EX-10.1






Exhibit 10.1




LOC Procurement Agreement

Execution Version




9 January 2013




ENDEAVOUR ENERGY UK LIMITED

(the “Payer”)




MAX PARTICIPATIONS II S.À R.L.

(the “Payee”)




ENDEAVOUR INTERNATIONAL CORPORATION

(the “Guarantor”)




____________________________________________________________




LOC PROCUREMENT AGREEMENT

____________________________________________________________




CONTENTS




CLAUSE PAGE



1. DEFINITIONS AND INTERPRETATION



2. LC ISSUANCE DOCUMENTS



3. REIMBURSEMENTS BY THE PAYER



4. RELEASE OF LETTERS OF CREDIT



5. CASH COLLATERAL FROM PAYER



6. FEES AND COSTS & EXPENSES



7. TAX GROSS-UP AND INDEMNITIES



8. RANKING



9. INDEMNITY



10. GUARANTEE



11. REPRESENTATIONS AND WARRANTIES



12. COVENANTS



13. EARLY TERMINATION EVENTS



14. COSTS OF PARTIES



15. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999



16. LIMITED RECOURSE



17. COUNTERPARTS



18. NOTICES.



19. GOVERNING LAW AND JURISDICTION



SCHEDULE 1 CONDITIONS PRECEDENT



SCHEDULE 2 FORM OF EACH LETTER OF CREDIT



THIS LOC PROCUREMENT AGREEMENT (this “Agreement”) is dated 9 January 2013 and made



BETWEEN:




	(1)	 	ENDEAVOUR ENERGY UK LIMITED, a company registered in England and Wales (with registration
number 5030838) whose registered office is at 33rd Floor, City Point, One Ropemaker
Street, London EC2Y 9UE (the “Payer”);






	(2)	 	MAX PARTICIPATIONS II S.À R.L., a private limited liability company (société à responsabilité
limitée) incorporated and existing under the laws of the Grand Duchy of Luxembourg, with its
registered office at 9, rue Basse L-4963 Clemency, Luxembourg, having a share capital of EUR
612,500 and registered with the Luxembourg trade and companies register under number B 106062
(the “Payee”); and






	(3)	 	ENDEAVOUR INTERNATIONAL CORPORATION, a corporation incorporated in the state of Nevada whose
registered office is at 811 Main, Suite 2100, Houston, TX 77002, USA (the “Guarantor”).





BACKGROUND




	(A)	 	At the request of the Guarantor, the Payee shall, on the date hereof, enter into an agreement
with Deutsche Bank AG (the “LC Bank”) acting out of its New York branch and its London branch
pursuant to which the Payee (in its capacity as the “LC Party”) will instruct the LC Bank to
issue Letters of Credit (as defined below) for the benefit of Hess Limited. The Letters of
Credit are to be issued to support the decommissioning liabilities of the Payer and shall be
fully released on or prior to the LC Release Date (as defined below).






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






	(C)	 	The Payer and the Payee wish to enter into this Agreement to document, amongst other things,
the terms governing such reimbursement arrangement and the fees payable by the Payer to the
Payee for procuring the issue of the Letters of Credit. The Guarantor is entering into this
Agreement in its capacity as guarantor in respect of the obligations of the Payer towards the
Payee under this Agreement.





IT IS AGREED:




	1.	 	DEFINITIONS AND INTERPRETATION






	1.1	 	In this Agreement:






“Arrangement Fee” has the meaning given to such term in Clause 6.2 (Fees and costs &
expenses).




“Business Day” means a day (other than a Saturday or a Sunday) on which banks are open for
general business in London, England; Houston, Texas (USA); and Luxembourg. If any time
period or payment is to be made on a day which is not a Business Day, that period will
instead end on, or such payment shall be made on, the next Business Day.




“Bankruptcy Law” means any bankruptcy, liquidation, insolvency or similar law or regulation
in any jurisdiction, including, without limitation, U.S. Bankruptcy Law.




“Custodian” means any administrator, receiver, trustee, assignee, liquidator, custodian or
similar official under Bankruptcy Law.




“Early Termination Event” has the meaning given to such term in Clause 13 (Early Termination
Events).




“Endeavour Party” shall mean the Payer and the Guarantor.




“Fee” has the meaning given to such term in Clause 6.1 (Fees & costs and expenses).




“Group” means the Guarantor and its subsidiaries.




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




“ITA” means the UK Income Tax Act 2007.




“LC Amount” means, at any time, the outstanding face amount (in Sterling) of the Letters of
Credit issued pursuant to the LC Issuance Agreement, plus the amount, if any, demanded under
those Letters of Credit and not reimbursed by the Payer in accordance with this Agreement:
as at the LC Issuance Date, the LC Amount will be £20,600,000.




“LC Bank” has the meaning given to such term in the recitals.




“LC Fee” means the fees, costs and expenses reimbursable by the Payer pursuant to Clause 6.2
(Fees & costs and expenses).




“LC Issuance Agreement” means the agreement dated on or about the date hereof between the LC
Bank and the Payee in respect of the issuance of the Letters of Credit.




“LC Issuance Date” means the date on which the Guarantor requests the issue of the Letters
of Credit by notice to the Payee.




“LC Issuance Document” means each of the LC Issuance Agreement and the Letters of Credit.




“LC Party” has the meaning given to such term in the recitals.




“LC Release Date” means 9 July 2014.




“Letter of Credit” means each letter of credit issued by the LC Bank, acting via its London
branch, pursuant to the LC Issuance Agreement and this Agreement, substantially in the forms
set out in Schedule 2 (Form of each Letter of Credit).




“Liability Expiry Date” means the date upon which the LC Bank is under no actual or
contingent liabilities in respect of any Letter of Credit.




“Material Adverse Effect” means a material adverse effect on the ability of the Payer or
Guarantor to discharge its obligations under this Agreement, including the reimbursement
obligations herein.




“Material Subsidiary” means any direct or indirect subsidiary, including its subsidiaries,
of the Guarantor that meets any of the following conditions:




	 	(a)	 	the Guarantor’s and its other subsidiaries’ investments in and advances to such
subsidiary exceed ten (10) per cent. of the total assets of the Guarantor and its
subsidiaries consolidated as of the end of the most recently completed fiscal year;






	 	(b)	 	the Guarantor’s and its other subsidiaries’ proportionate share of the total
assets (after intercompany eliminations) of such subsidiary exceeds ten (10) per cent.
of the total assets of the Guarantor and its subsidiaries consolidated as of the end of
the most recently completed fiscal year; or






	 	(c)	 	the Guarantor’s and its other subsidiaries’ equity in the income from
continuing operations before income taxes, extraordinary items and cumulative effect of
a change in accounting principle of such subsidiary exceeds ten (10) per cent. of such
income of the Guarantor and its subsidiaries consolidated for the most recently
completed fiscal year.






For the avoidance of doubt, the Payer shall be deemed to be a “Material Subsidiary” of the
Guarantor for the purpose of this Agreement.




“Payment Date” has the meaning given to such term in Clause 7.4 (Tax Gross-up and
Indemnities).




“Project Finance Indebtedness” means any indebtedness (other than such indebtedness incurred
by the Guarantor) incurred to finance the ownership, acquisition, construction, development
and/or operation of an asset or portfolio of assets in respect of which the person or
persons to whom such indebtedness is or may be owed by the relevant borrower (whether or not
a member of the Group) have no recourse whatsoever to any member of the Group for the
repayment of or a payment of any sum relating to such indebtedness other than:




	 	(a)	 	recourse to such borrower for amounts limited to the aggregate cash flow or net
cash flow (other than historic cash flow or historic net cash flow) from such assets;
and/or






	 	(b)	 	recourse to such borrower for the purpose only of enabling amounts to be
claimed in respect of such indebtedness in an enforcement of any encumbrance given by
such borrower over such assets or the income, cash flow or other proceeds deriving
therefrom to secure such indebtedness or any encumbrance given by any holding company
of the borrower over any equity in the borrower (except where, in relation to the grant
of any encumbrance over the equity in the borrower, the borrower is a Material
Subsidiary or is a subsidiary of the Guarantor (other than a subsidiary which is a
single purpose company whose principal assets and business are constituted by the
ownership, acquisition, financing, development and/or operation of an asset or a
portfolio of assets and the indebtedness (in respect of which such encumbrance has been
granted) has been incurred in connection with the financing of the ownership,
acquisition, development and/or operation of such asset or portfolio of assets)) or any
recourse referred to in (c) below, provided that: (i) the extent of such recourse to
such borrower is limited solely to the amount of any recoveries made on any such
enforcement; and (ii) such person or persons is or are not entitled, by virtue of any
right or claim arising out of or in connection with such indebtedness, to commence
proceedings for the winding up or dissolution of the borrower or to appoint or procure
the appointment of any receiver, trustee or similar person or officer in respect of the
borrower or any of its assets (save for the assets the subject of such encumbrance);
and/or






	 	(c)	 	recourse to such borrower generally or directly or indirectly to a member of
the Group (other than the Guarantor or a Material Subsidiary) under, in each case, any
form of completion guarantee, assurance or undertaking, which recourse is limited to
claim for damages (other than liquidated damages and damages required to be calculated
in a specific way) for breach of an obligation (not being a payment obligation or an
obligation to procure payment by another or an obligation to comply or to procure
compliance by another with any financial ratios or other tests of financial condition)
by the person against whom such recourse is available; and/or






	 	(d)	 	recourse to another member of the Group (including the Guarantor) in respect of
any contractual commitment to provide equity or subordinated debt or in respect of
letters of credit or guarantees relating to any such equity commitment or subordinated
debt and in each case were entered into as an initial and integral part of such
indebtedness.






“Quarterly Date” means each of 31 March, 30 June, 30 September and 31 December. If,
however, any such day is not a Business Day, the relevant Quarterly Date will instead be the
next Business Day in the same calendar month (if there is one) or the preceding Business Day
(if there is not).




“Quarterly Period” means each period for the accrual of the Fee, the first such period
commencing on the LC Issuance Date and ending on (but excluding) the first Quarterly Date
occurring thereafter and each subsequent period shall commence on (and include) the
Quarterly Date and end on (but exclude) the next Quarterly Date or, in the case of the last
Quarterly Period, the Termination Date.




“Relevant Debt” means any present or future indebtedness of the Guarantor in the form of
bonds, notes, debentures, loan stock or other securities which have an original maturity of
more than one year from its date of issue and which are for the time being, quoted, listed
or ordinarily dealt in or on any stock exchange over the counter or other securities market
but excluding Project Finance Indebtedness.




“Relevant Direction” has the meaning given to such term in Clause 7.4 (Tax Gross-up and
Indemnities).




“Relevant Fees” means the Fee, the LC Fee, the Arrangement Fee, the Termination Fee and any
accrued interest thereon.




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




“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature
(including any penalty or interest payable in connection with any failure to pay or any
delay in paying any of the same).




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




“Tax Deduction” means a deduction or withholding for or on account of Tax imposed by the
United Kingdom from a payment under this Agreement.




“Tax Payment” means the increase in a payment made by an Endeavour Party to the Payee under
Clause ý7.3 (Tax gross-up) or 7.8 (Tax indemnity).




“Termination Date” means the date on which all the Letters of Credit are released.




“Termination Fee” has the meaning given to such term in Clause 6.3 (Fees and Costs &
Expenses).




“Transaction Documents” means this Agreement and the LC Issuance Documents.




“Treaty” means the convention in force from time to time between the United Kingdom and
Luxembourg for the avoidance of double taxation.



	 	 	 	 	 
	 	1.2	 	 	“U.S. Bankruptcy Law” means Title 11, United States Bankruptcy Code.

“VAT” means value added tax and any other tax of a similar nature.

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








	 	(a)	 	the “Payer”, the “Payee” or the “Guarantor” shall each be construed so as to
include its successors in title, permitted assigns and permitted transferees;






	 	(b)	 	the singular includes the plural and vice versa;






	 	(c)	 	the word “including” is without limitation;






	 	(d)	 	“assets” includes present and future properties, revenues and rights of every
description;






	 	(e)	 	“indebtedness” includes any obligation for the payment or repayment of money,
whether present or future, actual or contingent;






	 	(f)	 	an outstanding amount of a Letter of Credit at any time is the maximum amount
that is or may be payable by the LC Bank in respect of that Letter of Credit at that
time;






	 	(g)	 	a “person” includes any individual, firm, company, corporation, government,
state or agency of a state or any association, trust, joint venture, consortium or
partnership (whether or not having separate legal personality);






	 	(h)	 	a provision of law is a reference to that provision as amended or re-enacted;
and






	 	(i)	 	the Payer providing “cash cover” means the Payer paying an amount and in the
currency specified by the Payee to be held by the Payee as segregated funds for
application as set-off to the obligations of the Payer herein.






	1.3	 	Clause and Schedule headings are for ease of reference only. Any reference to a
Clause or Schedule shall be to a clause or schedule of this Agreement unless expressly stated.






	2.	 	LC ISSUANCE DOCUMENTS






	2.1	 	The Guarantor, on behalf of the Payer, shall, by written notice to the Payee, request
the Payee, and the Payee hereby agrees, to: (i) enter into the LC Issuance Documents to which
it is a party; and (ii) in its capacity as the LC Party, instruct the LC Bank to issue the
Letters of Credit on the LC Issuance Date, subject to Clause 2.2.






	2.2	 	The Payee shall, in its capacity as LC Party, not be obliged to instruct the LC Bank
to issue the Letters of Credit pursuant to Clause 2.1, unless the Payee has received all of
the documents listed in Schedule 1 (Conditions Precedent). The Payee shall notify the
Guarantor promptly upon the receipt of all of the documents listed in Schedule 1 (Conditions
Precedent).






	2.3	 	No amendment, modification or waiver in respect of any LC Issuance Document shall be
proposed or entered into without the prior written consent of the Guarantor and the Payee.






	3.	 	REIMBURSEMENTS BY THE PAYER






	3.1	 	If the Payee receives a notice of demand for payment under a Letter of Credit from
the LC Bank pursuant to the terms of the LC Issuance Agreement, the Payee shall immediately
notify the Payer of the amount demanded and the date on which it is payable. The Payer shall
within three (3) Business Days of demand from the Payee pay to the Payee an amount equal to
the amount of such demand to be held by the Payee as cash cover but without double-counting in
respect of cash cover provided by the Payer (and not otherwise required under this Clause 3.1)
pursuant to Clause 5.1 (Cash Collateral from Payer) or Clause 13 (Early Termination Events).






	3.2	 	The Payer, in respect of each Letter of Credit issued or deemed issued under the LC
Issuance Agreement, unconditionally and irrevocably:






	 	(a)	 	agrees that the Payee shall authorise and direct the LC Bank: (i) to pay any
demand which appears on its face to be in order and made pursuant to and in accordance
with any such Letter of Credit on first request or demand being made; and (ii) to pay
all amounts which the LC Bank is requested or demanded to pay pursuant to and in
accordance with any such Letter of Credit without requiring proof of the agreement of
the Payer that the amounts so demanded or paid are or were due;






	 	(b)	 	agrees that the Payee shall authorise and direct the LC Bank to exercise the
rights and powers conferred on it by any such Letter of Credit and confirms that the LC
Bank shall be entitled to pay any demand which appears on its face to be in order and
agrees that in respect of any such Letter of Credit that the LC Bank shall not be
concerned with the legality of the claim or any underlying transaction or any set-off,
counterclaim or defence as between the Payer and any other person. This Clause shall
apply in respect of amounts so paid without regard to any other condition, the
sufficiency, accuracy or genuineness of any such request or demand or any certificate
or statement in connection therewith or any incapacity of or limitation upon the powers
of any person signing, or issuing such request, demand or certificate. The Payer
agrees that the LC Bank and the Payee shall not be obliged to enquire as to any such
matters and may assume that any such request, demand, certificate or statement is
correct and properly made; and






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






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






	 	(ii)	 	the release of the Payer or any other person under the terms of any
composition or arrangement with any creditor;






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






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






	 	(v)	 	any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of any beneficiary under a Letter
of Credit or any other person; or






	 	(vi)	 	any insolvency or similar proceedings.






	3.3	 	The Payer shall not, by virtue of any payment made by it under this Clause 3 or
otherwise, be subrogated to any rights, security or monies held or received by the Payee or be
entitled at any time to exercise, claim or have the benefit or any right of contribution or
subrogation or similar right against the Payee. All rights of contribution or similar rights
against the Payee in relation to this Agreement are hereby waived by the Payer.






	3.4	 	The obligations of the Payer under this Clause 3 shall be continuing, shall extend to
the ultimate balance of the obligations and liabilities of the Payer under this Clause 3 and
shall continue in force notwithstanding any intermediate payment in part of such obligations
or liabilities.






	4.	 	RELEASE OF LETTERS OF CREDIT






	4.1	 	The Payer shall procure the release of all Letters of Credit on or prior to the LC
Release Date. Upon notice from the Payer, the Payee agrees to provide promptly such
instructions to the LC Bank in accordance with the terms of the Payer’s notice, as may be
required to effect the release of the Letters of Credit in accordance with the LC Issuance
Documents.






	4.2	 	If the Payer fails to procure the release of the Letters of Credit on the LC Release
Date, it shall on the LC Release Date pay to the Payee in immediately available funds an
amount equal to the LC Amount less any amount paid by the Payer pursuant to Clause 3.1 and the
Payer authorises the Payee to apply all amounts paid pursuant to Clause 3.1 and this Clause
4.2 in discharge of the Payee’s obligations under the LC Issuance Documents.






	5.	 	CASH COLLATERAL FROM PAYER






	5.1	 	The Payer may, at its discretion, provide cash cover to the Payee at any time to
cover its obligations under this Agreement. The Payee may use such funds to satisfy, to the
extent possible, any obligations of the Payer or the Guarantor (as applicable) under this
Agreement.






	5.2	 	The Payee shall withdraw monies in respect of cash cover provided by the Payer under
this Agreement in order to satisfy any obligations of the Payer or the Guarantor (as
applicable) under this Agreement.






	5.3	 	To the extent the amount of cash cover exceeds the Payer’s obligations (or
Guarantor’s obligations, as applicable) under this Agreement, following the Termination Date,
the Payee shall return any excess amounts of cash cover, calculated as follows to the extent
that the amount of cash cover provided by the Payer hereunder (including any accrued interest
thereon) exceeds the sum of: (a) the LC Amount; and (b) any due but unpaid amounts under the
Fee, the LC Fee, the Arrangement Fee and the Termination Fee and under Clause 14 (Costs of
Parties). The Payee shall effect such payment within seven (7) Business Days after the
Termination Date.






	6.	 	FEES AND COSTS & EXPENSES






	6.1	 	In consideration for the Payee procuring the issue of the Letters of Credit, the
Payer shall pay the Payee a fee (the “Fee”) in Sterling equal to a rate per annum for each
Quarterly Period which is 9 (nine) per cent. (to be calculated on a daily basis) from the date
of this Agreement until the Termination Date on the aggregate balance of the LC Amount. The
amount of the Fee accrued on each Quarterly Date shall be due and payable on that Quarterly
Date.






	6.2	 	Following the receipt of a request by the Payee to pay any fees with respect to the
Letters of Credit (such fees being the sum due from the Payee to the LC Bank pursuant to
clause 3(i) of the LC Issuance Agreement equal to (i) a rate of 0.65 per cent per annum on the
aggregate balance of the LC Amount plus (ii) an initial payment of US$ 250) (the “LC Fee”),
the Payer shall, within two (2) Business Days of such request, pay such fees in Sterling to
the Payee to the account specified by the Payee in such request.






	6.3	 	In respect of the issuance of the Letters of Credit, the Payer shall pay the Payee an
arrangement fee in Sterling (an “Arrangement Fee”) in an amount equal to one (1) per cent. of
the LC Amount for value on the LC Issuance Date.






	6.4	 	In respect of the issuance of the Letters of Credit, the Payer shall also pay the
Payee a termination fee in Sterling (a “Termination Fee”) in an amount equal to two (2) per
cent. of the LC Amount, such payment to be due and payable on the Termination Date. The Payer
shall pay the Payee the Termination Fee in full on the Termination Date.






	6.5	 	If the Payer (or Guarantor, as applicable) fails to pay any amount due and payable by
it in connection with or under this Agreement on its due date, interest shall accrue on the
overdue amount from the due date up to the date of actual payment (both before and after
judgment) at a rate of two (2) per cent. per annum. Any interest accruing under this Clause
6.5 shall be immediately payable by the Payer on demand by the Payee.






	6.6	 	All payments pursuant to this Agreement shall be made no later than 9:30 am (London
time) to the account specified by the Payee.






	7.	 	TAX GROSS-UP AND INDEMNITIES






	7.1	 	Each Endeavour Party shall make all payments to be made by it without any Tax
Deduction, unless a Tax Deduction is required by law.






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






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






	7.4	 	A payment shall not be increased under Clause 7.3 by reason of a Tax Deduction if, on
the date on which the relevant payment falls due (the “Payment Date”), that payment could have
been made by the relevant Endeavour Party to the Payee without a Tax Deduction on the basis of
a direction that has previously been issued by HMRC to such Endeavour Party that such payment
could be made without a Tax Deduction pursuant to a successful application for relief under
the Treaty (a “Relevant Direction”) in circumstances where on or prior to the Payment Date,
such Relevant Direction has been withdrawn or become invalid by reason of any default by the
Payee in complying with the terms of such application or of any misrepresentation made by or
with the prior authority of the Payee in the relevant application provided that for the
avoidance of doubt, neither (a) a failure to obtain a Relevant Direction nor (b) the
withdrawal or invalidation of a Relevant Direction for any other reason shall relieve the
relevant Endeavour Party of any obligation to increase payments under Clause 7.3.






	7.5	 	If an Endeavour Party is required to make a Tax Deduction, that Endeavour Party shall
make that Tax Deduction and any payment required in connection with that Tax Deduction within
the time allowed and in the minimum amount required by law.






	7.6	 	Within thirty days of making either a Tax Deduction or any payment required in
connection with that Tax Deduction, the Endeavour Party making that Tax Deduction shall
deliver to the Payee entitled to the payment a statement under section 975 of the ITA or other
evidence reasonably satisfactory to the Payee that the Tax Deduction has been made or (as
applicable) any appropriate payment paid to the relevant taxing authority.






	7.7	 	The Payee and the Payer shall co-operate in completing any procedural formalities
which the Endeavour Party considers is necessary for that Endeavour Party to obtain
authorisation to make that payment without a Tax Deduction and shall take such reasonable
action as the Payer requires (including authorising the Payer to take conduct of such dispute)
to dispute any refusal of an application to obtain such authorisation, provided that all costs
of such dispute shall be borne by the Payer and the Payee shall be indemnified accordingly.






	7.8	 	The Payer shall (within ten Business Days of demand by the Payee) pay to the Payee an
amount equal to the loss, liability or cost which the Payee determines will be or has been
(directly or indirectly) suffered for or on account of Tax by that Payee in respect of this
Agreement.






	7.9	 	Clause 7.8 shall not apply:






	 	(a)	 	with respect to any Tax assessed on the Payee:






	 	(i)	 	under the law of the jurisdiction in which the Payee is incorporated
or, if different, the jurisdiction (or jurisdictions) in which the Payee is
treated as resident for tax purposes; or






	 	(ii)	 	if that Tax is imposed on or calculated by reference to the net
income received or receivable (but not any sum deemed to be received or
receivable) by the Payee; or






	 	(b)	 	to the extent a loss, liability or cost:






	 	(i)	 	is compensated for by an increased payment under Clause ý7.3; or






	 	(ii)	 	would have been compensated for by an increased payment under Clause
ý7.3 but was not so compensated solely because one of the exclusions in Clause
7.4 applied.






	7.10	 	If the Payee intends to make, a claim under Clause 7.8 shall promptly notify the
Payer of the event which will give, or has given, rise to the claim.






	7.11	 	If the Payer makes a Tax Payment and the Payee determines that:






	 	(a)	 	a Tax Credit is attributable to an increased payment of which that Tax Payment
forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax
Payment was required; and






	 	(b)	 	the Payee has obtained and utilised that Tax Credit,






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




	7.12	 	The Payee shall use its reasonable endeavours:






	 	(a)	 	to satisfy and maintain the status for the purposes of the Treaty of a resident
of Luxembourg;






	 	(b)	 	not to carry on a business in the United Kingdom through a permanent
establishment with which this Agreement, or any payment hereunder, is effectively
connected; and






	 	(c)	 	to be regarded as the beneficial owner of payments received by it under this
Agreement, taking account of published HMRC practice on the meaning of “beneficial
owner” at the date of this Agreement.






	7.13	 	The Payee, if requested by the Payer shall deliver such other documentation
prescribed by applicable law or reasonably requested by the Payer as will enable the Payer to
determine whether or not such Payee is subject to United States backup withholding or
information reporting requirements or obligations to deduction or withholding required by
sections 1471 to 1474 of the US Internal Revenue Code (or any associated regulations or other
official guidance, or any treaty, law, regulation or other official guidance enacted in any
other jurisdiction which facilitates the implementation of those sections).






	7.14	 	The Payer shall pay and, within ten Business Days of demand, indemnify the Payee
against any cost, loss or liability the Payee incurs in relation to all stamp duty,
registration and other similar Taxes payable in respect of this Agreement, except for any
voluntary registration of this Agreement in Luxembourg by the Payee.






	7.15	 	All amounts expressed to be payable under this Agreement by an Endeavour Party to a
Payee which (in whole or in part) constitute the consideration for any supply for VAT purposes
are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, if
VAT is or becomes chargeable on any supply made by a Payee to an Endeavour Party under this
Agreement and the Payee is required to account to the relevant tax authority for the VAT, the
Endeavour Party must pay to the Payee (in addition to and at the same time as paying any other
consideration for such supply) an amount equal to the amount of the VAT (and the Payee must
promptly provide an appropriate VAT invoice to that Party).






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






	8.	 	RANKING






The payment obligations of the Payer and the Guarantor under this Agreement rank at least
pari passu with the claims of all its other unsecured and unsubordinated creditors, except
for obligations mandatorily preferred by laws applying to companies generally.




	9.	 	INDEMNITY






	9.1	 	Except in respect of Tax (in relation to which Clause 7 shall apply), the Payer
agrees to reimburse the Payee on demand for and to indemnify and hold the Payee, harmless,
against and with respect to, any and all loss, liability, damage, or expense (including,
without limitation, attorney’s fees and costs) that the Payee may suffer or incur in
connection with any demand made pursuant to and in accordance with, or any dispute relating
to, any Letter of Credit issued in accordance with the LC Issuance Agreement and this
Agreement, in each case other than by reason of any negligence, wilful misconduct or breach
of, or misrepresentation under, this Agreement or any LC Issuance Document by the Payee.






	9.2	 	If any payment received by the Payee pursuant to this Agreement shall, on the
subsequent bankruptcy, insolvency, corporate reorganisation or other similar event of the
Payer or the Guarantor, be avoided, reduced, invalidated or set aside under any laws relating
to bankruptcy, insolvency, corporate reorganisation or other such similar events, such payment
shall not be considered as discharging or diminishing the liability of the Guarantor (as both,
principal debtor and indemnifier) and the indemnity contained in this Clause 9 and the
guarantee contained in Clause 10 shall continue to apply as if such payment had at all times
remained owing or outstanding by the Payer and the Guarantor shall continue to indemnify and
keep the Payee indemnified on the terms of indemnity contained in this Clause 9 and the
guarantee contained in Clause 10.






	10.	 	GUARANTEE






	10.1	 	The Guarantor unconditionally and irrevocably:






	 	(a)	 	guarantees to the Payee punctual performance by the Payer of the Payer’s
obligations under this Agreement; and






	 	(b)	 	undertakes with the Payee that whenever the Payer does not pay any amount due
under this Agreement, it shall promptly pay on demand that amount to the Payee.






	10.2	 	The Guarantor shall indemnify and hold the Payee harmless promptly on demand against
any cost, loss or liability suffered by the Payee in connection with any demand made pursuant
to and in accordance with, or any dispute relating to, any Letter of Credit issued in
accordance with the LC Issuance Agreement and this Agreement, in each case (including, without
limitation, if any obligation, including this guarantee, is or becomes unenforceable, invalid
or illegal) other than by reason of negligence, wilful misconduct or breach of, or
misrepresentation under, this Agreement or any LC Issuance Document by the Payee. The amount
of such cost, loss or liability shall be equal to the amount which the Payee would otherwise
have been entitled to recover.






	10.3	 	Without affecting the obligations of the Payer, the Guarantor will be liable to the
Payee under this Clause 10, as if it were a principal debtor and not merely a surety.
Accordingly, it will not be discharged, nor will its liability be affected, by anything which
would not discharge it or affect its liability if it were the sole principal debtor hereunder.






	10.4	 	The Guarantor agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of any other provisions hereto or
to any LC Issuance Document or any change in or amendment hereto or to any LC Issuance
Document made in accordance with this Agreement.






	10.5	 	The Guarantor’s obligations under this Agreement are, and will remain, in full force
and effect by way of continuing security until no sum remains payable by the Payer under this
Agreement. This guarantee is in addition to and is not in any way prejudiced by any other
guarantee or security now or subsequently held by the Payee.






	10.6	 	The Guarantor, in respect of each Letter of Credit issued or deemed issued under the
LC Issuance Agreement, unconditionally and irrevocably:






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






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






	 	(ii)	 	the release of the Guarantor or any other person under the terms of
any composition or arrangement with any creditor;






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






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






	 	(v)	 	any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of any beneficiary under a
Letter of Credit or any other person; or






	 	(vi)	 	any insolvency or similar proceedings.






	11.	 	REPRESENTATIONS AND WARRANTIES






	11.1	 	Each of the Payer and the Guarantor makes the representations and warranties set out
in this Clause 11.1 to the Payee on the date of this Agreement:






	 	(a)	 	it is a limited liability corporation, duly incorporated and validly existing
under the law of its jurisdiction of incorporation and it has the power to own its
assets and carry on its business as it is being conducted;






	 	(b)	 	it has the power to enter into, perform and deliver, and has taken all
necessary action to authorise its entry into, performance and delivery of, this
Agreement and the transactions contemplated by this Agreement and this Agreement
constitutes a legal, valid and binding agreement of it, enforceable in accordance with
its terms (save for customary exceptions relating to the rights of creditors generally
and the application of insolvency laws);






	 	(c)	 	no litigation, arbitration or administrative proceedings or investigations of,
or before, any court, arbitral body or agency which, if adversely determined, are
reasonably likely to have a Material Adverse Effect have (to the best of its knowledge
and belief (having made due and careful enquiry)) been started or threatened against
it;






	 	(d)	 	it has not breached any law or regulation which if breached has or is
reasonably likely to have a Material Adverse Effect;






	 	(e)	 	it and its subsidiaries are not in violation or default of: (i) any provision
of its or its subsidiaries’ organizational documents; (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which it is a party or
bound or to which its property is subject; or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to it or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over it or such subsidiary or any of its properties, as
applicable, except, in each case, for any such default or violation that would not,
individually or in the aggregate, have a Material Adverse Effect;






	 	(f)	 	the execution of this Agreement and the performance of the obligations
hereunder do not conflict with, result in a breach or violation or imposition of any
lien, charge or encumbrance upon any property or assets of it or any of its
subsidiaries pursuant to: (i) its or its subsidiaries’ organizational documents;
(ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which it or any of its subsidiaries is a party or bound or to which its
or their property is subject; or (iii) any statute, law, rule, regulation, judgment,
order or decree of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over it or any of its
subsidiaries or any of its or their properties;






	 	(g)	 	no order has been made and no resolution has been passed for the winding up of
it or for a provisional liquidator or manager to be appointed in respect of it and no
petition has been presented and no meeting has been convened for the purpose of
considering the winding up of it; no receiver, administrator or manager (which
expression shall include an administrative receiver) has been appointed in respect of
all or any of its assets, no petition for such appointment has been presented in
respect of it nor has any power of sale or power to appoint a receiver or manager under
the terms of any mortgage, charge or other security in respect of all or any of its
assets become exercisable;






	 	(h)	 	it has not admitted itself to be unable to pay its debts as they fall due, nor
has it failed to pay its debts when due, nor is it otherwise liable to be found unable
to pay its debts in accordance with applicable Bankruptcy Laws;






	 	(i)	 	no creditor has taken steps to enforce any debt or other sum owed by it or any
member of the Group and there exists no circumstances which would entitle a holder of
such debt to take any such steps; and






	 	(j)	 	it has not suspended or ceased or threatened to suspend or cease to carry on
all or a material part of its business.






	11.2	 	The Payee makes the representations and warranties set out in this Clause 11.2 to
the Payer and the Guarantor on the date of this Agreement:






	 	(a)	 	it is duly incorporated and validly existing under the laws of its place of
incorporation with full power and authority to conduct its business, to enter into
Transaction Documents to which it is a party and to perform any acts incidental or
necessary in connection thereto and is lawfully qualified to do business in those
jurisdictions in which business is conducted by it and to execute, deliver and perform
its trusts, powers, authorities, duties, discretions and obligations under the
Transaction Documents to which it is a party;






	 	(b)	 	no insolvency official (including, without limitation, any receiver (curateur),
liquidator (liquidateur), auditor (commissaire), verifier (expert-vérificateur), juge
délégué or juge commissaire has been appointed with respect to it or any of the assets
and no action or proceedings for such appointment is pending or, to its knowledge,
threatened and no insolvency proceeding has occurred with respect to it;






	 	(c)	 	the Transaction Documents to which it is a party have been duly authorised and
executed by the Payee and constitute valid, legally binding and enforceable obligations
of the Payee, except as limited by bankruptcy, insolvency, examinership or other
similar laws of general applicability affecting the enforcement of creditors’ rights
generally and by court’s discretion in relation to equitable remedies and subject to
mandatory Luxembourg law provisions;






	 	(d)	 	all authorisations, consents and approvals required by the Payee in connection
with (i) the execution of the Transaction Documents to which it is a party and (ii) the
performance by the Payee of the trusts, powers, authorities, duties, discretions and
obligations expressed to be undertaken by it under the Transaction Documents to which
it is a party are in full force and effect;






	 	(e)	 	the execution and delivery of the Transaction Documents to which it is a party
and the carrying out of the other transactions contemplated by the Transaction
Documents to which it is a party and compliance with their terms do not and will not to
the best of its knowledge:






	 	(i)	 	conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under any indenture, mortgage or other agreement or
instrument to which the Payee is a party or by which it or any of its assets is
bound;






	 	(ii)	 	infringe any existing applicable law, rule, regulation, judgment,
order or decree of any government, governmental body or court, domestic or
foreign, having jurisdiction over the Payee or any of its assets; or






	 	(iii)	 	except as expressly provided in the Transaction Documents to which
it is a party, result in the creation or imposition of any security interest in
any of its assets;






	 	(f)	 	there are no pending actions, suits or proceedings against or affecting the
Payee which, if determined adversely to the Payee, could individually or in the
aggregate have an adverse effect on the condition (financial or other), prospects,
results of operations or general affairs of the Payee or would adversely affect the
ability of the Payee to perform its trusts, powers, authorities, duties, discretions
and obligations under the Transaction Documents to which it is a party or which are
otherwise material in the context of the execution and performance of the Transaction
Documents to which it is a party and, to the best of the Payee’s knowledge, no such
actions, suits or proceedings are threatened or contemplated;






	 	(g)	 	no event has occurred which constitutes, or which with the giving of notice
and/or the lapse of time and/or a relevant determination would constitute, a
contravention of, or default under, any agreement or instrument by which it or any of
its assets is bound or affected, being a contravention or default which might:






	 	(i)	 	have a material adverse effect on the business, assets or condition of
it;






	 	(ii)	 	materially and adversely affect its ability to observe or perform its
trusts, powers, authorities, duties, discretions and obligations under any
Transaction Document to which it is a party; or






	 	(iii)	 	be material in the context of the execution and performance of the
Transaction Documents to which it is a party.






	12.	 	COVENANTS






	12.1	 	So long as any amount payable under this Agreement remains outstanding, the
Guarantor shall not create, incur, assume or permit to subsist any security upon the whole or
any part of its assets to secure: (a) any Relevant Debt; or (b) any guarantees in respect of
any Relevant Debt, in each case without the prior written consent of the Payee (such consent
not to be unreasonably withheld or delayed).






	12.2	 	The Payer and the Guarantor shall notify the Payee in writing immediately upon
becoming aware of the occurrence of any Early Termination Event.






	12.3	 	The Payer and the Guarantor shall send to the Payee at the time of their issue, and
in the case of annual audited financial statements in any event (in relation to the Guarantor)
within 180 days of the end of each financial year and (in relation to the Payer) within such
period as the same are required to be provided to shareholders under English law, one copy of
every balance sheet and profit and loss account.






	12.4	 	The Guarantor shall give to the Payee a report, signed by any officer of the
Guarantor, or, upon the request of the Payee, a certificate of its auditors, listing its
subsidiaries and those subsidiaries of the Guarantor which as at the last day of the last
financial year of the Guarantor or as at the date or throughout any period specified in such
request, as the case may be, were Material Subsidiaries. The Payee may rely on such
certificate without further enquiry of liability.






	12.5	 	The Guarantor shall ensure that the Payer remains a wholly-owned subsidiary of the
Guarantor.






	12.6	 	Each of the Payer and the Guarantor will cause all properties used or useful in the
conduct of their respective businesses to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will make all necessary repairs,
renewals, replacements, betterments and improvements thereto, which in the judgment of the
Payer or the Guarantor, as the case may be, may be necessary so that the business carried on
in connection therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Clause 12.6 shall prevent the Payer or the Guarantor from
discontinuing the operation or maintenance of any of such properties if such discontinuance
is, in the judgement of the Payer or the Guarantor, desirable in the conduct of its business.






	12.7	 	Each of the Payer and the Guarantor will pay or discharge, or cause to be paid or
discharged, before the same may become delinquent: (i) all taxes, assessments and governmental
charges levied or imposed upon it or upon its income, profits or property; (ii) all claims for
labour, materials and supplies which, if unpaid, might by law become a lien or charge upon its
property; and (iii) all stamp duty and other duties, if any, which may be imposed by the
United States or any political subdivision thereof or therein in connection with the issuance,
transfer, exchange or conversion of any securities; provided, however, that, in the case of
sub-paragraphs (i) and (ii) above, neither the Payer nor the Guarantor shall be required to
pay or discharge, or cause to be paid or discharged, any such tax, assessment, charge or claim
if: (A) the failure to do so will not, in the aggregate, have a material adverse impact on the
Payer or the Guarantor; or (B) the amount, applicability or validity is being contested in
good faith by appropriate proceedings.






	12.8	 	The Payee undertakes in favour of the Payer and the Guarantor that it shall:






	 	(a)	 	not permit the validity or effectiveness of any LC Issuance Document to which
it is a party to be impaired;






	 	(b)	 	except pursuant to the Transaction Documents, not issue, assume or guarantee
any indebtedness which is secured over, or for which the Payee grants any preferential
right or option over, the Payee’s rights and interests under the Transaction Documents
nor assign, transfer or dispose of any of such rights and interests; and






	 	(c)	 	not consolidate with or merge into any other corporation.






	12.9	 	None of the Payer, Guarantor, Payee or any of their respective affiliates or
representatives shall issue any public press release or public announcement concerning this
Agreement or the transactions contemplated hereby without obtaining the prior written approval
of the other parties hereto, such approval shall not be unreasonably withheld or delayed,
except where, disclosure is required by applicable law or by the applicable rules of any stock
exchange.






	12.10	 	The Payer, Guarantor and Payee agree that the terms of this Agreement shall not be
disclosed or otherwise made available to the public and that copies of this Agreement shall
not be publicly filed or otherwise made available to the public, except where such disclosure,
availability or filing is required by applicable Law or rules of a stock exchange and only to
the extent required by such law or stock exchange rules.






	13.	 	EARLY TERMINATION EVENTS






If any of the following events has occurred and is continuing (each an “Early Termination
Event”), the Payee may give notice to the Payer and the Guarantor notifying the Payer and
the Guarantor that the outstanding amounts due under this Agreement (together with accrued
fees, costs and expenses) are immediately due and payable and declare that full payment in
respect of each Letter of Credit and any outstanding Relevant Fees shall be provided by the
Payer immediately and whereupon such amounts shall become immediately due and payable by the
Payer:




	 	(a)	 	the Payer or the Guarantor does not pay on the due date any amount payable
pursuant to this Agreement, unless its failure to pay is caused by administrative or
technical error only and payment is made within five (5) Business Days of its due date;






	 	(b)	 	the Payer or the Guarantor defaults in the performance and observance of or
compliance with any of its other obligations under Clause 12 (Covenants) applicable to
it, and such default is incapable of remedy or, if in the reasonable determination of
the Payee such default is capable of remedy, is not remedied within twenty five (25)
calendar days following the date on which written notice specifying such default was
delivered to the Payer or the Guarantor by the Payee;






	 	(c)	 	the Guarantor pursuant to or under the meaning of the Bankruptcy Law:






	 	(i)	 	commences a voluntary case or proceeding;






	 	(ii)	 	consents to the entry of an order for relief against it in an
involuntary case or proceeding or the commencement of any case against it;






	 	(iii)	 	consents to the appointment of a Custodian of it or for any
substantial part of its property;






	 	(iv)	 	makes a general assignment for the benefit of its creditors;






	 	(v)	 	files a petition in bankruptcy or answer or consent seeking
reorganisation or relief; or






	 	(vi)	 	consents to the filing of such a petition or the appointment of or
taking possession by a Custodian.






	 	(d)	 	a court of competent jurisdiction enters an order or decree under U.S.
Bankruptcy Law:






	 	(i)	 	for relief against the Guarantor in an involuntary case or proceeding;






	 	(ii)	 	appoints a Custodian in respect of the Guarantor;






	 	(iii)	 	orders the winding up or liquidation of the Guarantor,






and the order or decree remains unstayed and in effect for 60 days.




	 	(e)	 	(i) an order is made by a competent court or a resolution is passed for the
winding-up or dissolution of the Payer, save for the purposes of amalgamation, merger,
consolidation, reorganisation or other similar arrangement on terms previously approved
in writing by the Payee; or (ii) a formal notice is given of an intention to appoint an
administrator or an application is made or petition is lodged or documents are filed
with the court or administrator in relation to the Payer;






	 	(f)	 	an event occurs which under applicable laws has (in the reasonable opinion of
the Payee) an analogous effect to any of the events referred to in paragraphs (c) to
(e) above;






	 	(g)	 	the Guarantor or any Material Subsidiary: (i) fails to make any payment by the
end of the applicable grace period, if any, after the final scheduled payment date for
such payment with respect to any indebtedness for borrowed money in an aggregate amount
in excess of US$5,000,000; or (ii) indebtedness for borrowed money of the Payer, the
Guarantor or any Material Subsidiary in an aggregate amount in excess of US$5,000,000
has been accelerated or otherwise declared due and payable, or required to be prepaid
or redeemed (other than by regularly scheduled required prepayment) prior to the
schedule maturity thereof as a result of a default with respect to such indebtedness;






	 	(h)	 	the guarantee provided by the Guarantor under this Agreement is not in full
force and effect; or






	 	(i)	 	it becomes unlawful for the Payer or the Guarantor to perform or comply with
any of its obligations under this Agreement.






	14.	 	COSTS OF PARTIES






The Payer hereby agrees to bear and pay for all of the fees, costs and expenses (including
legal fees, subject to a cap of US$ 100,000 in respect of the legal fees of the Payee and
its affiliates and representatives and of the LC Bank for the negotiation and completion of
this Agreement and the LC Issuance Documents) incurred by the Payee, the Payer, the
Guarantor and each of their respective affiliates and representatives in connection with
the negotiation and completion of this Agreement and the LC Issuance Documents, any
amendment or variation of this Agreement or the LC Issuance Documents requested by the
Payer and any enforcement of, or the preservation of, any rights of the Payee under this
Agreement.




	15.	 	CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999






A person who is not a party to this Agreement shall, unless otherwise expressly provided in
this Agreement, have no right under the Contracts (Rights of Third Parties) Act 1999 to
enforce any of its terms.




	16.	 	LIMITED RECOURSE






	16.1	 	The only assets of the Payee available to meet any claims of the Payer against the
Payee under or in respect of this Agreement will be the Payee’s assets. Any claim remaining
unsatisfied after the realisation of the Payee’s assets shall be extinguished and thereafter
it shall have no further claim against the Payee.






	16.2	 	This Agreement is a corporate obligation of each of the respective parties to it. No
party to this Agreement shall have any recourse in respect of any obligation, covenant or
agreement of any other party, expressed or implied, under this Agreement against any direct or
indirect shareholder or other economic beneficial owner or any officer, agent, employee or
director of any other party or any such shareholder or economic beneficial owner in their
capacity as such and each of the parties agrees that no personal liability shall attach to or
be incurred by any such persons of them in respect of, or of any breach of, any such
obligation, covenant or agreement.






	16.3	 	The provisions of this Clause 16 shall survive the termination of this Agreement.






	17.	 	COUNTERPARTS






This Agreement may be executed in any number of counterparts, and this has the same effect
as if the signatures on the counterparts were on a single copy of this Agreement.




	18.	 	NOTICES.






	18.1	 	Except as otherwise expressly provided herein, all notices and other communications
provided for hereunder shall be in writing (including facsimile), in English and may be given
in person, or sent by facsimile, or sent by way of letter sent by registered post, if to:






	 	(a)	 	the Payer, to Endeavour Energy UK Limited, 114 St. Martin’s Lane, London WC2N
4BE, England, Attention: Cathy Stubbs, Facsimile: 44 20 7451 2351, with a copy to
Endeavour International Corporation, 811 Main Street, Suite 2100, Houston, Texas 77002,
Attention: Cathy Stubbs, Facsimile: (713) 307-8794;






	 	(b)	 	the Guarantor, to Endeavour International Corporation, 811 Main Street, Suite
2100, Houston, Texas 77002, Attention: Cathy Stubbs, Facsimile: (713) 307-8794; and






	 	(c)	 	the Payee, to Max Participations II S.à r.l., 9, rue Basse L-4963 Clemency,
Luxembourg, Attention: Jean-Philippe Poncelet, Facsimile (352) 26 65 72-27, with a copy
to HBK Capital Management, 2101 Cedar Springs Road, Suite 700, Dallas Texas 75201,
Attention: Legal Department, Facsimile: (214) 758-1207.






	18.2	 	Any party may change its contact details by giving five (5) Business Days’ notice to
the other party.






	18.3	 	All such notices and communications shall be effective, if given in person, upon
delivery, if sent by way of fax, upon receipt of a correct transmission report, and if sent by
way of registered letter, three (3) Business Days after being deposited in the post postage
prepaid in an envelope addressed to the recipient at the address specified at Clause 18.1.






	19.	 	GOVERNING LAW AND JURISDICTION






	19.1	 	This Agreement and any non-contractual obligations arising out of or in relation to
this Agreement are governed by English law.






	19.2	 	The courts of England have exclusive jurisdiction to settle any dispute arising out
of or in connection with this Agreement (including a dispute relating to the existence,
validity or termination of this Agreement) (a “Dispute”).






	19.3	 	The parties to this Agreement agree that the courts of England are the most
appropriate and convenient courts to settle Disputes and accordingly no party will argue to
the contrary.






	19.4	 	Without prejudice to any other mode of service allowed under any relevant law, the
Guarantor irrevocably appoints the Payer and the Payee irrevocably appoints HBK Europe
Management LLP of 103-105 Jermyn Street, London SW1Y 6EE in each case as its agent for service
of process in relation to any proceedings before the English courts in connection with this
Agreement; and (ii) agrees that failure by any process agent to notify it of the process will
not invalidate the proceedings concerned.





{Remainder of this Page Intentionally Left Blank}




IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as a
deed on the date first written above.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	SIGNED AND DELIVERED AS A DEED
	 	 	)	 	 	 	 	 	 	 	 	 
	for and on behalf of
	 	 	)	 	 	 	 	 	 	 	 	 
	ENDEAVOUR ENERGY UK LIMITED
	 	 	)	 	 	 	 	 	 	 	 	 
	as the Payer
	 	 	)	 	 	 	 	 	 	 	 	 
	acting by /s/ Cathy Stubbs
	 	 	 	 	 	 	)	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	)	 
	 
	 	 	 	 	 	 	 	 	 	 	)	 
	In the presence of:
	 	 	 	 	 	 	 	 	 	 	 	 
	Signature of witness:
	 	 	 	 	 	 	 	 	 	 	 	 
	/s/ Praveen Martis
....................................................
Name of witness
(in BLOCK CAPITALS)
	 	 	 	 	 	 	 	 	 	 	 	 
	PRAVEEN MARTIS
....................................................
	 	 	 	 	 	 	 	 	 	 	 	 
	Address of witness:
	 	 	 	 	 	 	 	 	 	 	 	 
	Endeavour Energy
Brettenham House, South Entrance
....................................................
4th Floor, Lancaster Place
London, WC2E 7EN
	 	 	 	 	 	 	 	 	 	 	 	 
	SIGNED AND DELIVERED AS A DEED
	 	 	)	 	 	 	 	 	 	 	 	 
	for and on behalf of
	 	 	)	 	 	 	 	 	 	 	 	 
	MAX PARTICIPATIONS II S.À R.L.
	 	 	 	 	 	 	)	 	 	 	 	 
	as the Payee
	 	 	)	 	 	 	 	 	 	 	 	 
	acting by /s/ Jean Philippe Poncelet
	 	 	)	 	 	 	 	 	 	 	 	 
	Jean Philippe Poncelet
	 	 	 	 	 	 	 	 	 	 	 	 
	In the presence of:
	 	 	 	 	 	 	 	 	 	 	 	 
	Signature of witness:
	 	 	 	 	 	 	 	 	 	 	 	 
	/s. Philippe Vanderhoven
....................................................
Name of witness
(in BLOCK CAPITALS)
	 	 	 	 	 	 	 	 	 	 	 	 
	PHILIPPE VANDERHOVEN
....................................................
	 	 	 	 	 	 	 	 	 	 	 	 
	Address of witness:
	 	 	 	 	 	 	 	 	 	 	 	 
	9 Rue Barre
....................................................
	 	 	 	 	 	 	 	 	 	 	 	 
	L-4963 Clemency
....................................................
Luxembourg
	 	 	 	 	 	 	 	 	 	 	 	 






1




	 	 	 	 	 	 	 	 	 	 	 	 	 
	SIGNED AND DELIVERED AS A DEED
	 	 	 	 	 	 	 	 	 	 	)	 
	for and on behalf of
	 	 	 	 	 	 	 	 	 	 	)	 
	ENDEAVOUR INTERNATIONAL CORPORATION
	 	 	 	 	 	 	 	 	 	 	)	 
	as the Guarantor
	 	 	 	 	 	 	 	 	 	 	)	 
	acting by /s/ Cathy Stubbs
	 	 	 	 	 	 	)	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	)	 
	 
	 	 	 	 	 	 	 	 	 	 	)	 






In the presence of:



Signature of witness:



/s/ Praveen Martis


......................................................


Name of witness


(in BLOCK CAPITALS)



PRAVEEN MARTIS


......................................................



Address of witness:


Endeavour Energy


Brettenham House, South Entrance


......................................................


4th Floor, Lancaster Place


London, WC2E 7EN


......................................................



SCHEDULE 1




CONDITIONS PRECEDENT





	1.	 	CORPORATE DOCUMENTS





	 	 	 	 	 	 	 	 	 
	The following documents shall be delivered to the Payee:
	 	1.1	 	 	Board resolutions of each of the Payer and the Guarantor:
	 	 	 	 	 	1.1.1	 	 	approving the terms of, and the transactions contemplated by this Agreement;








	 	1.1.2	 	authorising a specified person or persons to execute each such document on its
behalf; and






	 	1.1.3	 	authorising a specified person or persons, on its behalf, to sign and/or
dispatch all other documents and notices to be signed and/or dispatched by it under or
in connection with any such document.






	1.2	 	A specimen signature of each person authorised by such board resolution referred to above.






	1.3	 	A copy of the constitutional documents of each of the Payer and the Guarantor.






	1.4	 	A certificate of an authorised signatory of each of the Payer and the Guarantor certifying on
behalf of the relevant company that:






	 	1.4.1	 	each copy document referred to in paragraphs 1.1, 1.2 and 1.3 for that company
above is correct, complete and in full force and effect at a date no earlier than the
date of this Agreement;






	 	1.4.2	 	no Early Termination Event has occurred or is continuing; and






	 	1.4.3	 	the representations and warranties contained in Clause 11.1 (Representations
and warranties) are true in all material respects.






	1.5	 	A certificate of good standing under the laws of the State of Nevada in respect of the
Guarantor.






	2.	 	TRANSACTION DOCUMENTS





Copies of the following documents duly executed by all parties thereto and in full force and effect
shall be delivered to the Payee:




	2.1	 	this Agreement;






	2.2	 	the LC Issuance Agreement in the form agreed between the parties thereto and the Guarantor;
and






	2.3	 	a warrant agreement executed by the Guarantor, together with the warrants duly issued
thereunder.






	3.	 	LEGAL OPINIONS





The following documents shall be delivered to the Payee:




	3.1	 	Legal opinion of Woodburn & Wedge, Nevada legal counsel to the Guarantor, as to the capacity
and due authorisation of the Guarantor to enter into this Agreement.






	3.2	 	Legal opinion of Vinson & Elkins RLLP, English counsel to the Payer, as to the capacity and
due authorisation of the Payer to enter into this Agreement and the enforceability of this
Agreement under English law.





SCHEDULE 2




FORM OF EACH LETTER OF CREDIT

PART A – FORM OF LETTER OF CREDIT 1




To: Hess Limited (the “Beneficiary”) Date:



Dear Sirs,



Irrevocable Standby Letter of Credit no. [ ]



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



1. DEFINITIONS



In this Letter of Credit:




“Business Day” means a day (other than a Saturday or a Sunday) on which banks are open for
general business in [        ].



“Demand” means a demand for a payment under this Letter of Credit.



“Expiry Date” means [        ].



“Total L/C Amount” means £2,100,000.



2. ISSUING BANK’S AGREEMENT




	2.1	 	The Beneficiary may request a drawing or drawings under this Letter of Credit by giving to
the Issuing Bank a duly completed Demand. A Demand may not be given after the Expiry Date.






	2.2	 	A Demand must be received at the latest by the Issuing Bank by 5.00 p.m. ([        ] time) on
any Business Day falling on or before the Expiry Date.






	2.3	 	Subject to the terms of this Letter of Credit, the Issuing Bank unconditionally and
irrevocably undertakes to the Beneficiary that, within five Business Days of receipt by it of
a Demand validly presented under this Letter of Credit, it must pay to the Beneficiary the
amount of the Demand. Demand(s) in excess of the Total L/C Amount are acceptable, provided
that the Issuing Bank shall not be obliged to make a payment(s) hereunder exceeding in
aggregate the Total L/C Amount.





3. EXPIRY




	3.1	 	On 5.00 p.m. ([        ] time) on the Expiry Date the obligations of the Issuing Bank under
this Letter of Credit will cease with no further liability on the part of the Issuing Bank
except for any Demand validly presented under the Letter of Credit that remains unpaid.






	3.2	 	The Issuing Bank will be released from its obligations under this Letter of Credit on the
date prior to the Expiry Date (if any) notified by the Beneficiary to the Issuing Bank as the
date upon which the obligations of the Issuing Bank under this Letter of Credit are released.






	3.3	 	The Issuing Bank may at any time without being required to do so, pay to the Beneficiary the
Total L/C Amount less any amount it may have already paid under this Letter of Credit and
thereupon the Issuing Bank’s obligations under this Letter of Credit will immediately cease
with no further liability on the part of the Issuing Bank.






	3.4	 	When the Issuing Bank is no longer under any obligation under this Letter of Credit, the
Beneficiary must return the original of this Letter of Credit to the Issuing Bank.





4. PAYMENTS




	4.1	 	All payments under this Letter of Credit must be made in GBP and for value on the due date to
the account nominated by the Beneficiary in the Demand.






	4.2	 	All issuing banking charges and commissions are for the account of the applicant. All other
charges are for Beneficiary’s account.





5. DELIVERY OF DEMAND



Each Demand must be delivered to our offices at:



[        ]



6. ASSIGNMENT



The Beneficiary’s rights under this Letter of Credit may not be assigned or transferred.



7. ISP




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



8. GOVERNING LAW



This Letter of Credit is governed by and shall be construed in accordance with English law.



9. JURISDICTION




The English courts have exclusive jurisdiction to settle any dispute in connection with this
Letter of Credit.



Yours faithfully



.........................................



For and on behalf of



[        ]



PART B – FORM OF LETTER OF CREDIT 2




To: Hess Limited (the “Beneficiary”) Date:



Dear Sirs,



Irrevocable Standby Letter of Credit no. [ ]



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



1. DEFINITIONS



In this Letter of Credit:




“Business Day” means a day (other than a Saturday or a Sunday) on which banks are open for
general business in [        ].



“Demand” means a demand for a payment under this Letter of Credit.



“Expiry Date” means [        ].



“Total L/C Amount” means £6,600,000.



2. ISSUING BANK’S AGREEMENT




	2.1	 	The Beneficiary may request a drawing or drawings under this Letter of Credit by giving to
the Issuing Bank a duly completed Demand. A Demand may not be given after the Expiry Date.






	2.2	 	A Demand must be received at the latest by the Issuing Bank by 5.00 p.m. [        ] on any
Business Day falling on or before the Expiry Date.






	2.3	 	Subject to the terms of this Letter of Credit, the Issuing Bank unconditionally and
irrevocably undertakes to the Beneficiary that, within five Business Days of receipt by it of
a Demand validly presented under this Letter of Credit, it must pay to the Beneficiary the
amount of the Demand. Demand(s) in excess of the Total L/C Amount are acceptable, provided
that the Issuing Bank shall not be obliged to make a payment(s) hereunder exceeding in
aggregate the Total L/C Amount.





3. EXPIRY




	3.1	 	On 5.00 p.m. ([        ]) on the Expiry Date the obligations of the Issuing Bank under this
Letter of Credit will cease with no further liability on the part of the Issuing Bank except
for any Demand validly presented under the Letter of Credit that remains unpaid.






	3.2	 	The Issuing Bank will be released from its obligations under this Letter of Credit on the
date prior to the Expiry Date (if any) notified by the Beneficiary to the Issuing Bank as the
date upon which the obligations of the Issuing Bank under this Letter of Credit are released.






	3.3	 	The Issuing Bank may at any time without being required to do so, pay to the Beneficiary the
Total L/C Amount less any amount it may have already paid under this Letter of Credit and
thereupon the Issuing Bank’s obligations under this Letter of Credit will immediately cease
with no further liability on the part of the Issuing Bank.






	3.4	 	When the Issuing Bank is no longer under any obligation under this Letter of Credit, the
Beneficiary must return the original of this Letter of Credit to the Issuing Bank.





4. PAYMENTS




	4.1	 	All payments under this Letter of Credit must be made in GBP and for value on the due date to
the account nominated by the Beneficiary in the Demand.






	4.2	 	All issuing banking charges and commissions are for the account of the applicant. All other
charges are for Beneficiary’s account.





5. DELIVERY OF DEMAND



Each Demand must be delivered to our offices at:



[        ]



6. ASSIGNMENT



The Beneficiary’s rights under this Letter of Credit may not be assigned or transferred.



7. ISP




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



8. GOVERNING LAW



This Letter of Credit is governed by and shall be construed in accordance with English law.



9. JURISDICTION




The English courts have exclusive jurisdiction to settle any dispute in connection with this
Letter of Credit.



Yours faithfully



.........................................



For and on behalf of



[        ]



PART C – LETTER OF CREDIT 3




To: Hess Limited (the “Beneficiary”) Date:



Dear Sirs,



Irrevocable Standby Letter of Credit no. [ ]



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



1. DEFINITIONS



In this Letter of Credit:




“Business Day” means a day (other than a Saturday or a Sunday) on which banks are open for
general business in [        ].



“Demand” means a demand for a payment under this Letter of Credit.



“Expiry Date” means [        ].



“Total L/C Amount” means £11,900,000.



2. ISSUING BANK’S AGREEMENT




	2.1	 	The Beneficiary may request a drawing or drawings under this Letter of Credit by giving to
the Issuing Bank a duly completed Demand. A Demand may not be given after the Expiry Date.






	2.2	 	A Demand must be received at the latest by the Issuing Bank by 5.00 p.m. ([        ]) on any
Business Day falling on or before the Expiry Date.






	2.3	 	Subject to the terms of this Letter of Credit, the Issuing Bank unconditionally and
irrevocably undertakes to the Beneficiary that, within five Business Days of receipt by it of
a Demand validly presented under this Letter of Credit, it must pay to the Beneficiary the
amount of the Demand. Demand(s) in excess of the Total L/C Amount are acceptable, provided
that the Issuing Bank shall not be obliged to make a payment(s) hereunder exceeding in
aggregate the Total L/C Amount.





3. EXPIRY




	3.1	 	On 5.00 p.m. ([        ]) on the Expiry Date the obligations of the Issuing Bank under this
Letter of Credit will cease with no further liability on the part of the Issuing Bank except
for any Demand validly presented under the Letter of Credit that remains unpaid.






	3.2	 	The Issuing Bank will be released from its obligations under this Letter of Credit on the
date prior to the Expiry Date (if any) notified by the Beneficiary to the Issuing Bank as the
date upon which the obligations of the Issuing Bank under this Letter of Credit are released.






	3.3	 	The Issuing Bank may at any time without being required to do so, pay to the Beneficiary the
Total L/C Amount less any amount it may have already paid under this Letter of Credit and
thereupon the Issuing Bank’s obligations under this Letter of Credit will immediately cease
with no further liability on the part of the Issuing Bank.






	3.4	 	When the Issuing Bank is no longer under any obligation under this Letter of Credit, the
Beneficiary must return the original of this Letter of Credit to the Issuing Bank.





4. PAYMENTS




	4.1	 	All payments under this Letter of Credit must be made in GBP and for value on the due date to
the account nominated by the Beneficiary in the Demand.






	4.2	 	All issuing banking charges and commissions are for the account of the applicant. All other
charges are for Beneficiary’s account.





5. DELIVERY OF DEMAND



Each Demand must be delivered to our offices at:



[        ]



6. ASSIGNMENT



The Beneficiary’s rights under this Letter of Credit may not be assigned or transferred.



7. ISP




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



8. GOVERNING LAW



This Letter of Credit is governed by and shall be construed in accordance with English law.



9. JURISDICTION




The English courts have exclusive jurisdiction to settle any dispute in connection with this
Letter of Credit.



Yours faithfully



.........................................



For and on behalf of



[        ]




2