Holders of all of the Registrable Securities; provided, however, that the Company shall not be obligated to effect any such registration, qualification, or compliance pursuant to this Section 3(a), or keep such registration effective pursuant to Section 4: (i) in any particular jurisdiction in which the Company would be required to qualify to do business as a foreign corporation or as a dealer in securities under the securities or blue sky laws of such jurisdiction or to execute a general consent to service of process in effecting such registration, qualification or compliance, in each case where it has not already done so; or (ii) during any Blackout Period, in which case the Registration Filing Date shall be extended to the date immediately following the last day of such Blackout Period. (b) Piggyback Registration. If prior to the date that the Company files a registration pursuant to Section 3(a), the Company shall determine to register for sale for cash any of its Common Stock, for its own account or for the account of others (other than the Holders), other than (i) a registration relating solely to employee benefit plans or securities issued or issuable to employees, consultants (to the extent the securities owned or to be owned by such consultants could be registered on Form S-8) or any of their Family Members (including a registration on Form S-8), (ii) a registration relating solely to a Commission Rule 145 transaction, a registration on Form S-4 in connection with a merger, acquisition, divestiture, reorganization, or similar event, or (iii) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered, the Company shall promptly give to the Holders written notice thereof (and in no event shall such notice be given less than 20 calendar days prior to the filing of such registration statement), and shall, subject to Section 3(c), include in such registration (and any related qualification under blue sky laws or other compliance) (a "PIGGYBACK REGISTRATION"), all of the Registrable Securities specified in a written request or requests, made within 10 calendar days after receipt of such written notice 4

from the Company, by any Holder or Holders. However, the Company may, without the consent of the Holders, withdraw such registration statement prior to its becoming effective if the Company or such other shareholders have elected to abandon the proposal to register the securities proposed to be registered thereby. (c) Underwriting. If a Piggyback Registration is for a registered public offering involving an underwriting, the Company shall so advise the Holders in writing or as a part of the written notice given pursuant to Section 3(b). In such event the right of any Holder to registration pursuant to Section 3(b) shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and any other shareholders of the Company distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company or selling shareholders, as applicable. Notwithstanding any other provision of this Section 3(c), if the underwriter or the Company determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may exclude some or all Registrable Securities from such registration and underwriting. The Company shall so advise all Holders (except those Holders who failed to timely elect to distribute their Registrable Securities through such underwriting or have indicated to the Company their decision not to do so), and the number of shares of Registrable Securities that may be included in the registration and underwriting, if any, shall be allocated among such Holders as follows: (i) In the event of a Piggyback Registration that is initiated by the Company, the number of shares that may be included in the registration and underwriting shall be allocated first to the Company and then, subject to obligations and commitments existing as of the date hereof, to all selling shareholders, including the Holders, who have requested to sell in the registration on a pro rata basis according to the number of shares requested to be included; and (ii) In the event of a Piggyback Registration that is initiated by the exercise of demand registration rights by a shareholder or shareholders of the Company (other than the Holders), then the number of shares that may be included in the registration and underwriting shall be allocated first to such selling shareholders who exercised such demand and then, subject to obligations and commitments existing as of the date hereof, to all other selling shareholders, including the Holders, who have requested to sell in the registration, on a pro rata basis according to the number of shares requested to be included. No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter. The Registrable Securities and/or other securities so withdrawn from such underwriting shall also be withdrawn from such registration; provided, however, that, if by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such registration (up to the 5

maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities pursuant to the terms and limitations set forth herein in the same proportion used above in determining the underwriter limitation. 4. Registration Procedures. In the case of each registration, qualification, or compliance effected by the Company pursuant to Section 3 hereof, the Company will keep each Holder including securities therein reasonably advised in writing (which may include e-mail) as to the initiation of each registration, qualification, and compliance and as to the completion thereof. With respect to any registration statement filed pursuant to Section 3, the Company will use its commercially reasonable best efforts to: (a) prepare and file with the Commission with respect to such Registrable Securities, a registration statement on Form S-1, Form S-3, or any other form for which the Company then qualifies or which counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended method(s) of distribution thereof, and use its commercially reasonable efforts to cause such registration statement to become and remain effective at least for a period ending with the first to occur of (i) the sale of all Registrable Securities covered by the registration statement, (ii) the availability under Rule 144 for the Holder to immediately, freely resell without restriction all Registrable Securities covered by the registration statement, (iii) one year after a registration statement filed pursuant to Section 3(a) is declared effective by the Commission (provided, however, that if the Company files a registration Form S-1 and subsequently becomes eligible to use Form S-3, it may file a post-effective amendment to such Form S-1 on Form S-3 prior to the end of such period and use its best efforts to cause such registration statement as amended to become effective until the end of such one-year period), or (iv) 90 days after a Piggyback Registration is declared effective by the Commission (in either case, the "EFFECTIVENESS PERIOD"); provided, however, if at the end of such oneyear period, any Holder is not able to immediately, freely resell all Registrable Securities that it owns, the Effectiveness Period shall continue until terminated pursuant to clause (i) or (ii)(but in no event, more than two years after the SEC Effective Date); and provided that no later than two business days before filing with the Commission a registration statement or prospectus or any amendments or supplements thereto, the Company shall (i) furnish to (A) one special counsel ("HOLDERS COUNSEL") selected by the Company for the benefit of the Holders (which Holders Counsel initially shall be John T. Unger of Thompson & Knight LLP, Houston, Texas) and David E. Wells of Hunton & Williams, LLP, counsel to Lancer, copies of all such documents proposed to be filed (excluding any exhibits other than applicable underwriting documents), in substantially the form proposed to be filed, which documents shall be subject to the review of such Holders Counsel, and (ii) notify each Holder of Registrable Securities covered by such registration statement of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered; (b) if a registration statement is subject to review by the Commission, promptly respond to all comments and diligently pursue resolution of any comments to the satisfaction of the Commission; 6

(c) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective during the Effectiveness Period (but in any event at least until expiration of the 90-day period referred to in Section 4(3) of the Securities Act and Rule 174, or any successor thereto, thereunder, if applicable), and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended method(s) of disposition by the sellers thereof set forth in such registration statement; (d) furnish, without charge, to each Holder of Registrable Securities covered by such registration statement (i) a reasonable number of copies of such registration statement (including any exhibits thereto other than exhibits incorporated by reference), each amendment and supplement thereto as such Holder may request, (ii) such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any other prospectus filed under Rule 424 under the Securities Act) as such Holders may request, in conformity with the requirements of the Securities Act, and (iii) such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder, but only during the Effectiveness Period; (e) use its commercially reasonable best efforts to register or qualify such Registrable Securities under such other applicable securities or blue sky laws of such jurisdictions as any Holder of Registrable Securities covered by such registration statement reasonably requests as may be necessary for the marketability of the Registrable Securities (such request to be made by the time the applicable registration statement is deemed effective by the Commission) and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction; (f) as promptly as practicable after becoming aware of such event, notify each Holder of such Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event which comes to the Company's attention if as a result of such event the prospectus included in such registration statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading and the Company shall promptly prepare and furnish to such Holder a supplement or amendment to such prospectus (or prepare and file appropriate reports under the Exchange Act) so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, unless suspension of the use of such prospectus otherwise is authorized herein or in the event of a Blackout Period, in which case no supplement or amendment need be furnished (or Exchange Act filing made) until the termination of such suspension or Blackout Period; 7

(g) comply, and continue to comply during the period that such registration statement is effective under the Securities Act, in all material respects with the Securities Act and the Exchange Act and with all applicable rules and regulations of the Commission with respect to the disposition of all securities covered by such registration statement, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first full calendar month after the SEC Effective Date, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act. (h) as promptly as practicable after becoming aware of such event, notify each Holder of Registrable Securities being offered or sold pursuant to the Registration Statement of the issuance by the Commission of any stop order or other suspension of effectiveness of the Registration Statement at the earliest possible time; (i) permit the Holders of Registrable Securities being included in the Registration Statement and their legal counsel, at such Holders' sole cost and expense (except as otherwise specifically provided in Section 6) to review and have a reasonable opportunity to comment on the Registration Statement and all amendments and supplements thereto at least two Business Days prior to their filing with the Commission; (j) make available for inspection by any Holder and any Inspector retained by such Holder, at such Holder's sole expense, all Records as shall be reasonably necessary to enable such Holder to exercise its due diligence responsibility, and cause the Company's officers, directors, and employees to supply all information which such Holder or any Inspector may reasonably request for purposes of such due diligence; provided, however, that such Holder shall hold in confidence and shall not make any disclosure of any record or other information which the Company determines in good faith to be confidential, and of which determination such Holder is so notified at the time such Holder receives such information, unless (i) the disclosure of such record is necessary to avoid or correct a misstatement or omission in the Registration Statement and a reasonable time prior to such disclosure the Holder shall have informed the Company of the need to so correct such misstatement or omission and the Company shall have failed to correct such misstatement of omission, (ii) the release of such record is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction or (iii) the information in such record has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company shall not be required to disclose any confidential information in such records to any Inspector until and unless such Inspector shall have entered into a confidentiality agreement with the Company with respect thereto, substantially in the form of this Section 4(j), which agreement shall permit such Inspector to disclose records to the Holder who has retained such Inspector. Each Holder agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the records deemed confidential. The Company shall hold in confidence and shall not make any disclosure of information concerning a Holder provided to the Company pursuant to this Agreement unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) disclosure of such 8

information to the Staff of the Division of Corporation Finance is necessary to respond to comments raised by the Staff in its review of the Registration Statement, (iii) disclosure of such information is necessary to avoid or correct a misstatement or omission in the Registration Statement, (iv) release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, or (v) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning a Holder is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to such Holder and allow such Holder, at such Holder's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information; (k) use its best efforts to cause all the Registrable Securities covered by the Registration Statement to be listed or quoted on the principal securities market on which securities of the same class or series issued by the Company are then listed or traded; (l) provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities at all times; (m) cooperate with the Holders of Registrable Securities being offered pursuant to the Registration Statement to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts as the Holders may reasonably request and registered in such names as the Holders may request; and (n) take all other reasonable actions necessary to expedite and facilitate disposition by the Holders of the Registrable Securities pursuant to the Registration Statement. 5. Suspension of Offers and Sales. Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(f) hereof or of the commencement of an Blackout Period, such Holder shall discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 4(f) hereof or notice of the end of the Blackout Period, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company's expense) all copies (including, without limitation, any and all drafts), other than permanent file copies, then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the period mentioned in Section 4(a) (iii) hereof shall be extended by the greater of (i) ten business days or (ii) the number of days during the period from and including the date of the giving of such notice pursuant to Section 4(f) hereof to and including the date when each Holder of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 4(f) hereof. 9

6. Registration Expenses. The Company shall pay all expenses in connection with any registration, including, without limitation, all registration, filing, stock exchange and NASD fees, printing expenses, all fees and expenses of complying with securities or blue sky laws, the fees and disbursements of counsel for the Company and of its independent accountants, and the reasonable fees and disbursements of a Holders Counsel; provided that, in any underwritten registration, each party shall pay for its own underwriting discounts and commissions and transfer taxes. Except as provided above in this Section 6 and Section 10, the Company shall not be responsible for the expenses of any attorney or other advisor employed by a Holder of Registrable Securities. 7. Preemptive Rights. (a) Subsequent Offerings. In the event the Company issues and sells Equity Securities other than the Equity Securities excluded by Section 7(e) hereof at a price or conversion or exercise price, as the case may be, that is less than $2.00 per share of Common Stock, each Holder who qualifies as an "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities act (an "ELIGIBLE HOLDER") shall have a preemptive right to purchase such number of shares of Equity Securities necessary for such Eligible Holder to maintain its percentage ownership position in the Company. Each Eligible Holder's preemptive share is equal to the ratio of (a) the number of shares of the Company's Common Stock of which such Eligible Holder is deemed to be a holder immediately prior to the issuance of such Equity Securities to (b) the total number of shares of the Company's outstanding Common Stock (including all shares of Common Stock issued or issuable upon conversion of any security of the Company or upon the exercise of any outstanding warrants, options, or rights to subscribe to or purchase any Common Stock or other security of the Company) immediately prior to the issuance of the Equity Securities. (b) Exercise of Preemptive Rights. If the Company issues any Equity Securities, it shall give each Eligible Holder written notice of such issuance, describing the Equity Securities and the price and the terms and conditions upon which the Company issued the same and shall provide each Eligible Holder with access to any information regarding such offering and the Company, provided to the purchasers of Equity Securities. Each Eligible Holder shall have 10 Business Days from the giving of such notice to exercise its preemptive right to purchase Equity Securities for the price and upon the terms and conditions specified in the notice by giving written notice to the Company and stating therein the quantity of Equity Securities to be purchased. Notwithstanding the foregoing, the Company shall not be required to offer or sell such Equity Securities to any Holder who would cause the Company to be in violation of applicable federal securities laws by virtue of such offer or sale. (c) Issuance of Equity Securities to Other Persons. The Company shall have 90 days after expiration of the 10Business Day period set forth in Section 7(b) to sell the Equity Securities in respect of which the Holders' rights were not exercised, at a price and upon general terms and conditions materially no more favorable to the purchasers thereof than specified in the Company's notice to the Eligible Holders pursuant to Section 7(b) hereof. If the Company has not sold such Equity Securities within 90 days of the notice provided pursuant to Section 7(b), 10

the Company shall not thereafter issue or sell any Equity Securities, without first offering such securities to the Eligible Holders in the manner provided above. (d) Termination and Waiver of Preemptive Rights. The preemptive rights established by this Section 7 shall terminate upon the earlier of (i) the effective date of a registration statement pursuant to Section 3(a) or (ii) twelve months after the Closing Date. (e) Excluded Securities. The preemptive rights established by this Section 4 shall have no application to any of the following Equity Securities: (i) up to 7,200,000 shares (as may be adjusted for any stock dividend, combinations, splits, recapitalizations and the like) of Common Stock (and/or options, warrants or other Common Stock purchase rights issued pursuant to such options, warrants or other rights) issued or to be issued after the date hereof to employees, officers or directors of, or consultants or advisors to the Company or any subsidiary, pursuant to stock purchase or stock option plans or other arrangements that are approved by the board of directors of the Company; (ii) capital stock of the Company issued or issuable pursuant to any rights or agreements outstanding as of the date of this Agreement, options and warrants outstanding as of the date of this Agreement, and capital stock issued pursuant to or upon the exercise of any such rights or agreements granted after the date of this Agreement; provided that in the case of rights or agreements granted after the date of this Agreement, the pre-emptive right established by this Section 7 applied with respect to the initial sale or grant by the Company of such rights or agreements and such rights or agreements were approved by the board of directors of the Company; (iii) shares of Common Stock issued in connection with any stock split, dividend, combination, distribution, or recapitalization; or (iv) any Equity Securities issued for consideration other than cash in connection with any merger, consolidation, strategic alliance, acquisition, or similar business combination approved by the board of directors of the Company. 8. Assignment of Rights. No Holder may assign its rights under this Agreement to any party without the prior written consent of the Company; provided, however, that a Holder may assign its rights under this Agreement without such restrictions to a Permitted Assignee as long as (a) such transfer or assignment is effected in accordance with applicable securities laws; (b) such transferee or assignee agrees in writing to become subject to the terms of this Agreement; and (c) the Company is given written notice by such Holder of such transfer or assignment, stating the name and address of the transferee or assignee and identifying the Registrable Securities with respect to which such rights are being transferred or assigned. 9. Information by Holder. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing. 11

10. Indemnification. (a) In the event of the offer and sale of Registrable Securities held by Holders under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, partners, each other person who participates as an underwriter in the offering or sale of such securities, and each other person, if any, who controls or is under common control with such Holder or any such underwriter within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, and expenses to which the Holder or any such director, officer, partner or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such shares were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading, and the Company shall reimburse the Holder, and each such director, officer, partner, underwriter and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability, action or proceeding; provided that the foregoing shall not apply to, and the Company shall not be liable, in any such case (i) to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by or on behalf of such Holder specifically stating that it is for use in the preparation thereof, (ii) provided that the Company has complied with its obligations hereunder to furnish such Holder with copies of the applicable prospectus, if the person asserting any such loss, claim, damage, liability (or action or proceeding in respect thereof) who purchased the Registrable Securities that are the subject thereof did not receive a copy of an amended preliminary prospectus or the final prospectus (or the final prospectus as amended or supplemented) at or prior to the written confirmation of the sale of such Registrable Securities to such person because of the failure of such Holder or underwriter to so provide such amended preliminary or final prospectus and the untrue statement or alleged untrue statement or omission or alleged omission of a material fact made in such preliminary prospectus was corrected in the amended preliminary or final prospectus (or the final prospectus as amended or supplemented), or (iii) provided that the plan of distribution mechanics described in the applicable prospectus are, in form and substance, reasonable and customary for transactions of this type, to the extent that the Holders failed to comply with the terms of such plan of distribution mechanics. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, or any such director, officer, partner, underwriter or controlling person and shall survive the transfer of such shares by the Holder. 12

(b) As a condition to including any Registrable Securities to be offered by a Holder in any registration statement filed pursuant to this Agreement, each such Holder agrees to be bound by the terms of this Section 10 and to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, legal counsel and accountants for the Company, any underwriter, any other Holder selling securities in such registration statement and any controlling person within the meaning of the Securities Act of any such underwriter or other Holder, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) an untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information about such Holder as a Holder of the Company furnished to the Company, (ii) provided that the Company has complied with its obligations hereunder to furnish such Holder with copies of the applicable prospectus, if the person asserting any such loss, claim, damage, liability (or action or proceeding in respect thereof) who purchased the Registrable Securities that are the subject thereof did not receive a copy of an amended preliminary prospectus or the final prospectus (or the final prospectus as amended or supplemented) at or prior to the written confirmation of the sale of such Registrable Securities to such person because of the failure of such Holder or underwriter to so provide such amended preliminary or final prospectus and the untrue statement or alleged untrue statement or omission or alleged omission of a material fact made in such preliminary prospectus was corrected in the amended preliminary or final prospectus (or the final prospectus as amended or supplemented), or (iii) provided that the plan of distribution mechanics described in the applicable prospectus are, in form and substance, reasonable and customary for transactions of this type, to the extent that the Holders failed to comply with the terms of such plan of distribution mechanics. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, or any such director, officer, partner, underwriter or controlling person and shall survive the transfer of such shares by the Holder, and such Holder shall reimburse the Company, and each such director, officer, legal counsel and accountants, underwriter, other Holder, and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating, defending, or settling and such loss, claim, damage, liability, action, or proceeding; provided, however, that such indemnity agreement found in this Section 10(b) shall in no event exceed the gross proceeds from the offering received by such Holder. Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling person and shall survive the transfer by any Holder of such shares. (c) Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Section 10(a) or (b) hereof (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the indemnifying party of the commencement of such action; provided that the failure of any indemnified party to give notice 13

as provided herein shall not relieve the indemnifying party of its obligations under Section 10(a) or (b) hereof, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in the reasonable judgment of counsel to such indemnified party a conflict of interest between such indemnified and indemnifying parties may exist or the indemnified party may have defenses not available to the indemnifying party in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defenses thereof or the indemnifying party fails to defend such claim in a diligent manner, other than reasonable costs of investigation. Neither an indemnified nor an indemnifying party shall be liable for any settlement of any action or proceeding effected without its consent. No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement, which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim. (d) In the event that an indemnifying party does or is not permitted to assume the defense of an action pursuant to Section 10(c) or in the case of the expense reimbursement obligation set forth in Section 10(a) and (b), the indemnification required by Section 10(a) and (b) hereof shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills received or expenses, losses, damages, or liabilities are incurred. (e) If the indemnification provided for in this Section 10 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall (i) contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense as is appropriate to reflect the proportionate relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, not only the proportionate relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations. No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall 14

be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation. (f) Other Indemnification. Indemnification similar to that specified in the preceding subsections of this Section 10 (with appropriate modifications) shall be given by the Company and each Holder of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act. 11. Miscellaneous (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas and the United States of America, both substantive and remedial. Any judicial proceeding brought against either of the parties to this agreement or any dispute arising out of this Agreement or any matter related hereto shall be brought in the courts of the State of Texas, Harris County, or in the United States District Court for the Southern District of Texas and, by its execution and delivery of this agreement, each party to this Agreement accepts the jurisdiction of such courts. The foregoing consent to jurisdiction shall not be deemed to confer rights on any person other than the parties to this Agreement. (b) Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, Permitted Assigns, executors and administrators of the parties hereto. In the event the Company merges with, or is otherwise acquired by, a direct or indirect subsidiary of a publicly traded company, the Company shall condition the merger or acquisition on the assumption by such parent company of the Company's obligations under this Agreement. (c) Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof. (d) Notices, etc. All notices or other communications which are required or permitted under this Agreement shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, by electronic mail, or by courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered:
If to the Company: Continental Southern Resources, Inc. 111 Presidential Boulevard, Suite 158A Bala Cynwyd, Pennsylvania 19004 Attention: Stephen P. Harrington Facsimile: 610-__________ e-mail: shags@comcast.com

15

If to the Purchasers:

To each Purchaser at the address set forth on Exhibit A Sanders Morris Harris Inc. 600 Travis, Suite 3100 Houston, Texas 77002 Attention: President Facsimile: ( 713) 224-1101 e-mail: ben.morris@smhhou.com Marty Steinberg, Esq., as the Receiver for Lancer Management Group II, LLC, Lancer Offshore, Inc., and as the party in control of Lancer Partners, LP. c/o David E. Wells Hunton & Williams, LLP 1111 Brickell Avenue, Suite 2500 Miami, Florida 33131 Facsimile: (305) 810-2460 e-mail: dwells@hunton.com

with a copy to:

If to Lancer:

or at such other address as any party shall have furnished to the other parties in writing. (e) Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Holder of any Registrable Securities, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereunder occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement, or any waiver on the part of any Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to any holder, shall be cumulative and not alternative. (f) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. (g) Severability. In the case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. (h) Amendments. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and by the holders of a majority 16

of the number of shares of Registrable Securities outstanding as of the date of such amendment or waiver. The Purchasers acknowledge that by the operation of this Section 11(h), the holders of a majority of the outstanding Registrable Securities may have the right and power to diminish or eliminate all rights of the Purchasers under this Agreement. (i) Limitation on Subsequent Registration Rights. After the date of this Agreement, the Company shall not, without the prior written consent of the Holders of at least a majority of the Registrable Share then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights senior to those granted to the Holder hereunder. [Signatures on the following page] 17

This Registration Rights Agreement is hereby executed as of the date first above written. COMPANY: CONTINENTAL SOUTHERN RESOURCES, INC.
By: /s/ STEPHEN P. HARRINGTON -------------------------------------Name: Stephen P. Harrington Title: President

SANDERS MORRIS HARRIS INC., Individually and as Agent and Attorney in Fact for the Purchasers listed on Exhibit A attached hereto
By: /s/ JOHN MALANGA -------------------------------------Name: John Malanga Title: Vice President

LANCER OFFSHORE, INC.
By: /s/ MARTY STEINBERG -------------------------------------Name: Marty Steinberg Title: Receiver

LANCER PARTNERS, LP
By: /s/ MARTY STEINBERG -------------------------------------Name: Marty Steinberg Title: Party in Control

18

Exhibit A Purchaser Information [INTENTIONALLY OMITTED] 19

EXHIBIT 10.28 INTEREST PURCHASE AGREEMENT BY AND BETWEEN CONTINENTAL SOUTHERN RESOURCES, INC. AND KNOX GAS, LLC FEBRUARY 26, 2004

TABLE OF CONTENTS 1.1 2.1 2.2 3.1 3.2 3.3 3.4 3.5 4.1 4.2 4.3 4.4 4.5 5.1 5.2 5.3 5.4 5.5 5.6 5.7 6.1 6.2 6.3 7.1 7.2 7.3 7.4 7.5 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14 The Purchase and Sale........................................................................... Closing Date.................................................................................... Closing Deliveries.............................................................................. Organization and Qualification.................................................................. Authorization; Validity and Effect of Agreement................................................. No Conflict; Required Filings and Consents...................................................... Investment Intent............................................................................... Brokers and Finders Fees........................................................................ Organization and Qualification.................................................................. Authorization; Validity and Effect of Agreement................................................. No Conflict; Required Filings and Consents...................................................... Title to LP Interest............................................................................ Brokers and Finders............................................................................. Access to Information........................................................................... Confidentiality; No Solicitation................................................................ Best Efforts; Consents.......................................................................... Further Assurances.............................................................................. Public Announcements............................................................................ Notification of Certain Matters................................................................. Prohibition on Trading in Securities............................................................ Mutual Conditions to Obligations of the Company and Knox Gas.................................... Conditions to Obligations of Knox Gas..........................................................1 Conditions to Obligations of the Company.......................................................1 Indemnification by the Parties.................................................................1 Indemnification Procedures for Third-Party Claims..............................................1 Indemnification Procedures for Non-Third Party Claims..........................................1 Limitations on Indemnification.................................................................1 Exclusive Remedy...............................................................................1 Entire Agreement...............................................................................1 Amendment and Modifications....................................................................1 Extensions and Waivers.........................................................................1 Successors and Assigns.........................................................................1 Survival of Representations, Warranties and Covenants..........................................1 Headings; Definitions..........................................................................1 Severability...................................................................................1 Specific Performance...........................................................................1 Expenses.......................................................................................1 Notices........................................................................................1 Governing Law..................................................................................1 Arbitration....................................................................................1 Counterparts...................................................................................1 Certain Definitions............................................................................1

i

Exhibits 1.1(b)(ii) 2.2(a)(2) 3.1 Form of Note Form of Pledge Agreement Certificate of Formation and Operating Agreement of Knox Gas, LLC

ii

INTEREST PURCHASE AGREEMENT THIS INTEREST PURCHASE AGREEMENT (the "Agreement"), is made and entered into this 26th day of February, 2004, by and between CONTINENTAL SOUTHERN RESOURCES, INC. a Nevada corporation (the "Company"), and KNOX GAS, LLC, a Delaware limited liability company ("Knox Gas"). RECITALS WHEREAS, the Board of Directors of the Company and the Managers and Members of Knox Gas have approved, and deem it advisable and in the best interests of their respective companies and stockholders or interest holders, as the case may be, to consummate the transactions contemplated hereby upon the terms and subject to the conditions set forth in this Agreement; and WHEREAS, the Company wishes to sell to Knox Gas, and Knox Gas wishes to purchase, a certain partnership interests owned by the Company in exchange for cash consideration and a note payable (the transactions contemplated hereby (other than those set forth in Section 6.1 hereof) collectively referred to herein as, the "Transactions"). NOW, THEREFORE, in consideration of the foregoing premises and representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE I THE PURCHASE AND SALE 1.1 THE PURCHASE AND SALE. (a) The Purchase and Sale. Upon the terms and subject to the conditions set forth in this Agreement, the Company shall sell, and Knox Gas shall purchase, the Company's ninety-nine percent (99%) limited partnership interest (the "LP Interest") in Knox Miss. Partners, L.P. ("Knox Miss"), and the Company's one percent (1%) membership interest in Knox Miss., LLC, the general partner in Knox Miss (the "Membership Interest"; together with the LP Interest, the "Interests"). (b) Purchase Price. In consideration for the sale of the Interests by the Company to Knox Gas and for other covenants and agreements of the Company contained herein, Knox Gas shall transfer to the Company five million dollars ($5,000,000) (the "Purchase Price") as follows: (i) Five hundred thousand dollars ($500,000) (the "Deposit") as of the date hereof, which amount will be applied against the Purchase Price on the Closing Date (as defined below); and

(ii) The issuance of a note dated as of the Closing Date substantially in the form attached hereto as Exhibit 1.1(b) (ii) (the "Note") payable to the Company in the amount of four million, five hundred thousand dollars ($4,500,000), issuable to the Company upon the Closing Date and secured by the Pledge Agreement (as defined in Section 2.2(a)(ii)). ARTICLE II THE CLOSING 2.1 CLOSING DATE. The closing of the Transactions (the "Closing") shall take place as of the date hereof (the "Closing Date") at the offices of the Company or at such other place as may be mutually agreed upon in writing by the parties hereto. 2.2 CLOSING DELIVERIES. (a) At the Closing, Knox Gas shall deliver or cause to be delivered to the Company the following documents: (i) The Note; (ii) A pledge agreement substantially in the form attached hereto as Exhibit 2.2(a)(ii) (the "Pledge Agreement"); (iii) An incumbency certificate signed by the Manager of Knox Gas dated at or about the Closing Date; (iv) A certificate of good standing from the Secretary of State of the State of Delaware, dated at or about the Closing Date, to the effect that Knox Gas is in good standing under the laws of said state; (v) Certificate of Formation of Knox Gas certified by the Secretary of State of the State of Delaware at or about the Closing Date and the Operating Agreement of Knox Gas certified by the Manager of Knox Gas at or about the Closing Date; (vi) Manager and/or Member resolutions of Knox Gas dated at or about the Closing Date authorizing the Transactions, certified by the Manager of Knox Gas; (vii) Such other documents, instruments and consents required to consummate the Transactions and to comply with the terms hereof. (b) At the Closing, the Company shall deliver or cause to be delivered to Knox Gas the following documents: (i) All agreements evidencing the Interests; 2

(ii) An incumbency certificate signed by all of the executive officers of the Company dated at or about the Closing Date; (iii) A certificate of good standing from the Secretary of State of the State of Nevada, dated at or about the Closing Date, to the effect that the Company is in good standing under the laws of said state; (iv) Board resolutions of the Company dated at or about the Closing Date authorizing the Transactions, certified by the Secretary of the Company; and (v) Such other documents, instruments and consents required to consummate the Transactions and to comply with the terms hereof. (c) Each of the parties to this Agreement shall have otherwise executed whatever documents and agreements, provided whatever consents or approvals and shall have taken all such other actions as are required under this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF KNOX GAS Knox Gas hereby makes the following representations and warranties to the Company. 3.1 ORGANIZATION AND QUALIFICATION. Knox Gas is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, with full power and authority to own and operate its business as presently conducted, except where the failure to be or have any of the foregoing would not have a Material Adverse Effect. Knox Gas is duly qualified as a foreign entity to do business and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary, except for such failures to be so qualified or in good standing as would not, individually or in the aggregate, have a Material Adverse Effect. Knox Gas has no subsidiaries. True, correct and complete copies of the Certificate of Formation and Operating Agreement of Knox Gas, as amended to date, are attached hereto as Exhibit 3.1. 3.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENT. Knox Gas has the requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Transactions. The execution and delivery of this Agreement by Knox Gas and the performance by Knox Gas of its obligations hereunder and the consummation of the Transactions have been duly authorized by its Manager, all other necessary company action on the part of Knox Gas has been taken, and no other company proceedings on the part of Knox Gas are necessary to authorize this Agreement and the Transactions. This Agreement has been duly and validly executed and delivered by Knox Gas 3

and, assuming that it has been duly authorized, executed and delivered by the other parties hereto, constitutes a legal, valid and binding obligation of Knox Gas, enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 3.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. Neither the execution and delivery of this Agreement by Knox Gas nor the performance by Knox Gas of its obligations hereunder, nor the consummation of the Transactions, will: (i) conflict with Knox Gas's Certificate of Formation or Operating Agreement; (ii) violate any statute, law, ordinance, rule or regulation applicable to Knox Gas or any of the properties or assets of Knox Gas; or (iii) violate, breach, be in conflict with or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision of, or result in the termination of, the acceleration of the maturity of, or the acceleration of the performance of any obligation of Knox Gas under, or result in the creation or imposition of any Liens upon any properties, assets or business of Knox Gas under, any material contract or any order, judgment or decree to which Knox Gas is a party or by which Knox Gas or any of its assets or properties is bound or encumbered except, in the case of clauses (ii) and (iii), for such violations, breaches, conflicts, defaults or other occurrences which, individually or in the aggregate, would not have a Material Adverse Effect or would not prevent the consummation of this Agreement or the Transactions. 3.4 INVESTMENT INTENT. The Interests being acquired in connection with the Transactions is being acquired for Knox Gas's own account for investment purposes only and not with a view to, or with any present intention of, distributing or reselling any of such Interests. Knox Gas acknowledges and agrees that the Interests has not been registered under the Securities Act or under any state securities laws, and that the Interests may not be, directly or indirectly, sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act and applicable state securities laws, except pursuant to an available exemption from such registration. Knox Gas also acknowledges and agrees that neither the SEC nor any securities commission or other Governmental Authority has (a) approved the transfer of the Interests or passed upon or endorsed the merits of the transfer of the Interest, this Agreement or the Transactions; or (b) confirmed the accuracy of, determined the adequacy of, or reviewed this Agreement. Knox Gas has such knowledge, sophistication and experience in financial, tax and business matters in general, and investments in securities in particular, that it is capable of evaluating the merits and risks of this investment in the Interests, and Knox Gas has made such investigations in connection herewith as it deemed necessary or desirable so as to make an informed investment decision without relying upon the Company for legal or tax advice related to this investment. Knox Gas and each of its Members are "accredited investors" within the meaning of Rule 501 promulgated under the Securities Act. 4

3.5 BROKERS AND FINDERS FEES. Neither Knox Gas nor any of its officers, directors, employees or managers has employed any broker or finder or incurred any liability for any investment banking fees, brokerage fees, commissions or finders fees in connection with the Transactions for which Knox Gas has or could have any liability. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby makes the following representations and warranties to Knox Gas: 4.1 ORGANIZATION AND QUALIFICATION. The Company is duly organized, validly existing and in good standing under the laws of its jurisdiction of its organization, with the corporate power and authority to own and operate its business as presently conducted, except where the failure to be or have any of the foregoing would not have a Material Adverse Effect. The Company is duly qualified as a foreign corporation or other entity to do business and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary, except for such failures to be so qualified or in good standing as would not have a Material Adverse Effect. 4.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENT. The Company has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the Transactions. The execution and delivery of this Agreement by the Company and the performance by the Company of its obligations hereunder and the consummation of the Transactions have been duly authorized by its Board of Directors and all other necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement and the Transactions. This Agreement has been duly and validly executed and delivered by the Company and, assuming that it has been duly authorized, executed and delivered by the other parties hereto, constitutes a legal, valid and binding obligation of the Company, in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. Neither the execution and delivery of the Agreement by the Company nor the performance by the Company of its obligations hereunder, nor the consummation of the Transactions, will: (i) conflict with the Company's Articles of Incorporation or Bylaws; (ii) violate any statute, law, ordinance, rule or regulation, applicable to the Company or any of the 5

properties or assets of the Company; or (iii) violate, breach, be in conflict with or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision of, or result in the termination of, the acceleration of the maturity of, or the acceleration of the performance of any obligation of the Company, or result in the creation or imposition of any Lien upon any properties, assets or business of the Company under, any material contract or any order, judgment or decree to which the Company is a party or by which it or any of its assets or properties is bound or encumbered except, in the case of clauses (ii) and (iii), for such violations, breaches, conflicts, defaults or other occurrences which, individually or in the aggregate, would not have a material adverse effect on its obligation to perform its covenants under this Agreement. 4.4 TITLE TO LP INTEREST. The Company has good and marketable title to the LP Interest and is the sole record and beneficial owner of the LP Interest, free and clear of any Liens. With the exception of this Agreement, there are no outstanding options, warrants, agreements, conversion rights, preemptive rights or other rights to purchase or otherwise acquire the LP Interest, nor are there any obligations of any Person to purchase, redeem or otherwise acquire the LP Interest. There are no voting trusts or other agreements or understandings to which the Company is a party with respect to the voting of the LP Interest, nor is there any indebtedness of the Company issued and outstanding that has general voting rights with respect to the LP Interest. 4.5 BROKERS AND FINDERS. Neither the Company nor any of its officers, directors, employees or managers has employed any broker or finder or incurred any liability for any investment banking fees, brokerage fees, commissions or finders' fees in connection with the Transactions for which the Company has or could have any liability. ARTICLE V CERTAIN COVENANTS 5.1 ACCESS TO INFORMATION. At all times prior to the Closing or the earlier termination of this Agreement in accordance with the provisions of Article VIII, and in each case subject to Section 5.2 below, each party hereto shall provide to the other party (and the other party's authorized representatives) reasonable access during normal business hours and upon reasonable prior notice to the premises, properties, books, records, assets, liabilities, operations, contracts, personnel, financial information and other data and information of or relating to such party (including without limitation all written proprietary and trade secret information and documents, and other written information and documents relating to intellectual property rights and matters), and will cooperate with the other party in conducting its due diligence investigation of such party, provided that the party granted such access shall not interfere unreasonably with the operation of the business conducted by the party granting access, and provided that no such access need be 6

granted to privileged information or any agreements or documents subject to confidentiality agreements. 5.2 CONFIDENTIALITY; NO SOLICITATION. (a) Confidentiality. Each party shall hold, and shall cause its respective Affiliates and representatives to hold, all Confidential Information made available to it in connection with the transactions contemplated under this Agreement in strict confidence, shall not use such information except for the sole purpose of evaluating the Transactions and shall not disseminate or disclose any of such information other than to its directors, officers, managers, employees, shareholders, interest holders, Affiliates, agents and representatives, as applicable, who need to know such information for the sole purpose of evaluating the Transactions and with respect to representatives, advisors and Affiliates of the Persons involved in the transactions described in Section 6.1, including potential investors in the contemplated private offering of the Company's common stock, par value $.001 per share ("Common Stock") (each of whom shall be informed in writing by the disclosing party of the confidential nature of such information and directed by such party in writing to treat such information confidentially). If this Agreement is terminated pursuant to the provisions of Article VIII, each party shall immediately return to the other party all such information, all copies thereof and all information prepared by the receiving party based upon the same. The above limitations on use, dissemination and disclosure shall not apply to Confidential Information that (i) is learned by the disclosing party from a third party entitled to disclose it; (ii) becomes known publicly other than through the disclosing party or any third party who received the same from the disclosing party, provided that the disclosing party had no Knowledge that the disclosing party was subject to an obligation of confidentiality; (iii) is required by law or court order to be disclosed by the parties; or (iv) is disclosed with the express prior written consent thereto of the other party. The parties shall undertake all necessary steps to ensure that the secrecy and confidentiality of such information will be maintained in accordance with the provisions of this subsection (a). Notwithstanding anything contained herein to the contrary, in the event a party is required by court order or subpoena to disclose information which is otherwise deemed to be confidential or subject to the confidentiality obligations hereunder, prior to such disclosure, the disclosing party shall: (i) promptly notify the non-disclosing party and, if having received a court order or subpoena, deliver a copy of the same to the non-disclosing party; (ii) cooperate with the non-disclosing party, at the expense of the nondisclosing party, in obtaining a protective or similar order with respect to such information; and (iii) provide only that amount of information as the disclosing party is advised by its counsel is necessary to strictly comply with such court order or subpoena. (b) No Solicitation. Except as otherwise contemplated in this Agreement, the Company shall not, directly or indirectly, solicit any inquiries or proposals for, or enter into or continue or resume any discussions with respect to or enter into any negotiations or agreements relating to the sale or exchange of the Interests. The Company shall promptly notify the Company if any such proposal or offer, or any inquiry or contact with any Person or entity with respect thereto, is made. 7

5.3 BEST EFFORTS; CONSENTS. Subject to the terms and conditions herein provided, each of the Company and Knox Gas agrees to use all reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated under this Agreement and to cooperate with the others in connection with the foregoing, including using its reasonable efforts to (i) obtain all waivers, consents and approvals from other parties to loan agreements, leases, mortgages and other contracts necessary for the consummation of such transactions, (ii) make all filings with, and obtain all consents, approvals and authorizations that are required to be obtained from, Governmental Authorities, (iii) lift or rescind any injunction, restraining order, decree or other order adversely affecting the ability of the parties hereto to consummate such transactions, (iv) effect all necessary registrations and filings and submissions of information requested by Governmental Authorities, and (v) fulfill all conditions to this Agreement. Each of the Company and Knox Gas shall use all reasonable efforts to prevent the entry, enactment or promulgation of any threatened or pending preliminary or permanent injunction or other order, decree or ruling or statute, rule, regulation or executive order that would adversely affect the ability of the parties hereto to consummate such transactions. 5.4 FURTHER ASSURANCES. Subject to Section 5.3, each of the parties hereto agrees to use its reasonable best efforts before and after the Closing Date to take or cause to be taken all action, to do or cause to be done, and to assist and cooperate with the other party hereto in doing, all things necessary, proper or advisable under applicable laws to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated under this Agreement, including, but not limited to (i) the satisfaction of the conditions precedent to the obligations of any of the parties hereto; (ii) to the extent consistent with the obligations of the parties set forth in Section 5.3, the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the performance of the obligations hereunder; and (iii) the execution and delivery of such instruments, and the taking of such other actions, as the other party hereto may reasonably require in order to carry out the intent of this Agreement. 5.5 PUBLIC ANNOUNCEMENTS. The Company and Knox Gas shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or the transactions contemplated hereunder, and shall not issue any other press release or make any other public statement without prior consent of the other parties, except as may be required by law or, with respect to the Company, by obligations pursuant to rule or regulation of the Exchange Act, the Securities Act, any rule or regulation promulgated thereunder or any rule or regulation of the National Association of Securities Dealers. 8

5.6 NOTIFICATION OF CERTAIN MATTERS. Each party hereto shall promptly notify the other party in writing of any events, facts or occurrences that would result in any breach of any representation or warranty or breach of any covenant by such party contained in this Agreement. 5.7 PROHIBITION ON TRADING IN SECURITIES. Knox Gas acknowledges that information concerning the matters that are the subject matter of this Agreement may constitute material non-public information under United States federal securities laws, and that United States federal securities laws prohibit any Person who has received material non-public information relating to the Company from purchasing or selling securities of the Company, or from communicating such information to any Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell securities of the Company. Accordingly, until such time as any such non-public information has been adequately disseminated to the public, Knox Gas shall not purchase or sell any securities of the Company, or communicate such information to any other Person. ARTICLE VI CONDITIONS TO CONSUMMATION OF THE TRANSACTION 6.1 MUTUAL CONDITIONS TO OBLIGATIONS OF THE COMPANY AND KNOX GAS. The obligations of the Company and Knox Gas to consummate the Transactions shall be subject to the fulfillment, or written waiver by each of the Company and Knox Gas, at or prior to the Closing, of each of the following conditions: (a) Trident Growth Fund, L.P. ("Trident") shall receive (i) an aggregate of approximately 375,000 shares of common stock, $.001 per share ("Common Stock"), of the Company in full satisfaction and release of all amounts, liabilities and obligations due and owing by Parent to Trident under that certain First Amended Loan Agreement between the Company and Trident, the First Amended Security Agreement between the Company and Trident and the 6% Secured Convertible Promissory Note in the principal amount of $600,000, all dated July 29, 2003 (collectively, the "Trident 2003 Loan Documents"), and (ii) $1,500,000 cash, payable in good funds, in full satisfaction and release of all amounts, liabilities and obligations due and owing by the Company to Trident under that certain Loan Agreement between the Company and Trident, the Security Agreement between the Company and Trident and the 12% Secured Convertible Promissory Note in the principal amount of $1,500,000, all dated April 5, 2002 (the "Trident 2002 Loan Documents," and together with the Trident 2003 Loan Documents, the "Trident Loan Documents"). In connection with the foregoing, Trident shall deliver and surrender to the Company (i) the original promissory notes issued by the Company in connection with the Trident Loan Documents, (ii) a release of the Company from any and all obligations under the Trident Loan Documents, and (iii) any other documentation necessary to facilitate the termination and release of all Liens on any asset of the Company; 9

(b) Michael P. Marcus ("Marcus") shall convert the full $1,550,000 principal amount due under the 12% convertible promissory notes issued by the Company to Marcus, dated October 18 and 30, 2002, and all accrued interest due thereunder, into shares of Common Stock. In connection with the foregoing, Marcus shall deliver and surrender to the Company (i) the original promissory notes issued by the Company in connection with the underlying loan documents, (ii) a release of the Company from any and all obligations under the underlying loan documents, and (iii) any other documentation necessary to facilitate the termination and release of all Liens on any asset of the Company; (c) The holders of all of the Company's outstanding shares of Series C Convertible Preferred Stock (the "Series C Preferred Stock") shall enter into an agreement with the Company, pursuant to which, on or prior to Closing, they will convert their shares of Series C Preferred Stock, and waive certain registration rights and other rights of such holders under such agreements; (d) The Company, CSOR Acquisition Corp. and NSNV, Inc. ("North Sea") shall enter into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which, on or prior to Closing, North Sea shall merge with and into CSOR Acquisition Corp., with the separate corporate existence of North Sea ceasing and CSOR Acquisition Corp. continuing as the surviving corporation (the "Merger"); (e) The Company shall purchase from RAM Trading Limited all of the shares of Series B Convertible Preferred Stock currently owned by Lancer Offshore, Inc. and approximately 14,100,000 shares of Common Stock currently owned by Lancer Offshore, Inc. and Lancer Partners, L.P.; (f) The Company shall complete a private offering of Common Stock for a minimum of $45,000,000 of gross proceeds (the "Equity Offering"); (g) The Company shall purchase from the holders of all of the Company's outstanding shares of Series A Convertible Preferred Stock and Series B Preferred Stock not owned by Lancer Offshore, Inc., Michael Laurer or their respective Affiliates (the "Non-Lancer/Laurer Series B Preferred Stock"), all of the shares of Series A Preferred Stock and Non-Lancer/Laurer Series B Preferred Stock in exchange for certain non-core assets of the Company, and in connection therewith provide a general release of the Company and its Affiliates from any and all pre-Closing claims (h) The Company shall have entered into employment agreements with each of William L. Transier and John N. Seitz; (i) No domestic or foreign governmental or regulatory agency, authority, bureau, commission, department, official or similar body or instrumentality thereof, or any governmental court, arbitral tribunal located or having jurisdiction in the United States shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, decree, judgment, injunction or other order, whether temporary, preliminary or permanent which is then in effect and has the effect of making the Closing illegal or otherwise prohibiting consummation 10

of the Closing; provided, that the parties use reasonable commercial efforts to challenge any decree, judgment or injunction or other order that is not final and non-applicable, but in no event will any party be required to expend in excess of $25,000 with respect to such challenge; and (j) There shall not be pending, instituted or threatened by any Person or Governmental Authority any suit, action, investigation or proceeding seeking to (i) alter, prevent, materially delay, restrain or prohibit the consummation of the Merger, the Equity Offering or the other transactions contemplated by this Agreement, (ii) obtain from the Company any damages that would have, or could reasonably be expected to have, a Material Adverse Effect on the Company, or (iii) seeking to prohibit or limit the ownership or operation by the Company of its businesses or assets in a manner that would have, or could reasonably be expected to have, a Material Adverse Effect on the Company. 6.2 CONDITIONS TO OBLIGATIONS OF KNOX GAS. The obligations of Knox Gas to consummate the Transactions shall be subject to the fulfillment, or written waiver by Knox Gas, at or prior to the Closing, of each of the following conditions: (a) The representations and warranties of the Company set out in this Agreement shall be true and correct in all material respects at and as of the time of the Closing as though such representations and warranties were made at and as of such time; (b) The Company shall have performed and complied in all material respects with all covenants, conditions, obligations and agreements required by this Agreement to be performed or complied with by the Company on or prior to the Closing Date; (c) There shall be delivered to Knox Gas an officer's certificate of the Company to the effect that the conditions set forth in Section 6.2(a) and (b) have been satisfied; and (d) The Company shall have made all the deliveries required of the Company under Section 2.2(a). 6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the Company to consummate the Transactions shall be subject to the fulfillment, or written waiver by the Company, at or prior to the Closing of each of the following conditions: (a) The representations and warranties of Knox Gas set out in this Agreement shall be true and correct in all material respects at and as of the time of the Closing as though such representations and warranties were made at and as of such time; (b) Knox Gas shall have performed and complied in all material respects with all covenants, conditions, obligations and agreements required by this Agreement to be performed or complied with by Knox Gas on or prior to the Closing Date; 11

(c) There shall be delivered to the Company a certificate of the Manager of Knox Gas to the effect that the conditions set forth in Section 6.2(a) and (b) hereof have been satisfied; (d) Knox Gas shall have made all the deliveries required of Knox Gas under Section 2.2(b); and (e) The Company shall have completed a due diligence review of the business, operations, financial condition and prospects of Knox Gas and shall have been satisfied with the results of its due diligence review in its sole and absolute discretion. ARTICLE VII INDEMNIFICATION 7.1 INDEMNIFICATION BY THE PARTIES. From and after the Closing Date, the Company or Knox Gas, as the case may be (the "Indemnitor"), shall indemnify and hold harmless Knox Gas or the Company, as the case may be (the "Indemnitee"), and its respective officers and directors (the Indemnitee and each such officer and director an "Indemnified Party"), from and against any and all demands, claims, actions or causes of action, judgments, assessments, losses, liabilities, damages or penalties and reasonable attorneys' fees and related disbursements (collectively, "Claims") suffered by such Indemnified Party resulting from or arising out of (i) any inaccuracy in or breach of any of the representations or warranties made by the Indemnitor herein, in any certificate, or in any other document delivered herewith or otherwise required hereby at the time they were made, and, except for representations and warranties that speak as of a specific date or time (which need only be true and correct as of such date or time), on and as of the Closing Date, (ii) any breach or nonfulfillment of any covenants or agreements made by the Indemnitor, and (iii) any misrepresentation made by the Indemnitor, in each case as made herein or in the Exhibits annexed hereto or in any closing certificate, schedule or any ancillary certificates or other documents or instruments furnished by the Indemnitor pursuant hereto or in connection with the Transactions. 7.2 INDEMNIFICATION PROCEDURES FOR THIRD-PARTY CLAIMS. (a) Upon obtaining Knowledge of any Claim by a third party which has given rise to, or is expected to give rise to, a claim for indemnification hereunder, the Indemnitee shall give written notice ("Notice of Claim") of such claim or demand to the Indemnitor, specifying in reasonable detail such information as the Indemnified Party may have with respect to such indemnification claim (including copies of any summons, complaint or other pleading which may have been served on it and any written claim, demand, invoice, billing or other document evidencing or asserting the same). Subject to the limitations set forth in Section 7.2(b) hereof, no failure or delay by the Indemnitee in the performance of the foregoing shall reduce or otherwise affect the obligation of the Indemnitor to indemnify and hold the Indemnified Party harmless, except to the extent that such failure or delay shall have actually adversely affected 12

Indemnitor's ability to defend against, settle or satisfy any Claims for which the Indemnified Party entitled to indemnification hereunder. (b) If the claim or demand set forth in the Notice of Claim given by the Indemnitee pursuant to Section 7.2(a) hereof is a claim or demand asserted by a third party, the Indemnitor shall have fifteen (15) days after the date on which Notice of Claim is given to notify the Indemnitee in writing of its election to defend such third party claim or demand on behalf of the Indemnified Party. If the Indemnitor elects to defend such third party claim or demand, the Indemnitee shall make available to the Indemnitor and its agents and representatives all records and other materials that are reasonably required in the defense of such third party claim or demand and shall otherwise cooperate with, and assist the Indemnitor in the defense of, such third party claim or demand, and so long as the Indemnitor is defending such third party claim in good faith, the Indemnified Party shall not pay, settle or compromise such third party claim or demand. If the Indemnitor elects to defend such third party claim or demand, the Indemnified Party shall have the right to participate in the defense of such third party claim or demand, at such Indemnified Party's own expense. In the event, however, that such Indemnified Party reasonably determines that representation by counsel to the Indemnitor of both the Indemnitor and such Indemnified Party could reasonably be expected to present counsel with a conflict of interest, then the Indemnified Party may employ separate counsel to represent or defend it in any such action or proceeding and the Indemnitor will pay the fees and expenses of such counsel. If the Indemnitor does not elect to defend such third party claim or demand or does not defend such third party claim or demand in good faith, the Indemnified Party shall have the right, in addition to any other right or remedy it may have hereunder, at the Indemnitor's expense, to defend such third party claim or demand; provided, however, that (i) such Indemnified Party shall not have any obligation to participate in the defense of, or defend, any such third party claim or demand; (ii) such Indemnified Party's defense of or its participation in the defense of any such third party claim or demand shall not in any way diminish or lessen the obligations of the Indemnitor under the agreements of indemnification set forth in this Article VII; and (iii) such Indemnified Party may not settle any claim without the consent of the Indemnitor, which consent shall not be unreasonably withheld or delayed. (c) The Indemnitor and the Indemnitee and the other Indemnified Party, if any, shall cooperate fully in all aspects of any investigation, defense, pre-trial activities, trial, compromise, settlement or discharge of any claim in respect of which indemnity is sought pursuant to this Article VII, including, but not limited to, by providing the other party with reasonable access to employees and officers (including as witnesses) and other information. (d) Except for third party claims being defended in good faith, the Indemnitor shall satisfy its obligations under this Article VII in respect of a valid claim for indemnification hereunder which is not contested by the Indemnitor in good faith in cash within thirty (30) days after the date on which Notice of Claim is given. 7.3 INDEMNIFICATION PROCEDURES FOR NON-THIRD PARTY CLAIMS. In the event any Indemnified Party should have an indemnification claim against the Indemnitor under this Agreement that does not involve a claim by a third party, the 13

Indemnified Party shall promptly deliver notice of such claim to the Indemnitor in writing and in reasonable detail. The failure by any Indemnified Party to so notify the Indemnitor shall not relieve the Indemnitor from any liability that it may have to such Indemnified Party, except to the extent that the Indemnitor has been actually prejudiced by such failure. If the Indemnitor does not notify the Indemnified Party within fifteen (15) Business Days following its receipt of such notice that the Indemnitor disputes such claim, such claim specified by the Indemnitor in such notice shall be conclusively deemed a liability of the Indemnitor under this Article VII and the Indemnitor shall pay the amount of such liability to the Indemnified Party on demand, or in the case of any notice in which the amount of the claim is estimated, on such later date when the amount of such claim is finally determined. If the Indemnitor disputes its liability with respect to such claim in a timely manner, the Indemnitor and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute shall be submitted to arbitration pursuant to Section 8.12. 7.4 LIMITATIONS ON INDEMNIFICATION. No claim for indemnification under this Article VII shall be asserted by, and no liability for such indemnify shall be enforced against, the Indemnitor to the extent the Indemnified Party has theretofore received indemnification or otherwise been compensated for such Claim. In the event that an Indemnified Party shall later collect any such amounts recovered under insurance policies with respect to any Claim for which it has previously received payments under this Article VII from the Indemnitor, such Indemnified Party shall promptly repay to the Indemnitor such amount recovered. 7.5 EXCLUSIVE REMEDY. The indemnification provisions of this Article VII (i) shall be the exclusive remedy following the Closing with respect to breaches thereof, (ii) shall apply without regard to, and shall not be subject to, any limitation by reason of set-off, limitation or otherwise and (iii) are intended to be comprehensive and not to be limited by any requirements of law concerning prominence of language or waiver of any legal right under any law (including, without limitation, rights under any workers compensation statute or similar statute conferring immunity from suit). The obligations of the parties set forth in this Article VII shall be conditioned upon the Closing having occurred. ARTICLE VIII MISCELLANEOUS 8.1 ENTIRE AGREEMENT. This Agreement and the Schedules and Exhibits hereto contain the entire agreement between the parties and supercede all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. 14

8.2 AMENDMENT AND MODIFICATIONS. This Agreement may not be amended, modified or supplemented except by an instrument or instruments in writing signed by the party against whom enforcement of any such amendment, modification or supplement is sought. 8.3 EXTENSIONS AND WAIVERS. At any time prior to the Closing, the parties hereto entitled to the benefits of a term or provision may (a) extend the time for the performance of any of the obligations or other acts of the parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document, certificate or writing delivered pursuant hereto, or (c) waive compliance with any obligation, covenant, agreement or condition contained herein. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument or instruments in writing signed by the party against whom enforcement of any such extension or waiver is sought. No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement. 8.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided, however, that no party hereto may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other party hereto. Except as provided in Article VII, nothing in this Agreement is intended to confer upon any person not a party hereto (and their successors and assigns) any rights, remedies, obligations or liabilities under or by reason of this Agreement. 8.5 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and warranties contained herein shall survive the Closing and shall thereupon terminate twelve (12) months from the Closing, except that the representations contained in Sections 3.1, 3.2, 3.4, 4.1, 4.2 and 4.4 shall survive indefinitely. All covenants, conditions, obligations and agreements contained herein which by their terms contemplate actions following the Closing shall survive the Closing and remain in full force and effect in accordance with their terms. All other covenants, conditions, obligations and agreements contained herein shall not survive the Closing and shall thereupon terminate. 8.6 HEADINGS; DEFINITIONS. The Section and Article headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. All references to Sections or Articles contained herein mean Sections or Articles of this Agreement unless otherwise stated. All capitalized terms defined herein are equally applicable to both the singular and plural forms of such terms. 15

8.7 SEVERABILITY. If any provision of this Agreement or the application thereof to any Person or circumstance is held to be invalid or unenforceable to any extent, the remainder of this Agreement shall remain in full force and effect and shall be reformed to render the Agreement valid and enforceable while reflecting to the greatest extent permissible the intent of the parties. 8.8 SPECIFIC PERFORMANCE. The parties hereto agree that in the event that any party fails to consummate the Transactions in accordance with the terms of this Agreement, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the parties shall be entitled to specific performance in such event, without the necessity of proving the inadequacy of money damages as a remedy, in addition to any other remedy at law or in equity. 8.9 EXPENSES. Whether or not the Transactions are consummated, and except as otherwise expressly set forth herein, all legal and other costs and expenses incurred in connection with the Transactions shall be paid by the party incurring such expenses and shall be paid at the Closing. 8.10 NOTICES. All notices hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered personally, sent by documented overnight delivery service or, to the extent receipt is confirmed, telecopy, telefax or other electronic transmission service to the appropriate address or number as set forth below.
If to the Company: ----------------Continental Southern Resources, Inc. 1001 Fannin Street, 17th Floor Houston, Texas 77010 Attention: William L. Transier If to Knox Gas: -------------Knox Gas, LLC 111 Presidential Boulevard Suite 158A Bala Cynwyd, PA 19004 Attention: Manager with a copy to: -------------Porter & Hedges, L.L.P. 700 Louisiana, Suite 3500 Houston, Texas 77002 Attention: Chris A. Ferazzi

16

8.11 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to the laws that might otherwise govern under applicable principles of conflicts of laws thereof, except to the extent that Delaware law shall apply to the internal corporate governance of Knox Gas. 8.12 ARBITRATION. If a dispute arises as to the interpretation of this Agreement, it shall be decided in an arbitration proceeding conforming to the Rules of the American Arbitration Association applicable to commercial arbitration then in effect at the time of the dispute. The arbitration shall take place in Philadelphia, Pennsylvania. The decision of the Arbitrators shall be conclusively binding upon the parties and final, and such decision shall be enforceable as a judgment in any court of competent jurisdiction. The parties shall share equally the costs of the arbitration. 8.13 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement. 8.14 CERTAIN DEFINITIONS. As used herein: (a) "Affiliate" shall have the meanings ascribed to such term in Rule 12b-2 of the Exchange Act; (b) "Business Day" shall mean any day other than a Saturday, Sunday or a day on which federally chartered financial institutions are not open for business in the City of Philadelphia, Pennsylvania; (c) "Confidential Information" shall mean the existence and contents of this Agreement and the Schedules and Exhibits hereto, and all proprietary technical, economic, environmental, operational, financial and/or business information or material of one party which, prior to or following the Closing Date, has been disclosed by the Company, on the one hand, or Knox Gas, on the other hand, in written, oral (including by recording), electronic, or visual form to, or otherwise has come into the possession of, the other. (d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended; (e) "Governmental Authority" shall mean any nation or government, any state, municipality or other political subdivision thereof and any entity, body, agency, commission or court, whether domestic, foreign or multinational, exercising executive, legislative, judicial, 17

regulatory or administrative functions of or pertaining to government and any executive official thereof; (f) "Knowledge" shall mean (i) with respect to an individual, knowledge of a particular fact or other matter, if such individual is aware of such fact or other matter, and (ii) with respect to a Person that is not an individual, knowledge of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, knowledge of such fact or other matter; (g) "Liens" shall mean liens, pledges, charges, claims, security interests, purchase agreements, options, title defects, restrictions on transfer or other encumbrances, or any agreements (other than this Agreement) to do any of the foregoing, of any nature whatsoever, whether consensual, statutory or otherwise; (h) "Material Adverse Effect" shall mean, with respect to any Person, any adverse effect on the business, assets, liabilities, condition (financial or otherwise) or results of operation of such Person and its subsidiaries, if any, which is material to such Person and its subsidiaries, if any, taken as a whole; (i) "Person" shall mean any individual, corporation, partnership, association, trust or other entity or organization, including a governmental or political subdivision or any agency or institution thereof; (j) "SEC" shall mean the Securities and Exchange Commission; and (k) "Securities Act" shall mean the Securities Act of 1933, as amended. [Remainder of page intentionally left blank] 18

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. CONTINENTAL SOUTHERN RESOURCES, INC.
By: /s/ WILLIAM L. TRANSIER -----------------------------William L. Transier Co-Chief Executive Officer

KNOX GAS, LLC
By: /s/ ERNEST BARTLETT -----------------------------Name: Ernest Bartlett, President Title: FEQ Investments, Managing Member

19

EXHIBIT 10.29 INTEREST PLEDGE AGREEMENT THIS INTEREST PLEDGE AGREEMENT (the "Agreement"), dated February 26, 2004, is made and entered into by and among Knox Gas, LLC, a Delaware limited liability company ("Pledgor"), and Continental Southern Resources, Inc., a Nevada corporation (the "Secured Party"). WHEREAS, pursuant to that certain Interest Purchase Agreement, dated as of even date herewith (the "Purchase Agreement"), by and between the Pledgor and the Secured Party, the Pledgor purchased the Secured Party's ninety-nine percent (99%) limited partnership interest (the "LP Interest") in Knox Miss. Partners, L.P. ("Knox Miss") and the Secured Party's one percent (1%) membership interest in Knox Miss., LLC ("Knox LLC"), the general partner in Knox Miss (the "Membership Interest"; together with the LP Interest, the "Interests"), and issued that certain Secured Promissory Note dated February 26, 2004 in the principal amount of US $4,500,000 (the "Note"); and WHEREAS, in order to secure the Pledgor's obligations under the Note, the Secured Party has requested that the Pledgor pledge and grant a security interest in and to the Interests of the Pledgor set forth on Schedule A hereto. NOW, THEREFORE, intending to be legally bound hereby, the parties hereto hereby agree as follows: 1. Defined Terms. (a) Except as otherwise expressly provided herein, capitalized terms used in this Agreement shall have the respective meanings assigned to them in the Purchase Agreement or the Note, as applicable. Where applicable and except as otherwise expressly provided herein, terms used herein (whether or not capitalized) shall have the respective meanings assigned to them in the Uniform Commercial Code, as amended from time to time (the "Code"). (b) "Pledged Collateral" shall mean and include the following: (i) the Interests listed on Schedule A attached hereto and made a part hereof, and all rights and privileges pertaining thereto, including, without limitation, all present and future securities and other ownership interests receivable in respect of, or in exchange for, such Interests, all rights under operating agreements, member agreements, security holder agreements and other similar agreements relating to such Interests, all rights to subscribe for securities and other ownership interests incident to or arising from ownership of such Interests, all cash, interest, securities and other dividends or distributions paid or payable on such Interests, and all books and records (whether paper, electronic or any other medium) pertaining to the foregoing, including, without limitation, all partnership record and transfer books, and (ii) whatever is received when any of the foregoing is sold, exchanged, replaced or otherwise disposed of, including all proceeds thereof, as such term is defined in the Code.

2. Grant of Security Interest. To secure the payment and performance of all obligations and of all indebtedness of Pledgor under the Note (collectively, the "Secured Obligations"), Pledgor hereby grants to the Secured Party a first priority security interest in and hereby pledges to the Secured Party, all of such Pledgor's now existing and hereafter acquired or arising right, title and interest in, to and under the Pledged Collateral whether now or hereafter existing and wherever located. 3. Further Assurances. Prior to or concurrently with the execution of this Agreement, and thereafter at any time and from time to time upon reasonable request of the Secured Party, Pledgor shall execute and deliver to the Secured Party all financing statements, continuation financing statements, assignments, certificates and documents of title, affidavits, reports, notices, schedules of account, letters of authority, further pledges, powers of attorney and all other documents (collectively, the "Security Documents") which the Secured Party may reasonably request, in form reasonably satisfactory to the Secured Party, and take such other action which the Secured Party may reasonably request, to perfect and continue perfected and to create and maintain the first priority status of the Secured Party's security interest in the Pledged Collateral and to fully consummate the transactions contemplated under this Agreement. Pledgor hereby irrevocably makes, constitutes and appoints the Secured Party as Pledgor's true and lawful attorney with power to sign the name of such Pledgor on all or any of the documents which the Secured Party determines must be executed, filed, recorded or sent in order to perfect or continue perfected the Secured Party' security interest in the Pledged Collateral in any jurisdiction. Such power, being coupled with an interest, is irrevocable until all of the Secured Obligations have been indefeasibly full in paid and the Note have terminated. 4. Representations and Warranties. Pledgor hereby represents and warrants to the Secured Party as follows: (a) Pledgor has and will continue to have (or, in the case of after-acquired Pledged Collateral, at the time such Pledgor acquires rights in such Pledged Collateral, will have and will continue to have), title to the Pledged Collateral, free and clear of all liens. (b) The securities constituting the Pledged Collateral have been duly authorized and validly issued to Pledgor (as set forth on Schedule A hereto), and are fully paid and nonassessable. (c) The security interests in the Pledged Collateral granted hereunder are valid, perfected and of first priority, subject to the lien of no other Person. (d) Except as provided in the Limited Partnership Agreement of Knox Miss (the "Limited Partnership Agreement") and the Operating Agreement of Knox LLC, there are no restrictions upon the transfer of the Pledged Collateral and Pledgor has the power and authority and 2

right to transfer the Pledged Collateral owned by Pledgor free of any encumbrances and without obtaining the consent of any other Person. (e) Pledgor has all necessary power to execute, deliver and perform this Agreement. (f) There are no actions, suits, or proceedings pending or, to Pledgor's best knowledge after due inquiry, threatened against or affecting Pledgor with respect to the Pledged Collateral, at law or in equity or before or by any governmental authority, and Pledgor is not in default with respect to any judgment, writ, injunction, decree, rule or regulation which could adversely affect Pledgor's performance hereunder. (g) This Agreement has been duly executed and delivered and constitutes the valid and legally binding obligation of Pledgor, enforceable in accordance with its terms, except to the extent that enforceability of this Agreement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors' rights generally or limiting the right of specific performance. (h) Neither the execution and delivery by Pledgor of this Agreement, nor the compliance with the terms and provisions hereof, will violate any provision of any law or conflict with or result in a breach of any of the terms, conditions or provisions of any judgment, order, injunction, decree or ruling of any governmental authority to which Pledgor is subject or any provision of any agreement, understanding or arrangement to which Pledgor is a party or by which Pledgor is bound. (i) The address of Pledgor's chief executive office is as set forth on the signature page hereto. (j) All rights of Pledgor in connection with its ownership of the Interests are evidenced and governed solely by the agreements, certificate of partnership, Limited Partnership Agreement and other organizational documents of Knox Miss and the agreements, certificate of organization, Operating Agreement and other organizational documents of Knox LLC, and no shareholder or other similar agreements are applicable to the Pledged Collateral. 5. General Covenants. Pledgor hereby covenants and agrees as follows: (a) Pledgor shall do all reasonable acts that may be necessary and appropriate to maintain, preserve and protect the Pledged Collateral. Pledgor shall be responsible for the risk of loss of, damage to, or destruction of the Pledged Collateral owned by Pledgor, unless such loss is the result of the gross negligence or willful misconduct of any Secured Party. Pledgor shall notify the Secured Party in writing ten (10) days prior to any change in such Pledgor's chief executive office address. 3

(b) Pledgor shall appear in and defend any action or proceeding of which Pledgor is aware which could reasonably be expected to affect Pledgor's title to, or the Secured Party's interest in, the Pledged Collateral or the proceeds thereof; provided, however, that with the consent of the Secured Party, Pledgor may settle such actions or proceedings with respect to the Pledged Collateral, which consent shall not be unreasonably withheld or delayed. (c) Pledgor shall, and shall cause Knox Miss and Knox LLC to, keep separate, accurate and complete records of the Pledged Collateral, disclosing the Secured Party's security interest hereunder. (d) Pledgor shall comply with all laws applicable to the Pledged Collateral unless any noncompliance would not individually or in the aggregate materially impair the use or value of the Pledged Collateral or the Secured Party's rights hereunder. (e) Pledgor shall pay any and all taxes, duties, fees or imposts of any nature imposed by any governmental authority on any of the Pledged Collateral, except to the extent contested in good faith by appropriate proceedings. (f) To the extent, following the date hereof, Pledgor acquires securities, shares, capital stock or other ownership interests described in the definition of Pledged Collateral, in respect of, in exchange for, or upon the conversion of, the Pledged Collateral, such securities, shares, capital stock or ownership interests shall be subject to the terms hereof and, upon such acquisition, shall be deemed to be hereby pledged to the Secured Party, and Pledgor thereupon shall deliver all such securities, shares, capital stock, and other ownership interests together with an updated Schedule A hereto, to the Secured Party. (g) Except as set forth in Section 15 hereof, during the term of this Agreement, Pledgor shall not sell, assign, replace, retire, transfer or otherwise dispose of its Pledged Collateral. 6. Other Rights With Respect to Pledged Collateral. (a) In addition to the other rights with respect to the Pledged Collateral granted to the Secured Party hereunder, at any time and from time to time, after and during the continuation of any default under the Note, the Secured Party, at its option and at the expense of the Pledgor, may (a) transfer into the name of the Secured Party or into the name of its nominee, all or any part of the Pledged Collateral, thereafter receiving all dividends, income or other distributions upon the Pledged Collateral; (b) take control of and manage all or any of the Pledged Collateral; (c) apply to the payment of any of the Secured Obligations, whether any be due and payable or not, any moneys, including cash dividends, distributions and income from any Pledged Collateral, now or hereafter in the hands of the Secured Party, on deposit or otherwise, belonging to Pledgor, as the Secured Party in its sole discretion shall determine; and (d) do anything that Pledgor is required but fails to do hereunder. (b) In the event that upon the occurrence of any default under the Note and while such default shall be continuing the Secured Party desires to exercise any of its rights or remedies 4

under this Agreement, it shall deliver written notice (a "Default Notice") to the Pledgor, which notice shall be dated and state that a default under the Note has occurred and is continuing, that it desires to exercise certain of its rights and remedies hereunder and direct the Pledgor to deliver the Pledged Collateral to the Secured Party. Unless the Secured Party is notified in writing by the Pledgor within five (5) days from the date of the Default Notice that the Pledgor disputes the Secured Party's right to exercise any of its rights or remedies hereunder, the Pledgor shall promptly deliver the Pledged Collateral to the Secured Party. If the Secured Party is notified in writing by the Pledgor within five (5) days from the date of the Default Notice that the Pledgor in good faith contests the right of the Secured Party to exercise its rights or remedies hereunder, then, and in that event, the parties shall be permitted to submit the issues in dispute to arbitration in accordance with the provisions of Section 17 of this Agreement. 7. Additional Remedies Upon Event of Default. Upon the occurrence of any default under the Note and while such default shall be continuing, the Secured Party shall have, in addition to all rights and remedies of a secured party under the Code or other applicable law, and in addition to its rights under Section 6 above, the Purchase Agreement and the Note, the following rights and remedies: (a) The Secured Party may, after ten (10) days' advance notice to the Pledgor, sell, assign, give an option or options to purchase or otherwise dispose of the Pledged Collateral or any part thereof at public or private sale, at the Secured Party's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Secured Party may deem commercially reasonable. Pledgor agrees that ten (10) days' advance notice of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Secured Party shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. The Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Pledgor recognizes that the Secured Party may be compelled to resort to one or more private sales of the Pledged Collateral to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. (b) The proceeds of any collection, sale or other disposition of the Pledged Collateral, or any part thereof, shall, after the Secured Party has made all deductions of expenses, including but not limited to, attorneys' fees and other expenses incurred in connection with repossession, collection, sale or disposition of such Pledged Collateral or in connection with the enforcement of the Secured Party's rights with respect to the Pledged Collateral, including in any insolvency, bankruptcy or reorganization proceedings, be applied against the Secured Obligations, whether or not all the same be then due and payable, as follows: (i) first, to the Secured Obligations and to reimburse the Secured Party for out-of-pocket costs, expenses and disbursements, including without limitation reasonable attorneys' fees and legal expenses, incurred by the Secured Party in connection with realizing on the 5

Pledged Collateral including expenses incurred by the Secured Party for the reasonable maintenance, preservation, protection or enforcement of, or realization upon, the Pledged Collateral, including without limitation advances for taxes, insurance, and the like, and reasonable expenses incurred to sell or otherwise realize on, or prepare for sale of or other realization on, any of the Pledged Collateral, in such order as the Secured Party may determine in its discretion; and (ii) the balance, if any, as required by law. 8. Secured Party's Duties. The powers conferred on the Secured Party hereunder are solely to protect its interest in the Pledged Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Pledged Collateral in its possession and the accounting for moneys actually received by it hereunder, the Secured Party shall have no duty as to any Pledged Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged Collateral. 9. No Waiver; Cumulative Remedies. No failure to exercise, and no delay in exercising, on the part of any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any further exercise thereof or the exercise of any other right, power or privilege. The remedies herein provided are cumulative and not exclusive of any remedies provided under the Note and the Purchase Agreement or by law. Pledgor waives any right to require the Secured Party to proceed against any other person or to exhaust any of the Pledged Collateral or other security for the Secured Obligations or to pursue any remedy in the Secured Party's power. 10. Assignment. All rights and obligations of the parties under this Agreement shall inure to the benefit of their respective successors and assigns. 11. Severability. Any provision of this Agreement that shall be held invalid or unenforceable shall be ineffective without invalidating the remaining provisions hereof. 12. Governing Law. This Agreement shall be construed in accordance with and governed by the internal laws of the State of Texas without regard to its conflicts of law principles, except to the extent the validity or perfection of the security interests or the remedies hereunder in respect of any Pledged Collateral are governed by the law of a jurisdiction other than the State of Texas. 6

13. Notices. All notices, requests, demands, directions and other communications (collectively, "notices") given to or made upon any party hereto under the provisions of this Agreement shall be in writing (including telex or facsimile communication) and shall be hand delivered, sent by a recognized overnight courier or sent by telex or facsimile to the respective parties at the addresses and numbers set forth in the signature page hereto or in accordance with any subsequent unrevoked written direction from any party to the others. All notices shall, except as otherwise expressly provided herein, be effective in the case of telex or facsimile, when received, or in the case of hand delivered notice, when hand delivered or, in the case of overnight couriered notice, the business day after deposit with such courier. 14. Specific Performance. The parties acknowledge and agree that, in addition to the other rights of the parties hereunder and under the Note, because a party's remedies at law for failure of any other party to comply with the provisions hereof would be inadequate and that any such failure would not be adequately compensable in damages, the parties agree that each the provisions hereof may be specifically enforced. 15. Voting Rights in Respect of the Pledged Collateral. So long as no default shall occur and be continuing under the Note, Pledgor may exercise any and all voting rights pertaining to the Pledged Collateral. 16. Release of Pledged Collateral. An agreement evidencing the Pledged Collateral shall be released and delivered to Pledgor after full payment of all principal and interest due under the Note is made to the Secured Party. In the event such full payment of all principal and interest is not so received by the Secured Party, the Secured Party shall be permitted to submit the issues in dispute to arbitration in accordance with the provisions of Section 17 of this Agreement. 17. Arbitration. If a dispute arises as to the interpretation of this Agreement, it shall be decided in an arbitration proceeding conforming to the Rules of the American Arbitration Association applicable to commercial arbitration then in effect at the time of the dispute. The arbitration shall take place in the Commonwealth of Pennsylvania. The decision of the Arbitrators shall be conclusively binding upon the parties and final, and such decision shall be enforceable as a judgment in any court of competent jurisdiction. The parties shall share equally the costs of the arbitration. 7

18. Entire Agreement; Amendments. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements relating to a grant of a security interest in the Pledged Collateral by Pledgor. This Agreement may not be amended or supplemented except by a writing signed by the Secured Party and the Pledgor. 19. Counterparts. This Agreement may be executed in any number of counterparts and delivered via facsimile, and by different parties hereto in separate counterparts, each of which when so executed shall be deemed an original and all of which taken together shall constitute but one and the same agreement. 20. Descriptive Headings. The descriptive headings which are used in this Agreement are for the convenience of the parties only and shall not affect the meaning of any provision of this Agreement. [Remainder of page intentionally left blank] 8

SIGNATURE PAGE TO INTEREST PLEDGE AGREEMENT IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have caused this Agreement to be duly executed as of the date first above written. KNOX GAS, LLC
By: /s/ ERNEST BARTLETT ---------------------------------------Name: Ernest Bartlett Title: President, FEQ Investments, Managing Member

Address: 111 Presidential Blvd.

Suite 158A Bala Cynwyd, PA 19004 CONTINENTAL SOUTHERN RESOURCES, INC.
By: /s/ WILLIAM L. TRANSIER ---------------------------------------William L. Transier Co-Chief Executive Officer

Address: 111 Presidential Blvd.

Suite 158A Bala Cynwyd, PA 19004

SCHEDULE A TO INTEREST PLEDGE AGREEMENT DESCRIPTION OF PLEDGED COLLATERAL
Pledgor ------Knox Pledged Collateral -----------------Gas, LLC The ninety-nine percent (99%) limited partnership interest in Knox Miss Partners, L.P., which limited partnership interest shall be released after payment in full of the principal due under the Note in accordance with Section 16 of this Interest Pledge Agreement. The one percent (1%) membership interest in Knox Miss, LLC, the general partner in Knox Miss. Partners, L.P., which membership interest shall be released after payment in full of the principal due under the Note in accordance with Section 16 of this Interest Pledge Agreement.

EXHIBIT 10.30 SECURED PROMISSORY NOTE $4,500,000 February 26, 2004 FOR VALUE RECEIVED, Knox Gas, LLC, a Delaware limited liability company with a principal place of business at 111 Presidential Blvd., Suite 158A, Bala Cynwyd, PA 19004 (the "Borrower"), hereby promises to pay to Continental Southern Resources, Inc., a Nevada corporation with a principal place of business at 1001 Fannin Street, Suite 1700, Houston, Texas 77010 (the "Lender"), the principal sum of Four Million Five Hundred Thousand Dollars (US $4,500,000), together with interest on the unpaid principal balance from time to time outstanding, from the date hereof until maturity at a fixed rate per annum equal to four percent (4%) (the "Stated Rate"). Interest on this Note shall be calculated at an annual rate based on the actual number of days elapsed in an actual calendar year (365 days or 366 days in a leap year, as may be applicable). Principal and interest under this Note shall be due and payable as follows: $500,000 plus accrued and unpaid interest shall be paid on or before March 27, 2004; $1,000,000 plus accrued and unpaid interest shall be paid on or before April 27, 2004; $1,000,000 plus accrued and unpaid interest shall be paid on or before June 27, 2004; and $2,000,000 plus accrued and unpaid interest shall be paid on or before August 27, 2004. All past due principal of, and interest on, this Note shall accrue interest from the date due until the date it is paid at the lower of (i) 4% plus the Stated Rate per annum and (ii) the maximum rate allowed by law. The Borrower shall have the right, from time to time, without premium or penalty, to prepay the indebtedness evidenced by this Note, in full or in part. The obligation of the Borrower for payment of principal, interest and all other sums hereunder is secured by that certain Interest Pledge Agreement, dated as of even date herewith, between the Borrower and the Lender (the "Pledge Agreement"). All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest or otherwise, shall be made without set off or counterclaim and shall be made on or prior to the due date set forth above to the Lender at the address set forth above, or such other place as the Lender may from time to time designate in writing. If any payment or action to be made or taken hereunder shall be stated to be or become due on a day that is not a business day, such payment or action shall be made or taken on the next following business day and such extension of time shall be included in computing interest or fees, if any, in connection with such payment or action. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any governmental authority): (a) default in the payment of the principal sum of this Note, and any interest accrued thereon, when such principal and interest becomes due and payable (whether by acceleration or otherwise), or

(b) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Borrower in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Borrower a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Borrower under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Borrower or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or (c) the commencement by the Borrower of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Borrower in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Borrower or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Borrower in furtherance of any such action. Upon the occurrence of an Event of Default, the entire amount of the indebtedness evidenced by this Note shall be immediately due and payable. Upon the acceleration of the obligations evidenced by this Note and failure by the Borrower to pay amounts then due hereunder, Lender may proceed to protect, exercise and enforce all of its rights and remedies under this Note, the Pledge Agreement and that certain Interest Purchase Agreement, dated as of even date herewith, between the Borrower and the Lender and applicable law. The remedies provided in this Note are cumulative and concurrent, may be pursued in any order, separately, successively or together, may be exercised as often as occasion therefor may arise, and shall be in addition to, and not in substitution for, the rights and remedies that would otherwise be vested in the Lender for the recovery of damages, or otherwise, in the event of a breach of any of the undertakings of the Borrower hereunder. This Note may not be modified, altered or amended, except by an agreement in writing signed by the Borrower and the Lender. It is the intention of the parties hereto to conform strictly to usury laws applicable to the holder of this Note. Accordingly, if the transactions contemplated hereby would be usurious under applicable law (including the laws of the United States of America and the State of Texas), then, in that event, notwithstanding anything to the contrary in this Note, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under law applicable to the holder of this Note that is contracted for, taken, reserved, charged or received under this Note shall under no circumstances exceed the maximum amount allowed by such applicable law; (ii) in the event that the maturity of this Note is accelerated by reason of an election of the holder of this Note resulting from any Event of Default, or in the event of any permitted prepayment, then such consideration that constitutes interest under law applicable to the holder of this Note may never include more than the maximum amount allowed by such applicable law, and (iii) excess interest, if any, provided for 2

in this Note or otherwise shall be canceled automatically and, if theretofore paid, shall be credited by the holder of this Note on the principal amount of this Note (or, to the extent that the principal amount of this Note shall have been or would thereby be paid in full, refunded by the holder of this Note to the Borrower). The right to accelerate the maturity of this Note does not include the right to accelerate any interest that has not otherwise accrued on the date of such acceleration, and the holder of this Note does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to the holder of this Note for the use, forbearance or detention of sums included in this Note shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of this Note until payment in full so that the rate or amount of interest on account of the indebtedness under this Note does not exceed the applicable usury ceiling, if any. As used in this paragraph, the term "applicable law" shall mean the law of the State of Texas. All reasonable attorney's fees and expenses and other reasonable out-of-pocket costs incurred by the Payee in connection with the collection of this Note subsequent to an Event of Default (as defined herein) shall become amounts due and owing under the terms of this Note in addition to all other amounts owing pursuant to the other provisions of this Note. Borrower hereby waives demand, presentment for payment, protest, notice of protest, notice of intention to accelerate the indebtedness hereunder, notice of the acceleration of the indebtedness hereunder and filing of suit and diligence in collecting this Note or enforcing of any of the rights of Lender. This Note shall bind the Borrower and its successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns, except that Borrower may not sell, assign or transfer this Note or any portion hereof without obtaining the prior written consent of the Lender. All references herein to the "Borrower" and the "Lender" shall be deemed to apply to the Borrower and the Lender, respectively, and their respective successors and assigns. This Note and any other documents delivered in connection herewith and the rights and obligations of the parties hereto and thereto shall for all purposes be governed by and construed and enforced in accordance with the internal laws of the State of Texas without giving effect to its conflicts of law principles. IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has executed this Note as of the date first written above with the intention that this Note shall constitute a sealed instrument. KNOX GAS, LLC
/s/ ERNEST BARTLETT ---------------------------------------Name: Ernest Bartlett Title: FEQ Investments, Managing Member By:

EXHIBIT 10.31 CONFIDENTIALITY AGREEMENT RAM Trading Ltd. ("Purchaser") understand and acknowledges that the Securities Purchase Agreement and related documents (the "Offering Documents") contain information that may be regarded as material non-public information under Regulation FD under the Securities Act of 1933, as amended. Applicable securities laws prohibit the Company from distributing the Offering Documents without obtaining Purchaser's agreement to maintain the confidentiality of such information and to not disclose such information to any person. In consideration of the Company providing the Offering Documents to Purchaser, Purchaser hereby acknowledges and agrees that the Offering Documents are confidential, are being provided to Purchaser solely for the purpose of aiding Purchaser in Purchaser's consideration of the terms thereof, and that other than as otherwise required by law, rule or regulation, neither the Offering Documents nor any of the information contained therein shall be disclosed to any person. You are strongly cautioned that Federal law provides severe civil and criminal penalties for trading in the public market on the basis of material non-public information. IN WITNESS WHEREOF, Purchaser acknowledges and agrees to abide by the terms of this Confidentiality Agreement. RAM TRADING LTD:
/s/ JAMES R. PARK ---------------------------------------Name: James R. Park Title: VP Ritchie Capital Management LLC Investment Advisor to RAM Trading Ltd. By:

SECURITIES PURCHASE AGREEMENT THIS SECURITIES PURCHASE AGREEMENT (the "Agreement"), is made this 28th day of October 2003, by and between Continental Southern Resources, Inc., a Nevada corporation, ("Seller"), and RAM Trading, Ltd., a (the "Purchaser"), WITNESSETH: WHEREAS, the Seller owns beneficially and of record 99 Units of Limited Partnership Interest in Knox Miss Partners, LP., a Delaware limited partnership (the "Company"); and WHEREAS, the Seller desires to sell, and Purchaser desires to purchase, 10 Units of Limited Partnership Interest from Seller (the "Interest") and 150,000 shares (the "Shares") of common stock, $.001 par value per share, of the Seller (the "Common Stock") for the consideration and on the terms set forth herein. NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I SALE AND TRANSFER OF SECURITIES 1.1 Sale and Purchase of the Interest and Shares. In reliance upon the representations, warranties and covenants contained in this Agreement, the Purchaser agrees to purchase the Interest and Shares from the Seller, and the Seller agrees to sell, transfer, convey, assign and deliver the Interest and Shares to the Purchaser, on the terms and conditions set forth in this Agreement, such sale, transfer, conveyance, assignment and delivery of the Interest and Shares causing the entire right, title and interest in and to the Interest and Shares to be transferred beneficially and of record to Purchaser, free and clear of any Encumbrances or Rights of any kind or nature whatsoever. 1.2 Purchase Price. The aggregate purchase price for the Interest and the Shares (the "Purchase Price") shall be One Million Two Hundred Thousand Dollars ($1,200,000). ARTICLE II CLOSING 2.1 Closing Date. The closing of the transactions described in this Agreement (the "Closing") shall take place at the office of the Seller or any other location agreed to by the parties concurrent with the execution and delivery of this Agreement. 2

2.2 Closing Transactions. At the Closing, the following transactions shall occur, all of such transactions being deemed to occur simultaneously: (a) The Seller shall deliver to the Purchaser the following: (1) A certificate or certificates, if any, representing all of the Interest duly endorsed by the Seller in blank or accompanied by assignments separate from the certificate duly endorsed in blank; (2) A certificate or certificates registered in the name of the Purchaser evidencing the Shares; and (3) such other documents, agreements, consents, and approvals as are required under this Agreement or as may be reasonably requested by the Purchaser. (b) Purchaser will deliver to the Seller the following: (1) the Purchase Price by wire transfer of immediately available funds; and (2) such other documents, agreements, consents, and approvals as are required under this Agreement or as may be reasonably requested by the Seller. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER As a material inducement to Purchaser to execute this Agreement and consummate the transactions contemplated hereby, the Seller represents to the Purchaser that the following representations and warranties are true and correct. 3.1 Organization, Qualification and Status. The Seller is a duly organized and validly existing corporation in good standing under the laws of the State of Nevada with adequate power and authority to conduct the business in which it is now engaged, has the corporate power and authority to execute, deliver and perform this Agreement, and is duly qualified and licensed to do business as a foreign corporation in such other states or jurisdictions as is necessary to enable it to carry on its business, except where the failure to do so would not have a material adverse effect on its business. 3.2 Authority; Valid and Binding Obligation. The execution and delivery of this Agreement and the transactions contemplated hereby have been duly authorized by the Board of Directors of the Seller. No other corporate act or proceeding on the part of the Seller is necessary to authorize this Agreement or the consummation of the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by Seller and constitutes a legal, valid and binding obligation 3

of Seller enforceable against it in accordance with the terms hereof, except as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium, reorganization or other similar laws and legal and equitable principles limiting or affecting the rights of creditors generally; and/or (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law. 3.3 Ownership of Interest. The Seller owns and holds, beneficially and of record, the entire right, title and interest in and to the Interest and the Shares, free and clear of Rights or Encumbrances of any kind or nature whatsoever. The Seller has the full power and authority to vote, transfer and dispose of the Interest and the Shares, free and clear of any Right or Encumbrance of any kind or nature whatsoever other than restrictions under the Securities Act and applicable state securities laws, and under the LP Agreement (as defined below). Other than the transactions contemplated by this Agreement, there is no outstanding vote, plan, pending proposal, or other right of any Person to acquire, or to cause the redemption of, the Interest or the Shares or to effect the merger or consolidation of the Company with or into any other Person. 3.4 Limited Partnership Agreement. The copy of the Limited Partnership Agreement of the Company (the "LP Agreement"), attached hereto as Exhibit A and made a part hereof is true, correct and complete, and includes all amendments to the date hereof. 3.5 Reservation of Shares. The Shares have been duly and validly authorized and when issued and paid for in accordance with the terms hereof, shall be fully paid and non assessable. An additional 685,000 shares of restricted Common Stock (the "Additional Shares') have been duly authorized and reserved for issuance upon the exercise of the Option (as defined in Section 7.1 hereof). Upon issuance and payment therefore in accordance with the terms hereof, the Additional Shares shall be duly and validly issued and fully paid and non assessable. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER As a material inducement to the Seller to execute this Agreement and to consummate the transactions contemplated hereby, Purchaser represents to the Seller that the following representations and warranties are true and correct. 4.1 Organization and Qualification. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. Purchaser has the corporate power and authority to carry on its business as presently conducted. Purchaser is duly qualified or licensed to do business and in good standing as a foreign corporation in each of the jurisdictions in which the nature of its business or the character of the properties and assets which it owns or leases makes such qualification or licensing necessary except where failure to do so would not have a material adverse effect on its business. 4

4.2 Authorization; Valid and Binding Obligation. Purchaser has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and thereunder. This Agreement has been duly authorized, executed and delivered by Purchaser and constitutes a legal, valid and binding obligation of Purchaser, enforceable against it in accordance with the terms hereof except as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium, reorganization or other similar laws and legal and equitable principles limiting or affecting the rights of creditors generally; and/or (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law. 4.5 Accredited Investor. The Purchaser has such knowledge and experience in business and financial matters such that it is capable of evaluating the merits and risks of purchasing the Interest and the Shares. Purchaser is an "accredited investor" as that term is defined in Rule 501 of Regulation D of the Act. 4.6 Investment Intent. The Purchaser hereby acknowledges that it has been advised that neither the transfer of the Interest or the issuance of the Shares has been registered with, or reviewed by, the Securities and Exchange Commission ("SEC"), as such transactions are intended to be private transactions exempt from the registration provisions of the Securities Act. The Purchaser represents that the Interest and the Shares are being acquired for its own account and not on behalf of any other person, for investment purposes only and not with a view towards distribution. The Purchaser agrees that it will not attempt to sell, transfer, assign, pledge or otherwise dispose of all or any portion of the Interest or the Shares unless they are registered under the Securities Act and applicable state securities laws or an exemption from such registration is available. The Purchaser understands that neither the Interest nor the Shares has been registered under the Securities Act and applicable state securities laws by reason of a claimed exemption under the provisions of the Securities Act and applicable state securities laws that depends, in part, upon the Seller's investment intention. 4.7 Access to Company Information. The Purchaser hereby acknowledges that it has had access to all material and relevant information concerning the Company and its management, financial condition, capitalization, market information, properties and prospects, necessary to enable it to make an informed investment decision with respect to its purchase of the Interests. The Purchaser acknowledges that it has had the opportunity to ask questions of and receive answers from, and to obtain additional information from, representatives of the Company concerning the acquisition of the Interest, and the present and proposed business and financial condition of the Company, and has had all such questions answered to its satisfaction and has been supplied with all information requested. 5

4.8 Access to Seller Information. The Seller hereby acknowledges that it has had access to all material and relevant information concerning the Seller) and its management, financial condition) capitalization, market information, properties and prospects) necessary to enable it to make an informed investment decision with respect to an investment in the Shares) including but not limited to, the Seller's Annual Report on Form l0-KSB for the fiscal year ended December 31, 2002, which was filed with the SEC on or about April 17, 2003 (the "Form 10-KSB") and the Seller's Quarterly Report on Form 10-QSB for the three months ended March 31, 2003, which was filed with the SEC on May 16, 2003 (the "Form 10-QSB"). The Purchaser has carefully read and reviewed) and is familiar with and understands the contents of) the Form 10-KSB and Form 10- QSB, including) without limitation, the "Risk Factors" set forth in the Form 10-KSB. The Purchaser acknowledges that it has had the opportunity to ask questions of and receive answers from, and to obtain additional information from, representatives of the Seller concerning the present and proposed business and financial condition of the Seller) and has had all such questions answered to its satisfaction and has been supplied with all information requested. 4.9 Legend on Certificates. The Purchaser understands and acknowledges that the Shares and any certificates issued in replacement therefor shall bear the following legend) in addition to any other legend required by law or otherwise: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF REGISTRATION OF THE SECURITIES UNDER THE SECURITIES ACT OF 1933) AS AMENDED, AND REGISTRATION OR QUALIFICATION OF THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR RECEIPT OF AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED. The Purchaser further understands that the Interest is uncertificated and that in the event certificates are issued to evidence the Interest) such certificates will bear restrictive legends setting forth the transfer restrictions imposed by the Securities Act and the LP Agreement. 4.10 Disclosure. No representation or warranty of Purchaser in this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the factual statements contained herein, in light of the circumstances under which such statements are made, not misleading. Neither this Agreement nor any other document, certificate, exhibit, statement or schedule furnished or to be furnished by or on behalf of the Purchaser to the Seller in connection with the transactions contemplated hereby contains or will contain any untrue statement of a 6

material fact, or omits or will omit to state a material fact necessary to make the factual statements contained therein, in light of the circumstances under which they were made, not misleading. ARTICLE V INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES The representations and warranties contained herein shall survive the execution and delivery of this Agreement. Purchaser agrees to indemnify, hold harmless and defend the Seller and its respective affiliates and agents with respect to any and all loss, damage, expense, claim, action or liability any of them may incur as a result of the breach or untruth of any representations or warranties made by Purchaser herein, and Purchaser agrees that in the event of any breach or untruth of any representations or warranties made by Purchaser herein, the Seller may, at its option, forthwith rescind the sale of the Interest and the Shares to Purchaser. ARTICLE VI REGISTRATION RIGHTS The Purchaser shall be entitled to the rights and subject to the obligations set forth in Article 6 of that certain Securities Purchase Agreement dated May 23, 2003 by and between the Seller and Purchaser (the "SPA") with respect to the Shares. If, in the judgment of Seller's counsel, the Purchaser is not permitted by federal or state securities laws to participate in the registration contemplated by Article 6 of the SPA, the Shares will be included in the next registration statement filed by the Company (other than registration statements on Form S-8, S-4 or any other SEC Form relating to compensatory plans or business combinations) in accordance with the provisions of Article 6 of the SPA. ARTICLE VII ADDITIONAL AGREEMENTS OF THE PARTIES 7.1 Option; Prohibition on Transfer. The Seller and Purchaser shall have the following additional rights with respect to the Interest: (a) Option. Commencing at 9:00 a.m. on the 46th day after the date of this Agreement (the "Commencement Date") and ending at 5:00 p.m. Eastern Standard Time on January [___], 2004 (the "Termination Date"), Seller shall have the right, exercisable in its sole discretion, to purchase the Interest from the Purchaser (the "Call") and Purchaser shall have the right, exercisable in its sole discretion, to sell the Interest to the Seller (the .'Put" and together with the Call, the "Option") at an exercise price (the "Exercise Price") equal to $1,200,000, as appropriately adjusted to reflect any additional capital contributions paid by Purchaser with respect to the Interest, by delivering written notice ("Notice of Exercise") to the other party of its intention to exercise this Option. The Notice of Exercise shall set forth a date on which the Exercise Price shall be delivered to the Purchaser and the Interest transferred to the Seller, which date shall be not less than five (5) nor more than ten (10) days after the date of the Notice of Exercise. The Exercise Price shall be paid by the issuance of the Additional Shares, subject to proportional adjustment in the event that the Seller (i) pays a dividend or makes a distribution on its shares of Common Stock in shares of Common Stock, (ii) subdivides or reclassifies its outstanding Common Stock into a greater number of shares, or (iii) combines or reclassifies its 7

outstanding Common Stock into a smaller number of shares, unless both parties mutually agree that the loan will be repaid by wire transfer from Seller to Purchaser. (b) Commencing on the date hereof and ending on the Termination Date, the Purchaser shall not and shall not enter into any agreement to sell, assign, pledge, hypothecate, grant any other property interest, whether contingent or otherwise, with respect to, or otherwise transfer, all or any part of the Interest and shall not grant and shall not enter into any agreement to grant any subscription, warrant, option, voting agreement, voting trust, proxy, or other arrangement or commitment obligating or which may obligate it to dispose of or vote the Interest in whole or in part to any Person. 7.2 Consent of General Partner. Knox Miss, LLC, the general partner of the Partnership, hereby consents to the transfer of the Interest by Seller pursuant to the terms of this Agreement and the issuance and any exercise of the Option by the Seller or Purchaser. 7.3 Prohibition on Trading in Purchaser Common Stock. The Purchaser acknowledges that the United States securities laws prohibit any person who has received material non-public information concerning the matters which are the subject matter of this Agreement from purchasing or selling the securities of the Seller, or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of Seller. Accordingly, the "Purchaser agrees that it will comply with such securities laws. 7.4 Further Acts and Assurances. The parties agree that, at any time and from time to time, on and after the Closing, upon the reasonable request of the other party, they will do or cause to be done all such further acts and things and execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all papers, documents, instruments, agreements, assignments, transfers, assurances and conveyances as may be necessary or desirable to carry out and give effect to the provisions and intent of this Agreement. 7.5 Public Announcements. Neither the Seller nor the Purchaser shall disclose to the public or to any third party the existence of this Agreement, the terms hereof or the transactions contemplated hereby, or any other material non-public information concerning or relating to the other party hereto, other than with the express prior written consent of the other party hereto, except as may be required by law or court order. except to enforce the rights of such disclosing party under this Agreement; and "except that Seller shall have the right to make such public disclosures of this Agreement and the transactions contemplated hereby as it determines are necessary or appropriate under federal or state securities laws; provided, however, that notwithstanding anything to the contrary contained in this Agreement, any party hereto may disclose this Agreement to any of its directors, officers, employees, shareholders, affiliates, agents and representatives who need to know such information for the sole purpose of evaluating, or performing the party's obligations or exercising 8

the party's rights under, this Agreement, and to any party whose consent is required in connection with this Agreement. ARTICLE VIII MISCELLANEOUS 8.1 Definitions. For purposes of this Agreement, the following terms have the meanings specified: "Encumbrance" means and includes: (i) with respect to any personal property, any intangible property or any property other than real property, any security or other property interest or right, claim lien, pledge, option, charge, including, without limitation, any outstanding additional capital contribution with respect to the Interest, security interest, contingent or conditional sale, or other title claim or retention agreement or lease or use agreement in the nature thereof, interest or other right or claim of third parties, whether voluntarily incurred or arising by operation of law, and including any agreement to grant or submit to any of the foregoing in the future; and (ii) with respect to any real property (whether and including owned real estate or leased real estate) any mortgage, lien, easement, interest right-of-way, condemnation or eminent domain proceeding, encroachment, any building, use or other form of restriction, encumbrance or other claim (including adverse or prescriptive) or right of third parties (including Governmental Authorities) any lease or sublease, boundary dispute, and agreements with respect to any real property including: purchase, sale, right of first refusal, option, construction, building or property service, maintenance, property management, conditional or contingent sale, use or occupancy, franchise or concession, whether voluntarily incurred or arising by operation of law, and including any agreement to grant or submit to any of the foregoing in the future. "Governmental Authority" means any: (i) nation, state, county, city, town, village, district or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other government; (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch board commission, department, instrumentality office or other entity and any court or other tribunal); (iv) multi-national organization or body; and/or (v) body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature. "Indebtedness" means (i) all outstanding bank and other loans, notes, lines of credit, capital leases or debt instruments, and (ii) all other indebtedness, excluding trade payables, operating leases and other current liabilities 9

"Liability" or "Liabilities" means any and all debts, liabilities and/or obligations of any type, nature or description (whether known or unknown, asserted or unasserted, secured or unsecured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated and whether due or to become due). "Person" means any individual, corporation (including any non-profit corporation), general, limited or limited liability partnership, limited liability company, joint venture, estate, trust, association, organization, or other entity or Governmental Authority. "Rights" means any and all outstanding subscriptions, warrants, options, voting agreements, voting trusts, proxies, or other arrangements or commitments obligating or which may obligate a Person to dispose of or vote any securities, including, without limitation, the Interest or the Shares. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. 8.2 Notices. All notices, requests, consents or other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed, first class postage prepaid, by registered or certified mail to the following addresses: If to the Seller: Continental Southern Resources, Inc. 111 Presidential Boulevard, Suite 158-A Bala Cynwyd, P A 19004 Attention: Chief Executive Officer and With a copy to: Spector Gadon & Rosen, P.C. Seven Penn Center 1635 Market Street, 7th Floor Philadelphia, PA 19103 Attention: Vincent A. Vietti, Esquire In the case of Purchaser: To that address indicated on the signature page hereof Unless specified otherwise, such notices and other communications shall for all purposes of this Agreement be treated as being effective upon being delivered personally or, if sent by mail, five days after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed as set forth above, and postage prepaid. 10

8.3 Entire Agreement; Assignment. This Agreement, including all Exhibits hereto, constitutes the entire Agreement between the parties with respect to its subject matter and supersedes all prior agreements and understandings, both written and oral, among the parties or any of them with respect to such subject matter. Neither party may assign this Agreement or any of its or his rights hereunder without the prior written consent of the other parties. 8.4 Binding Effect; Benefit. This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and assigns. Nothing in this Agreement is intended to confer on any person other than the parties to this Agreement or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. 8.5 Headings. The descriptive headings of the sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. 8.6 Counterparts. This Agreement may be executed in two or more counterparts and delivered via facsimile, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. 8.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to the laws that might otherwise govern under principles of conflicts of laws applicable thereto. 8.8 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 8.9 Amendment and Modification. This Agreement may not be amended except by an instrument in writing signed on behalf of Purchaser and the Seller. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 11

IN WITNESS WHEREOF, each of the parties has executed or caused this Agreement to be executed as of the date first above written. CONTINENTAL SOUTHERN RESOURCES, INC.
By: /s/ STEPHEN P. HARRINGTON ------------------------------------------Authorized Executive Officer

RAM TRADING LTD.
By: /s/ JAMES R. PARK -------------------------------------------Authorized Executive Officer Address: VP Ritchie Capital Management, LLC, Investment Advisor to RAM Trading Ltd.

KNOX MISS PARTNERS, L.P. solely for the purpose of Section 7.2 hereof By: Knox Miss, LLC, its General Partner
By: /s/ MARK BUSH -------------------------------------------Manager

12

EXHIBIT 10.32 FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT THIS FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT (this "Amendment"), is made and entered into as of December 10, 2003, by and between CONTINENTAL SOUTHERN RESOURCES, INC. a Nevada corporation ("Seller"), and RAM TRADING, LTD. a Cayman Islands corporation (the "Purchaser") for the purpose of amending the Securities Purchase Agreement (the "Purchase Agreement") dated October 28, 2003, by and between the Seller and Purchaser. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement. RECITALS WHEREAS, the parties hereto desire to amend certain provisions of the Purchase Agreement to reflect the intent of all of the parties thereto by making the Option exercisable as of December 10, 2003 and by increasing the number of shares reserved for issuance upon exercise of the Option. NOW, THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: 1. Section 3.5 is hereby deleted in its entirety and replaced with the following provision: Section 3.5 Reservation of Shares The Shares have been duly and validly authorized and when issued and paid for in accordance with the terms hereof, shall be fully paid and non assessable. An additional 835,000 shares of restricted Common Stock (the "Additional Shares") have been duly authorized and reserved for issuance upon the exercise of the Option (as defined in Section 7.1 hereof). Upon issuance and payment therefore in accordance with the terms hereof, the Additional Shares shall be duly and validly issued and fully paid and non assessable. 2. Section 7.1(a) is hereby deleted in its entirety and replaced with the following provision: (a) Option. Commencing on December 10, 2003 and ending at 5:00 p.m. Eastern Standard Time on April 30, 2004 (the "Termination Date"), Seller shall have the right, exercisable in its sole discretion, to purchase the Interest from the Purchaser (the "Call") and Purchaser shall have the right, exercisable in its sole discretion, to sell the Interest to the Seller (the "Put" and together with the Call, the "Option") at an exercise price (the "Exercise Price") equal to $1,200,000, as appropriately adjusted to reflect any additional capital contributions paid by Purchaser with respect to the Interest, by delivering written notice ("Notice of Exercise") to the other party of its intention to exercise this

Option. The Notice of Exercise shall set forth a date on which the Exercise Price shall be delivered to the Purchaser and the Interest transferred to the Seller, which date shall be not less than five (5) nor more than (10) days after the date of the Notice of Exercise. The Exercise Price shall be paid by the issuance of the Additional Shares, subject to proportional adjustment in the event that the Seller (i) pays a dividend or makes a distribution on its shares of Common Stock in shares of Common Stock, (ii) subdivides or reclassifies its outstanding Common Stock into a greater number of shares, or (ii) combines or reclassifies its outstanding Common Stock into a smaller number of shares, unless both parties mutually agree that the loan will be repaid by wire transfer from Seller to Purchaser. 3. Except as expressly provided herein, the Purchase Agreement shall remain in full force and effect. 4. This Amendment may be executed in counterpart, each of which shall be deemed to be an original, and both of which together shall constitute one and the same agreement. 5. This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to the laws that might otherwise govern under applicable principles of conflicts of laws thereof. IN WITNESS WHEREOF, Purchaser and Seller have caused this Amendment to be signed by their respective officers hereunto duly authorized, all as of the date first written above. CONTINENTAL SOUTHERN RESOURCES, INC. By:______________________________________ Name: Title: RAM TRADING, LTD. By:______________________________________ Name: Title: 2

EXHIBIT 10.33 CONFIDENTIALITY AGREEMENT RAM Trading Ltd. ("Purchaser") understand and acknowledges that the Securities Purchase Agreement and related documents (the "Offering Documents") contain information that may be regarded as material non-public information under Regulation FD under the Securities Act of 1933, as amended. Applicable securities laws prohibit the Company from distributing the Offering Documents without obtaining Purchaser's agreement to maintain the confidentiality of such information and to not disclose such information to any person. In consideration of the Company providing the Offering Documents to Purchaser, Purchaser hereby acknowledges and agrees that the Offering Documents are confidential, are being provided to Purchaser solely for the purpose of aiding Purchaser in Purchaser's consideration of the terms thereof, and that other than as otherwise required by law, rule or regulation, neither the Offering Documents nor any of the information contained therein shall be disclosed to any person. You are strongly cautioned that Federal law provides severe civil and criminal penalties for trading in the public market on the basis of material non-public information. IN WITNESS WHEREOF, Purchaser acknowledges and agrees to abide by the terms of this Confidentiality Agreement. RAM TRADING LTD:
By: /s/JAMES R. PARK ------------------------------------Name: James R. Park Title: Authorized Signatory Address: 2100 Enterprise Avenue ------------------------------------Geneva, IL 60134 -------------------------------------

August 27, 2003 -------------------------------Date

SECURITIES PURCHASE AGREEMENT THIS SECURITIES PURCHASE AGREEMENT (the "Agreement"), is made this 27th day of August 2003, by and between Continental Southern Resources, Inc., a Nevada corporation, ("Seller"), and RAM Trading, Ltd., a Cayman Island company (the "Purchaser"), WITNESSETH: WHEREAS, the Seller owns beneficially and of record 25.25 Units of Limited Partnership Interest in Louisiana Shelf Partners, L.P., a Delaware limited partnership (the "Company"); and WHEREAS, the Seller desires to sell, and Purchaser desires to purchase, 7 Units of Limited Partnership Interest from Seller (the "Interest") and 150,000 shares (the "Shares") of common stock, $.001 par value per share, of the Seller (the "Common Stock") for the consideration and on the terms set forth herein. NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I SALE AND TRANSFER OF SECURITIES 1.1. Sale and Purchase of the Interest and Shares. In reliance upon the representations, warranties and covenants contained in this Agreement, the Purchaser agrees to purchase the Interest and Shares from the Seller, and the Seller agrees to sell, transfer, convey, assign and deliver the Interest and Shares to the Purchaser, on the terms and conditions set forth in this Agreement, such sale, transfer, conveyance, assignment and delivery of the Interest and Shares causing the entire right, title and interest in and to the Interest and Shares to be transferred beneficially and of record to Purchaser, free and clear of any Encumbrances or Rights of any kind or nature whatsoever. 1.2. Purchase Price. The aggregate purchase price for the Interest and the Shares (the "Purchase Price") shall be One Million Dollars ($1,000,000). ARTICLE II CLOSING 2.1 Closing Date. The closing of the transactions described in this Agreement (the "Closing") shall take place at the office of the Seller or any other location agreed to by the parties concurrent with the execution and delivery of this Agreement. 2

2.2 Closing Transactions. At the Closing, the following transactions shall occur, all of such transactions being deemed to occur simultaneously: (a) The Seller shall deliver to the Purchaser the following: (1) A certificate or certificates, if any, representing all of the Interest duly endorsed by the Seller in blank or accompanied by assignments separate from the certificate duly endorsed in blank; (2) A certificate or certificates registered in the name of the Purchaser evidencing the Shares; and (3) such other documents, agreements, consents, and approvals as are required under this Agreement or as may be reasonably requested by the Purchaser. (b) Purchaser will deliver to the Seller the following: (1) the Purchase Price by wire transfer of immediately available funds; and (2) such other documents, agreements, consents, and approvals as are required under this Agreement or as may be reasonably requested by the Seller. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER As a material inducement to Purchaser to execute this Agreement and consummate the transactions contemplated hereby, the Seller represents to the Purchaser that the following representations and warranties are true and correct. 3.1 Organization, Qualification and Status. The Seller is a duly organized and validly existing corporation in good standing under the laws of the State of Nevada with adequate power and authority to conduct the business in which it is now engaged, has the corporate power and authority to execute, deliver and perform this Agreement, and is duly qualified and licensed to do business as a foreign corporation in such other states or jurisdictions as is necessary to enable it to carry on its business, except where the failure to do so would not have a material adverse effect on its business. 3.2 Authority; Valid and Binding Obligation. The execution and delivery of this Agreement and the transactions contemplated hereby have been duly authorized by the Board of Directors of the Seller. No other corporate act or proceeding on the part of the Seller is necessary to authorize this Agreement or the consummation of the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by Seller and constitutes a legal, valid and binding obligation of Seller enforceable against it in accordance with the terms hereof, except as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium, reorganization or other similar laws 3

and legal and equitable principles limiting or affecting the rights of creditors generally; and/or (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law. 3.3 Ownership of Interest. The Seller owns and holds, beneficially and of record, the entire right, title and interest in and to the Interest and the Shares, free and clear of Rights or Encumbrances of any kind or nature whatsoever. The Seller has the full power and authority to vote, transfer and dispose of the Interest and the Shares, free and clear of any Right or Encumbrance of any kind or nature whatsoever other than restrictions under the Securities Act and applicable state securities laws, and under the LP Agreement (as defined below). Other than the transactions contemplated by this Agreement, there is no outstanding vote, plan, pending proposal, or other right of any Person to acquire, or to cause the redemption of, the Interest or the Shares or to effect the merger or consolidation of the Company with or into any other Person. 3.4 Limited Partnership Agreement. The copy of the Limited Partnership Agreement of the Company (the "LP Agreement"), attached hereto as Exhibit A and made a part hereof is true, correct and complete, and includes all amendments to the date hereof. 3.5 Reservation of Shares. The Shares have been duly and validly authorized and when issued and paid for in accordance with the terms hereof, shall be fully paid and non assessable. An additional 650,000 shares of restricted Common Stock (the "Additional Shares") have been duly authorized and reserved for issuance upon the exercise of the Option (as defined in Section 7.1 hereof). Upon issuance and payment therefore in accordance with the terms hereof, the Additional Shares shall be duly and validly issued and fully paid and non assessable. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER As a material inducement to the Seller to execute this Agreement and to consummate the transactions contemplated hereby, Purchaser represents to the Seller that the following representations and warranties are true and correct. 4.1 Organization and Qualification. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. Purchaser has the corporate power and authority to carry on its business as presently conducted. Purchaser is duly qualified or licensed to do business and in good standing as a foreign corporation in each of the jurisdictions in which the nature of its business or the character of the properties and assets which it owns or leases makes such qualification or licensing necessary except where failure to do so would not have a material adverse effect on its business. 4.2 Authorization; Valid and Binding Obligation. 4

Purchaser has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and thereunder. This Agreement has been duly authorized, executed and delivered by Purchaser and constitutes a legal, valid and binding obligation of Purchaser, enforceable against it in accordance with the terms hereof except as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium, reorganization or other similar laws and legal and equitable principles limiting or affecting the rights of creditors generally; and/or (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law. 4.5 Accredited Investor. The Purchaser has such knowledge and experience in business and financial matters such that it is capable of evaluating the merits and risks of purchasing the Interest and the Shares. Purchaser is an "accredited investor" as that term is defined in Rule 501 of Regulation D of the Act 4.6 Investment Intent. The Purchaser hereby acknowledges that it has been advised that neither the transfer of the Interest or the issuance of the Shares has been registered with, or reviewed by, the Securities and Exchange Commission ("SEC"), as such transactions are intended to be private transactions exempt from the registration provisions of the Securities Act. The Purchaser represents that the Interest and the Shares are being acquired for its own account and not on behalf of any other person, for investment purposes only and not with a view towards distribution. The Purchaser agrees that it will not attempt to sell, transfer, assign, pledge or otherwise dispose of all or any portion of the Interest or the Shares unless they are registered under the Securities Act and applicable state securities laws or an exemption from such registration is available. The Purchaser understands that neither the Interest nor the Shares has been registered under the Securities Act and applicable state securities laws by reason of a claimed exemption under the provisions of the Securities Act and applicable state securities laws that depends, in part, upon the Seller's investment intention. 4.7 Access to Company Information. The Purchaser hereby acknowledges that it has had access to all material and relevant information concerning the Company and its management, financial condition, capitalization, market information, properties and prospects, necessary to enable it to make an informed investment decision with respect to its purchase of the Interests. The Purchaser acknowledges that it has had the opportunity to ask questions of and receive answers from, and to obtain additional information from, representatives of the Company concerning the acquisition of the Interest, and the present and proposed business and financial condition of the Company, and has had all such questions answered to its satisfaction and has been supplied with all information requested. 4.8 Access to Seller Information. 5

The Seller hereby acknowledges that it has had access to all material and relevant information concerning the Seller, and its management, financial condition, capitalization, market information, properties and prospects, necessary to enable it to make an informed investment decision with respect to an investment in the Shares, including but not limited to, the Seller's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002, which was filed with the SEC on or about April 17, 2003 (the " Form 10-KSB") and the Seller's Quarterly Report on Form 10-QSB for the three months ended March 31, 2003, which was filed with the SEC on May 16, 2003 (the "Form 10-QSB"). The Purchaser has carefully read and reviewed, and is familiar with and understands the contents of, the Form 10-KSB and Form 10-QSB, including, without limitation, the "Risk Factors" set forth in the Form 10-KSB. The Purchaser acknowledges that it has had the opportunity to ask questions of and receive answers from, and to obtain additional information from, representatives of the Seller concerning the present and proposed business and financial condition of the Seller, and has had all such questions answered to its satisfaction and has been supplied with all information requested. 4.9 Legend on Certificates. The Purchaser understands and acknowledges that the Shares and any certificates issued in replacement therefor shall bear the following legend, in addition to any other legend required by law or otherwise: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF REGISTRATION OF THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND REGISTRATION OR QUALIFICATION OF THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR RECEIPT OF AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED. The Purchaser further understands that the Interest is uncertificated and that in the event certificates are issued to evidence the Interest, such certificates will bear restrictive legends setting forth the transfer restrictions imposed by the Securities Act and the LP Agreement. 4.10 Disclosure. No representation or warranty of Purchaser in this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the factual statements contained herein, in light of the circumstances under which such statements are made, not misleading. Neither this Agreement nor any other document, certificate, exhibit, statement or schedule furnished or to be furnished by or on behalf of the Purchaser to the Seller in connection with the transactions contemplated hereby contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the 6

factual statements contained therein, in light of the circumstances under which they were made, not misleading. ARTICLE V INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES The representations and warranties contained herein shall survive the execution and delivery of this Agreement. Purchaser agrees to indemnify, hold harmless and defend the Seller and its respective affiliates and agents with respect to any and all loss, damage, expense, claim, action or liability any of them may incur as a result of the breach or untruth of any representations or warranties made by Purchaser herein, and Purchaser agrees that in the event of any breach or untruth of any representations or warranties made by Purchaser herein, the Seller may, at its option, forthwith rescind the sale of the Interest and the Shares to Purchaser. ARTICLE VI REGISTRATION RIGHTS The Purchaser shall be entitled to the rights and subject to the obligations set forth in Article 6 of that certain Securities Purchase Agreement dated May 23, 2003 by and between the Seller and Purchaser (the "SPA") with respect to the Shares. If, in the judgment of Seller's counsel, the Purchaser is not permitted by federal or state securities laws to participate in the registration contemplated by Article 6 of the SPA, the Shares will be included in the next registration statement filed by the Company (other than registration statements on Form S-8, S-4 or any other SEC Form relating to compensatory plans or business combinations) in accordance with the provisions of Article 6 of the SPA. ARTICLE VII ADDITIONAL AGREEMENTS OF THE PARTIES 7.1 Option; Prohibition on Transfer. The Seller and Purchaser shall have the following additional rights with respect to the Interest: (a) Option. Commencing at 9:00 a.m. on the 91st day after the date of this Agreement (the "Commencement Date") and ending at 5:00 p.m. Eastern Standard Time on August [___], 2004 (the "Termination Date"), Seller shall have the right, exercisable in its sole discretion, to purchase the Interest from the Purchaser (the "Call") and Purchaser shall have the right, exercisable in its sole discretion, to sell the Interest to the Seller (the "Put" and together with the Call, the "Option") at an exercise price (the "Exercise Price") equal to $1,300,000, as appropriately adjusted to reflect any additional capital contributions paid by Purchaser with respect to the Interest, by delivering written notice ("Notice of Exercise") to the other party of its intention to exercise this Option. The Notice of Exercise shall set forth a date on which the Exercise Price shall be delivered to the Purchaser and the Interest transferred to the Seller, which date shall be not less than five (5) nor more than ten (10) days after the date of the Notice of Exercise. The Exercise Price shall be paid by the issuance of the Additional Shares, subject to proportional adjustment in the event that the Seller (i) pays a dividend or makes a distribution on its shares of Common Stock in shares of Common Stock, (ii) subdivides or reclassifies its outstanding Common Stock into a greater number of shares, or (iii) combines or reclassifies its 7

outstanding Common Stock into a smaller number of shares, unless both parties mutually agree that the loan will be repaid by wire transfer from Seller to Purchaser. (b) Commencing on the date hereof and ending on the Termination Date, the Purchaser shall not and shall not enter into any agreement to sell, assign, pledge, hypothecate, grant any other property interest, whether contingent or otherwise, with respect to, or otherwise transfer, all or any part of the Interest and shall not grant and shall not enter into any agreement to grant any subscription, warrant, option, voting agreement, voting trust, proxy, or other arrangement or commitment obligating or which may obligate it to dispose of or vote the Interest in whole or in part to any Person. 7.2 Consent of General Partner. LS Gas, LLC, the general partner of the Company, hereby consents to the transfer of the Interest by Seller pursuant to the terms of this Agreement and the issuance and any exercise of the Option by the Seller or Purchaser. 7.3 Prohibition on Trading in Purchaser Common Stock. The Purchaser acknowledges that the United States securities laws prohibit any person who has received material non-public information concerning the matters which are the subject matter of this Agreement from purchasing or selling the securities of the Seller, or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of Seller. Accordingly, the Purchaser agrees that it will comply with such securities laws. 7.4 Further Acts and Assurances. The parties agree that, at any time and from time to time, on and after the Closing, upon the reasonable request of the other party, they will do or cause to be done all such further acts and things and execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all papers, documents, instruments, agreements, assignments, transfers, assurances and conveyances as may be necessary or desirable to carry out and give effect to the provisions and intent of this Agreement. 7.5 Public Announcements. Neither the Seller nor the Purchaser shall disclose to the public or to any third party the existence of this Agreement, the terms hereof or the transactions contemplated hereby, or any other material non-public information concerning or relating to the other party hereto, other than with the express prior written consent of the other party hereto, except as may be required by law or court order, except to enforce the rights of such disclosing party under this Agreement; and except that Seller shall have the right to make such public disclosures of this Agreement and the transactions contemplated hereby as it determines are necessary or appropriate under federal or state securities laws; provided, however, that notwithstanding anything to the contrary contained in this Agreement, any party hereto may disclose this Agreement to any of its directors, officers, 8

employees, shareholders, affiliates, agents and representatives who need to know such information for the sole purpose of evaluating, or performing the party`s obligations or exercising the party's rights under, this Agreement, and to any party whose consent is required in connection with this Agreement. ARTICLE VIII MISCELLANEOUS 8.1 Definitions For purposes of this Agreement, the following terms have the meanings specified: "Encumbrance" means and includes: (i) with respect to any personal property, any intangible property or any property other than real property, any security or other property interest or right, claim, lien, pledge, option, charge, including, without limitation, any outstanding additional capital contribution with respect to the Interest, security interest, contingent or conditional sale, or other title claim or retention agreement or lease or use agreement in the nature thereof, interest or other right or claim of third parties, whether voluntarily incurred or arising by operation of law, and including any agreement to grant or submit to any of the foregoing in the future; and (ii) with respect to any real property (whether and including owned real estate or leased real estate), any mortgage, lien, easement, interest, right-of-way, condemnation or eminent domain proceeding, encroachment, any building, use or other form of restriction, encumbrance or other claim (including adverse or prescriptive) or right of third parties (including Governmental Authorities), any lease or sublease, boundary dispute, and agreements with respect to any real property including: purchase, sale, right of first refusal, option, construction, building or property service, maintenance, property management, conditional or contingent sale, use or occupancy, franchise or concession, whether voluntarily incurred or arising by operation of law, and including any agreement to grant or submit to any of the foregoing in the future. "Governmental Authority" means any: (i) nation, state, county, city, town, village, district or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other government; (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, board, commission, department, instrumentality, office or other entity, and any court or other tribunal); (iv) multi-national organization or body; and/or (v) body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature. 9

"Indebtedness" means (i) all outstanding bank and other loans, notes, lines of credit, capital leases or debt instruments, and (ii) all other indebteness, excluding trade payables, operating leases and other current liabilities. "Liability" or "Liabilities" means any and all debts, liabilities and/or obligations of any type, nature or description (whether known or unknown, asserted or unasserted, secured or unsecured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated and whether due or to become due). "Person" means any individual, corporation (including any non-profit corporation), general, limited or limited liability partnership, limited liability company, joint venture, estate, trust, association, organization, or other entity or Governmental Authority. "Rights" means any and all outstanding subscriptions, warrants, options, voting agreements, voting trusts, proxies, or other arrangements or commitments obligating or which may obligate a Person to dispose of or vote any securities, including, without limitation, the Interest or the Shares. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. 8.2 Notices. All notices, requests, consents or other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed, first class postage prepaid, by registered or certified mail to the following addresses: If to the Seller: Continental Southern Resources, Inc. 111 Presidential Boulevard, Suite 158-A Bala Cynwyd, PA 19004 Attention: Chief Executive Officer and With a copy to: Spector Gadon & Rosen, P.C. Seven Penn Center 1635 Market Street, 7th Floor Philadelphia, PA 19103 Attention: Vincent A. Vietti, Esquire In the case of Purchaser: To that address indicated on the signature page hereof. Unless specified otherwise, such notices and other communications shall for all purposes of this Agreement be treated as being effective upon being delivered personally or, if sent by 10

mail, five days after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed as set forth above, and postage prepaid. 8.3 Entire Agreement; Assignment. This Agreement, including all Exhibits hereto, constitutes the entire Agreement between the parties with respect to its subject matter and supersedes all prior agreements and understandings, both written and oral, among the parties or any of them with respect to such subject matter. Neither party may assign this Agreement or any of its or his rights hereunder without the prior written consent of the other parties. 8.4 Binding Effect; Benefit. This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and assigns. Nothing in this Agreement is intended to confer on any person other than the parties to this Agreement or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. 8.5 Headings. The descriptive headings of the sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. 8.6 Counterparts. This Agreement may be executed in two or more counterparts and delivered via facsimile, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. 8.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to the laws that might otherwise govern under principles of conflicts of laws applicable thereto. 8.8 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 8.9 Amendment and Modification. This Agreement may not be amended except by an instrument in writing signed on behalf of Purchaser and the Seller. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, each of the parties has executed or caused this Agreement to be executed as of the date first above written. CONTINENTAL SOUTHERN RESOURCES, INC.
By: /s/ STEPHEN P. HARRINGTON -----------------------------------------Authorized Executive Officer

RAM TRADING LTD.
By: /s/JAMES R. PARK -----------------------------------------Authorized Signatory Address: 2100 Enterprise Avenue --------------------------------------------Geneva, IL 60134 ---------------------------------------------

LOUISIANA SHELF PARTNERS, L.P. solely for the purpose of Section 7.2 hereof By: LS Gas, LLC., its General Partner
By: /s/ MARK A. BUSH -----------------------------------------Manager

12

EXHIBIT A LIMITED PARTNERSHIP AGREEMENT OF LOUISIANA SHELF PARTNERS, L.P.

EXHIBIT 10.34 CONFIDENTIAL LOCK-UP AGREEMENT FEBRUARY 26, 2004 Continental Southern Resources, Inc. 111 Presidential Blvd. Suite 158A Bala Cynwyd, PA 19004 Attention: Board of Directors Gentlemen: Continental Southern Resources, Inc., a Nevada corporation (the "Parent"), CSOR Acquisition Corp., a Delaware corporation and subsidiary of the Parent ("Merger Sub"), NSNV, Inc., a Texas corporation (the "Company"), have entered into the Agreement and Plan of Merger (the "Merger Agreement") dated as of February 26, 2004, which provides, among other things, that the Company will merge with and into the Merger Sub (the "Merger") upon the terms and subject to the conditions set forth in the Merger Agreement (capitalized terms not defined in this Certificate shall have the meanings ascribed to them in the Merger Agreement). The undersigned understands and acknowledges that immediately before or contemporaneously with the Closing of the Merger Agreement, Parent will close a private placement of shares of its common stock with gross proceeds of at least $45,000,000 and that in order to complete the private placement, the Company's placement agent has requested that certain holders of shares of Company common stock agree not to sell, transfer or otherwise dispose of their shares for a certain period of time, as more fully described below. The undersigned acknowledges that completion of the private placement will be of material benefit to the Parent and to the undersigned as a beneficial owner of the Parent's common stock. In addition, under the terms of the Merger Agreement, the undersigned is required to execute and deliver this Lock-Up Agreement as a condition to Parent's closing of the transactions contemplated by the Merger Agreement, including the Merger. In order to facilitate both the Merger and the private placement described above, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby agrees to the restrictions set forth below with respect to __________ shares (the "Shares") of Company common stock of which the undersigned is the sole record and beneficial owner. Commencing upon the closing (the "Closing") of the Merger Agreement and terminating on the date one (1) year from the Closing, the undersigned will not, without the prior written approval of the Company, directly or indirectly (i) sell, assign, exchange, transfer, encumber, pledge, distribute, appoint or otherwise transfer or dispose of, or offer or contract to do any of the forgoing with respect to (A) any of the Shares, (B) any securities convertible into or exchangeable or exercisable for Company common stock, or (C) any interest in (including any option to buy or sell) any of the Shares or securities convertible into or exchangeable or exercisable for Company common stock, in whole or in part; or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of

ownership of any of the Shares, whether any of the transactions described in clause (A), (B) or (C) above is to be settled by delivery of Shares, in cash or otherwise (any such transaction, whether or not for consideration, shall be referred to as a "Transaction"); provided, however, that this "Lock-Up Agreement" shall not restrict any transfer of any Shares or securities convertible into or exchangeable or exercisable for Company common stock in a privately negotiated transaction that is not executed on the OTCBB or any other market or exchange on which the Company's common stock is then traded, to the Company or any of its subsidiaries or to any of the undersigned's Related Persons (as defined below) who agree in writing to be bound by the provisions of this Lock-Up Agreement. The undersigned acknowledges and understands that the Company's prior approval may require the concurrence of the Company's placement agent and the investors in the private placement. As used in this Lock-Up Agreement, "Related Persons" means: (a) if the undersigned is a natural person, (i) any Immediate Family Member of the undersigned, (ii) any Estate of the undersigned or of any Immediate Family Member of the undersigned, (iii) the trustee of any inter vivos or testamentary trust of which all the beneficiaries are Immediate Family Members of the undersigned, and (iv) any Entity the entire equity interest in which is owned by any one or more of the undersigned and Immediate Family Members of the undersigned; and (b) if the undersigned is an Entity, Estate or trust, (i) any Person who owns an equity interest in the undersigned on the date hereof, (ii) any Person who would be a Related Person under clause (a) of this definition of a natural person who is an ultimate beneficial owner of the undersigned, or (iii) any other Entity the entire equity interest in which is owned by any one or more of the undersigned and Immediate Family Members of the undersigned. As used in this Lock-Up Agreement; (A) "Estate" means, as to any natural person who has died or been adjudicated mentally incompetent by a court of competent jurisdiction, (i) that person's estate or (ii) the administrator, conservator, executor, guardian or representative of that person's estate; (B) "Immediate Family Member" means, (i) if the undersigned is a natural person, any child or grandchild (by blood or legal adoption) or spouse of the undersigned at that time, or any child of the undersigned's spouse; and (ii) if the undersigned is an Entity which has as an ultimate beneficial owner one or more natural persons, any child or grandchild (by blood or legal adoption) or spouse at that time (if not then an ultimate beneficial owner of the Entity), or any child of the spouse, of the ultimate beneficial owner or owners of the Entity; (C) "Entity" means any sole proprietorship, corporation, partnership of any kind having a separate legal status, limited liability company, business trust, unincorporated organization or association, mutual company, joint stock company or joint venture; (D) "Person" means any natural person, Entity, estate, trust, union or employee organization or Governmental Authority; and (E) "Governmental Authority" means any national, state, county, municipal or other government, domestic or foreign, or any agency, board, bureau, commission, court, department or other instrumentality of any such government. The undersigned understands that the Company will take such steps as may be necessary to enforce the foregoing provisions and restrict the sale or transfer of the Shares as provided herein including, but not limited to, notifying its transfer agent to place stop transfer instructions reflecting the foregoing restrictions on the Company's stock transfer records, and the undersigned hereby agrees to and authorize any such actions and acknowledge that the Company is relying upon this Lock-Up Agreement in taking any such actions.

The undersigned understands that certain of the information contained herein may be regarded as material nonpublic information under Regulation FD under the Securities Exchange Act of 1934, as amended, the improper use of which would violate applicable United States securities laws. Accordingly, the undersigned will not publish, disclose or disseminate the existence or contents of this Lock-Up Agreement to any Person, and will maintain the confidentiality of the existence and contents of this Lock-Up Agreement. The undersigned further understand that United States securities laws provide for severe civil and criminal penalties for those persons trading securities while in possession of material non-public information. This Lock-Up Agreement shall become effective upon the Closing. The terms and conditions of this Lock-Up Agreement shall inure to the benefit of and be binding upon the respective successors, assigns, heirs and personal representative of the undersigned. The undersigned represents that its signatory hereto has the full power and authority to execute and deliver this Lock-Up Agreement on its behalf. This Lock-Up Agreement may be executed and delivered via facsimile Intending to be legally bound hereby, the undersigned has executed this Lock-Up Agreement on and as of the date set forth above. Very truly yours, By: ______________________________ Address:

EXHIBIT 10.35 CONFIDENTIAL LOCK-UP AGREEMENT FEBRUARY 26, 2004 Continental Southern Resources, Inc. 111 Presidential Blvd. Suite 158A Bala Cynwyd, PA 19004 Attention: Board of Directors Gentlemen: The undersigned understands and acknowledges that Continental Southern Resources, Inc., a Nevada corporation (the "Company"), will be conducting a private placement of shares of its common stock intended to raise gross proceeds of at least $45,000,000 and that in order to complete the private placement, the Company's placement agent has requested that certain holders of shares of Company common stock agree not to sell, transfer or otherwise dispose of their shares for a certain period of time, as more fully described below. The undersigned acknowledges that completion of the private placement will be of material benefit to the Company and to the undersigned as a beneficial owner of the Company's common stock. In order to facilitate the private placement described above, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby agrees to the restrictions set forth below with respect to ___________________________ shares (the "Shares") of Company common stock of which the undersigned is the sole record and beneficial owner. Commencing upon the closing (the "Closing") of the private placement and terminating on the earlier of (i) one (1) year from the Closing or (ii) the effective date of a registration statement filed with the Securities and Exchange Commission to permit the public resale of the shares of common stock issued in the private placement, the undersigned will not, without the prior written approval of the Company, directly or indirectly (i) sell, assign, exchange, transfer, encumber, pledge, distribute, appoint or otherwise transfer or dispose of, or offer or contract to do any of the forgoing with respect to (A) any of the Shares, (B) any securities convertible into or exchangeable or exercisable for Company common stock, or (C) any interest in (including any option to buy or sell) any of the Shares or securities convertible into or exchangeable or exercisable for Company common stock, in whole or in part; or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Shares, whether any of the transactions described in clause (A), (B) or (C) above is to be settled by delivery of Shares, in cash or otherwise (any such transaction, whether or not for consideration, shall be referred to as a "Transaction"); provided, however, that this "Lock-Up Agreement" shall not restrict any transfer of any Shares or securities convertible into or exchangeable or exercisable for Company common stock in a privately negotiated transaction that is not executed on the OTCBB or any other market or exchange on which the Company's common stock is then traded, to the Company or any of its subsidiaries or to any of the undersigned's Related Persons (as defined below) who agree in writing to be bound by the provisions of this Lock-Up Agreement. The

undersigned acknowledges and understands that the Company's prior approval may require the concurrence of the Company's placement agent and the investors in the private placement. As used in this Lock-Up Agreement, "Related Persons" means: (a) if the undersigned is a natural person, (i) any Immediate Family Member of the undersigned, (ii) any Estate of the undersigned or of any Immediate Family Member of the undersigned, (iii) the trustee of any inter vivos or testamentary trust of which all the beneficiaries are Immediate Family Members of the undersigned, and (iv) any Entity the entire equity interest in which is owned by any one or more of the undersigned and Immediate Family Members of the undersigned; and (b) if the undersigned is an Entity, Estate or trust, (i) any Person who owns an equity interest in the undersigned on the date hereof, (ii) any Person who would be a Related Person under clause (a) of this definition of a natural person who is an ultimate beneficial owner of the undersigned, or (iii) any other Entity the entire equity interest in which is owned by any one or more of the undersigned and Immediate Family Members of the undersigned. As used in this Lock-Up Agreement; (A) "Estate" means, as to any natural person who has died or been adjudicated mentally incompetent by a court of competent jurisdiction, (i) that person's estate or (ii) the administrator, conservator, executor, guardian or representative of that person's estate; (B) "Immediate Family Member" means, (i) if the undersigned is a natural person, any child or grandchild (by blood or legal adoption) or spouse of the undersigned at that time, or any child of the undersigned's spouse; and (ii) if the undersigned is an Entity which has as an ultimate beneficial owner one or more natural persons, any child or grandchild (by blood or legal adoption) or spouse at that time (if not then an ultimate beneficial owner of the Entity), or any child of the spouse, of the ultimate beneficial owner or owners of the Entity; (C) "Entity" means any sole proprietorship, corporation, partnership of any kind having a separate legal status, limited liability company, business trust, unincorporated organization or association, mutual company, joint stock company or joint venture; (D) "Person" means any natural person, Entity, estate, trust, union or employee organization or Governmental Authority; and (E) "Governmental Authority" means any national, state, county, municipal or other government, domestic or foreign, or any agency, board, bureau, commission, court, department or other instrumentality of any such government. Notwithstanding anything contained herein to the contrary, this Lock-Up Agreement shall not prohibit the undersigned from engaging in a Transaction involving up to __________ Shares commencing six (6) months after the Closing or from engaging in a Transaction involving up to an additional __________ Shares commencing nine (9) months after the Closing. The undersigned understands that the Company will take such steps as may be necessary to enforce the foregoing provisions and restrict the sale or transfer of the Shares as provided herein including, but not limited to, notifying its transfer agent to place stop transfer instructions reflecting the foregoing restrictions on the Company's stock transfer records, and the undersigned hereby agrees to and authorize any such actions and acknowledge that the Company is relying upon this Lock-Up Agreement in taking any such actions. The undersigned understands that certain of the information contained herein may be regarded as material nonpublic information under Regulation FD under the Securities Exchange Act of 1934, as amended, the improper use of which would violate applicable United States securities laws. Accordingly, the undersigned will not publish, disclose or disseminate the existence or contents of this Lock-Up Agreement to any Person, and will maintain the

confidentiality of the existence and contents of this Lock-Up Agreement. The undersigned further understand that United States securities laws provide for severe civil and criminal penalties for those persons trading securities while in possession of material non-public information. This Lock-Up Agreement shall become effective upon the Closing. Accordingly, in the event that the Closing does not occur, this Lock-Up Agreement shall be null and void The terms and conditions of this Lock-Up Agreement shall inure to the benefit of and be binding upon the respective successors, assigns, heirs and personal representative of the undersigned. The undersigned represents that its signatory hereto has the full power and authority to execute and deliver this Lock-Up Agreement on its behalf. This Lock-Up Agreement may be executed and delivered via facsimile Intending to be legally bound hereby, the undersigned has executed this Lock-Up Agreement on and as of the date set forth above. Very truly yours, Print Name of Entity By: _____________________________ Name: Title:

Address

EXHIBIT 10.36 CONTINENTAL SOUTHERN RESOURCES, INC. 2004 INCENTIVE PLAN (EFFECTIVE FEBRUARY 26, 2004)

. . . TABLE OF CONTENTS
Section 1. GENERAL PROVISIONS RELATING TO PLAN GOVERNANCE, COVERAGE AND BENEFITS......................... 1.1 Purpose................................................................................ 1.2 Definitions............................................................................ 1.3 Plan Administration.................................................................... 1.4 Shares of Common Stock Available for Incentive Awards.................................. 1.5 Share Pool Adjustments for Awards and Payouts.......................................... 1.6 Common Stock Available................................................................. 1.7 Participation.......................................................................... 1.8 Types of Incentive Awards.............................................................. Section 2. STOCK OPTIONS................................................................................. 2.1 Grant of Stock Options................................................................. 2.2 Stock Option Terms..................................................................... 2.3 Stock Option Exercises................................................................. 2.4 Supplemental Payment on Exercise of Nonstatutory Stock Options or Stock Appreciation Rights........................................................... Section 3. RESTRICTED STOCK.............................................................................. 3.1 Award of Restricted Stock.............................................................. 3.2 Restrictions........................................................................... 3.3 Delivery of Shares of Common Stock..................................................... 3.4 Supplemental Payment on Vesting of Restricted Stock.................................... Section 4. OTHER STOCK-BASED AWARDS...................................................................... 4.1 Grant of Other Stock-Based Awards...................................................... 4.2 Other Stock-Based Award Terms.......................................................... 4.3 Performance Awards..................................................................... Section 5. PROVISIONS RELATING TO PLAN PARTICIPATION..................................................... 5.1 Plan Conditions........................................................................ 5.2 Transferability and Exercisability..................................................... 5.3 Rights as a Stockholder................................................................ 5.4 Listing and Registration of Shares of Common Stock..................................... 5.5 Change in Stock and Adjustments........................................................ 5.6 Termination of Employment, Death, Disability and Retirement............................ 5.7 Change in Control...................................................................... 5.8 Exchange of Incentive Awards........................................................... 5.9 Financing.............................................................................. Section 6. GENERAL....................................................................................... 6.1 Effective Date and Grant Period........................................................ 6.2 Funding and Liability of Company....................................................... 6.3 Withholding Taxes......................................................................

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6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14 6.15

No Guarantee of Tax Consequences...............................................................3 Designation of Beneficiary by Participant......................................................3 Deferrals......................................................................................3 Amendment and Termination......................................................................3 Requirements of Law............................................................................3 Rule 16b-3 Securities Law Compliance and Compliance with Company Policies...............................................................................3 Compliance with Code Section 162(m)............................................................3 Successors.....................................................................................3 Miscellaneous Provisions.......................................................................3 Severability...................................................................................3 Gender, Tense and Headings.....................................................................3 Governing Law..................................................................................3

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CONTINENTAL SOUTHERN RESOURCES, INC. 2004 INCENTIVE PLAN SECTION 1. GENERAL PROVISIONS RELATING TO PLAN GOVERNANCE, COVERAGE AND BENEFITS 1.1 PURPOSE The purpose of the Plan is to foster and promote the long-term financial success of Continental Southern Resources, Inc. (the "COMPANY") and its Subsidiaries and to increase stockholder value by: (a) encouraging the commitment of selected key Employees, Consultants and Outside Directors, (b) motivating superior performance of key Employees, Consultants and Outside Directors by means of long-term performance related incentives, (c) encouraging and providing key Employees, Consultants and Outside Directors with a program for obtaining ownership interests in the Company which link and align their personal interests to those of the Company's stockholders, (d) attracting and retaining key Employees, Consultants and Outside Directors by providing competitive incentive compensation opportunities, and (e) enabling key Employees, Consultants and Outside Directors to share in the long-term growth and success of the Company. The Plan provides for payment of various forms of incentive compensation and it is not intended to be a plan that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The Plan shall be interpreted, construed and administered consistent with its status as a plan that is not subject to ERISA. Subject to approval by the Company's stockholders pursuant to Section 6.1, the Plan is established effective as of February 26, 2004 (the "EFFECTIVE DATE"). The Plan shall commence on the Effective Date, and shall remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to Section 6.7, until all Shares subject to the Plan have been purchased or acquired according to its provisions. However, in no event may an Incentive Award be granted under the Plan after the expiration of ten (10) years from the Effective Date. 1.2 Definitions The following terms shall have the meanings set forth below: (a) AUTHORIZED OFFICER. The Chairman of the Board, the Chief Executive Officer or any other senior officer of the Company to whom either of them delegate the authority to execute any Incentive Agreement for and on behalf of the Company. No officer or director shall be an Authorized Officer with respect to any Incentive Agreement for himself. (b) BOARD. The Board of Directors of the Company. 1

(c) CAUSE. Unless otherwise expressly provided in the Grantee's Incentive Agreement, when used in connection with the termination of a Grantee's Employment, shall mean the termination of the Grantee's Employment by the Company by reason of (i) the conviction of the Grantee by a court of competent jurisdiction as to which no further appeal can be taken of a crime involving moral turpitude or a felony; (ii) the proven commission by the Grantee of an act of fraud upon the Company; (iii) the willful and proven misappropriation of any funds or property of the Company by the Grantee; (iv) the willful, continued and unreasonable failure by the Grantee to perform the material duties assigned to him; (v) the knowing engagement by the Grantee in any direct, material conflict of interest with the Company without compliance with the Company's conflict of interest policy, if any, then in effect; or (vi) the knowing engagement by the Grantee, without the written approval of the Board, in any activity which competes with the business of the Company or which would result in a material injury to the business, reputation or goodwill of the Company. (d) CHANGE IN CONTROL. Unless otherwise expressly provided in the Grantee's Incentive Agreement, any of the events described in and subject to Section 5.7. (e) CODE. The Internal Revenue Code of 1986, as amended, and the regulations and other authority promulgated thereunder by the appropriate governmental authority. References herein to any provision of the Code shall refer to any successor provision thereto. (f) COMMITTEE. A committee appointed by the Board consisting of not less than two directors as appointed by the Board to administer the Plan. During such period that the Company is a Publicly Held Corporation, the Plan shall be administered by a committee appointed by the Board consisting of not less than two directors who fulfill the "non-employee director" requirements of Rule 16b-3 under the Exchange Act and the "outside director" requirements of Section 162(m) of the Code. In either case, the Committee may be the Compensation Committee of the Board, or any subcommittee of the Compensation Committee, provided that the members of the Committee satisfy the requirements of the previous provisions of this paragraph. Notwithstanding the foregoing, if the composition of the Board does not provide the Company the ability to establish a committee meeting the foregoing requirements, the Plan shall be administered by the full Board. The Board shall have the power to fill vacancies on the Committee arising by resignation, death, removal or otherwise. The Board, in its sole discretion, may bifurcate the powers and duties of the Committee among one or more separate committees, or retain all powers and duties of the Committee in a single Committee. The members of the Committee shall serve at the discretion of the Board. Notwithstanding the preceding paragraphs, the term "Committee" as used in the Plan with respect to any Incentive Award for an Outside Director shall refer to the entire Board. In the case of an Incentive Award for an Outside Director, the Board shall have all the powers and responsibilities of the Committee hereunder as to such Incentive Award, and any actions as to such Incentive Award may be acted upon only by the Board 2

(unless it otherwise designates in its discretion). When the Board exercises its authority to act in the capacity as the Committee hereunder with respect to an Incentive Award for an Outside Director, it shall so designate with respect to any action that it undertakes in its capacity as the Committee. (g) COMMON STOCK. The common stock of the Company, $.001 par value per share, and any class of common stock into which such common shares may hereafter be converted, reclassified or recapitalized. (h) COMPANY. Continental Southern Resources, Inc., a corporation organized under the laws of the State of Nevada, and any successor in interest thereto. (i) CONSULTANT. An independent agent, consultant, attorney, an individual who has agreed to become an Employee within the next six (6) months, or any other individual who is not an Outside Director or employee of the Company (or any Parent or Subsidiary) and who (i), in the opinion of the Committee, is in a position to contribute to the growth or financial success of the Company (or any Parent or Subsidiary), (ii) is a natural person and (iii) provides bona fide services to the Company (or any Parent or Subsidiary), which services are not in connection with the offer or sale of securities in a capital raising transaction, and do not directly or indirectly promote or maintain a market for the Company's securities. (j) COVERED EMPLOYEE. A named executive officer who is one of the group of covered employees, as defined in Section 162(m) of the Code and Treasury Regulation ss. 1.162-27(c) (or its successor), during such period that the Company is a Publicly Held Corporation. (k) DISABILITY. Unless otherwise expressly provided in the Grantee's Incentive Agreement, as determined by the Committee in its discretion exercised in good faith, a physical or mental condition of the Employee that would entitle him to payment of disability income payments under the Company's long term disability insurance policy or plan for employees, as then effective, if any; or in the event that the Grantee is not covered, for whatever reason, under the Company's long-term disability insurance policy or plan, "Disability" means a permanent and total disability as defined in Section 22(e)(3) of the Code. A determination of Disability may be made by a physician selected or approved by the Committee and, in this respect, the Grantee shall submit to an examination by such physician upon request. (l) EMPLOYEE. Any employee of the Company (or any Parent or Subsidiary) within the meaning of Section 3401(c) of the Code who, in the opinion of the Committee, is in a position to contribute to the growth, development and financial success of the Company (or any Parent or Subsidiary), including, without limitation, officers who are members of the Board. (m) EMPLOYMENT. Employment by the Company (or any Parent or Subsidiary), or by any corporation issuing or assuming an Incentive Award in any transaction described in Section 424(a) of the Code, or by a parent corporation or a 3

subsidiary corporation of such corporation issuing or assuming such Incentive Award, as the parent-subsidiary relationship shall be determined at the time of the corporate action described in Section 424(a) of the Code. In this regard, neither the transfer of a Grantee from Employment by the Company to Employment by any Parent or Subsidiary, nor the transfer of a Grantee from Employment by any Parent or Subsidiary to Employment by the Company, shall be deemed to be a termination of Employment of the Grantee. Moreover, the Employment of a Grantee shall not be deemed to have been terminated because of an approved leave of absence from active Employment on account of temporary illness, authorized vacation or granted for reasons of professional advancement, education, health, or government service, or military leave, or during any period required to be treated as a leave of absence by virtue of any applicable statute, Company personnel policy or agreement. Whether an authorized leave of absence shall constitute termination of Employment hereunder shall be determined by the Committee in its discretion. Unless otherwise provided in the Incentive Agreement, the term "Employment" for purposes of the Plan is also defined to include (i) compensatory or advisory services performed by a Consultant for the Company (or any Parent or Subsidiary) and (ii) membership on the Board by an Outside Director. (n) EQUITY OFFERING. The private placement of up to 25,000,000 shares of Common Stock solely to accredited investors pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder and that certain Company Confidential Private Placement Memorandum dated January 23, 2004, as supplemented. (o) EXCHANGE ACT. The Securities Exchange Act of 1934, as amended. (p) FAIR MARKET VALUE. Except as set forth below, the Fair Market Value of one share of Common Stock on the date in question is deemed to be (i) the closing sales price on the immediately preceding business day of a share of Common Stock as reported on the consolidated reporting system for the securities exchange(s) on which Shares are then listed or admitted to trading (as reported in the Wall Street Journal or other reputable source), or (ii) if not so reported, the closing sale price for a Share on the immediately preceding business day as quoted on the Nasdaq Stock Market, Inc. ("NASDAQ"), or (iii) if not quoted on NASDAQ, the average of the closing bid and asked prices for a Share as quoted by the National Quotation Bureau's "Pink Sheets" or the National Association of Securities Dealers' OTC Bulletin Board System. If there was no public trade of Common Stock on the date in question, Fair Market Value shall be determined by reference to the last preceding date on which such a trade was so reported. Notwithstanding the foregoing, the Fair Market Value of one share of Common Stock as of the grant date of any Incentive Award granted within 30 days after the Equity Offering is consummated shall be the price paid per share of Common Stock by the investors in such Equity Offering. If the Company is not a Publicly Held Corporation at the time a determination of the Fair Market Value of the Common Stock is required to be made hereunder, the 4

determination of Fair Market Value for purposes of the Plan shall be made by the Committee in its discretion exercised in good faith. In this respect, the Committee may rely on such financial data, valuations, experts, and other sources, in its discretion, as it deems advisable under the circumstances. (q) GRANTEE. Any Employee, Consultant or Outside Director who is granted an Incentive Award under the Plan. (r) IMMEDIATE FAMILY. With respect to a Grantee, the Grantee's spouse, children or grandchildren (including legally adopted and step children and grandchildren) (s) INCENTIVE AGREEMENT. The written agreement entered into between the Company and the Grantee setting forth the terms and conditions pursuant to which an Incentive Award is granted under the Plan, as such agreement is further defined in Section 5.1(a). (t) INCENTIVE AWARD. A grant of an award under the Plan to a Grantee, including any Nonstatutory Stock Option, Incentive Stock Option, Reload Option, Restricted Stock Award, Other Stock-Based Award or Performance Award. (u) INCENTIVE STOCK OPTION OR ISO. A Stock Option granted by the Committee to an Employee under Section 2 which is designated by the Committee as an Incentive Stock Option and intended to qualify as an Incentive Stock Option under Section 422 of the Code. (v) INSIDER. An individual who is, on the relevant date, an officer, director or ten percent (10%) beneficial owner of any class of the Company's equity securities that is registered pursuant to Section 12 of the Exchange Act, all as defined under Section 16 of the Exchange Act. (w) NONSTATUTORY STOCK OPTION. A Stock Option granted by the Committee to a Grantee under Section 2 that is not designated by the Committee as an Incentive Stock Option. (x) OPTION PRICE. The exercise price at which a Share may be purchased by the Grantee of a Stock Option. (y) OTHER STOCK-BASED AWARD. An award granted by the Committee to a Grantee under Section 4.1 that is valued in whole or in part by reference to, or is otherwise based upon, Common Stock. (z) OUTSIDE DIRECTOR. A member of the Board who is not, at the time of grant of an Incentive Award, an employee of the Company or any Parent or Subsidiary. (aa) PARENT. Any corporation (whether now or hereafter existing) which constitutes a "parent" of the Company, as defined in Section 424(e) of the Code. 5

(bb) PERFORMANCE AWARD. An award granted by the Committee to the Grantee under Section 4.3. (cc) PERFORMANCE-BASED EXCEPTION. The performance-based exception from the tax deductibility limitations of Section 162(m) of the Code, as prescribed in Code ss. 162(m) and Treasury Regulation ss. 1.16227(e) (or its successor), which is applicable during such period that the Company is a Publicly Held Corporation. (dd) PERFORMANCE PERIOD. A period of time, as may be determined in the discretion of the Committee and set out in the Incentive Agreement, over which performance is measured for the purpose of determining a Grantee's right to and the payment value of an Incentive Award. (ee) PERFORMANCE SHARE OR PERFORMANCE UNIT. An Incentive Award that is a Performance Award under Section 4.3 representing a contingent right to receive cash or Shares of Common Stock (which may be Restricted Stock) at the end of a Performance Period and which, in the case of Performance Shares, is denominated in Common Stock, and in the case of Performance Units is denominated in cash values. (ff) PLAN. The Continental Southern Resources, Inc. 2004 Incentive Plan as set forth herein and as it may be amended from time to time. (gg) PUBLICLY HELD CORPORATION. A corporation issuing any class of common equity securities required to be registered under Section 12 of the Exchange Act. (hh) RESTRICTED STOCK. Shares of Common Stock issued or transferred to a Grantee pursuant to Section 3. (ii) RESTRICTED STOCK AWARD. An authorization by the Committee to issue or transfer Restricted Stock to a Grantee. (jj) RESTRICTION PERIOD. The period of time determined by the Committee and set forth in the Incentive Agreement during which the transfer of Restricted Stock by the Grantee is restricted. (kk) RETIREMENT. The voluntary termination of Employment from the Company or any Parent or Subsidiary constituting retirement for age on any date after the Employee attains the normal retirement age of sixty-five (65) years, or such other age as may be designated by the Committee in the Employee's Incentive Agreement. (ll) SHARE. A share of the Common Stock. (mm) SHARE POOL. The number of shares authorized for issuance under Section 1.4, as adjusted for awards and payouts under Section 1.5 and as adjusted for changes in corporate capitalization under Section 5.5. (nn) STOCK OPTION OR OPTION. Pursuant to Section 2, (i) an Incentive Stock Option granted to an 6

Employee or (ii) a Nonstatutory Stock Option granted to an Employee, Consultant or Outside Director, whereunder such stock option the Grantee has the right to purchase Shares of Common Stock. In accordance with Section 422 of the Code, only an Employee may be granted an Incentive Stock Option. (oo) SUBSIDIARY. Any corporation (whether now or hereafter existing) which constitutes a "subsidiary" of the Company, as defined in Section 424(f) of the Code. (pp) SUPPLEMENTAL PAYMENT. Any amount, as described in Sections 2.4, 3.4 or 4.3, that is dedicated to payment of income taxes which are payable by the Grantee resulting from an Incentive Award. 1.3 Plan Administration (a) AUTHORITY OF THE COMMITTEE. Except as may be limited by law and subject to the provisions herein, the Committee shall have full power to (i) select Grantees who shall participate in the Plan; (ii) determine the sizes, duration and types of Incentive Awards; (iii) determine the terms and conditions of Incentive Awards and Incentive Agreements; (iv) determine whether any Shares subject to Incentive Awards will be subject to any restrictions on transfer; (v) construe and interpret the Plan and any Incentive Agreement or other agreement entered into under the Plan; and (vi) establish, amend, or waive rules for the Plan's administration. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan including, without limitation, correcting any defect, supplying any omission or reconciling any inconsistency in the Plan or any Incentive Agreement. The determinations of the Committee shall be final and binding. (b) MEETINGS. The Committee shall designate a chairman from among its members who shall preside at all of its meetings, and shall designate a secretary, without regard to whether that person is a member of the Committee, who shall keep the minutes of the proceedings and all records, documents, and data pertaining to its administration of the Plan. Meetings shall be held at such times and places as shall be determined by the Committee and the Committee may hold telephonic meetings. The Committee may take any action otherwise proper under the Plan by the affirmative vote, taken with or without a meeting, of a majority of its members. The Committee may authorize any one or more of their members or any officer of the Company to execute and deliver documents on behalf of the Committee. (c) DECISIONS BINDING. All determinations and decisions made by the Committee shall be made in its discretion pursuant to the provisions of the Plan, and shall be final, conclusive and binding on all persons including the Company, its stockholders, Employees, Grantees, and their estates and beneficiaries. The Committee's decisions and determinations with respect to any Incentive Award need not be uniform and may be made selectively among Incentive Awards and Grantees, whether or not such Incentive Awards are similar or such Grantees are similarly situated. (d) MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject to the stockholder approval requirements of Section 6.7 if applicable, the Committee may, in its 7

discretion, provide for the extension of the exercisability of an Incentive Award, accelerate the vesting or exercisability of an Incentive Award, eliminate or make less restrictive any restrictions contained in an Incentive Award, waive any restriction or other provisions of an Incentive Award, or otherwise amend or modify an Incentive Award in any manner that is either (i) not adverse to the Grantee to whom such Incentive Award was granted or (ii) consented to by such Grantee. With respect to an Incentive Award that is an incentive stock option (as described in Section 422 of the Code), no adjustment to such option shall be made to the extent constituting a "modification" within the meaning of Section 424(h)(3) of the Code unless otherwise agreed to by the optionee in writing. (e) DELEGATION OF AUTHORITY. The Committee may delegate to designated officers or other employees of the Company any of its duties under this Plan pursuant to such conditions or limitations as the Committee may establish from time to time; provided, however, while the Company is a Publicly Held Corporation, the Committee may not delegate to any person the authority to (i) grant Incentive Awards, or (ii) take any action which would contravene the requirements of Rule 16b-3 under the Exchange Act or the Performance-Based Exception under Section 162(m) of the Code. (f) EXPENSES OF COMMITTEE. The Committee may employ legal counsel, including, without limitation, independent legal counsel and counsel regularly employed by the Company, and other agents as the Committee may deem appropriate for the administration of the Plan. The Committee may rely upon any opinion or computation received from any such counsel or agent. All expenses incurred by the Committee in interpreting and administering the Plan, including, without limitation, meeting expenses and professional fees, shall be paid by the Company. (g) SURRENDER OF PREVIOUS INCENTIVE AWARDS. The Committee may, in its absolute discretion, grant Incentive Awards to Grantees on the condition that such Grantees surrender to the Committee for cancellation such other Incentive Awards (including, without limitation, Incentive Awards with higher exercise prices) as the Committee directs. Incentive Awards granted on the condition precedent of surrender of outstanding Incentive Awards shall not count against the limits set forth in Section 1.4 until such time as such previous Incentive Awards are surrendered and canceled. (h) INDEMNIFICATION. EACH PERSON WHO IS OR WAS A MEMBER OF THE COMMITTEE, OR OF THE BOARD, SHALL BE INDEMNIFIED BY THE COMPANY AGAINST AND FROM ANY DAMAGE, LOSS, LIABILITY, COST AND EXPENSE THAT MAY BE IMPOSED UPON OR REASONABLY INCURRED BY HIM IN CONNECTION WITH OR RESULTING FROM ANY CLAIM, ACTION, SUIT, OR PROCEEDING TO WHICH HE MAY BE A PARTY OR IN WHICH HE MAY BE INVOLVED BY REASON OF ANY ACTION TAKEN OR FAILURE TO ACT UNDER THE PLAN (INCLUDING SUCH INDEMNIFICATION FOR A PERSON'S OWN, SOLE, CONCURRENT OR JOINT NEGLIGENCE OR STRICT LIABILITY), EXCEPT FOR ANY SUCH ACT OR OMISSION CONSTITUTING WILLFUL MISCONDUCT OR GROSS NEGLIGENCE. SUCH PERSON SHALL BE INDEMNIFIED BY THE COMPANY FOR ALL AMOUNTS 9

PAID BY HIM IN SETTLEMENT THEREOF, WITH THE COMPANY'S APPROVAL, OR PAID BY HIM IN SATISFACTION OF ANY JUDGMENT IN ANY SUCH ACTION, SUIT, OR PROCEEDING AGAINST HIM, PROVIDED HE SHALL GIVE THE COMPANY AN OPPORTUNITY, AT ITS OWN EXPENSE, TO HANDLE AND DEFEND THE SAME BEFORE HE UNDERTAKES TO HANDLE AND DEFEND IT ON HIS OWN BEHALF. THE FOREGOING RIGHT OF INDEMNIFICATION SHALL NOT BE EXCLUSIVE OF ANY OTHER RIGHTS OF INDEMNIFICATION TO WHICH SUCH PERSONS MAY BE ENTITLED UNDER THE COMPANY'S ARTICLES OF INCORPORATION OR BYLAWS, AS A MATTER OF LAW, OR OTHERWISE, OR ANY POWER THAT THE COMPANY MAY HAVE TO INDEMNIFY THEM OR HOLD THEM HARMLESS. 1.4 SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS Subject to adjustment under Section 5.5, there shall be available for Incentive Awards under the Plan that are granted wholly or partly in Common Stock (including rights or Stock Options that may be exercised for or settled in Common Stock) 6,200,000 Shares of Common Stock; of this amount 6,200,000 Shares of Common Stock reserved under the Plan shall be available for Nonstatutory Stock Options; 6,200,000 of the Shares of Common Stock reserved under the Plan shall be available for grants of Incentive Stock Options; 3,100,000 Shares of Common Stock shall be available for Restricted Stock; and 6,200,000 Shares of Common Stock shall be available for each of the types of the stock based awards individually under Section 4 including each of the Other Stock Based Awards which are authorized under Section 4.1 including, without limitation, purchase rights, Shares of Common Stock awarded which are not subject to any restrictions or conditions, convertible or exchangeable debentures, other rights convertible into Shares, Incentive Awards valued by reference to the value of securities of, or the performance of, the Company or a specified Subsidiary, division or department, and settlement in cancellation of rights of any person with a vested interest in any other plan, fund, program or arrangement that is or was sponsored, maintained or participated in by the Company or any Parent or Subsidiary and the Performance Awards under Section 4.3. The number of Shares of Common Stock that are the subject of Incentive Awards under this Plan, that are forfeited or terminated, expire unexercised, withheld for tax withholding requirements, are settled in cash in lieu of Common Stock or in a manner such that all or some of the Shares covered by an Incentive Award are not issued to a Grantee or are exchanged for Incentive Awards that do not involve Common Stock, shall again immediately become available for Incentive Awards hereunder. The Committee may from time to time adopt and observe such procedures concerning the counting of Shares against the Plan maximum as it may deem appropriate. The Board and the appropriate officers of the Company shall from time to time take whatever actions are necessary to file any required documents with governmental authorities, stock exchanges and transaction reporting systems to ensure that Shares are available for issuance pursuant to Incentive Awards. During such period that the Company is a Publicly Held Corporation, then unless and until the Committee determines that a particular Incentive Award granted to a Covered Employee is not intended to comply with the Performance-Based Exception, the following rules shall apply to grants of Incentive Awards to Covered Employees: 9

(a) Subject to adjustment as provided in Section 5.5, the maximum aggregate number of Shares of Common Stock (including Stock Options, Restricted Stock, or Other Stock-Based Awards paid out in Shares) that may be granted in any calendar year pursuant to any Incentive Award held by any individual Covered Employee shall be 1,000,000 Shares. (b) The maximum aggregate cash payout (including Other Stock-Based Awards paid out in cash) with respect to Incentive Awards granted in any calendar year which may be made to any Covered Employee shall be five million dollars ($5,000,000). (c) With respect to any Stock Option granted to a Covered Employee that is canceled or repriced, the number of Shares subject to such Stock Option shall continue to count against the maximum number of Shares that may be the subject of Stock Options granted to such Covered Employee hereunder and, in this regard, such maximum number shall be determined in accordance with Section 162(m) of the Code. (d) The limitations of subsections (a), (b) and (c) above shall be construed and administered so as to comply with the Performance-Based Exception. 1.5 SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS. The following Incentive Awards and payouts shall reduce, on a one Share for one Share basis, the number of Shares authorized for issuance under the Share Pool: (a) Stock Options; (b) Restricted Stock Awards; and (c) A payout of an Other Stock-Based Award or Performance Awards in Shares. The following transactions shall restore, on a one Share for one Share basis, the number of Shares authorized for issuance under the Share Pool: (a) A payout of an Other Stock-Based Award or Performance Awards in the form of cash; (b) A cancellation, termination, expiration, forfeiture, or lapse for any reason of any Shares subject to an Incentive Award; and (c) Payment of an Option Price or Restricted Stock purchase price as provided in the Incentive Agreement or as determined by the Compensation Committee in its sole discretion with previously acquired Shares or by withholding Shares that otherwise would be acquired on exercise or grant (i.e., the Share Pool shall be increased by the number of Shares turned in or withheld as payment of the Option Price or Restricted Stock purchase price). 10

1.6 COMMON STOCK AVAILABLE. The Common Stock available for issuance or transfer under the Plan shall be made available from Shares now or hereafter (a) held in the treasury of the Company, (b) authorized but unissued shares, or (c) shares to be purchased or acquired by the Company. No fractional shares shall be issued under the Plan; payment for fractional shares shall be made in cash. 1.7 Participation (a) ELIGIBILITY. The Committee shall from time to time designate those Employees, Consultants and/or Outside Directors, if any, to be granted Incentive Awards under the Plan, the type of Incentive Awards granted, the number of Shares or Stock Options, as the case may be, which shall be granted to each such person, and any other terms or conditions relating to the Incentive Awards as it may deem appropriate to the extent not inconsistent with the provisions of the Plan. A Grantee who has been granted an Incentive Award may, if otherwise eligible, be granted additional Incentive Awards at any time. (b) INCENTIVE STOCK OPTION ELIGIBILITY. No Consultant or Outside Director shall be eligible for the grant of any Incentive Stock Option. In addition, no Employee shall be eligible for the grant of any Incentive Stock Option who owns or would own immediately before the grant of such Incentive Stock Option, directly or indirectly, stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, or any Parent or Subsidiary. This restriction does not apply if, at the time such Incentive Stock Option is granted, the Option Price with respect to the Incentive Stock Option is at least one hundred and ten percent (110%) of the Fair Market Value on the date of grant and the Incentive Stock Option by its terms is not exercisable after the expiration of five (5) years from the date of grant. For the purpose of the immediately preceding sentence, the attribution rules of Section 424(d) of the Code shall apply for the purpose of determining an Employee's percentage ownership in the Company or any Parent or Subsidiary. This paragraph shall be construed consistent with the requirements of Section 422 of the Code. 1.8 TYPES OF INCENTIVE AWARDS The types of Incentive Awards that may be granted under the Plan are Stock Options as described in Section 2, Restricted Stock as described in Section 3, Other Stock-Based Awards as described in Section 4, or any combination of the foregoing. SECTION 2. STOCK OPTIONS 2.1 GRANT OF STOCK OPTIONS The Committee is authorized to grant (a) Nonstatutory Stock Options to Employees, Consultants and/or Outside Directors and (b) Incentive Stock Options to Employees only, in accordance with the terms and 11

conditions of the Plan, and with such additional terms and conditions, not inconsistent with the Plan, as the Committee shall determine in its discretion. Successive grants may be made to the same Grantee whether or not any Stock Option previously granted to such person remains unexercised. 2.2 Stock Option Terms (a) WRITTEN AGREEMENT. Each grant of a Stock Option shall be evidenced by a written Incentive Agreement. Among its other provisions, each Incentive Agreement shall set forth the extent to which the Grantee shall have the right to exercise the Stock Option following termination of the Grantee's Employment. Such provisions shall be determined in the discretion of the Committee, shall be included in the Grantee's Incentive Agreement and need not be uniform among all Stock Options issued pursuant to the Plan. (b) NUMBER OF SHARES. Each Stock Option shall specify the number of Shares of Common Stock to which it pertains. (c) EXERCISE PRICE. The Option Price with respect to each Stock Option shall be determined by the Committee; provided, however, that in the case of an Incentive Stock Option, the Option Price shall not be less than one hundred percent (100%) of the Fair Market Value per Share on the date the Incentive Stock Option is granted (110% for 10% or greater stockholders pursuant to Section 1.7(b)). To the extent that the Company is a Publicly Held Corporation and the Stock Option is intended to qualify for the Performance-Based Exception, the Option Price shall not be less than one hundred percent (100%) of the Fair Market Value per Share on the date the Stock Option is granted. Each Stock Option shall specify the method of exercise which shall be consistent with the requirements of Section 2.3(a). (d) TERM. In the Incentive Agreement, the Committee shall fix the term of each Stock Option (which shall be not more than ten (10) years from the date of grant for ISO grants; five (5) years for ISO grants to ten percent (10%) or greater stockholders pursuant to Section 1.7(b)). In the event no term is fixed, such term shall be ten (10) years from the date of grant. (e) EXERCISE. The Committee shall determine the time or times at which a Stock Option may be exercised in whole or in part. Each Stock Option may specify the required period of continuous Employment and/or the performance objectives to be achieved before the Stock Option or portion thereof will become exercisable. Each Stock Option, the exercise of which, or the timing of the exercise of which, is dependent, in whole or in part, on the achievement of designated performance objectives, may specify a minimum level of achievement in respect of the specified performance objectives below which no Stock Options will be exercisable and a method for determining the number of Stock Options that will be exercisable if performance is at or above such minimum but short of full achievement of the performance objectives. All such terms and conditions shall be set forth in the Incentive Agreement. 12

(f) $100,000 ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. Notwithstanding any contrary provision in the Plan, to the extent that the aggregate Fair Market Value (determined as of the time the Incentive Stock Option is granted) of the Shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Grantee during any single calendar year (under the Plan and any other stock option plans of the Company and its Subsidiaries or Parent) exceeds the sum of $100,000, such Incentive Stock Option shall be treated as a Nonstatutory Stock Option to the extent in excess of the $100,000 limit, and not an Incentive Stock Option, but all other terms and provisions of such Stock Option shall remain unchanged. This paragraph shall be applied by taking Incentive Stock Options into account in the order in which they were granted and shall be construed in accordance with Section 422(d) of the Code. In the absence of such regulations or other authority, or if such regulations or other authority require or permit a designation of the Options which shall cease to constitute Incentive Stock Options, then such Incentive Stock Options, only to the extent of such excess, shall automatically be deemed to be Nonstatutory Stock Options but all other terms and conditions of such Incentive Stock Options, and the corresponding Incentive Agreement, shall remain unchanged. 2.3 STOCK OPTION EXERCISES (a) METHOD OF EXERCISE AND PAYMENT. Stock Options shall be exercised by the delivery of a signed written notice of exercise to the Company as of a date set by the Company in advance of the effective date of the proposed exercise. The notice shall set forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. The Option Price upon exercise of any Stock Option shall be payable to the Company in full either: (i) in cash or its equivalent, or (ii) subject to prior approval by the Committee in its discretion, by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price (provided that the Shares which are tendered must have been held by the Grantee for at least six (6) months prior to their tender to satisfy the Option Price), or (iii) subject to prior approval by the Committee in its discretion, by withholding Shares which otherwise would be acquired on exercise having an aggregate Fair Market Value at the time of exercise equal to the total Option Price, or (iv) subject to prior approval by the Committee in its discretion, by a combination of (i), (ii), and (iii) above. Any payment in Shares shall be effected by the surrender of such Shares to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when the Stock Option is exercised. Unless otherwise permitted by the Committee in its discretion, the Grantee shall not surrender, or attest to the ownership of, Shares in payment of the Option Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Stock Option for financial reporting purposes. The Committee, in its discretion, also may allow the Option Price to be paid with such other consideration as shall constitute lawful consideration for the issuance of Shares (including, without limitation, effecting a "cashless exercise" with a broker of the Option), subject to applicable securities law restrictions and tax withholdings, or by any 13

other means which the Committee determines to be consistent with the Plan's purpose and applicable law. A "cashless exercise" of an Option is a procedure by which a broker provides the funds to the Grantee to effect an Option exercise, to the extent consented to by the Committee in its discretion. At the direction of the Grantee, the broker will either (i) sell all of the Shares received when the Option is exercised and pay the Grantee the proceeds of the sale (minus the Option Price, withholding taxes and any fees due to the broker) or (ii) sell enough of the Shares received upon exercise of the Option to cover the Option Price, withholding taxes and any fees due the broker and deliver to the Grantee (either directly or through the Company) a stock certificate for the remaining Shares. Dispositions to a broker effecting a cashless exercise are not exempt under Section 16 of the Exchange Act (if the Company is a Publicly Held Corporation). In no event will the Committee allow the Option Price to be paid with a form of consideration, including a loan or a "cashless exercise," if such form of consideration would violate the Sarbanes-Oxley Act of 2002 as determined by the Committee in its discretion. The Committee, in its discretion, may also allow an Option to be exercised by a broker-dealer acting on behalf of the Grantee if (i) the broker-dealer has received from the Grantee a duly endorsed Incentive Agreement evidencing such Option and instructions signed by the Grantee requesting the Company to deliver the shares of Common Stock subject to such Option to the broker-dealer on behalf of the Grantee and specifying the account into which such shares should be deposited, (ii) adequate provision has been made with respect to the payment of any withholding taxes due upon such exercise, and (iii) the broker-dealer and the Grantee have otherwise complied with Section 220.3(e)(4) of Regulation T, 12 CFR Part 220 (or its successor). As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver, or cause to be delivered, to or on behalf of the Grantee, in the name of the Grantee or other appropriate recipient, Share certificates for the number of Shares purchased under the Stock Option. Such delivery shall be effected for all purposes when the Company or a stock transfer agent of the Company shall have deposited such certificates in the United States mail, addressed to Grantee or other appropriate recipient. Subject to Section 5.2, during the lifetime of a Grantee, each Option granted to him shall be exercisable only by the Grantee (or his legal guardian in the event of his Disability) or by a broker-dealer acting on his behalf pursuant to a cashless exercise under the foregoing provisions of this Section 2.3(a). (b) RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such restrictions on any grant of Stock Options or on any Shares acquired pursuant to the exercise of a Stock Option as it may deem advisable, including, without limitation, restrictions under (i) any buy/sell agreement or right of first refusal, noncompetition, and any other agreement between the Company and any of its securities holders or employees, (ii) any applicable federal securities laws, (iii) the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or (iv) any blue sky or state securities law applicable to such Shares. Any certificate issued to evidence Shares issued upon the exercise of an Incentive Award may bear such legends and 14

statements as the Committee shall deem advisable to assure compliance with federal and state laws and regulations. Any Grantee or other person exercising an Incentive Award may be required by the Committee to give a written representation that the Incentive Award and the Shares subject to the Incentive Award will be acquired for investment and not with a view to public distribution; provided, however, that the Committee, in its sole discretion, may release any person receiving an Incentive Award from any such representations either prior to or subsequent to the exercise of the Incentive Award. (c) NOTIFICATION OF DISQUALIFYING DISPOSITION OF SHARES FROM INCENTIVE STOCK OPTIONS. Notwithstanding any other provision of the Plan, a Grantee who disposes of Shares of Common Stock acquired upon the exercise of an Incentive Stock Option by a sale or exchange either (i) within two (2) years after the date of the grant of the Incentive Stock Option under which the Shares were acquired or (ii) within one (1) year after the transfer of such Shares to him pursuant to exercise, shall promptly notify the Company of such disposition, the amount realized and his adjusted basis in such Shares. (d) PROCEEDS OF OPTION EXERCISE. The proceeds received by the Company from the sale of Shares pursuant to Stock Options exercised under the Plan shall be used for general corporate purposes. 2.4 SUPPLEMENTAL PAYMENT ON EXERCISE OF NONSTATUTORY STOCK OPTIONS OR STOCK APPRECIATION RIGHTS. The Committee, either at the time of grant or as of the time of exercise of any Nonstatutory Stock Option or stock appreciation right, may provide in the Incentive Agreement for a Supplemental Payment by the Company to the Grantee with respect to the exercise of any Nonstatutory Stock Option or stock appreciation right. The Supplemental Payment shall be in the amount specified by the Committee, which amount shall not exceed the amount necessary to pay the federal and state income tax payable with respect to both the exercise of the Nonstatutory Stock Option and/or stock appreciation right and the receipt of the Supplemental Payment, assuming the holder is taxed at either the maximum effective income tax rate applicable thereto or at a lower tax rate as deemed appropriate by the Committee in its discretion. The Committee shall have the discretion to grant Supplemental Payments that are payable solely in cash or Supplemental Payments that are payable in cash, Common Stock, or a combination of both, as determined by the Committee at the time of payment. SECTION 3. RESTRICTED STOCK 3.1 AWARD OF RESTRICTED STOCK (a) GRANT. In consideration of the performance of Employment by any Grantee who is an Employee, Consultant or Outside Director, Shares of Restricted Stock 15

may be awarded under the Plan by the Committee with such restrictions during the Restriction Period as the Committee may designate in its discretion, any of which restrictions may differ with respect to each particular Grantee. Restricted Stock shall be awarded for no additional consideration or such additional consideration as the Committee may determine, which consideration may be less than, equal to or more than the Fair Market Value of the shares of Restricted Stock on the grant date. The terms and conditions of each grant of Restricted Stock shall be evidenced by an Incentive Agreement. (b) IMMEDIATE TRANSFER WITHOUT IMMEDIATE DELIVERY OF RESTRICTED STOCK. Unless otherwise specified in the Grantee's Incentive Agreement, each Restricted Stock Award shall constitute an immediate transfer of the record and beneficial ownership of the Shares of Restricted Stock to the Grantee in consideration of the performance of services as an Employee, Consultant or Outside Director, as applicable, entitling such Grantee to all voting and other ownership rights in such Shares. As specified in the Incentive Agreement, a Restricted Stock Award may limit the Grantee's dividend rights during the Restriction Period in which the shares of Restricted Stock are subject to a "substantial risk of forfeiture" (within the meaning given to such term under Code Section 83) and restrictions on transfer. In the Incentive Agreement, the Committee may apply any restrictions to the dividends that the Committee deems appropriate. Without limiting the generality of the preceding sentence, if the grant or vesting of Shares of Restricted Stock granted to a Covered Employee, if applicable, is designed to comply with the requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems appropriate to the payment of dividends declared with respect to such Shares of Restricted Stock, such that the dividends and/or the Shares of Restricted Stock maintain eligibility for the Performance-Based Exception. In the event that any dividend constitutes a derivative security or an equity security pursuant to the rules under Section 16 of the Exchange Act, if applicable, such dividend shall be subject to a vesting period equal to the remaining vesting period of the Shares of Restricted Stock with respect to which the dividend is paid. Shares awarded pursuant to a grant of Restricted Stock may be (i) issued in the name of the Grantee and held, together with a stock power endorsed in blank, by the Committee or Company (or their delegates) or in trust or in escrow pursuant to an agreement satisfactory to the Committee or (ii) issued in "book entry" form or other means of evidencing uncertificated Shares, as determined by the Committee, until such time as the restrictions on transfer have expired. All such terms and conditions shall be set forth in the particular Grantee's Incentive Agreement. The Company or Committee (or their delegates) shall issue to the Grantee a receipt evidencing the certificates held by it which are registered in the name of the Grantee. 3.2 Restrictions (a) FORFEITURE OF RESTRICTED STOCK. Restricted Stock awarded to a Grantee may be subject to the following restrictions until the expiration of the Restriction Period: (i) a restriction that constitutes a "substantial risk of forfeiture" (as defined in Code 16

Section 83), or a restriction on transferability; (ii) unless otherwise specified by the Committee in the Incentive Agreement, the Restricted Stock that is subject to restrictions which are not satisfied shall be forfeited and all rights of the Grantee to such Shares shall terminate; and (iii) any other restrictions that the Committee determines in advance are appropriate, including, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee. Any such restrictions shall be set forth in the particular Grantee's Incentive Agreement. (b) ISSUANCE OF CERTIFICATES. Reasonably promptly after the date of grant with respect to Shares of Restricted Stock, the Company shall cause to be issued a stock certificate, registered in the name of the Grantee to whom such Shares of Restricted Stock were granted, evidencing such Shares; provided, however, that the Company shall not cause to be issued such a stock certificate unless it has received a stock power duly endorsed in blank with respect to such Shares; provided, further, in lieu of issuing such a stock certificate, the Committee may arrange to make "book entries" or other means of evidencing uncertificated Shares of Restricted Stock. Each such stock certificate shall bear the following legend or any other legend approved by the Company: The transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including forfeiture and restrictions against transfer) contained in the Continental Southern Resources, Inc. 2004 Incentive Plan and an Incentive Agreement entered into between the registered owner of such shares and Continental Southern Resources, Inc. A copy of the Plan and Incentive Agreement are on file in the corporate offices of Continental Southern Resources, Inc. Such legend shall not be removed from the certificate evidencing such Shares of Restricted Stock until such Shares vest pursuant to the terms of the Incentive Agreement. (c) REMOVAL OF RESTRICTIONS. The Committee, in its discretion, shall have the authority to remove any or all of the restrictions on the Restricted Stock if it determines that, by reason of a change in applicable law or another change in circumstance arising after the grant date of the Restricted Stock, such action is appropriate. 3.3 DELIVERY OF SHARES OF COMMON STOCK Subject to withholding taxes under Section 6.3 and to the terms of the Incentive Agreement, a stock certificate evidencing the Shares of Restricted Stock with respect to which the restrictions in the Incentive Agreement have been satisfied shall be delivered to the Grantee or other appropriate recipient free of restrictions. Such delivery shall be effected for all purposes when the Company shall have deposited such certificate in the United States mail, addressed to the Grantee or other appropriate recipient. 17

3.4 Supplemental Payment on Vesting of Restricted Stock The Committee, either at the time of grant or vesting of Restricted Stock, may provide for a Supplemental Payment by the Company to the holder in an amount specified by the Committee, which amount shall not exceed the amount necessary to pay the federal and state income tax payable with respect to both the vesting of the Restricted Stock and receipt of the Supplemental Payment, assuming the Grantee is taxed at either the maximum effective income tax rate applicable thereto or at a lower tax rate as deemed appropriate by the Committee in its discretion. The Committee shall have the discretion to grant Supplemental Payments that are payable solely in cash or Supplemental Payments that are payable in cash, Common Stock, or a combination of both, as determined by the Committee at the time of payment. SECTION 4. OTHER STOCK-BASED AWARDS 4.1 GRANT OF OTHER STOCK-BASED AWARDS Other Stock-Based Awards may be awarded by the Committee to selected Grantees that are denominated or payable in, valued in whole or in part by reference to, or otherwise related to, Shares of Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan and the goals of the Company. Types of Other Stock-Based Awards include, without limitation, purchase rights, Shares of Common Stock awarded which are not subject to any restrictions or conditions, convertible or exchangeable debentures, other rights convertible into Shares, Incentive Awards valued by reference to the value of securities of, or the performance of, the Company or a specified Subsidiary, division or department, and settlement in cancellation of rights of any person with a vested interest in any other plan, fund, program or arrangement that is or was sponsored, maintained or participated in by the Company or any Parent or Subsidiary. As is the case with other Incentive Awards, Other Stock-Based Awards may be awarded either alone or in addition to or in tandem with any other Incentive Awards. 4.2 OTHER STOCK-BASED AWARD TERMS (a) WRITTEN AGREEMENT. The terms and conditions of each grant of an Other Stock-Based Award shall be evidenced by an Incentive Agreement. (b) PURCHASE PRICE. Except to the extent that an Other Stock-Based Award is granted in substitution for an outstanding Incentive Award or is delivered upon exercise of a Stock Option, the amount of consideration required to be received by the Company shall be either (i) no consideration other than services actually rendered (in the case of authorized and unissued shares) or to be rendered, or (ii) in the case of an Other Stock-Based Award in the nature of a purchase right, consideration (other than services rendered or to be rendered) at least equal to fifty percent (50%) of the Fair Market Value of the Shares covered by such grant on the date of grant (or such percentage higher than 50% that is required by any applicable tax or securities law). To the extent that the Company is a Publically Held Corporation and that a stock appreciation right is intended 18

to qualify for the Performance-Based Exception, the exercise price per share of Common Stock shall not be less than one hundred percent (100%) of Fair Market Value of a share of Common Stock on the date of the grant of the stock appreciation right. (c) PERFORMANCE CRITERIA AND OTHER TERMS. In its discretion, the Committee may specify such criteria, periods or goals for vesting in Other Stock-Based Awards and payment thereof to the Grantee as it shall determine; and the extent to which such criteria, periods or goals have been met shall be determined by the Committee. All terms and conditions of Other Stock-Based Awards shall be determined by the Committee and set forth in the Incentive Agreement. (d) PAYMENT. Other Stock-Based Awards may be paid in Shares of Common Stock or other consideration related to such Shares, in a single payment or in installments on such dates as determined by the Committee, all as specified in the Incentive Agreement. (e) DIVIDENDS. The Grantee of an Other Stock-Based Award shall not be entitled to receive, currently or on a deferred basis, dividends or dividend equivalents with respect to the number of Shares covered by the Other Stock-Based Award, unless (and to the extent) otherwise as determined by the Committee and set forth in the Incentive Agreement. The Committee may also provide in the Incentive Agreement that the amounts of any dividends or dividend equivalent shall be deemed to have been reinvested in additional Shares of Common Stock. 4.3 Performance Awards (a) GRANT. During the period the Company is a Publicly Held Corporation, the Committee is authorized to grant Performance Awards to selected Grantees who are Employees or Consultants. Performance Awards may be by reference to Performance Shares or Performance Units. Each grant of Performance Awards shall he evidenced by an Incentive Agreement in such amounts and upon such terms as shall be determined by the Committee. The Committee may make grants of Performance Awards in such a manner that more than one Performance Period is in progress concurrently. For each Performance Period, the Committee shall establish the number of Performance Awards and their contingent values which may vary depending on the degree to which performance criteria established by the Committee are met. (b) PERFORMANCE CRITERIA. The Committee may establish performance goals applicable to Performance Awards based upon criteria in one or more of the following categories: (i) performance of the Company as a whole, (ii) performance of a segment of the Company's business, and (iii) individual performance. Performance criteria for the Company shall relate to the achievement of predetermined financial objectives for the Company and its Subsidiaries on a consolidated basis. Performance criteria for a segment of the Company's business shall relate to the achievement of financial and operating objectives of the segment for which the participant is accountable. Examples of performance criteria shall include (but are not limited to) pre-tax or after-tax profit levels, including: earnings per share, earnings before interest and taxes, earnings before interest, 19

taxes, depreciation and amortization, net operating profits after tax, and net income; total stockholder return; return on assets, equity, capital or investment; cash flow and cash flow return on investment; economic value added and economic profit; growth in earnings per share; levels of operating expense and maintenance expense or measures of customer satisfaction and customer service as determined from time to time including the relative improvement therein. Individual performance criteria shall relate to a participants overall performance, taking into account, among other measures of performance, the attainment of individual goals and objectives. The performance goals may differ among participants. (c) MODIFICATION. If the Committee determines, in its discretion exercised in good faith, that the established performance measures or objectives are no longer suitable to the Company's objectives because of a change in the Company's business, operations, corporate structure, capital structure, or other conditions the Committee deems to be appropriate, the Committee may modify the performance measures and objectives to the extent it considers such modification to be necessary. The Committee shall not permit any such modification that would cause the Performance Awards to fail to qualify for the Performance-Based Exception, if applicable. (d) PAYMENT. The basis for payment of Performance Awards for a given Performance Period shall be the achievement of those performance objectives determined by the Committee at the beginning of the Performance Period as specified in the Grantee's Incentive Agreement. If minimum performance is not achieved for a Performance Period, no payment shall be made and all contingent rights shall cease. If minimum performance is achieved or exceeded, the number of Performance Awards may be based on the degree to which actual performance exceeded the pre-established minimum performance standards. The amount of payment shall be determined by multiplying the number of Performance Awards granted at the beginning of the Performance Period times the final Performance Award value. Payments shall be made, in the discretion of the Committee as specified in the Incentive Agreement. (e) SPECIAL RULE FOR COVERED EMPLOYEES. No later than the ninetieth (90th) day following the beginning of a Performance Period (or twenty-five percent (25%) of the Performance Period) the Committee shall establish performance goals as described in Section 4.3 applicable to Performance Awards awarded to Covered Employees in such a manner as shall permit payments with respect thereto to qualify for the Performance-Based Exception, if applicable. If a Performance Award granted to a Covered Employee is intended to comply with the Performance-Based Exception, the Committee in establishing performance goals shall comply with Treasury Regulationss. l.162-27(e)(2) (or its successor). As soon as practicable following the Company's determination of the Company's financial results for any Performance Period, the Committee shall certify in writing: (i) whether the Company achieved its minimum performance for the objectives for the Performance Period, (ii) the extent to which the Company achieved its performance objectives for the Performance Period, (iii) any other terms that are material to the grant of Performance Awards, and (iv) the calculation of the payments, if any, to be paid to each Grantee for the Performance Period. 20

(f) SUPPLEMENTAL PAYMENT ON VESTING OF PERFORMANCE UNITS OR PERFORMANCE SHARES. The Committee, either at the time of grant or at the time of vesting of Performance Units or Performance Shares, may provide for a Supplemental Payment by the Company to the Grantee in an amount specified by the Committee, which amount shall not exceed the amount necessary to pay the federal and state income tax payable with respect to both the vesting of such Performance Units or Performance Shares and receipt of the Supplemental Payment, assuming the Grantee is taxed at either the maximum effective income tax rate applicable thereto or at a lower tax rate as seemed appropriate by the Committee in its discretion. The Committee shall have the discretion to grant Supplemental Payments that are payable in cash, Common Stock, or a combination of both, as determined by the Committee at the time of payment. SECTION 5. PROVISIONS RELATING TO PLAN PARTICIPATION 5.1 Plan Conditions (a) INCENTIVE AGREEMENT. Each Grantee to whom an Incentive Award is granted shall be required to enter into an Incentive Agreement with the Company, in such a form as is provided by the Committee. The Incentive Agreement shall contain specific terms as determined by the Committee, in its discretion, with respect to the Grantee's particular Incentive Award. Such terms need not be uniform among all Grantees or any similarly situated Grantees. The Incentive Agreement may include, without limitation, vesting, forfeiture and other provisions particular to the particular Grantee's Incentive Award, as well as, for example, provisions to the effect that the Grantee (i) shall not disclose any confidential information acquired during Employment with the Company, (ii) shall abide by all the terms and conditions of the Plan and such other terms and conditions as may be imposed by the Committee, (iii) shall not interfere with the employment or other service of any employee, (iv) shall not compete with the Company or become involved in a conflict of interest with the interests of the Company, (v) shall forfeit an Incentive Award if terminated for Cause, (vi) shall not be permitted to make an election under Section 83(b) of the Code when applicable, and (vii) shall be subject to any other agreement between the Grantee and the Company regarding Shares that may be acquired under an Incentive Award including, without limitation, an agreement restricting the transferability of Shares by Grantee. An Incentive Agreement shall include such terms and conditions as are determined by the Committee, in its discretion, to be appropriate with respect to any individual Grantee. The Incentive Agreement shall be signed by the Grantee to whom the Incentive Award is made and by an Authorized Officer. (b) NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any instrument executed pursuant to the Plan shall create any Employment rights (including without limitation, rights to continued Employment) in any Grantee or affect the right of the Company to terminate the Employment of any Grantee at any time without regard to the existence of the Plan. 21

(c) SECURITIES REQUIREMENTS. The Company shall be under no obligation to effect the registration pursuant to the Securities Act of 1933 of any Shares of Common Stock to be issued hereunder or to effect similar compliance under any state laws. Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates evidencing Shares pursuant to the Plan unless and until the Company is advised by its counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities, and the requirements of any securities exchange on which Shares are traded. The Committee may require, as a condition of the issuance and delivery of certificates evidencing Shares of Common Stock pursuant to the terms hereof, that the recipient of such Shares make such covenants, agreements and representations, and that such certificates bear such legends, as the Committee, in its discretion, deems necessary or desirable. If the Shares issuable on exercise of an Incentive Award are not registered under the Securities Act of 1933, the Company may imprint on the certificate for such Shares the following legend or any other legend which counsel for the Company considers necessary or advisable to comply with the Securities Act of 1933: THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON SUCH REGISTRATION OR UPON RECEIPT BY THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION, IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION, THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE OR TRANSFER. 5.2 TRANSFERABILITY AND EXERCISABILITY Incentive Awards granted under the Plan shall not be transferable or assignable other than: (a) by will or the laws of descent and distribution or (b) pursuant to a qualified domestic relations order (as defined by Section 414(p) of the Code); provided, however, only with respect to Incentive Awards of Nonstatutory Stock Options, the Committee may, in its discretion, authorize all or a portion of the Nonstatutory Stock Options to be granted on terms which permit transfer by the Grantee to (i) the members of the Grantee's Immediate Family, (ii) a trust or trusts for the exclusive benefit of such Immediate Family, or (iii) a partnership in which such members of such Immediate Family are the only partners, provided that (A) there may be no consideration for any such transfer, (B) the Incentive Agreement pursuant to which such Nonstatutory Stock Options are granted must be approved by the Committee, and must expressly provide for transferability in a manner consistent with this Section 5.2, and (C) subsequent transfers of transferred Options shall be prohibited except in accordance with clauses (a) and (b) (above) of this sentence. Following any permitted transfer, any Incentive Award shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that the term "Grantee" shall be deemed to refer to the 22

transferee. The termination of employment events of Section 5.6 and in the Incentive Agreement shall continue to be applied with respect to the original Grantee, and the Incentive Award shall be exercisable by the transferee only to the extent, and for the periods, specified in the Incentive Agreement. Except as may otherwise be permitted under the Code, in the event of a permitted transfer of a Nonstatutory Stock Option hereunder, the original Grantee shall remain subject to withholding taxes upon exercise. In addition, the Company shall have no obligation to provide any notices to a transferee including, for example, of the termination of an Incentive Award following the original Grantee's termination of employment. In the event that a Grantee terminates employment with the Company to assume a position with a governmental, charitable, educational or other nonprofit institution, the Committee may, in its discretion, subsequently authorize a third party, including but not limited to a "blind" trust, to act on behalf of and for the benefit of such Grantee regarding any outstanding Incentive Awards held by the Grantee subsequent to such termination of employment. If so permitted by the Committee, a Grantee may designate a beneficiary or beneficiaries to exercise the rights of the Grantee and receive any distribution under the Plan upon the death of the Grantee. No transfer by will or by the laws of descent and distribution shall be effective to bind the Company unless the Committee has been furnished with a copy of the deceased Grantee's enforceable will or such other evidence as the Committee deems necessary to establish the validity of the transfer. Any attempted transfer in violation of this Section 5.2 shall be void and ineffective. All determinations under this Section 5.2 shall be made by the Committee in its discretion. 5.3 RIGHTS AS A STOCKHOLDER (a) NO STOCKHOLDER RIGHTS. Except as otherwise provided in Section 3.1(b) for grants of Restricted Stock, a Grantee of an Incentive Award (or a permitted transferee of such Grantee) shall have no rights as a stockholder with respect to any Shares of Common Stock until the issuance of a stock certificate for such Shares. (b) REPRESENTATION OF OWNERSHIP. In the case of the exercise of an Incentive Award by a person or estate acquiring the right to exercise such Incentive Award by reason of the death or Disability of a Grantee, the Committee may require reasonable evidence as to the ownership of such Incentive Award or the authority of such person and may require such consents and releases of taxing authorities as the Committee may deem advisable. 5.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK The exercise of any Incentive Award granted hereunder shall only be effective at such time as counsel to the Company shall have determined that the issuance and delivery of Shares of Common Stock pursuant to such exercise is in compliance with all applicable laws, regulations of governmental authorities and the requirements of any securities exchange on which Shares of 23

Common Stock are traded. The Committee may, in its discretion, defer the effectiveness of any exercise of an Incentive Award in order to allow the issuance of Shares of Common Stock to be made pursuant to a registration statement, or an exemption from registration, or other methods for compliance available under federal or state securities laws. The Committee shall inform the Grantee in writing of its decision to defer the effectiveness of the exercise of an Incentive Award. During the period that the effectiveness of the exercise of an Incentive Award has been deferred, the Grantee may, by written notice to the Committee, withdraw such exercise and obtain the refund of any amount paid with respect thereto. 5.5 CHANGE IN STOCK AND ADJUSTMENTS (a) CHANGES IN LAW OR CIRCUMSTANCES. Subject to Section 5.7 (which only applies in the event of a Change in Control), in the event of any change in applicable law or any change in circumstances which results in or would result in any dilution of the rights granted under the Plan, or which otherwise warrants an equitable adjustment because it interferes with the intended operation of the Plan, then, if the Committee should so determine, in its absolute discretion, that such change equitably requires an adjustment in the number or kind of shares of stock or other securities or property theretofore subject, or which may become subject, to issuance or transfer under the Plan or in the terms and conditions of outstanding Incentive Awards, such adjustment shall be made in accordance with such determination. Such adjustments may include changes with respect to (i) the aggregate number of Shares that may be issued under the Plan, (ii) the number of Shares subject to Incentive Awards, and (iii) the Option Price or other price per Share for outstanding Incentive Awards. Any adjustment under this paragraph of an outstanding Incentive Stock Option shall be made only to the extent not constituting a "modification" within the meaning of Section 424(h)(3) of the Code unless otherwise agreed to by the Grantee in writing. The Committee shall give notice to each applicable Grantee of such adjustment which shall be effective and binding. (b) EXERCISE OF CORPORATE POWERS. The existence of the Plan or outstanding Incentive Awards hereunder shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalization, reorganization or other changes in the Company's capital structure or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding whether of a similar character or otherwise. (c) RECAPITALIZATION OF THE COMPANY. Subject to Section 5.7 (which only applies in the event of a Change in Control), if while there are Incentive Awards outstanding, the Company shall effect any subdivision or consolidation of Shares of Common Stock or other capital readjustment, the payment of a stock dividend, stock split, combination of Shares, recapitalization or other increase or reduction in the number of Shares outstanding, without receiving compensation therefor in money, services or property, then the number of Shares available under the Plan and the number of Incentive Awards which may thereafter be exercised shall (i) in the event of an increase in the 24

number of Shares outstanding, be proportionately increased and the Option Price or Fair Market Value of the Incentive Awards awarded shall be proportionately reduced; and (ii) in the event of a reduction in the number of Shares outstanding, be proportionately reduced, and the Option Price or Fair Market Value of the Incentive Awards awarded shall be proportionately increased. The Committee shall take such action and whatever other action it deems appropriate, in its discretion, so that the value of each outstanding Incentive Award to the Grantee shall not be adversely affected by a corporate event described in this subsection (c). (d) ISSUE OF COMMON STOCK BY THE COMPANY. Except as hereinabove expressly provided in this Section 5.5 and subject to Section 5.7 in the event of a Change in Control, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon any conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of, or Option Price or Fair Market Value of, any Incentive Awards then outstanding under previously granted Incentive Awards; provided, however, in such event, outstanding Shares of Restricted Stock shall be treated the same as outstanding unrestricted Shares of Common Stock. (e) ASSUMPTION UNDER THE PLAN OF OUTSTANDING STOCK OPTIONS. Notwithstanding any other provision of the Plan, the Committee, in its absolute discretion, may authorize the assumption and continuation under the Plan of outstanding and unexercised stock options or other types of stock-based incentive awards that were granted under a stock option plan (or other type of stock incentive plan or agreement) that is or was maintained by a corporation or other entity that was merged into, consolidated with, or whose stock or assets were acquired by, the Company as the surviving corporation. Any such action shall be upon such terms and conditions as the Committee, in its discretion, may deem appropriate, including provisions to preserve the holder's rights under the previously granted and unexercised stock option or other stock-based incentive award, such as, for example, retaining an existing exercise price under an outstanding stock option. Any such assumption and continuation of any such previously granted and unexercised incentive award shall be treated as an outstanding Incentive Award under the Plan and shall thus count against the number of Shares reserved for issuance pursuant to Section 1.4. In addition, any Shares issued by the Company through the assumption or substitution of outstanding grants from an acquired company shall reduce the Shares available for grants under Section 1.4. (f) ASSUMPTION OF INCENTIVE AWARDS BY A SUCCESSOR. Subject to the accelerated vesting and other provisions of Section 5.7 that apply in the event of a Change in Control, in the event of a Corporate Event (defined below), each Grantee shall be entitled to receive, in lieu of the number of Shares subject to Incentive Awards, such shares of capital stock or other securities or property as may be issuable or payable with respect to or in exchange for the number of Shares which Grantee would have received had he exercised the Incentive Award immediately prior to such Corporate Event, together with any adjustments (including, without limitation, adjustments to the Option 25

Price and the number of Shares issuable on exercise of outstanding Stock Options). For this purpose, Shares of Restricted Stock shall be treated the same as unrestricted outstanding Shares of Common Stock. A "CORPORATE EVENT" means any of the following: (i) a dissolution or liquidation of the Company, (ii) a sale of all or substantially all of the Company's assets, or (iii) a merger, consolidation or combination involving the Company (other than a merger, consolidation or combination (A) in which the Company is the continuing or surviving corporation and (B) which does not result in the outstanding Shares being converted into or exchanged for different securities, cash or other property, or any combination thereof). The Committee shall take whatever other action it deems appropriate to preserve the rights of Grantees holding outstanding Incentive Awards. Notwithstanding the previous paragraph of this Section 5.5(f), but subject to the accelerated vesting and other provisions of Section 5.7 that apply in the event of a Change in Control, in the event of a Corporate Event (described in the previous paragraph), the Committee, in its discretion, shall have the right and power to: (i) cancel, effective immediately prior to the occurrence of the Corporate Event, each outstanding Incentive Award (whether or not then exercisable) and, in full consideration of such cancellation, pay to the Grantee an amount in cash equal to the excess of (A) the value, as determined by the Committee, of the property (including cash) received by the holders of Common Stock as a result of such Corporate Event over (B) the exercise price of such Incentive Award, if any; provided, however, this subsection (i) shall be inapplicable to an Incentive Award granted within six (6) months before the occurrence of the Corporate Event but only if the Grantee is an Insider and such disposition is not exempt under Rule 16b-3 (or other rules preventing liability of the Insider under Section 16(b) of the Exchange Act) and, in that event, the provisions hereof shall be applicable to such Incentive Award after the expiration of six (6) months from the date of grant; or (ii) provide for the exchange or substitution of each Incentive Award outstanding immediately prior to such Corporate Event (whether or not then exercisable) for another award with respect to the Common Stock or other property for which such Incentive Award is exchangeable and, incident thereto, make an equitable adjustment as determined by the Committee, in its discretion, in the Option Price or exercise price of the Incentive Award, if any, or in the number of Shares or amount of property (including cash) subject to the Incentive Award; or (iii) provide for assumption of the Plan and such outstanding Incentive Awards by the surviving entity or its parent. The Committee, in its discretion, shall have the authority to take whatever action it deems to be necessary or appropriate to effectuate the provisions of this subsection (f). 26

5.6 TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT (a) TERMINATION OF EMPLOYMENT. Unless otherwise expressly provided in the Grantee's Incentive Agreement, if the Grantee's Employment is terminated for any reason other than due to his death, Disability, Retirement or for Cause, any non-vested portion of any Stock Option or other applicable Incentive Award at the time of such termination shall automatically expire and terminate and no further vesting shall occur after the termination date. In such event, except as otherwise expressly provided in his Incentive Agreement, the Grantee shall be entitled to exercise his rights only with respect to the portion of the Incentive Award that was vested as of the termination date for a period that shall end on the earlier of (i) the expiration date set forth in the Incentive Agreement with respect to the vested portion of such Incentive Award or (ii) the date that occurs ninety (90) calendar days after his termination date (not to exceed three (3) months in the case of an ISO). Unless otherwise expressly provided in his Incentive Agreement, a Grantee's Employment shall not be deemed to have been terminated if a Grantee who is an Employee becomes a Consultant or Outside Director immediately upon his termination of employment with the Company, or if a Grantee's status otherwise changes between or among Employee, Consultant or Outside Director without a gap in service for the Company in any such capacity. All determinations regarding whether and when there has been a termination of Employment shall be made by the Committee. (b) TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise expressly provided in the Grantee's Incentive Agreement, in the event of the termination of a Grantee's Employment for Cause, all nonvested Stock Options and other Incentive Awards granted to such Grantee shall immediately expire, and shall not be exercisable to any extent, as of 12:01 a.m. (CST) on the date of such termination of Employment. (c) RETIREMENT. Unless otherwise expressly provided in the Grantee's Incentive Agreement, upon the Retirement of any Employee who is a Grantee: (i) any non-vested portion of any outstanding Option or other Incentive Award shall immediately terminate and no further vesting shall occur; and (ii) any vested Option or other Incentive Award shall expire on the earlier of (A) the expiration date set forth in the Incentive Agreement for such Incentive Award; or (B) the expiration of (1) six (6) months after the date of Retirement in the case of any Incentive Award other than an Incentive Stock Option, or (2) three (3) months after termination of employment in the case of an Incentive Stock Option. (d) DISABILITY OR DEATH. Unless otherwise expressly provided in the Grantee's Incentive Agreement, upon termination of Employment as a result of the Grantee's Disability or death: (i) any nonvested portion of any outstanding Option or other applicable Incentive Award shall immediately terminate upon termination of Employment and no further vesting shall occur; and 27

(ii) any vested Incentive Award shall expire on the earlier of either (A) the expiration date set forth in the Incentive Agreement or (B) the one (1) year anniversary date of the Grantee's termination of Employment date. In the case of any vested Incentive Stock Option held by an Employee following termination of Employment, notwithstanding the definition of "Disability" in Section 1.2, whether the Employee has incurred a "Disability" for purposes of determining the length of the Option exercise period following termination of Employment under this paragraph (d) shall be determined by reference to Section 22(e)(3) of the Code to the extent required by Section 422(c)(6) of the Code. The Committee shall determine whether a Disability for purposes of this subsection (d) has occurred. (e) CONTINUATION. Subject to the conditions and limitations of the Plan and applicable law and regulation in the event that a Grantee ceases to be an Employee, Outside Director or Consultant, as applicable, for whatever reason, the Committee and Grantee may mutually agree with respect to any outstanding Option or other Incentive Award then held by the Grantee (i) for an acceleration or other adjustment in any vesting schedule applicable to the Incentive Award, (ii) for a continuation of the exercise period following termination for a longer period than is otherwise provided under such Incentive Award, or (iii) to any other change in the terms and conditions of the Incentive Award. In the event of any such change to an outstanding Inventive Award, a written amendment to the Grantee's Incentive Agreement shall be required. 5.7 Change in Control Notwithstanding any contrary provision in the Plan, in the event of a Change in Control (as defined below) the following actions shall automatically occur as of the day immediately preceding the Change in Control date unless expressly provided otherwise in the Grantee's Incentive Agreement: (a) all of the Stock Options then outstanding shall become one hundred percent (100%) vested and immediately and fully exercisable; (b) all of the restrictions and conditions of any Restricted Stock and any Other Stock-Based Awards then outstanding shall be deemed satisfied, and the Restriction Period with respect thereto shall be deemed to have expired; and (c) all of the Other Stock-Based Awards shall become fully vested, deemed earned in full, and promptly paid within thirty (30) days to the affected Grantees without regard to payment schedules and notwithstanding that the applicable performance cycle, retention cycle or other restrictions and conditions have not been completed or satisfied. Notwithstanding any other provision of the Plan, unless otherwise expressly provided in the Grantee's Incentive Agreement, the provisions of this Section 5.7 may not be terminated, amended, or modified to adversely affect any Incentive Award theretofore granted under the Plan without the prior written consent of the Grantee with respect to his outstanding Incentive Awards subject, however, to the last paragraph of this Section 5.7. 28

For all purposes of this Plan, a "CHANGE IN CONTROL" of the Company shall be deemed to occur if: (a) the Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (b) any person or entity, including a "group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 30% or more of the outstanding shares of the Company's voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (c) the Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or (d) During a period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (e) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Change in Control hereunder. Notwithstanding the occurrence of any of the foregoing events of this Section 5.7 which would otherwise result in a Change in Control, the Board may determine in its discretion, if it deems it to be in the best interest of the Company, that an event or events otherwise constituting a Change in Control shall not be deemed a Change in Control hereunder. Such determination shall be effective only if it is made by the Board prior to the occurrence of an event that otherwise would be a Change in Control, or after such event if made by the Board a majority of which is composed of directors who were members of the Board immediately prior to the event that otherwise would be or probably would lead to a Change in Control. 5.8 EXCHANGE OF INCENTIVE AWARDS The Committee may, in its discretion, permit any Grantee to surrender outstanding Incentive Awards in order to exercise or realize his rights under other Incentive Awards or in exchange for the grant of new Incentive Awards, or require holders of Incentive Awards to surrender outstanding Incentive Awards (or comparable rights under other plans or arrangements) as a condition precedent to the grant of new Incentive Awards. 29

5.9 Financing To the extent permitted by the Sarbanes-Oxley Act of 2002 or other applicable law, the Company may extend and maintain, or arrange for and guarantee, the extension and maintenance of financing to any Grantee to purchase Shares pursuant to exercise of an Incentive Award upon such terms as are approved by the Committee and the Board in their discretion. SECTION 6. GENERAL 6.1 EFFECTIVE DATE AND GRANT PERIOD This Plan is adopted by the Board effective as of the Effective Date subject to the approval of the stockholders of the Company within twelve (12) months from the Effective Date. Incentive Awards may be granted under the Plan at any time prior to receipt of such stockholder approval; provided, however, if the requisite stockholder approval is not obtained within the permissible time frame, then the Plan and any Incentive Awards granted hereunder shall automatically become null and void and of no force or effect. Unless sooner terminated by the Board pursuant to Section 6.7, no Incentive Award shall be granted under the Plan after ten (10) years from the Effective Date. 6.2 FUNDING AND LIABILITY OF COMPANY No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made, or otherwise to segregate any assets. In addition, the Company shall not be required to maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for purposes of the Plan. Although bookkeeping accounts may be established with respect to Grantees who are entitled to cash, Common Stock or rights thereto under the Plan, any such accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto. The Plan shall not be construed as providing for such segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto. Any liability or obligation of the Company to any Grantee with respect to an Incentive Award shall be based solely upon any contractual obligations that may be created by this Plan and any Incentive Agreement, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company, the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by the Plan. 6.3 Withholding Taxes (a) TAX WITHHOLDING. The Company shall have the power and the right to deduct or withhold, or require a Grantee to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to 30

be withheld with respect to any taxable event arising as a result of the Plan or an Incentive Award hereunder. (b) SHARE WITHHOLDING. With respect to tax withholding required upon the exercise of Stock Options, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of any Incentive Awards, Grantees may elect, subject to the approval of the Committee in its discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Grantee, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. Any fraction of a Share required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash by the Grantee. (c) INCENTIVE STOCK OPTIONS. With respect to Shares received by a Grantee pursuant to the exercise of an Incentive Stock Option, if such Grantee disposes of any such Shares within (i) two (2) years from the date of grant of such Option or (ii) one (1) year after the transfer of such shares to the Grantee, the Company shall have the right to withhold from any salary, wages or other compensation payable by the Company to the Grantee an amount sufficient to satisfy federal, state and local tax withholding requirements attributable to such disqualifying disposition. 6.4 NO GUARANTEE OF TAX CONSEQUENCES Neither the Company nor the Committee makes any commitment or guarantee that any federal, state or local tax treatment will apply or be available to any person participating or eligible to participate hereunder. 6.5 DESIGNATION OF BENEFICIARY BY PARTICIPANT Each Grantee may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Grantee, shall be in a form prescribed by the Committee, and will be effective only when filed by the Grantee in writing with the Committee during the Grantee's lifetime. In the absence of any such designation, benefits remaining unpaid at the Grantee's death shall be paid to the Grantee's estate. 6.6 Deferrals The Committee may permit a Grantee to defer such Grantee's receipt of the payment of cash or the delivery of Shares that would, otherwise be due to such Grantee by virtue of the lapse or waiver of restrictions with respect to Restricted Stock, or the satisfaction of any requirements or goals with respect to Other Stock-Based Awards. If any such deferral election is permitted, the Committee shall, in its discretion, establish rules and procedures for such payment deferrals to the extent consistent with the Code. 31

6.7 AMENDMENT AND TERMINATION The Board shall have complete power and authority to terminate or amend the Plan at any time; provided, however, if the Company is a Publicly Held Corporation, the Board shall not, without the approval of the stockholders of the Company within the time period required by applicable law, (a) except as provided in Section 5.5, increase the maximum number of Shares which may be issued under the Plan pursuant to Section 1.4, (b) amend the requirements as to the class of Employees eligible to purchase Common Stock under the Plan, (c) to the extent applicable, increase the maximum limits on Incentive Awards to Covered Employees as set for compliance with the Performance-Based Exception, (d) extend the term of the Plan, or (e) to the extent applicable, decrease the authority granted to the Committee under the Plan in contravention of Rule 16b-3 under the Exchange Act. No termination, amendment, or modification of the Plan shall adversely affect in any material way any outstanding Incentive Award previously granted to a Grantee under the Plan, without the written consent of such Grantee or other designated holder of such Incentive Award. In addition, to the extent that the Committee determines that (a) the listing for qualification requirements of any national securities exchange or quotation system on which the Common Stock is then listed or quoted, if applicable, or (b) the Code (or regulations promulgated thereunder), require stockholder approval in order to maintain compliance with such listing requirements or to maintain any favorable tax advantages or qualifications, then the Plan shall not be amended in such respect without approval of the Company's stockholders. 6.8 Requirements of Law The granting of Incentive Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. The Committee may refuse to issue or transfer any Shares or other consideration under an Incentive Award if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or other consideration might violate applicable laws. Certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules and regulations of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation, and any applicable federal or state securities law, if applicable. The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions. 6.9 RULE 16B-3 SECURITIES LAW COMPLIANCE AND COMPLIANCE WITH COMPANY POLICIES With respect to Insiders to the extent applicable, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 under the Exchange Act. With respect to all Grantees, transactions under the Plan are intended to comply with Securities Regulation BTR and the Company's insider trading policies as revised from time to time or such other similar Company policies, including but not limited to, policies relating to black out periods. Any 32

ambiguities or inconsistencies in the construction of an Incentive Award or the Plan shall be interpreted to give effect to such intention. However, to the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void to the extent deemed advisable by the Committee in its discretion. 6.10 COMPLIANCE WITH CODE SECTION 162(M) While the Company is a Publicly Held Corporation, unless otherwise determined by the Committee with respect to any particular Incentive Award, it is intended that the Plan shall comply fully with the applicable requirements so that any Incentive Awards subject to Section 162(m) that are granted to Covered Employees shall qualify for the Performance-Based Exception. If any provision of the Plan or an Incentive Agreement would disqualify the Plan or would not otherwise permit the Plan or Incentive Award to comply with the Performance-Based Exception as so intended, such provision shall be construed or deemed to be amended to conform to the requirements of the Performance-Based Exception to the extent permitted by applicable law and deemed advisable by the Committee; provided, however, no such construction or amendment shall have any adverse effect on the prior grant of an Incentive Award, or the economic value to a Grantee of any outstanding Incentive Award, unless consented to in writing by the Grantee. 6.11 Successors All obligations of the Company under the Plan with respect to Incentive Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
6.12 MISCELLANEOUS PROVISIONS (a) No Employee, Consultant, Outside Director, or other person shall have any claim or right to be granted an Incentive Award under the Plan. Neither the Plan, nor any action taken hereunder, shall be construed as giving any Employee, Consultant, or Outside Director any right to be retained in the Employment or other service of the Company or any Parent or Subsidiary. (b) No Shares of Common Stock shall be issued hereunder unless counsel for the Company is then reasonably satisfied that such issuance will be in compliance with federal and state securities laws, if applicable. (c) The expenses of the Plan shall be borne by the Company. (d) By accepting any Incentive Award, each Grantee and each person claiming by or through him shall be deemed to have indicated his acceptance of the Plan. 6.13 Severability In the event that any provision of this Plan shall be held illegal,

invalid or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining 33

provisions of the Plan, and the Plan shall be construed and enforced as if the illegal, invalid, or unenforceable provision was not included herein. 6.14 GENDER, TENSE AND HEADINGS Whenever the context so requires, words of the masculine gender used herein shall include the feminine and neuter, and words used in the singular shall include the plural. Section headings as used herein are inserted solely for convenience and reference and constitute no part of the interpretation or construction of the Plan. 6.15 Governing Law The Plan shall be interpreted, construed and constructed in accordance with the laws of the State of Texas without regard to its conflicts of law provisions, except as may be superseded by applicable laws of the United States. [SIGNATURE PAGE FOLLOWS] 34

IN WITNESS WHEREOF, Continental Southern Resources, Inc. has caused this Plan to be duly executed in its name and on its behalf by its duly authorized officer. CONTINENTAL SOUTHERN RESOURCES, INC.
By: /s/ STEPHEN P. HARRINGTON -----------------------------------Name: Stephen P. Harrington --------------------------------Title: President ---------------------------------

35

EXHIBIT 10.37 EMPLOYMENT AGREEMENT This Employment Agreement ("Agreement") is entered into effective as of February 26, 2004 (the "Effective Date"), by and between Continental Southern Resources, Inc., a Nevada corporation (the "Company"), and William L. Transier ("Employee"). WHEREAS, the Company wishes to employ Employee and Employee wishes to be employed by the Company; and WHEREAS, the Company and Employee desire to enter into an agreement reflecting the terms of the employment relationship, including the termination thereof; NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties, and agreements contained herein, and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 1. Effect of Agreement. Effective as of the Effective Date, this Agreement supersedes and replaces any preexisting employment agreements between the Company and the Employee. 2. Employment. The Company hereby employs Employee, and Employee hereby accepts employment by the Company, on the terms and conditions set forth in this Agreement. 3. Term of Employment. Subject to the provisions for earlier termination provided in this Agreement, the term of this Agreement (the "Term") shall be three (3) years commencing on the Effective Date. 4. Employee's Duties. During the Term of this Agreement, Employee shall serve as Co-Chief Executive Officer, with such duties and responsibilities as may from time to time be assigned to him by the board of directors of the Company (the "Board"), provided that such duties are consistent with the customary duties of such position. During the term of this Agreement, Employee shall also serve as a member of the Board. Employee agrees to devote all of his business time, skill and attention to the business and affairs of the Company and to use reasonable best efforts to perform faithfully and efficiently his duties and responsibilities. Employee shall not, either directly or indirectly, enter into any business or employment with or for any person, firm, association or corporation other than the Company during the Term of this Agreement; provided, however, that Employee shall not be prohibited from making financial investments in any other company or business, or, with notice to the Board, from serving on the board of directors of any other company if such service does not materially interfere with the performance of his duties or responsibilities hereunder. Employee shall at all times observe and comply with all lawful directions and instructions of the Board. 5. Compensation. (a) Inducement Stock. As inducement to the Employee to enter into this Agreement, the Company will issue 500,000 shares ("Inducement Stock") of Company restricted common stock ("Restricted Stock") to the Employee as of the Effective Date.

The Inducement Stock grants shall be evidenced by the forms of Inducement Stock Agreement attached hereto as Exhibits "A" and "B." (b) Base Compensation. Beginning on January 1, 2005, for services rendered by Employee under this Agreement, the Company shall pay to Employee a base salary of $500,000 per annum ("Base Compensation"). Subject to the availability of stock under the Company's 2004 Incentive Plan or any similar plan then in effect (the "Incentive Plan"), the Employee may make an annual election to take between 0% and 100% of his Base Compensation in the form of Restricted Stock (the "Salary Stock"), provided that he notifies the Company of his decision prior to the first pay period of each applicable year. For purposes hereof, the Salary Stock shall be valued at Fair Market Value, as that term is defined in the Incentive Plan and issued pursuant to the form of Restricted Stock Agreement attached hereto as Exhibit "B". Should insufficient shares be available under the Incentive Plan to grant the full amount of the Salary Stock, the remaining Base Compensation shall be paid in cash. The Base Compensation is payable in accordance with the Company's customary pay periods and subject to customary withholdings, including share withholdings as described in Section 15(b) hereof. Issuance of the Salary Stock shall be accomplished in a manner to provide the most favorable accounting treatment for the Company. The amount of Base Compensation shall be reviewed by the Board on an annual basis as of the close of each fiscal year of the Company and may be increased as the Board may deem appropriate. In the event the Board (or, if established, the compensation committee thereof) deems it appropriate to increase Employee's annual base salary, said increased amount shall thereafter be the "Base Compensation." Employee's Base Compensation, as increased from time to time, may not thereafter be decreased unless agreed to by Employee. Nothing contained herein shall prevent the Board from paying additional compensation to Employee in the form of bonuses or otherwise during the Term of this Agreement. 6. Bonus. With respect to each full fiscal year during the Employment Term, the Board in its sole discretion may grant the Employee a discretionary bonus ("Bonus"). The target bonus for each year shall be equal to the Base Compensation; however, the Board may grant a maximum Bonus of up to 200% of the Base Compensation payable in the form and in accordance with the Company's customary pay periods for its annual bonuses for its executives and subject to customary withholdings. 7. Additional Benefits. In addition to the Base Compensation provided for in Section 5 herein, Employee shall be entitled to the following: (a) Expenses. The Company shall, in accordance with any rules and policies that it may establish from time to time for executive officers, reimburse Employee for business expenses reasonably incurred in the performance of his duties. It is understood that Employee is authorized to incur reasonable business expenses for promoting the business of the Company, including reasonable expenditures for travel, lodging, meals and client or business associate entertainment. Request for reimbursement for such expenses must be accompanied by appropriate documentation. 2

(b) Vacation. Employee shall be entitled to five (5) weeks of vacation per year, without any loss of compensation or benefits. Employee shall not be entitled to compensation for, or to carry forward, any unused vacation time. (c) General Benefits. Employee shall be entitled to participate in the various employee benefit plans or programs, if any, provided to the officers of the Company in general, including but not limited to, health, dental, disability and life insurance plans, subject to the eligibility requirements with respect to each of such benefit plans or programs, and such other benefits or perquisites as may be approved by the Board during the Term of this Agreement. Nothing in this paragraph shall be deemed to prohibit the Company from making any changes in any of the plans, programs or benefits described in this Section 7, provided the change similarly affects all executive officers of the Company similarly situated. (d) Corporate Change. Upon the occurrence of a "Corporate Change" as hereinafter defined, Employee shall be considered as immediately and totally vested in any and all Restricted Stock, stock options or other similar awards previously made to Employee by the Company or its subsidiaries under a "Long Term Incentive Plan" or other grant duly adopted by the Board or the Compensation Committee thereof (such Restricted Stock, options or similar awards are hereinafter collectively referred to as "Options"). For purposes of this Agreement, a "Corporate Change" shall occur if (i) the Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously whollyowned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (ii) any person or entity, including a "group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 30% or more of the outstanding shares of the Company's voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (iii) the Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or (iv) during a period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (v) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Corporate Change hereunder. 8. Confidential Information. Employee, during the Term, will have access to and become familiar with confidential information, secrets and proprietary information concerning the business and affairs of the Company, its controlled subsidiaries and other controlled entities, 3

including client and customer information, information concerning their products, patent rights and know-how, and other technical information, business strategies and pricing information, and other confidential and/or proprietary information (collectively, "Confidential Information"). Confidential Information shall not include (i) any information that is or becomes generally available to the public other than as a result of Employee's improper or unauthorized disclosure of such information in violation of this Agreement or (ii) was within Employee's possession prior to its affiliation with the Company or its controlled subsidiaries or other controlled entities (including his affiliation with Endeavour International Operating Company, f/k/a NSNV, Inc. prior to its acquisition by the Company). As to such Confidential Information, Employee agrees as follows: (a) During the term of this Agreement or at any time following the termination of this Agreement, Employee will not, directly or indirectly, without the prior written consent of the Company (1) disclose or permit the disclosure of any such Confidential Information, or (2) use, reproduce or distribute, or make or permit any use, reproduction or distribution of, directly or indirectly, any such Confidential Information, except for any disclosure, use, reproduction or distribution that is required in the course of his employment with the Company, its controlled subsidiaries or other controlled entities. (b) If, during the term of this Agreement or at any time following the termination of this Agreement, Employee is requested or required (by oral question or request for information or documents, in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, Employee agrees to notify the Company immediately in writing of the request or requirement so that the Company may seek an appropriate protection order or waive compliance with the provisions of this Section. If, in the absence of a protective order or the receipt of a waiver under this Agreement, Employee is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, Employee may disclose such Confidential Information to the tribunal; provided, however, that Employee shall use his commercially reasonable best efforts to obtain a court order or other assurance that confidential treatment will be accorded to such Confidential Information. (c) Upon termination of employment of Employee, for whatever reason, Employee shall surrender to the Company any and all documents, manuals, correspondence, reports, records and similar items then or thereafter coming into the possession of Employee which contain any Confidential Information of the Company or its controlled subsidiaries or other controlled entities. (d) Employee recognizes and acknowledges that the obligations of Employee contained in Section 8 of this Agreement are reasonable and necessary to protect the legitimate business interests of the Company, and that any breach or violation of any of the provisions of such Section is likely to result in irreparable injury to the Company for which the Company would have no adequate remedy at law. Employee agrees that if Employee shall breach or violate Section 8 of this Agreement, the Company shall be entitled, if it so elects, to institute and prosecute proceedings at law or in equity, 4

including, but not limited to, a proceeding seeking injunctive relief, to obtain damages with respect to such breach or violation, to enforce the specific performance of Section 8 this Agreement by Employee, or to enjoin Employee from engaging in any activity in violation of Section 8 of this Agreement. Employee acknowledges that in the event of any such breach or violation, the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages or posting a bond, and to an equitable accounting of all earnings, profits, and other benefits arising from any such breach or violation, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. Employee agrees that in the event of any such violation, an action may be commenced for preliminary or permanent injunctive relief and other equitable relief in any federal or state court of competent jurisdiction sitting in Harris County, Texas, or in any other court of competent jurisdiction. Employee waives, to the fullest extent permitted by law, any objection that Employee may now or hereafter have to such jurisdiction or to the laying of the venue of any such suit, action, or proceeding brought in such a court and any claim that such suit, action or proceeding has been brought in an inconvenient forum. Employee agrees that effective service of process may be made upon Employee under the notice provisions contained in Section 12 of this Agreement. Employee further agrees that the existence of any claim or cause of action against the Company, whether predicated upon a breach or violation by the Company of this Agreement or any other contract or agreement between Employee and the Company, shall not constitute or be asserted as a defense to the enforcement by the Company to the provisions of this Section relating to the Company's right to injunctive or other equitable relief for Employee's breach or violation of Section 8 of this Agreement. 9. Termination. This Agreement may be terminated prior to the end of its Term as set forth below: (a) Resignation (other than for Good Reason). Employee may resign, including by reason of retirement, his position at any time by providing written notice of resignation to the Company in accordance with Section 12 hereof. In the event of such resignation, except in the case of resignation for Good Reason (as defined below), this Agreement shall terminate and Employee shall not be entitled to further compensation pursuant to this Agreement other than the payment of any unpaid Base Compensation or Bonus accrued hereunder as of the date of Employee's resignation. (b) Death. If Employee's employment is terminated due to his death, this Agreement shall terminate and the Company shall have no obligations to Employee or his legal representatives with respect to this Agreement other than the payment of any unpaid Base Compensation or Bonus previously accrued hereunder. (c) Discharge. (i) The Company may terminate Employee's employment only in the event of Employee's Misconduct or Disability (both as defined below) upon written notice thereof delivered to Employee in accordance with Section 9(f) and Section 12 hereof. In the event that Employee's employment is terminated during 5

the Term by the Company for any reason other than his Misconduct or Disability (both as defined below), then (A) the Company shall pay in lump sum in cash to Employee, within fifteen (15) days following the date of termination, an amount equal to the product of (i) Employee's Base Compensation as in effect immediately prior to Employee's termination (in the event a Corporate Change occurs prior to January 1, 2005, the Base Compensation shall be $500,000), multiplied by (ii) three, (B) for three years following the date of termination, the Company, at its cost, shall provide or arrange to provide Employee (and, as applicable, Employee's dependents) with accident and group health insurance benefits substantially similar to those which Employee (and Employee's dependents) were receiving immediately prior to Employee's termination (if any); however, the welfare benefits otherwise receivable by Employee pursuant to this clause (B) shall be reduced to the extent comparable welfare benefits are actually received by Employee (and/or Employee's dependents) during such period under any other employer's welfare plan(s) or program(s), with Employee being obligated to promptly disclose to the Company any such comparable welfare benefits, (C) in addition to the aforementioned compensation and benefits, the Company shall pay in lump sum in cash to Employee within fifteen (15) days following the date of termination an amount equal to the product of (i) Employee's average Bonus paid by the Company during the most recent two (2) years immediately prior to the date of termination (in the event that the date of termination is on or before December 31, 2004 and no Bonus has been paid with respect to the fiscal year ending December 31, 2004 as of the date of termination, the Bonus shall be equal to the Base Compensation for purposes of this section and in the event that the date of termination is after December 31, 2004 and on or before December 31, 2005 and no Bonus has been paid with respect to the fiscal year ending December 31, 2005, the Bonus with respect to the fiscal year ending December 31, 2005 shall be equal to the Base Compensation for purposes of this section), multiplied by (ii) three and (D) Employee shall be considered as immediately and totally vested in any and all Options previously made to Employee by Company or its subsidiaries. (ii) In the event Employee is terminated because of Misconduct, the Company shall have no obligations pursuant to this Agreement after the Date of Termination other than the payment of any unpaid Base Compensation or Bonus accrued through the Date of Termination. As used herein, "Misconduct" means (A) the continued failure by Employee to substantially perform his duties with the Company (other than any such failure resulting from Employee's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination by Employee for Good Reason), after a written demand for substantial performance is delivered to Employee by the Board, which demand specifically identifies the manner in which the Board believes that Employee has not substantially performed his duties, and the Employee fails to cure such failure within ten (10) days after receipt of such demand, (B) the engaging by Employee in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise (other than such conduct resulting from Employee's incapacity due to physical or mental illness or 6

any such actual or anticipated conduct after the issuance of a Notice of Termination by Employee for Good Reason), (C) Employee's conviction for the commission of a felony or (D) action by Employee toward the Company involving dishonesty. Anything contained in this Agreement to the contrary notwithstanding, the Board shall have the sole power and authority to terminate the employment of Employee on behalf of the Company (d) Disability. If Employee shall have been absent from the full-time performance of Employee's duties with the Company for ninety (90) consecutive calendar days as a result of Employee's incapacity due to physical or mental illness, Employee's employment may be terminated by the Company for "Disability" and Employee shall not be entitled to further compensation pursuant to this Agreement, except that Employee shall be considered as immediately and totally vested in any and all Options and restricted stock grants previously granted to Employee by Company or its subsidiaries. (e) Resignation for Good Reason. Employee shall be entitled to terminate his employment for Good Reason as defined herein. If Employee terminates his employment for Good Reason he shall be entitled to the compensation and benefits provided in Paragraph 9(c)(i) hereof. "Good Reason" shall mean the occurrence of any of the following circumstances without Employee's express written consent unless such breach or circumstances are fully corrected prior to the Date of Termination specified in the Notice of Termination given in respect hereof: (i) the material breach of any of the Company's obligations under this Agreement without Employee's express written consent; (ii) the continued assignment to Employee of any duties inconsistent with the office of Co-Chief Executive Officer not remedied within fifteen (15) days after the Company receives written notice of same from Employee; (iii) the failure by the Company to pay to Employee any portion of Employee's compensation and such failure is not remedied within fifteen (15) days after the Company receives written notice of same from Employee; (iv) the failure by the Company to continue to provide Employee with benefits substantially similar to those enjoyed by other executive officers who have entered into similar employment agreements with Employer under any of the Company's medical, health, accident, and/or disability plans in which Employee was participating immediately prior to such time; (v) a change in the location of Employee's principal place of employment by the Company by more than 50 miles from the location where he was principally employed immediately prior to the date of such change; or (vi) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 14 hereof. 7

In addition, the occurrence of a Corporate Change, shall constitute "Good Reason" hereunder, but only if Employee terminates his employment within ninety (90) days following the effective date of such Corporate Change. (f) Notice of Termination. Any purported termination of Employee's employment by the Company under Sections 9(c)(ii) or 9(d), or by Employee under Section 9(e), shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 12 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which, if by the Company and is for Misconduct or Disability, shall set forth in reasonable detail the reason for such termination of Employee's employment, or in the case of resignation by Employee for Good Reason, said notice must specify in reasonable detail the basis for such resignation. A Notice of Termination given by Employee pursuant to Section 9(e) shall be effective even if given after the receipt by Employee of notice that the Board has set a meeting to consider terminating Employee for Misconduct. Any purported termination for which a Notice of Termination is required which is not effected pursuant to this Section 9(f) shall not be effective. (g) Date of Termination. "Date of Termination" shall mean the date specified in the Notice of Termination, provided that the Date of Termination shall be at least 15 days following the date the Notice of Termination is given. Notwithstanding the foregoing, in the event Employee is terminated for Misconduct, the Company may refuse to allow Employee access to the Company's offices (other than to allow Employee to collect his personal belongings under the Company's supervision) prior to the Date of Termination. (h) Mitigation. Employee shall not be required to mitigate the amount of any payment provided for in this Section 9 by seeking other employment or otherwise, nor (except as set forth in Section 9(c)(i)(B)) shall the amount of any payment provided for in this Agreement be reduced by any compensation earned or benefits received by Employee as a result of employment by another employer, except that any severance amounts payable to Employee pursuant to the Company's severance plan or policy for employees in general shall reduce the amount otherwise payable pursuant to Sections 9(c)(i) or 9(e). (i) Excess Parachute Payments. Notwithstanding anything in this Agreement to the contrary, to the extent that any payment or benefit received or to be received by Employee hereunder in connection with the termination of Employee's employment would, as determined by tax counsel selected by the Company, constitute an "Excess Parachute Payment" (as defined in Section 280G of the Internal Revenue Code), the Company shall fully "grossup" such payment so that Employee is in the same "net" after-tax position he would have been if such payment and gross-up payments had not constituted Excess Parachute Payments. (j) Resignation from Board. In the event Employee's employment by the Company is terminated for any reason (other than Employee's death), Employee shall immediately resign as a member of the Board and the board of directors of any of the 8

Company's subsidiaries he may be a member of upon the written request of the Chairman of the Board. Nothing herein shall be deemed to limit the power of the shareholders of the Company to at any time remove any director, including, without limitation, Employee, in accordance with applicable law. All payments to Employees pursuant to this Agreement shall be conditioned upon Employee's compliance with his obligations under this Section 9(j). 10. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit Employee's continuing or future participation in any benefit, bonus, incentive, or other plan or program provided by the Company or any of its affiliated companies and for which Employee may qualify, nor shall anything herein limit or otherwise adversely affect such rights as Employee may have under any Options with the Company or any of its affiliated companies. 11. Assignability. The obligations of Employee hereunder are personal and may not be assigned or delegated by him or transferred in any manner whatsoever, nor are such obligations subject to involuntary alienation, assignment or transfer. The Company shall have the right to assign this Agreement and to delegate all rights, duties and obligations hereunder, either in whole or in part, to any parent, affiliate, successor or subsidiary organization or company of the Company, so long as the obligations of the Company under this Agreement remain the obligations of the Company. 12. Notice. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Company at its principal office address, directed to the attention of the Board with a copy to the Secretary of the Company, and to Employee at Employee's residence address on the records of the Company or to such other address as either party may have furnished to the other in writing in accordance herewith except that notice of change of address shall be effective only upon receipt. 13. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 14. Successors; Binding Agreement. (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Employee to compensation from the Company in the same amount and on the same terms as he would be entitled to hereunder if he terminated his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used herein, the term "Company" shall include any successor to its 9

business and/or assets as aforesaid which executes and delivers the Agreement provided for in this Section 14 or which otherwise becomes bound by all terms and provisions of this Agreement by operation of law. (b) This Agreement and all rights of Employee hereunder shall inure to the benefit of and be enforceable by Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Employee should die while any amounts would be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Employee's devisee, legatee, or other designee or, if there be no such designee, to Employee's estate. 15. Withholding Taxes. (a) Tax Withholding. The Company shall have the power and the right to deduct or withhold from any benefits payable under this Agreement an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld. (b) Share Withholding. With respect to tax withholding required upon the upon the lapse of restrictions on the Inducement Stock and the Salary Stock, or upon any other taxable event arising as a result of any stock awards pursuant to this Agreement, Employee may elect, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Employee, and shall be subject to any restrictions or limitations that the Company, in its discretion, deems appropriate. Any fraction of a share required to satisfy such obligation shall be disregarded and the Employee shall instead pay the amount due in cash. 16. No Restraints. As an inducement to the Company to enter into this Agreement, Employee represents and warrants that he is not a party to any other agreement or obligation for personal services, and that there exist no impediments or restraints, contractual or otherwise, on Employee's powers right or ability to enter into this Agreement and to perform his duties and obligations hereunder. 17. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Employee and such officer as may be specifically authorized by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or in compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement is an integration of the parties' agreement; no agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party, except those which are set forth expressly in this Agreement. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS. 10

18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 19. Arbitration. Either party may elect that any dispute or controversy arising under or in connection with this Agreement be settled by arbitration in Houston, Texas in accordance with the rules of the American Arbitration Association then in effect. If the parties cannot mutually agree on an arbitrator, then the arbitration shall be conducted by a three arbitrator panel, with each party selecting one arbitrator and the two arbitrators so selected selecting a third arbitrator. The findings of the arbitrator(s) shall be final and binding, and judgment may be entered thereon in any court having jurisdiction. The findings of the arbitrator(s) shall not be subject to appeal to any court, except as otherwise provided by applicable law. The arbitrator(s) may, in his or her (or their) own discretion, award legal fees and costs to the prevailing party. [SIGNATURE PAGE FOLLOWS] 11

IN WITNESS WHEREOF, the parties have executed this Agreement on February 26, 2004 effective for all purposes as provided above. CONTINENTAL SOUTHERN RESOURCES, INC.
By: /s/ STEPHEN P. HARRINGTON -----------------------------------Name: Stephen P. Harrington --------------------------------Title: President ---------------------------------

EMPLOYEE:
/s/ WILLIAM L. TRANSIER ----------------------------------------William L. Transier

12

EXHIBIT 10.38 EMPLOYMENT AGREEMENT This Employment Agreement ("Agreement") is entered into effective as of February 26, 2004 (the "Effective Date"), by and between Continental Southern Resources, Inc., a Nevada corporation (the "Company"), and John N. Seitz ("Employee"). WHEREAS, the Company wishes to employ Employee and Employee wishes to be employed by the Company; and WHEREAS, the Company and Employee desire to enter into an agreement reflecting the terms of the employment relationship, including the termination thereof; NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties, and agreements contained herein, and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 1. Effect of Agreement. Effective as of the Effective Date, this Agreement supersedes and replaces any preexisting employment agreements between the Company and the Employee. 2. Employment. The Company hereby employs Employee, and Employee hereby accepts employment by the Company, on the terms and conditions set forth in this Agreement. 3. Term of Employment. Subject to the provisions for earlier termination provided in this Agreement, the term of this Agreement (the "Term") shall be three (3) years commencing on the Effective Date. 4. Employee's Duties. During the Term of this Agreement, Employee shall serve as Co-Chief Executive Officer, with such duties and responsibilities as may from time to time be assigned to him by the board of directors of the Company (the "Board"), provided that such duties are consistent with the customary duties of such position. During the term of this Agreement, Employee shall also serve as a member of the Board. Employee agrees to devote all of his business time, skill and attention to the business and affairs of the Company and to use reasonable best efforts to perform faithfully and efficiently his duties and responsibilities. Employee shall not, either directly or indirectly, enter into any business or employment with or for any person, firm, association or corporation other than the Company during the Term of this Agreement; provided, however, that Employee shall not be prohibited from (i) making financial investments in any other company or business, (ii) acting as a consultant or director (or functionally equivalent position of a director) of Fischer-Seitz Capital Partners LLC or (iii) with notice to the Board, from serving on the board of directors of any other company, provided that in the case of clauses (ii) and (iii) above only if such service does not materially interfere with the performance of his duties or responsibilities hereunder. Employee shall at all times observe and comply with all lawful directions and instructions of the Board. 5. Compensation. (a) Inducement Stock. As inducement to the Employee to enter into this Agreement, the Company will issue 500,000 shares ("Inducement Stock") of Company

restricted common stock ("Restricted Stock") to the Employee as of the Effective Date. The Inducement Stock grants shall be evidenced by the forms of Inducement Stock Agreement attached hereto as Exhibits "A" and "B." (b) Base Compensation. Beginning on January 1, 2005, for services rendered by Employee under this Agreement, the Company shall pay to Employee a base salary of $500,000 per annum ("Base Compensation"). Subject to the availability of stock under the Company's 2004 Incentive Plan or any similar plan then in effect (the "Incentive Plan"), the Employee may make an annual election to take between 0% and 100% of his Base Compensation in the form of Restricted Stock (the "Salary Stock"), provided that he notifies the Company of his decision prior to the first pay period of each applicable year. For purposes hereof, the Salary Stock shall be valued at Fair Market Value, as that term is defined in the Incentive Plan and issued pursuant to the form of Restricted Stock Agreement attached hereto as Exhibit "B". Should insufficient shares be available under the Incentive Plan to grant the full amount of the Salary Stock, the remaining Base Compensation shall be paid in cash. The Base Compensation is payable in accordance with the Company's customary pay periods and subject to customary withholdings, including share withholdings as described in Section 15(b) hereof. Issuance of the Salary Stock shall be accomplished in a manner to provide the most favorable accounting treatment for the Company. The amount of Base Compensation shall be reviewed by the Board on an annual basis as of the close of each fiscal year of the Company and may be increased as the Board may deem appropriate. In the event the Board (or, if established, the compensation committee thereof) deems it appropriate to increase Employee's annual base salary, said increased amount shall thereafter be the "Base Compensation." Employee's Base Compensation, as increased from time to time, may not thereafter be decreased unless agreed to by Employee. Nothing contained herein shall prevent the Board from paying additional compensation to Employee in the form of bonuses or otherwise during the Term of this Agreement. 6. Bonus. With respect to each full fiscal year during the Employment Term, the Board in its sole discretion may grant the Employee a discretionary bonus ("Bonus"). The target bonus for each year shall be equal to the Base Compensation; however, the Board may grant a maximum Bonus of up to 200% of the Base Compensation payable in the form and in accordance with the Company's customary pay periods for its annual bonuses for its executives and subject to customary withholdings. 7. Additional Benefits. In addition to the Base Compensation provided for in Section 5 herein, Employee shall be entitled to the following: (a) Expenses. The Company shall, in accordance with any rules and policies that it may establish from time to time for executive officers, reimburse Employee for business expenses reasonably incurred in the performance of his duties. It is understood that Employee is authorized to incur reasonable business expenses for promoting the business of the Company, including reasonable expenditures for travel, lodging, meals and client or business associate entertainment. Request for reimbursement for such expenses must be accompanied by appropriate documentation. 2

(b) Vacation. Employee shall be entitled to five (5) weeks of vacation per year, without any loss of compensation or benefits. Employee shall not be entitled to compensation for, or to carry forward, any unused vacation time. (c) General Benefits. Employee shall be entitled to participate in the various employee benefit plans or programs, if any, provided to the officers of the Company in general, including but not limited to, health, dental, disability and life insurance plans, subject to the eligibility requirements with respect to each of such benefit plans or programs, and such other benefits or perquisites as may be approved by the Board during the Term of this Agreement. Nothing in this paragraph shall be deemed to prohibit the Company from making any changes in any of the plans, programs or benefits described in this Section 7, provided the change similarly affects all executive officers of the Company similarly situated. (d) Corporate Change. Upon the occurrence of a "Corporate Change" as hereinafter defined, Employee shall be considered as immediately and totally vested in any and all Restricted Stock, stock options or other similar awards previously made to Employee by the Company or its subsidiaries under a "Long Term Incentive Plan" or other grant duly adopted by the Board or the Compensation Committee thereof (such Restricted Stock, options or similar awards are hereinafter collectively referred to as "Options"). For purposes of this Agreement, a "Corporate Change" shall occur if (i) the Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously whollyowned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (ii) any person or entity, including a "group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 30% or more of the outstanding shares of the Company's voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (iii) the Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or (iv) during a period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (v) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Corporate Change hereunder. 8. Confidential Information. Employee, during the Term, will have access to and become familiar with confidential information, secrets and proprietary information concerning the business and affairs of the Company, its controlled subsidiaries and other controlled entities, 3

including client and customer information, information concerning their products, patent rights and know-how, and other technical information, business strategies and pricing information, and other confidential and/or proprietary information (collectively, "Confidential Information"). Confidential Information shall not include (i) any information that is or becomes generally available to the public other than as a result of Employee's improper or unauthorized disclosure of such information in violation of this Agreement or (ii) was within Employee's possession prior to its affiliation with the Company or its controlled subsidiaries or other controlled entities (including his affiliation with Endeavour International Operating Company, f/k/a NSNV, Inc. prior to its acquisition by the Company). As to such Confidential Information, Employee agrees as follows: (a) During the term of this Agreement or at any time following the termination of this Agreement, Employee will not, directly or indirectly, without the prior written consent of the Company (1) disclose or permit the disclosure of any such Confidential Information, or (2) use, reproduce or distribute, or make or permit any use, reproduction or distribution of, directly or indirectly, any such Confidential Information, except for any disclosure, use, reproduction or distribution that is required in the course of his employment with the Company, its controlled subsidiaries or other controlled entities. (b) If, during the term of this Agreement or at any time following the termination of this Agreement, Employee is requested or required (by oral question or request for information or documents, in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any Confidential Information, Employee agrees to notify the Company immediately in writing of the request or requirement so that the Company may seek an appropriate protection order or waive compliance with the provisions of this Section. If, in the absence of a protective order or the receipt of a waiver under this Agreement, Employee is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt, Employee may disclose such Confidential Information to the tribunal; provided, however, that Employee shall use his commercially reasonable best efforts to obtain a court order or other assurance that confidential treatment will be accorded to such Confidential Information. (c) Upon termination of employment of Employee, for whatever reason, Employee shall surrender to the Company any and all documents, manuals, correspondence, reports, records and similar items then or thereafter coming into the possession of Employee which contain any Confidential Information of the Company or its controlled subsidiaries or other controlled entities. (d) Employee recognizes and acknowledges that the obligations of Employee contained in Section 8 of this Agreement are reasonable and necessary to protect the legitimate business interests of the Company, and that any breach or violation of any of the provisions of such Section is likely to result in irreparable injury to the Company for which the Company would have no adequate remedy at law. Employee agrees that if Employee shall breach or violate Section 8 of this Agreement, the Company shall be entitled, if it so elects, to institute and prosecute proceedings at law or in equity, 4

including, but not limited to, a proceeding seeking injunctive relief, to obtain damages with respect to such breach or violation, to enforce the specific performance of Section 8 this Agreement by Employee, or to enjoin Employee from engaging in any activity in violation of Section 8 of this Agreement. Employee acknowledges that in the event of any such breach or violation, the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages or posting a bond, and to an equitable accounting of all earnings, profits, and other benefits arising from any such breach or violation, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. Employee agrees that in the event of any such violation, an action may be commenced for preliminary or permanent injunctive relief and other equitable relief in any federal or state court of competent jurisdiction sitting in Harris County, Texas, or in any other court of competent jurisdiction. Employee waives, to the fullest extent permitted by law, any objection that Employee may now or hereafter have to such jurisdiction or to the laying of the venue of any such suit, action, or proceeding brought in such a court and any claim that such suit, action or proceeding has been brought in an inconvenient forum. Employee agrees that effective service of process may be made upon Employee under the notice provisions contained in Section 12 of this Agreement. Employee further agrees that the existence of any claim or cause of action against the Company, whether predicated upon a breach or violation by the Company of this Agreement or any other contract or agreement between Employee and the Company, shall not constitute or be asserted as a defense to the enforcement by the Company to the provisions of this Section relating to the Company's right to injunctive or other equitable relief for Employee's breach or violation of Section 8 of this Agreement. 9. Termination. This Agreement may be terminated prior to the end of its Term as set forth below: (a) Resignation (other than for Good Reason). Employee may resign, including by reason of retirement, his position at any time by providing written notice of resignation to the Company in accordance with Section 12 hereof. In the event of such resignation, except in the case of resignation for Good Reason (as defined below), this Agreement shall terminate and Employee shall not be entitled to further compensation pursuant to this Agreement other than the payment of any unpaid Base Compensation or Bonus accrued hereunder as of the date of Employee's resignation. (b) Death. If Employee's employment is terminated due to his death, this Agreement shall terminate and the Company shall have no obligations to Employee or his legal representatives with respect to this Agreement other than the payment of any unpaid Base Compensation or Bonus previously accrued hereunder. (c) Discharge. (i) The Company may terminate Employee's employment only in the event of Employee's Misconduct or Disability (both as defined below) upon written notice thereof delivered to Employee in accordance with Section 9(f) and Section 12 hereof. In the event that Employee's employment is terminated during 5

the Term by the Company for any reason other than his Misconduct or Disability (both as defined below), then (A) the Company shall pay in lump sum in cash to Employee, within fifteen (15) days following the date of termination, an amount equal to the product of (i) Employee's Base Compensation as in effect immediately prior to Employee's termination (in the event a Corporate Change occurs prior to January 1, 2005, the Base Compensation shall be $500,000), multiplied by (ii) three, (B) for three years following the date of termination, the Company, at its cost, shall provide or arrange to provide Employee (and, as applicable, Employee's dependents) with accident and group health insurance benefits substantially similar to those which Employee (and Employee's dependents) were receiving immediately prior to Employee's termination (if any); however, the welfare benefits otherwise receivable by Employee pursuant to this clause (B) shall be reduced to the extent comparable welfare benefits are actually received by Employee (and/or Employee's dependents) during such period under any other employer's welfare plan(s) or program(s), with Employee being obligated to promptly disclose to the Company any such comparable welfare benefits, (C) in addition to the aforementioned compensation and benefits, the Company shall pay in lump sum in cash to Employee within fifteen (15) days following the date of termination an amount equal to the product of (i) Employee's average Bonus paid by the Company during the most recent two (2) years immediately prior to the date of termination (in the event that the date of termination is on or before December 31, 2004 and no Bonus has been paid with respect to the fiscal year ending December 31, 2004 as of the date of termination, the Bonus shall be equal to the Base Compensation for purposes of this section and in the event that the date of termination is after December 31, 2004 and on or before December 31, 2005 and no Bonus has been paid with respect to the fiscal year ending December 31, 2005, the Bonus with respect to the fiscal year ending December 31, 2005 shall be equal to the Base Compensation for purposes of this section), multiplied by (ii) three and (D) Employee shall be considered as immediately and totally vested in any and all Options previously made to Employee by Company or its subsidiaries. (ii) In the event Employee is terminated because of Misconduct, the Company shall have no obligations pursuant to this Agreement after the Date of Termination other than the payment of any unpaid Base Compensation or Bonus accrued through the Date of Termination. As used herein, "Misconduct" means (A) the continued failure by Employee to substantially perform his duties with the Company (other than any such failure resulting from Employee's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination by Employee for Good Reason), after a written demand for substantial performance is delivered to Employee by the Board, which demand specifically identifies the manner in which the Board believes that Employee has not substantially performed his duties, and the Employee fails to cure such failure within ten (10) days after receipt of such demand, (B) the engaging by Employee in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise (other than such conduct resulting from Employee's incapacity due to physical or mental illness or 6

any such actual or anticipated conduct after the issuance of a Notice of Termination by Employee for Good Reason), (C) Employee's conviction for the commission of a felony or (D) action by Employee toward the Company involving dishonesty. Anything contained in this Agreement to the contrary notwithstanding, the Board shall have the sole power and authority to terminate the employment of Employee on behalf of the Company (d) Disability. If Employee shall have been absent from the full-time performance of Employee's duties with the Company for ninety (90) consecutive calendar days as a result of Employee's incapacity due to physical or mental illness, Employee's employment may be terminated by the Company for "Disability" and Employee shall not be entitled to further compensation pursuant to this Agreement, except that Employee shall be considered as immediately and totally vested in any and all Options and restricted stock grants previously granted to Employee by Company or its subsidiaries. (e) Resignation for Good Reason. Employee shall be entitled to terminate his employment for Good Reason as defined herein. If Employee terminates his employment for Good Reason he shall be entitled to the compensation and benefits provided in Paragraph 9(c)(i) hereof. "Good Reason" shall mean the occurrence of any of the following circumstances without Employee's express written consent unless such breach or circumstances are fully corrected prior to the Date of Termination specified in the Notice of Termination given in respect hereof: (i) the material breach of any of the Company's obligations under this Agreement without Employee's express written consent; (ii) the continued assignment to Employee of any duties inconsistent with the office of Co-Chief Executive Officer not remedied within fifteen (15) days after the Company receives written notice of same from Employee; (iii) the failure by the Company to pay to Employee any portion of Employee's compensation and such failure is not remedied within fifteen (15) days after the Company receives written notice of same from Employee; (iv) the failure by the Company to continue to provide Employee with benefits substantially similar to those enjoyed by other executive officers who have entered into similar employment agreements with Employer under any of the Company's medical, health, accident, and/or disability plans in which Employee was participating immediately prior to such time; (v) a change in the location of Employee's principal place of employment by the Company by more than 50 miles from the location where he was principally employed immediately prior to the date of such change; or (vi) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 14 hereof. 7

In addition, the occurrence of a Corporate Change, shall constitute "Good Reason" hereunder, but only if Employee terminates his employment within ninety (90) days following the effective date of such Corporate Change. (f) Notice of Termination. Any purported termination of Employee's employment by the Company under Sections 9(c)(ii) or 9(d), or by Employee under Section 9(e), shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 12 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which, if by the Company and is for Misconduct or Disability, shall set forth in reasonable detail the reason for such termination of Employee's employment, or in the case of resignation by Employee for Good Reason, said notice must specify in reasonable detail the basis for such resignation. A Notice of Termination given by Employee pursuant to Section 9(e) shall be effective even if given after the receipt by Employee of notice that the Board has set a meeting to consider terminating Employee for Misconduct. Any purported termination for which a Notice of Termination is required which is not effected pursuant to this Section 9(f) shall not be effective. (g) Date of Termination. "Date of Termination" shall mean the date specified in the Notice of Termination, provided that the Date of Termination shall be at least 15 days following the date the Notice of Termination is given. Notwithstanding the foregoing, in the event Employee is terminated for Misconduct, the Company may refuse to allow Employee access to the Company's offices (other than to allow Employee to collect his personal belongings under the Company's supervision) prior to the Date of Termination. (h) Mitigation. Employee shall not be required to mitigate the amount of any payment provided for in this Section 9 by seeking other employment or otherwise, nor (except as set forth in Section 9(c)(i)(B)) shall the amount of any payment provided for in this Agreement be reduced by any compensation earned or benefits received by Employee as a result of employment by another employer, except that any severance amounts payable to Employee pursuant to the Company's severance plan or policy for employees in general shall reduce the amount otherwise payable pursuant to Sections 9(c)(i) or 9(e). (i) Excess Parachute Payments. Notwithstanding anything in this Agreement to the contrary, to the extent that any payment or benefit received or to be received by Employee hereunder in connection with the termination of Employee's employment would, as determined by tax counsel selected by the Company, constitute an "Excess Parachute Payment" (as defined in Section 280G of the Internal Revenue Code), the Company shall fully "grossup" such payment so that Employee is in the same "net" after-tax position he would have been if such payment and gross-up payments had not constituted Excess Parachute Payments. (j) Resignation from Board. In the event Employee's employment by the Company is terminated for any reason (other than Employee's death), Employee shall immediately resign as a member of the Board and the board of directors of any of the 8

Company's subsidiaries he may be a member of upon the written request of the Chairman of the Board. Nothing herein shall be deemed to limit the power of the shareholders of the Company to at any time remove any director, including, without limitation, Employee, in accordance with applicable law. All payments to Employees pursuant to this Agreement shall be conditioned upon Employee's compliance with his obligations under this Section 9(j). 10. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit Employee's continuing or future participation in any benefit, bonus, incentive, or other plan or program provided by the Company or any of its affiliated companies and for which Employee may qualify, nor shall anything herein limit or otherwise adversely affect such rights as Employee may have under any Options with the Company or any of its affiliated companies. 11. Assignability. The obligations of Employee hereunder are personal and may not be assigned or delegated by him or transferred in any manner whatsoever, nor are such obligations subject to involuntary alienation, assignment or transfer. The Company shall have the right to assign this Agreement and to delegate all rights, duties and obligations hereunder, either in whole or in part, to any parent, affiliate, successor or subsidiary organization or company of the Company, so long as the obligations of the Company under this Agreement remain the obligations of the Company. 12. Notice. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Company at its principal office address, directed to the attention of the Board with a copy to the Secretary of the Company, and to Employee at Employee's residence address on the records of the Company or to such other address as either party may have furnished to the other in writing in accordance herewith except that notice of change of address shall be effective only upon receipt. 13. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 14. Successors; Binding Agreement. (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Employee to compensation from the Company in the same amount and on the same terms as he would be entitled to hereunder if he terminated his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used herein, the term "Company" shall include any successor to its 9

business and/or assets as aforesaid which executes and delivers the Agreement provided for in this Section 14 or which otherwise becomes bound by all terms and provisions of this Agreement by operation of law. (b) This Agreement and all rights of Employee hereunder shall inure to the benefit of and be enforceable by Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Employee should die while any amounts would be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Employee's devisee, legatee, or other designee or, if there be no such designee, to Employee's estate. 15. Withholding Taxes. (a) Tax Withholding. The Company shall have the power and the right to deduct or withhold from any benefits payable under this Agreement an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld. (b) Share Withholding. With respect to tax withholding required upon the upon the lapse of restrictions on the Inducement Stock and the Salary Stock, or upon any other taxable event arising as a result of any stock awards pursuant to this Agreement, Employee may elect, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Employee, and shall be subject to any restrictions or limitations that the Company, in its discretion, deems appropriate. Any fraction of a share required to satisfy such obligation shall be disregarded and the Employee shall instead pay the amount due in cash. 16. No Restraints. As an inducement to the Company to enter into this Agreement, Employee represents and warrants that he is not a party to any other agreement or obligation for personal services, and that there exist no impediments or restraints, contractual or otherwise, on Employee's powers right or ability to enter into this Agreement and to perform his duties and obligations hereunder. 17. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Employee and such officer as may be specifically authorized by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or in compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement is an integration of the parties' agreement; no agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party, except those which are set forth expressly in this Agreement. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS. 10

18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 19. Arbitration. Either party may elect that any dispute or controversy arising under or in connection with this Agreement be settled by arbitration in Houston, Texas in accordance with the rules of the American Arbitration Association then in effect. If the parties cannot mutually agree on an arbitrator, then the arbitration shall be conducted by a three arbitrator panel, with each party selecting one arbitrator and the two arbitrators so selected selecting a third arbitrator. The findings of the arbitrator(s) shall be final and binding, and judgment may be entered thereon in any court having jurisdiction. The findings of the arbitrator(s) shall not be subject to appeal to any court, except as otherwise provided by applicable law. The arbitrator(s) may, in his or her (or their) own discretion, award legal fees and costs to the prevailing party. [SIGNATURE PAGE FOLLOWS] 11

IN WITNESS WHEREOF, the parties have executed this Agreement on February 26, 2004 effective for all purposes as provided above. CONTINENTAL SOUTHERN RESOURCES, INC.
By: /s/ STEPHEN P. HARRINGTON ----------------------------------Name: Stephen P. Harrington ----------------------------------Title: President -----------------------------------

EMPLOYEE:
/s/ JOHN N. SEITZ ---------------------------------------John N. Seitz

EXHIBIT 10.39 CONTINENTAL SOUTHERN RESOURCES, INC. RESTRICTED STOCK AWARD AGREEMENT THIS RESTRICTED STOCK AGREEMENT (this "AGREEMENT") is made and entered into by and between Continental Southern Resources, Inc. (the "COMPANY") and __________, an Employee of the Company ("GRANTEE") effective as of the grant date(s) shown in APPENDIX A attached hereto. WHEREAS, effective February 26, 2004 Grantee shall be an employee of Continental Southern Resources, Inc. (the "Company") and as an inducement for such employment, the Company desires to grant to Grantee a number of restricted shares of the Company's common stock, par value $.001 per share (the "COMMON STOCK"), subject to the terms and conditions of this Agreement, with a view to increasing Grantee's interest in the Company's welfare and growth; and WHEREAS, Grantee desires to receive shares of the Common Stock as inducement stock pursuant to the employment agreement between Grantee and Company dated February 26, 2004. NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: 1. GRANT OF COMMON STOCK. Subject to the restrictions, forfeiture provisions and other terms and conditions set forth herein (a) the Company hereby grants to Grantee the number of shares of Common Stock ("RESTRICTED SHARES") as set out in Appendix A hereto, and (b) subject to the terms hereof, Grantee shall have and may exercise rights and privileges of ownership of such Restricted Shares, including, without limitation, the voting rights of such shares and the right to receive dividends declared in respect thereof. This Agreement and the grant of Restricted Shares are subject to administration by and the rules and procedures established by the Board of Directors of the Company (the "Board") or a committee appointed by the Board to administer this Agreement (the "Committee") and the Board or the Committee, if so appointed, shall have the authority to construe and interpret the terms of this Agreement and to provide omitted terms to carry out this Agreement. Except with respect to Section 3(v), any authority provided to the Company, the Board or Committee herein shall also be provided to the Committee, if one is appointed by the Board. The Committee shall have the authority to take all actions that it deems advisable for the administration of this Agreement. 2. TRANSFER RESTRICTIONS; VESTING. (a) Generally. Grantee shall not sell, assign, transfer, exchange, pledge, encumber, gift, devise, hypothecate or otherwise dispose of (collectively, "TRANSFER") any Restricted Shares prior to their vesting in accordance with the Vesting Schedule set out in Appendix A. Further, even after such Restricted Shares become vested, such vested Restricted Shares may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities or other applicable law or Company policies as determined by Company on advice of counsel chosen by the Company in its sole discretion. Restricted

Shares shall vest as of each of the Vesting Dates set out in Appendix A provided that Grantee remains an Employee through the Vesting Date, except as may otherwise be provided herein. (b) Dividends, etc. If the Company (i) declares a dividend or makes a distribution on Common Stock in shares of Common Stock or (ii) subdivides or reclassifies outstanding shares of Common Stock into a greater number of shares of Common Stock or (iii) combines or reclassifies outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the number of shares of Grantee's Common Stock subject to the transfer restrictions in this Agreement shall be proportionally increased or reduced as to prevent enlargement or dilution of Grantee's rights and duties hereunder. The determination of the Company's Board of Directors regarding such adjustment should be final and binding. 3. VESTING ON CHANGE IN CONTROL. Notwithstanding the provisions in Section 2, on the date immediately preceding the date of a Change in Control of the Company (as defined below), the Restricted Shares shall be 100% vested. For purposes of this Agreement, a "CHANGE IN CONTROL" shall mean the occurrence of any of the following events: (i) the Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (ii) any person or entity, including a "group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 30% or more of the outstanding shares of the Company's voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (iii) the Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or (iv) During a period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (v) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Change in Control hereunder. 2

4. FORFEITURE. (a) Termination of Employment. If Grantee's employment with the Company is terminated by the Company or Grantee for any reason, then Grantee shall immediately forfeit all Restricted Shares which are unvested unless the Board of Directors, in its sole discretion, determines that any or all of such unvested Restricted Shares shall not be so forfeited. (b) Forfeited Shares. Any Restricted Shares forfeited under this Section 5 shall automatically revert to the Company and become canceled. Any certificate(s) representing Restricted Shares which include forfeited shares shall only represent that number of Restricted Shares which have not been forfeited hereunder. Upon the Company's request, Grantee agrees for himself and any other holder(s) to tender to the Company any certificate(s) representing Restricted Shares which include forfeited shares for a new certificate representing the unforfeited number of Restricted Shares. 5. ISSUANCE OF CERTIFICATE. (a) The Company shall cause to be issued a stock certificate, registered in the name of the Grantee, evidencing the Restricted Shares upon receipt of a stock power duly endorsed in blank with respect to such shares. In addition to any other legends that may be required by the Shareholders' Agreement or otherwise, each such stock certificate shall bear the following legend: THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE RESTRICTED STOCK AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND CONTINENTAL SOUTHERN RESOURCES, INC.. COPIES OF THE RESTRICTED STOCK AGREEMENT ARE ON FILE IN THE OFFICE OF THE SECRETARY OF CONTINENTAL SOUTHERN RESOURCES, INC., LOCATED AT 1001 FANNIN, SUITE 1700, HOUSTON, TEXAS 77002. Such legend shall not be removed from the certificate evidencing Restricted Shares until such time as the restrictions thereon have lapsed. (b) The certificate issued pursuant to this Section 6, together with the stock powers relating to the Restricted Shares evidenced by such certificate, shall be held by the Company. The Company may issue to the Grantee a receipt evidencing the certificates held by it which are registered in the name of the Grantee. 6. TAX REQUIREMENTS. (a) Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy 3

federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this grant. (b) Share Withholding. With respect to tax withholding required upon any taxable event arising as a result of this grant, Participant may elect, subject to the approval of the Board or Committee in its sole discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares of common stock having a Fair Market Value on the date the tax is to be determined equal to the statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. Any fraction of a share of common stock required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash by the Participant. 7. MISCELLANEOUS. (a) Certain Transfers Void. Any purported transfer of Restricted Shares in breach of any provision of this Agreement shall be void and ineffectual, and shall not operate to transfer any interest or title in the purported transferee. (b) No Fractional Shares. All provisions of this Agreement concern whole shares of Common Stock. If the application of any provision hereunder would yield a fractional share, the value of such fractional share shall be paid to the Grantee in cash. (c) Not an Employment Agreement. This Agreement is not an employment agreement, and this Agreement shall not be, and no provision of this Agreement shall be construed or interpreted to create any employment relationship or right to continued employment with the Company, Company affiliates, parent, subsidiary or their affiliates. (d) Dispute Resolution. (i) Arbitration. All disputes and controversies of every kind and nature between any parties hereto arising out of or in connection with this Agreement or the transactions described herein as to the construction, validity, interpretation or meaning, performance, non-performance, enforcement, operation or breach, shall be submitted to arbitration pursuant to the following procedures: (1) After a dispute or controversy arises, any party may, in a written notice delivered to the other parties to the dispute, demand such arbitration. Such notice shall designate the name of the arbitrator (who shall be an impartial person) appointed by such party demanding arbitration, together with a statement of the matter in controversy. (2) Within 30 days after receipt of such demand, the other parties shall, in a written notice delivered to the first party, name such parties' arbitrator (who shall be an impartial person). If such parties fail to name an arbitrator, then the second arbitrator shall be named by the American Arbitration Association (the "AAA"). The two arbitrators so selected shall name a third arbitrator (who shall be an impartial person) within 30 days, or in lieu of such agreement on a third arbitrator by the two arbitrators so appointed, the third arbitrator shall be appointed by the AAA. If any arbitrator appointed 4

hereunder shall die, resign, refuse or become unable to act before an arbitration decision is rendered, then the vacancy shall be filled by the method set forth in this Section for the original appointment of such arbitrator. (3) Each party shall bear its own arbitration costs and expenses. The arbitration hearing shall be held in Houston, Texas at a location designated by a majority of the arbitrators. The Commercial Arbitration Rules of the American Arbitration Association shall be incorporated by reference at such hearing and the substantive laws of the State of Texas (excluding conflict of laws provisions) shall apply. (4) The arbitration hearing shall be concluded within ten (10) days unless otherwise ordered by the arbitrators and the written award thereon shall be made within fifteen (15) days after the close of submission of evidence. An award rendered by a majority of the arbitrators appointed pursuant to this Agreement shall be final and binding on all parties to the proceeding, shall resolve the question of costs of the arbitrators and all related matters, and judgment on such award may be entered and enforced by either party in any court of competent jurisdiction. (5) Except as set forth in Section 7(d)(ii), the parties stipulate that the provisions of this Section shall be a complete defense to any suit, action or proceeding instituted in any federal, state or local court or before any administrative tribunal with respect to any controversy or dispute arising out of this Agreement or the transactions described herein. The arbitration provisions hereof shall, with respect to such controversy or dispute, survive the termination or expiration of this Agreement. No party to an arbitration may disclose the existence or results of any arbitration hereunder without the prior written consent of the other parties; nor will any party to an arbitration disclose to any third party any confidential information disclosed by any other party to an arbitration in the course of an arbitration hereunder without the prior written consent of such other party. (ii) Emergency Relief. Notwithstanding anything in this Section 7(d) to the contrary, any party may seek from a court any provisional remedy that may be necessary to protect any rights or property of such party pending the establishment of the arbitral tribunal or its determination of the merits of the controversy or to enforce a party's rights under Section 7(d). (e) Notices. Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal in-hand delivery, by telecopy or similar facsimile means, by certified or registered mail, return receipt requested, or by courier or delivery service, addressed to the Company at the address indicated beneath its signature on the execution page of this Agreement, and to Grantee at his address indicated on the Company's stock records, or at such other address and number as a party shall have previously designated by written notice given to the other party in the manner herein set forth. Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means), and when delivered and receipted for (or upon the date of attempted delivery where 5

delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested. (f) Amendment and Waiver. This Agreement may be amended, modified or superseded only by written instrument executed by the Company and Grantee. Any waiver of the terms or conditions hereof shall be made only by a written instrument executed and delivered by the party waiving compliance. Any amendment or waiver agreed to by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company other than Grantee. The failure of any party at any time or times to require performance of any provisions hereof shall in no manner effect the right to enforce the same. No waiver by any party of any term or condition in this Agreement, or breach thereof, in one or more instances shall be deemed a continuing waiver of any such condition or breach, a waiver of any other condition, or the breach of any other term or condition. (g) Independent Legal and Tax Advice. The Grantee has been advised and Grantee hereby acknowledges that he or she has been advised to obtain independent legal and tax advice regarding this grant of Restricted Shares and the disposition of such shares, including, without limitation, the election available under Section 83(b) of the Internal Revenue Code. (h) Governing Law and Severability. This Agreement shall be governed by the internal laws, and not the laws of conflict, of the State of Texas. The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement which shall remain in full force and effect. (i) Successors and Assigns. Subject to the limitations which this Agreement imposes upon transferability of Restricted Shares, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and Grantee, and, upon his death, on his estate and beneficiaries thereof (whether by will or the laws of descent and distribution). (j) Community Property. Each spouse individually is bound by, and such spouse's interest, if any, in any shares is subject to, the terms of this Agreement. Nothing in this Agreement shall create a community property interest where none otherwise exists. (k) Entire Agreement. This Agreement supersedes any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement and that any agreement, statement or promise that is not contained in this Agreement shall not be valid or binding or of any force or effect. [SIGNATURE PAGE FOLLOWS] 6

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first above written. COMPANY: CONTINENTAL SOUTHERN RESOURCES, INC. By: Name: Title:
Address: Continental Southern Resources, Inc. 1001 Fannin, Suite 1700 Houston, Texas 77002 Telecopy No.: (713) 307-8793 Attention: Secretary

GRANTEE: 7

APPENDIX A TO RESTRICTED STOCK AGREEMENT GRANTEE'S NAME:
NUMBER OF RESTRICTED SHARES GRANTED -------------------------

GRANT DATE: -----------

February 26, 2004
VESTING SCHEDULE: DATE ---NUMBER OF SHARES VESTED -----------------------

Note: All vesting is subject to the terms and conditions of the Agreement. 8

EXHIBIT 14.1 ENDEAVOUR INTERNATIONAL CORPORATION CODE OF ETHICS FOR THE CHIEF EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS Endeavour International Corporation (the "Company") requires its senior officers, including its Chief Executive Officer(s), Chief Financial Officer, Chief Accounting Officer or Controller of the Company, or person(s) performing similar functions as the foregoing (the "Senior Officers"), to maintain the highest ethical and legal standards while performing their duties and responsibilities to the Company, with particular emphasis on those duties that relate to the preparation and reporting of the financial information of the Company. The following principles and responsibilities shall govern the professional conduct of these officers. I. Honest and ethical conduct. The Senior Officers shall act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships, and shall report any material transaction or relationship that reasonably could be expected to give rise to such a conflict between their interests and those of the Company to the Audit Committee of the Board of Directors. The Senior Officers shall act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing their independent judgment to be subordinated. II. Financial Records and Reporting. The Senior Officers shall provide full, fair, accurate, timely and understandable disclosure in the reports and other documents to be filed by the Company with the Securities and Exchange Commission or otherwise publicly disclosed and shall comply with applicable rules and regulations of federal, state and local governments, and other appropriate private and public regulatory agencies. The Senior Officers shall respect the confidentiality of information acquired in the course of their work and shall not disclose such information except when authorized or legally obligated to disclose. The Senior Officers will not use confidential information acquired in the course of employment at the Company for personal advantage. The Senior Officers shall share knowledge and maintain skills important and relevant to the Company's needs; shall proactively promote ethical behavior of the Company's employees and as a partner with industry peers and associates; and shall maintain control over and responsibly manage assets and resources employed or entrusted to them by the Company. III. Compliance with Laws, Rules and Regulations

Senior Officers shall establish and maintain mechanisms to oversee the compliance of the Company with applicable federal, state or local law, statute, regulation or administrative rule and to identify, report and correct in a swift and certain manner, any detected deviations from applicable federal, state or local law, statute, regulation or administrative rule. IV. Compliance with this Code Senior Officers shall promptly report any violations of this Code of Ethics to the Audit Committee of the Board of Directors of the Company; and shall be held accountable for adherence to this Code of Ethics. A proven failure to uphold the standards stated herein shall be grounds for such employment sanctions as shall be imposed by the Board of Directors, up to and including termination of employment. 2

. . . EXHIBIT 21.1 SUBSIDIARIES
Name: 1. Knox Miss., L.P 2. Endeavour Operating Corporation, formerly NSNV, Inc. 3. PHT Partners, L.P. 4. PHT Holding GP, LLC 5. Louisiana Shelf Partners, L.P. Jurisdiction of Organization Delaware Delaware

Delaware Texas Delaware

EXHIBIT 31.1 CERTIFICATIONS I, William L. Transier, certify that: 1. I have reviewed this annual report on Form 10-KSB of Endeavour International Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Date: March 30, 2004 /s/ William L. Transier --------------------------William L. Transier Co-Chief Executive Officer

EXHIBIT 31.2 CERTIFICATIONS I, John N. Seitz, certify that: 1. I have reviewed this annual report on Form 10-KSB of Endeavour International Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Date: March 30, 2004 /s/ John N. Seitz --------------------------John N. Seitz Co-Chief Executive Officer

EXHIBIT 31.3 CERTIFICATIONS I, Robert L. Thompson, certify that: 1. I have reviewed this annual report on Form 10-KSB of Endeavour International Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Date: March 30, 2004 /s/ Robert L. Thompson --------------------------Robert L. Thompson Chief Accounting Officer

EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Endeavour International Corporation (the "Company") on Form 10KSB for the period ending December 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William L. Transier, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ William L. Transier ---------------------------William L. Transier Co-Chief Executive Officer Date: March 30, 2004

A signed original of this written statement required by Section 906 has been provided to Endeavour International Corporation and will be retained by Endeavour International Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Endeavour International Corporation (the "Company") on Form 10KSB for the period ending December 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John N. Seitz, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ John N. Seitz ---------------------------John N. Seitz Co-Chief Executive Officer Date: March 30, 2004

A signed original of this written statement required by Section 906 has been provided to Endeavour International Corporation and will be retained by Endeavour International Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.3 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Endeavour International Corporation (the "Company") on Form 10KSB for the period ending December 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert L. Thompson, Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ Robert L. Thompson ---------------------------Robert L. Thompson Chief Accounting Officer Date: March 30, 2004

A signed original of this written statement required by Section 906 has been provided to Endeavour International Corporation and will be retained by Endeavour International Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 99.1 AUDITED FINANCIAL STATEMENTS OF NSNV, INC. (A DEVELOPMENT STAGE ENTITY) FOR THE PERIOD OCTOBER 16, 2003 (INCEPTION) TO DECEMBER 31, 2003

INDEPENDENT AUDITOR'S REPORT Board of Directors and Shareholders NSNV, Inc. Houston, Texas We have audited the accompanying balance sheet of NSNV, Inc. (a development stage entity), and the related statements of operations, shareholders' equity, and cash flows for the period October 16, 2003 (date of inception) through December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of NSNV, Inc. as of December 31, 2003, and the results of operations, changes in shareholders' equity and its cash flows for the period October 16, 2003 (date of inception) through December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. L J SOLDINGER ASSOCIATES LLC Deer Park, Illinois March 26, 2004

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) STATEMENT OF OPERATIONS
October 16, 2003 (Inception) to December 31, 2003 ----------------------$ -

Revenues Costs of Operations: Amortization of Intangible Assets General and Administrative Expenses Total Expenses

5,181 130,450 --------135,631 --------(135,631) ========= $ (1.36) =========

Net Loss to Common Shareholders

Loss per Share - Basic and Diluted

Weighted Average Shares Outstanding - Basic and Diluted

100,000 =========

The accompanying notes are an integral part of these financial statements. 2

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) BALANCE SHEET
December 31, 2003 ----------------ASSETS Current Assets: Cash and Cash Equivalents Deferred Current Assets Total Current Assets Intangible Assets, Net of Amortization Other Assets

$

1,000 1,000,000 ----------1,001,000 1,238,335 3,500,000 -----------

Total Assets

$ 5,739,335 =========== LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities: Accounts Payable Accounts Payable - Related Parties Total Current Liabilities Long-term Liabilities - Related Party

$

146,745 2,000,000 ----------2,146,745 3,500,000 ----------5,646,745

Total Liabilities Shareholders' Equity: Common Stock, $0.01 par value; 100,000 shares authorized and outstanding Paid In Capital Less: Subscription Receivable Deficit Accumulated During the Development Stage Total Shareholders' Equity

1,000 1,227,221 (1,000,000) (135,631) ----------92,590 ----------$ 5,739,335 ===========

Total Liabilities and Shareholders' Equity

The accompanying notes are an integral part of these financial statements. 3

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) STATEMENT OF CASH FLOWS
October 16, 2003 (Inception) to December 31, 2003 ----------------------OPERATING ACTIVITIES: Net loss Amortization of Intangible Assets Adjustments to reconcile net loss to net cash used in operating activities: Change in Deferred Current Assets Change in Accounts Payable Change in Accounts Payable - Related Party Net Cash Provided By Operating Activities FINANCING ACTIVITIES: Contributions by Shareholders' Net Cash Provided By Financing Activities $ (135,631) 5,181

(1,000,000) 130,450 1,000,000 ---------------

1,000 --------------1,000 --------------1,000 --------------$ 1,000 ===============

Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents at the Beginning of the Period Cash and Cash Equivalents at the End of the Period

The accompanying notes are an integral part of these financial statements. 4

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) STATEMENT OF SHAREHOLDERS' EQUITY
Deficit Accumulated Common Stock During the ----------------Paid In Subscription Development Shares Amount Capital Receivable Stage ------- ---------------------------------------------------Initial Contribution by Shareholders Purchase of Intangible Asset Net Loss Balance, December 31, 2003 81,500 $ 815 $ 1,000,185 $ (1,000,000) $ -

Total Shareholders' Equity ------------$ 1,000

18,500 ------100,000 =======

185 -------$ 1,000 ========

227,036 -----------$ 1,227,221 ============

$

-

(135,631) -----------$ (135,631) ============

227,221 (135,631) -----------$ 92,590 ============

-----------$ (1,000,000) ============

The accompanying notes are an integral part of these financial statements. 5

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS NOTE 1 - DESCRIPTION OF BUSINESS NSNV, Inc., a Texas corporation (the "Company" or "NSNV") was formed on October 16, 2003 as a wholly owned subsidiary of North Sea New Ventures, L.L.C. We are presently engaged in the business of acquiring, exploring, and developing natural gas and oil properties with a initial focus on the North Sea. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP"). DEVELOPMENT STAGE ENTERPRISE The Company is a Development Stage Enterprise, as defined in Statement of Financial Accounting Standards ("SFAS") No. 7, Accounting and Reporting for Development Stage Enterprises. Under SFAS No. 7, certain additional financial information is required to be included in the financial statements for the period from inception of the Company to the current balance sheet date. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 6

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. CONCENTRATIONS OF CREDIT RISK Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits at financial institutions or unsecured loans. At various times during the year, the Company may exceed the federally insured limits. To mitigate this risk, the Company places its cash deposits only with high credit quality institutions. Management believes the risk of loss is minimal. INTANGIBLES ASSETS The Company accounts for intangible assets in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets." Intangible assets with a finite useful life are amortized over the useful life. Additionally, intangible assets that are being amortized are reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets, whenever the events or circumstances (as specified in SFAS No. 144) indicate that the carrying amount may not be recoverable. INCOME TAXES The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as part of the provision for income taxes in the period that includes the enactment date. 7

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS LOSS PER SHARE Loss per common share is calculated in accordance with SFAS No. 128, Earnings Per Share. Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding. Diluted loss per share is computed similarly to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares had been issued and if the additional common shares were dilutive. The Company currently has no potentially dilutive common shares outstanding. SEGMENT INFORMATION The Company has determined it has one reportable operating segment as defined by SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. NOTE 3 - LIQUIDITY AND CAPITAL RESOURCES The Company is in the development stage and has significant obligations to pay in future years and its liabilities exceed its assets. The Company will be required to raise funds through additional offerings of its securities or issuance of debt in order to have the funds necessary to complete these acquisitions and continue its operations. See Note 9 - Subsequent Events for discussion of the merger and acquisitions that occurred in 2004. NOTE 4 - INTANGIBLE ASSETS On December 16, 2003, NSNV and PGS Exploration (UK) Limited ("PGS"), a United Kingdom corporation that is a provider of geophysical services, entered into an agreement where, in exchange for certain consideration including, among other things, a cash payment of $ 1,000,000 paid in January 2004 and 18.5% of the outstanding stock of NSNV, PGS granted NSNV the right to use 79,200 square kilometers of 3-D seismic and related data in the North Sea region. Under the agreement, PGS may not license all or part of the data on a non-cash basis for a period of two to three years, depending on the area the data covers. In connection with 8

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS this, the Company recorded an intangible asset of approximately $1.2 million. The intangible asset is being amortized over its estimated useful life of 10 years on a straight-line basis, with no residual value. While we have a license to the seismic data in perpetuity, the seismic data will become part of the public domain in the United Kingdom in 10 years. The unamortized balance of the intangible asset as of December 31, 2003 is as follows:
License fee Less accumulated amortization $ 1,243,516 (5,181) ----------$ 1,238,335 ===========

The Company recorded amortization expense of $5,181 for 2003. Estimated amortization expense for each of the five years through December 31, 2008 is $124,352. See Note 8 related to NSNV's purchase commitment of services from PGS. NOTE 5 - INCOME TAXES Deferred income taxes result from the net tax effects of temporary timing differences between the carrying amounts of assets and liabilities reflected on the financial statements and the amounts recognized for income tax purposes. The tax effects of temporary differences and net operating loss carryforwards that give rise to significant portions of deferred tax assets and liabilities are as follows at December 31:
2003 --------Deferred tax asset: Tax benefit arising from net operating loss carryforward Less valuation allowance $ 46,000

(46,000) --------$ =========

Net deferred tax asset

9

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS Income tax benefit consists of the following:
December 31, 2003 ----------------Deferred: Federal State Federal and state benefit of net operating loss carryforward Less valuation allowance $ 46,000 ----------46,000 (46,000) ----------$ ===========

Net deferred tax asset

As of December 31, 2003, the Company had losses which resulted in net operating loss carryforwards for tax purposes amounting to approximately $46,000 that may be offset against future taxable income. These NOL carryforwards expire in 2024. However, these carryforwards may be significantly limited due to changes in the ownership of the Company as a result of future equity offerings. Recognition of the benefits of the deferred tax assets and liabilities will require that the Company generate future taxable income. There can be no assurance that the Company will generate any earnings or any specific level of earning in future years. Therefore, the Company has established a valuation allowance for deferred tax assets (net of liabilities) of approximately $46,000 as of December 31, 2003. The following table presents the principal reasons for the difference between the Company's effective tax rates and of United States federal statutory income tax rate of 34%. 10

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS
Period From Inception December 31, 2003 --------------------$ 46,000 (46,000) ---------$ ========== 0% ==========

Federal income tax benefit at statutory rate State income tax benefit (net of effect of federal benefit) Less valuation allowance

Income Tax Benefit

Effective Income Tax Rate

NOTE 6 - SHAREHOLDERS' EQUITY The Company has 100,000 shares of its common stock outstanding with a par value of $0.01 per share. The common stockholders are entitled to one vote per share and have the right to elect all directors. On December 16, 2003, the Company issued 81,500 shares of its common stock to North Sea New Ventures, L.L.C., a Texas Limited Partnership owned by William L. Transier and John N. Seitz. The Company received $1,000 cash and promissory notes aggregating $1,000,000. The promissory notes were paid in full, with accrued interest, in January 2004. As discussed previously, in December 2003, the Company also issued 18,500 shares of its common stock to PGS in connection with the acquisition of the certain seismic data. NOTE 7 - SUPPLEMENTARY CASH FLOW DISCLOSURES During 2003, the Company had no cash payments for interest or income taxes. The Company acquired an intangible asset through issuing 18,500 shares of common stock valued at $227,221 and recording a payable due to PGS of $1,000,000 plus a payable for legal fees of $16,295. 11

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS NOTE 8 - COMMITMENTS AND CONTINGENCIES GENERAL The oil and gas industry is subject to regulation by federal, state and local authorities. In particular, gas and oil production operations and economics are affected by environmental protection statutes, tax statutes and other laws and regulations relating to the petroleum industry. The Company believes it is in compliance with all federal, state and local laws, regulations applicable to the Company and its properties and operations, the violation of which would have a material adverse effect on the Company or its financial condition. COMMITMENTS Related Party As a part of the Agreement entered into with PGS on December 16, 2003, the Company has an obligation to purchase products and services from PGS or its affiliates for a period of three years commencing on December 16, 2003 as follows:
Year 1 Year 2 Year 3 $ 1,000,000 1,500,000 2,000,000 -----------$ 4,500,000 ============

PGS has agreed to provide NSNV with product discounts and certain consulting services during the term of the agreement. Unrelated Party The Company has contracted with an unrelated party to provide engineering and other services related to acquisition of oil and gas assets, development and production business in the North Sea for a maximum consideration of $400,000 cash and shares and options, to be valued at $400,000 per year, to purchase shares in NSNV's successor company. The contract may be terminated with six months notice by the Company or three months notice by the other party. In addition, both parties may elect to participate in the 12

NSNV, INC. (A DEVELOPMENT STAGE ENTITY) NOTES TO FINANCIAL STATEMENTS acquisition of any exploration or development projects initiated by the other party, up to 15% of the asset to be acquired. NOTE 9 - SUBSEQUENT EVENTS On January 5, 2004, the Company issued two 4.0% promissory notes for $50,000 each to two members of North Sea New Ventures, L.L.C. The notes were repaid on February 26, 2004 with the accrued interest. On January 27, 2004, the Company issued two 4.0% promissory notes for $75,000 each to two members of North Sea New Ventures, L.L.C. The notes were repaid on February 26, 2004 with the accrued interest. On February 24, 2044, the Company (the "Surviving Company") merged with North Sea New Ventures, L.L.C. (the "Merged Company"). The 81,500 shares of the Company's common stock owned by North Sea New Ventures, L.L.C. were equally distributed to two members, each member had a 50% interest in North Sea New Ventures, L.L.C. On February 27, 2004, the Company was acquired (the "Merger") by Continental Southern Resources, Inc., a Nevada corporation, ("CSOR") through a merger with newly created subsidiary of CSOR resulting in NSNV becoming a wholly-owned subsidiary of the Company. The former shareholders of NSNV received an aggregate of 12.5 million common shares of CSOR in the merger, representing 18.9% of CSOR's outstanding common stock immediately after the closing of the merger. The Merger is intended to provide the expanded company with the following competitive advantages: (i) a pre-eminent seismic and geological database of the North Sea region and (ii) a proven and experienced management team comprised of Messrs. Transier and Seitz, each pursuant to three-year employment agreements, and certain other former executives of Ocean Energy, Inc. and Anadarko Petroleum Corporation. 13

EXHIBIT 99.2 UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS OF ENDEAVOUR INTERNATIONAL CORPORATION (FORMERLY CONTINENTAL SOUTHERN RESOURCES, INC.) TO REFLECT THE OFFERING, MERGER AND RESTRUCTURING

UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS OF ENDEAVOUR INTERNATIONAL CORPORATION (FORMERLY CONTINENTAL SOUTHERN RESOURCES, INC.) The accompanying pro forma financial statements are presented in accordance with Article 11 of Regulation S-X. The following unaudited pro forma condensed combined financial information reflects adjustments to give affect to the following: - The issuance by Continental Southern Resources, Inc. (the "Company" or "CSOR") of 25 million shares of common stock at $2.00 per share in a private placement (the "Offering"). - The Company's restructuring of various financial and shareholder related items (the "Restructuring") as follows: - Repayment of $1,500,000 principal amount of our outstanding convertible notes; - Issuance of 1,026,624 shares of our common stock in exchange for the $1,550,000 principal balance and accrued interest due under the Michael P. Marcus convertible debenture at a conversion price of $1.75; - Issuance of 375,000 shares of our common stock in exchange for the $600,000 principal balance and accrued interest due under the Trident convertible debenture at a conversion price of $1.60; - Issuance of 2,808,824 shares of our common stock upon conversion of all of the outstanding Series C Preferred Stock, and accrued dividends, at a conversion price of $1.70 per share; - Purchase of all outstanding shares of Series A Preferred Stock and 20,212.86 shares of Series B Preferred Stock in exchange for certain of our non-core assets ; - Purchase of 14.1 million shares of common stock and 103,500.07 shares of Series B Preferred Stock from RAM Trading, Ltd. for $5,330,948 in cash; and - Sale of the Company's entire limited partnership interest in Knox Miss. Partners, L.P. for $500,000 in cash and a $4.5 million short-term note. - The acquisition (the "Merger") of NSNV, Inc. ("NSNV"), whereby the former shareholders of NSNV received an aggregate of 12.5 million common shares of the Company. Subsequent to the Merger, the Company was renamed Endeavour International Corporation ("Endeavour"). - The income statement data assume that the Offering and Restructuring transactions were consummated on January 1, 2003. The income statement data assume that the Merger transactions were consummated on October 16, 2003, the inception of NSNV. The balance sheet data assume that all transactions were consummated on December 31, 2003. The unaudited pro forma condensed combining financial data are not necessarily indicative of the results of operations or the financial position which would have occurred had the transactions been consummated at January 1, 2003, nor are they necessarily indicative of future results of operations or financial position. The unaudited pro forma combined financial data should be read in conjunction with the historical consolidated financial statements and related notes thereto of CSOR and NSNV. 2

ENDEAVOUR INTERNATIONAL CORPORATION (FORMERLY CONTINENTAL SOUTHERN RESOURCES, INC.) UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET AS OF DECEMBER 31, 2003
Historical Continental Southern Resources, Inc. ----------CURRENT ASSETS: Cash Notes Receivable Marketable Securities Interest Receivables Other Current Assets Total Current Assets Oil and Gas Properties, Costs Not Being Amortized Equity Interests in Entities with Oil and Gas Properties Intangible Assets Goodwill Other Assets Pro fo Restr and O -----

Pro Forma The Offering for the Adjustments Offering ---------------------ASSETS $ 46,250,000 (A) $46,306,680 847,928 719,480 225,186 1,471,470 ----------49,570,744

The Restructuring Adjustments -------------

56,680 847,928 719,480 225,186 1,471,470 ----------3,320,744

$

-----------46,250,000

(5,943,007)(B), 3,652,072 (C), (719,480)(C) (225,186)(C), (1,338,401)(B), ------------(4,574,002)

$

(D), (E) (D) (D) (E)

$40, 4,

---44,

6,428,227

6,428,227

(6,428,227)(C), (D)

2,838,536 80,407 ----------$12,667,914 ===========

-----------$ 46,250,000 ============

2,838,536 80,407 ----------$58,917,914 ===========

2,

(71,037)(E) ------------$ (11,073,266) =============

---$47, ====

Total Assets

Historical NSNV ---------CURRENT ASSETS: Cash Notes Receivable Marketable Securities Interest Receivables Other Current Assets Total Current Assets Oil and Gas Properties, Costs Not Being Amortized Equity Interests in Entities with Oil and Gas Properties Intangible Assets Goodwill Other Assets

The Merger Adjustments ----------ASSETS $

Endeavour Pro Forma for the Offering, Restructuring, and Merger --------------

1,000 1,000,000 ----------1,001,000

$

(87,640) (M) ----------(87,640)

$ 40,364,673 4,500,000 1,045,429 -----------45,910,102

-

-

1,238,335 3,500,000 ----------$5,739,335 ===========

7,686,665 16,745,745 ----------$24,344,770 ===========

(H) (H)

2,838,536 8,925,000 16,745,745 3,509,370 -----------$ 77,928,753 ============

Total Assets

3

ENDEAVOUR INTERNATIONAL CORPORATION (FORMERLY CONTINENTAL SOUTHERN RESOURCES, INC.) UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET AS OF DECEMBER 31, 2003
Historical Continental Southern Resources, Inc. ----------CURRENT LIABILITIES: Accounts Payable and Accrued Expenses $ 5,235,725 Convertible Debentures 3,242,654 Deferred Equity Option 870,000 Other Current Liabilities 23,643 -----------Total Current Liabilities 9,372,022 Other Liabilities -----------9,372,022 29,505

Pro Forma The The Offering for the Restructuring Adjustments Offering Adjustments ---------------------- ------------LIABILITIES AND STOCKHOLDERS' EQUITY

R a -

$

250,000 (A)

$ 5,485,725 3,242,654 870,000 23,643 ----------9,622,022 ----------9,622,022 29,505

$

(4,168,329)(B), (C), (E), (F) (3,242,654)(B) (870,000)(G)

-----------250,000

(23,643)(C), (D) ------------(8,304,626)

-----------250,000

------------(8,304,626)

Total Liabilities Minority Interest STOCKHOLDERS' EQUITY: Preferred Stock, Series A, B and C Common Stock Additional Paid In Capital Less: Stock Subscription Receivables Other Equity Deficit Accumulated During the Development Stage Total Stockholders' Equity

4,713 37,145 50,175,898

25,000 (A) 45,975,000 (A)

4,713 62,145 96,150,898

(4,693)(C), (E), (F) (8,752)(B), (E), (F), (G) (4,430,960)(B), (E), (F), (G)

(425,000) (490,036)

(425,000) (490,036)

425,000 (C) 489,036 (C)

(46,036,333) ------------ -----------3,266,387 -----------46,000,000 ------------

(46,036,333) 761,729 (B), (C), (D) ----------- ------------49,266,387 ----------(2,768,640) -------------

Total Liabilities and Stockholders' Equity

$ 12,667,914 ============

$ 46,250,000 ============

$58,917,914 ===========

$ (11,073,266) ============= Endeavour Pro Forma for the Offering, Restructuring, and Merger --------------

Historical The Merger NSNV Adjustments -------------------LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable and Accrued Expenses Convertible Debentures Deferred Equity Option Other Current Liabilities Total Current Liabilities Other Liabilities

$2,146,745 ---------2,146,745 3,500,000 ---------5,646,745

$

337,360

(H)

$

3,801,501 -

----------337,360

-----------3,801,501 3,500,000 -----------7,301,501

----------337,360

Total Liabilities

Minority Interest STOCKHOLDERS' EQUITY: Preferred Stock, Series A, B and C Common Stock Additional Paid In Capital Less: Stock Subscription Receivables Other Equity Deficit Accumulated During the Development Stage Total Stockholders' Equity

-

29,505

1,000 1,227,221

11,675 23,860,104

(H) (H)

20 66,068 116,807,263

(1,000,000) -

(1,000,000) (1,000)

(135,631) ---------92,590 ----------

135,631 ----------24,007,410 -----------

(H)

(45,274,604) -----------70,597,747 ------------

Total Liabilities and Stockholders' Equity

$5,739,335 ==========

$24,344,770 ===========

$ 77,928,753 ============

4

ENDEAVOUR INTERNATIONAL CORPORATION (FORMERLY CONTINENTAL SOUTHERN RESOURCES, INC.) UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003
Historical Continental Southern Resources, Inc. -----------$ 27,305

Revenues Expenses: Operating Expenses Depletion and Amortization Impairment of oil and gas properties Bad Debt Expense - Related Party General and Administrative Total Expenses

The Offering Adjustments -----------$

Pro Forma for the Offering ------------$ 27,305

The Restructuring Adjustments ------------$ (27,305)(I)

920,494 1,496,725 21,502,321 1,800,000 2,261,451 -----------27,980,991 -----------(27,953,686)

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

920,494 1,496,725 21,502,321 1,800,000 2,261,451 -----------27,980,991 -----------(27,953,686)

(920,494)(I) (1,496,725)(I) (10,117,867)(I) (297,249)(I) ------------(12,832,335) ------------12,805,030

Loss from Operations Other (Income) Expense: Equity interest in oil and gas partnerships Interest Income Interest Expense Gain on Sale of Oil and Gas Interest Loss on Sale of Marketable Securities Total Other (Income) Expense

1,217,317 (239,950) 3,569,992

1,217,317 (239,950) 3,569,992

1,408 (I) (3,554,547)(E) (J)

(1,235,248) 1,659,220 -----------4,971,331 -----------(32,925,017) 82,260 -----------(32,842,757) (4,405,708) -----------$(37,248,465) ============ $ (1.06) ============

(1,235,248) 1,659,220 -----------4,971,331 -----------(32,925,017) 82,260 -----------(32,842,757) (4,405,708) -----------$(37,248,465) ============ $ (0.62) ============

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

------------(3,553,139) ------------16,358,169 (77,459)(I) ------------16,280,710 4,245,836 (I) ------------$ 20,526,546 =============

Loss Before Minority Interest Minority Interest

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

Net Loss Preferred Stock Dividends

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

Net Loss to Common Stockholders

============

Net Loss Per Share - Basic and Diluted

============

Weighted Average Number of Common Share Outstanding - Basic and Diluted

35,076,435 ============

25,000,000 (A) ============

60,076,435 ============

(8,752,224)(I) =============

Revenues Expenses: Operating Expenses Depletion and Amortization Impairment of oil and gas properties Bad Debt Expense - Related Party General and Administrative

Historical NSNV ---------$ -

The Merger Adjustments ----------$

Endeavour Pro Forma for the Offering, Restructuring, and Merger -------------$ -

5,181 130,510

32,007 (L)

37,188 11,384,454 1,800,000 2,094,712

Total Expenses

-----------135,691 -----------(135,691)

----------32,007 ----------(32,007)

------------15,316,354 ------------(15,316,354)

Loss from Operations Other (Income) Expense: Equity interest in oil and gas partnerships Interest Income Interest Expense Gain on Sale of Oil and Gas Interest Loss on Sale of Marketable Securities Total Other (Income) Expense

----------------------(135,691) -----------(135,691) -----------$ (135,691) ============ $ (1.36) ============

1,217,317 (238,542) 15,445 (1,235,248) 1,659,220 ------------1,418,192 ------------(16,734,546) 4,801 ------------(16,729,745) (159,872) ------------(16,889,617) ============= $ (0.31) =============

--------------------(32,007)

Loss Before Minority Interest Minority Interest

----------(32,007)

Net Loss Preferred Stock Dividends

----------$ (32,007) ===========

Net Loss to Common Stockholders

Net Loss Per Share - Basic and Diluted

Weighted Average Number of Common Share Outstanding - Basic and Diluted

100,000 ============

2,539,178 (L) ===========

53,963,389 =============

5

ENDEAVOUR INTERNATIONAL CORPORATION (FORMERLY CONTINENTAL SOUTHERN RESOURCES, INC.) NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS (A) To record the Offering by the issuance of 25,000,000 shares of common stock for proceeds of $46,000,000, net of placement agent commissions of $2,500,000, financial advisory fees of $1,250,000 and accrued offering expenses of $250,000. (B) To record the repayment of $1,500,000 principal amount of our outstanding convertible notes and the conversion of all remaining convertible notes into common stock. (C) To record the sale of BWP Gas LLC and various other non-core assets to the holders of the Series A Preferred Stock and certain holders of the Series B Preferred Stock as follows: - Cash of $5,589; - Notes receivable of $817,500; - Interest receivables of $223,778; - Accounts receivable of $10,276; - Marketable securities of $719,480; - Oil and gas properties not being amortized of $679,649; - Developed oil and gas interests of $71,037; - Accounts payable of $844,950; - Deferred revenue of $20,143; and - Subscription receivables of $425,000. (D) To record the sale of all the limited partnership units in Knox Miss. Partners, L.P. for $5.0 million. The $5.0 million was payable $500,000 in cash and by the issuance of a $4.5 million short-term note that is secured by a pledge of the limited partnership interest. The assets and liabilities sold included the following: - Cash of $6,470; - Notes receivable of $30,428; - Interest receivable of $1,408; - Oil and gas properties not being amortized of $5,748,578; - Payables for oil and gas interest of $2,018,913; and - Note payable of $3,500. (E) To record the purchase and retirement of 14.1 million shares of common stock and 103,500.07 shares of Series B Preferred Stock from RAM Trading, Ltd. for $5,330,948 in cash, and issuance of 300,000 shares of our common stock issued as compensation for related legal and consulting services.

(F) To record the issuance 2,808,824 shares of our common stock upon conversion of all of the outstanding Series C Preferred Stock, and accrued dividends of $165,625, at a conversion price of $1.70 per share, net of deferred expenses of $712,910. 6

ENDEAVOUR INTERNATIONAL CORPORATION (FORMERLY CONTINENTAL SOUTHERN RESOURCES, INC.) NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS (G) To record the Company's exercise of its call option to buy back the Knox Miss limited partnership interest from RAM Trading Ltd. and issuance of 835,000 shares of common stock in full payment of the option. (H) To record the preliminary allocation of the purchase price of the Merger, including estimated merger costs to property and goodwill. The following is a calculation and allocation of the purchase price to the acquired assets and liabilities based on their relative fair values.
Calculation of Purchase Price: Shares of common stock to be issued............. Common stock price of the Offering.............. Fair value of stock issued...................... Add: Estimated merger cost...................... Purchase price

12,500,000 $ 2.00 ---------------25,000,000 525,000 ---------------$ 25,525,000 ================

Allocation of Purchase Price: Equity.......................................... Working Capital................................. Intangible assets............................... Goodwill........................................

$

24,100,000 (1,570,745) 8,925,000 16,745,745

The purchase price allocation is subject to change in the fair value of the acquired's working capital on the effective date and the actual merger costs incurred. These items will not be known until the effective date of the merger. Management does not believe the final purchase price allocation will differ materially from the preliminary purchase price allocation. (I) To reverse the revenues and expenses of BWP Gas LLC and the other non-core assets sold. (J) To reverse the historical interest expense of the convertible notes that were retired or converted. (K) To reverse the historical preferred stock dividends of the Series A, Series B and Series C preferred stock that were converted to common or surrendered as payment for BWP Gas LLC and other non-core assets. (L) To adjust the historical amortization of the intangible asset of NSNV to the amortization of the fair value of the intangible asset recorded in the purchase price allocation over its useful life of 10 years. (M) To reverse the prepaid legal fees related to the Merger incurred in 2003 by CSOR. (N) To reverse the expenses of Knox Miss-Partners, L.P.