Document:

Exhibit104

HOLLY ENERGY PARTNERS, L.P. 
LONG-TERM INCENTIVE PLAN 
NOTICE OF GRANT OF RESTRICTED UNITS 
(Employee)
Pursuant to the terms and conditions of the Holly Energy Partners, L.P. Long-Term Incentive Plan (the “Plan”), and the associated Restricted Unit Agreement which has been made separately available to you (your “Agreement”), you are hereby issued Units subject to certain restrictions thereon and under the conditions set forth in this Notice of Grant of Restricted Units (the “Notice”), in the Agreement, and in the Plan (the “Restricted Units”).  Capitalized terms used but not defined herein shall have the meanings set forth in the Plan or your Agreement.  You may obtain a copy of the Plan and a copy of the prospectus related to the Units by following the instructions attached as Appendix A.  Additionally, you may request a copy of the Plan or the prospectus by contacting Cara Whitesel at Cara.Whitesel@hollyfrontier.com or 214.871.3883.
Grantee:        ____________
Date of Grant:        ____________ (the “Date of Grant”)
Number of Units:    __________
		
	Vesting Schedule:
	The restrictions on all of the Restricted Units granted pursuant to the Agreement will expire and the Restricted Units will become transferable and non-forfeitable according to the following schedule; provided, that you remain in the employ of, or a service provider to, the Company or its Subsidiaries continuously from the Date of Grant through such vesting dates.  

	
		
	On or After Each of the Following Vesting Dates
	Cumulative Portion of Units as to Which the Restricted Units are Transferable and Nonforfeitable

	December 15, 2013
	One-third

	December 15, 2014
	One-third

	December 15, 2015
	One-third

Except as otherwise provided in Section 6 of your Agreement, all Restricted Units that have not become vested and non-forfeitable pursuant to this Notice will be null and void and forfeited to the Company in the event of your termination by the Company or its Subsidiaries for any reason.  Notwithstanding the terms of the Plan to the contrary, the restrictions on the Restricted Units will not vest upon a Change in Control absent a Special Involuntary Termination.
Vesting of the Units will be included in your income in an amount equal to the closing price of the Units on the date of vesting (or if such day is not a business day, the last preceding business 

1

day).  By accepting the Restricted Units you acknowledge and agree that (a) you are not relying upon any determination by the Company, its affiliates, Holly Energy Partners, L.P. or any of their respective employees, directors, officers, attorneys or agents (collectively, the “Company Parties”) of the Fair Market Value of the Units on the Date of Grant, (b) you are not relying upon any written or oral statement or representation of the Company Parties regarding the tax effects associated with this Notice and the Agreement and your receipt, holding and vesting of the Restricted Units, (c) in accepting the Restricted Units you are relying on your own judgment and the judgment of the professionals of your choice with whom you have consulted and (d) a copy of the Agreement and the Plan has been made available to you.  By accepting the Restricted Units you release, acquit and forever discharge the Company Parties from all actions, causes of actions, suits, debts, obligations, liabilities, claims, damages, losses, costs and expenses of any nature whatsoever, known or unknown, on account of, arising out of, or in any way related to the tax effects associated with this Notice and the Agreement and your receipt, holding and vesting of the Restricted Units.
Furthermore, you understand and acknowledge that you should consult with your tax advisor regarding the advisability of filing with the Internal Revenue Service an election under section 83(b) of the Code with respect to the Restricted Units for which the restrictions have not lapsed.  This election must be filed no later than 30 days after Date of Grant set forth in this Notice of Grant of Restricted Units.  This time period cannot be extended.  You acknowledge (a) that you have been advised to consult with a tax advisor regarding the tax consequences of the award of the Restricted Units and (b) that timely filing of a section 83(b) election is your sole responsibility, even if you request the Company or its representative to file such election on your behalf.
Holly Logistic Services, L.L.C.

    
Matthew P. Clifton, Chief Executive Officer

2

Appendix A

A-1
2EX-10.1

Exhibit 10.1

DATED 30 APRIL 2013

ENDEAVOUR ENERGY UK LIMITED

- and -

CIDOVAL S.À R.L.

DEED OF GRANT OF A PRODUCTION PAYMENT

in respect of United Kingdom Continental Shelf

Seaward Production Licence P.213 (Block 16/26a A-ALBA) (the Alba Field)

and

Seaward Production Licence P.255 (Blocks 22/6c A and 22/6s A) (the Bacchus Field)

TABLE OF CONTENTS

DEED OF GRANT

DATED 30 APRIL 2013

BETWEEN:

	(1)	 	ENDEAVOUR ENERGY UK LIMITED, a company incorporated in England and Wales (registered number
05030838) whose registered office is at 33rd Floor, CityPoint, One Ropemaker
Street, London EC2Y 9UE (the “Grantor”); and

	(2)	 	CIDOVAL 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 40, avenue Monterey, L-2163 Luxembourg, having a share capital of USD20,425 and
being registered with the Luxembourg trade and companies register under number B175673 (the
“Grantee”).

RECITALS:

The Grantor has agreed to grant to the Grantee the Production Payment with respect to the proceeds
of sale of any and all Petroleum produced from the area covered by the Subject Interests on and
subject to the following terms and conditions.

IT IS AGREED:

	1.	 	DEFINITIONS AND INTERPRETATIONS

	1.1	 	In this Agreement, save where the context otherwise requires, the following words and
expressions have the following meanings:

“Agreement” means this deed of grant of a production payment between the Parties, including
the Schedules.

“Available Production” for each Relevant Period, Petroleum produced and saved during such
Relevant Period from all wells situated on, produced from or allocated to the Subject
Interests and to which the Grantor is entitled as at the date of this Agreement or such
lesser percentage interest share as may be held by the Grantor from time to time after
deduction of Petroleum which: (i) may be used in the conduct of operations during such
Relevant Period; (ii) is produced from a well pursuant to a non-consent provision in which
the Grantor has not elected to participate; or (iii) is required to be delivered during such
Relevant Period to the Forward Sale Counterparty pursuant to the Forward Sale Agreement or
any other deliveries to persons under the forward sale, prepayment or similar arrangements
entered into by the Grantor in accordance with Clause 3.7(a).

“Blocks” means Block 16/26a A-ALBA of Licence P.213 and Blocks 22/6c A and 22/6s A of
Licence P.255.

“Business Day” means any day (other than a Saturday, Sunday or public holiday) on which
banks in the City of London, United Kingdom and in New York, New York, USA are generally
open for business.

“Contest” has the meaning specified in Clause 4.4.

“Current Market Value” means the volume weighted average price (whether fixed or floating)
per barrel actually received by the Grantor at the point of sale for its share of production
and sold from its share of Petroleum allocated to the Subject Interests for the Relevant
Period, provided that:

	 	(a)	 	the relevant contract or other agreement was negotiated and agreed to on an
open market, arm’s length basis;

	 	(b)	 	the said price actually received shall be reduced by an appropriate share of
customary marketing fees and be net of VAT or similar Tax due out of the proceeds of
such Petroleum sales; and

	 	(c)	 	the price per barrel received by the Grantor under the trade agreed on 27
February 2013 by the Grantor and Forward Sale Counterparty in an amount of twenty-two
million and five hundred thousand Dollars ($22,500,000) under the Forward Sale
Agreement and any other forward sale, pre-payment or other similar arrangements entered
into in accordance with this Agreement or under any financial hedge shall be
disregarded for the purposes of the foregoing calculation.

“DECC Measurement Guidance” means the Department for Energy & Climate Change Guidance Notes
for Petroleum Measurement in force from time to time.

“Deed of Novation and Amendment” means the deed of novation and amendment dated 28 March
2013 entered into, inter alios, between the Grantor and the Grantee relating to the SPA.

“Deficiency Amount” for a Relevant Period, means the aggregate amount of any Shortfalls
outstanding from any prior Relevant Periods plus all amounts owing pursuant to Clauses 4.1,
4.6 and 4.8(c), which shall be multiplied by ten per cent. (10%) per annum accruing on such
Deficiency Amount from the Settlement Date on which such Deficiency Amount would have been
paid had the Target Dollar Amount been reached up to the date on which such Deficiency
Amount is no longer outstanding.

“Dispute” has the meaning specified in Clause 13.2.

“Effective Date” means the date of the Sale and Purchase Agreement.

“Encumbrances” means all liens, charges (whether fixed or floating), farm-in or earn-in
rights, royalty interests, pledges, options, net profit interests, rights of pre-emption,
mortgages or other similar third party rights securing any obligation of any person or any
other type of preferential arrangement having similar effect.

“Existing Security” means the security created pursuant to: (i) a debenture dated 12 April
2012 between the Grantor and Cyan Partners, LP, and (ii) a supplemental agreement relating
to the debenture dated 31 May 2012 between the Grantor and Cyan Partners, LP.

“Forward Sale Agreement” means the crude oil forward sale agreement entered into by and
between the Grantor and the purchaser thereunder (the “Forward Sale Counterparty”) dated 29
January 2013.

“Licences” means United Kingdom Seaward Production Licence P.213, covering Block 16/26a
A-ALBA and United Kingdom Seaward Production Licence P.255, covering Blocks 22/6c A and
22/6s A.

“Maximum Percentage” means forty per cent. (40%) of Available Production for the period
through to and including the first six (6) Settlement Dates and ninety per cent. (90%) of
Available Production for the period thereafter, being the maximum percentage of Available
Production to which the Grantee shall be entitled for each Relevant Period.

“Party” or “Parties” means a party or parties to this Agreement.

“Payee” has the meaning specified in Clause 4.10.

“Payor” has the meaning specified in Clause 4.10.

“Permitted Encumbrances” means the following:

	 	(a)	 	Encumbrances arising under the Licence Interest Documents; and

	 	(b)	 	Existing Security.

“Petroleum” has the meaning ascribed to it under the Licences.

“Production Payment” has the meaning ascribed to it in Clause 2.

“Production Payment Percentage” for each Relevant Period, means a percentage of Available
Production for such Relevant Period up to the Maximum Percentage, which shall be calculated
as follows:

{(Target Dollar Amount for the Settlement Date falling immediately following

such Relevant Period + Deficiency Amount) / Current Market Value } * 100

Available Production

as may be adjusted in accordance with Clause 4.8(c).

“Production Payment Security Documents” means the documents listed in paragraphs (b) to (e)
(inclusive) of the definition of “Completion Documents” set out in the Sale and Purchase
Agreement.

“Relevant Period” means a period up to but not including a Settlement Date. For the
avoidance of doubt, the first Relevant Period shall be the period from and including the
Effective Date up to but not including the first Settlement Date, with the following
Relevant Period being from and including the first Settlement Date up to but not including
the next Settlement Date.

“Sale and Purchase Agreement” means the sale and purchase agreement between the Parties
dated 5 March 2013.

“Secretary” means the Secretary of State for Energy & Climate Change, or any other person
discharging the function of the Secretary of State in respect of the Licence.

“Settlement Date” means:

	 	(a)	 	the dates set out in Schedule 1 as “Settlement Dates”; and

	 	(b)	 	to the extent only that there exists a Deficiency Amount following the final
Settlement Date referred to in paragraph (a) above, each succeeding 31 March, 30 June,
30 September and 31 December thereafter until such time as the Deficiency Amount is
reduced to zero.

“Shortfall” means an amount, if any, by which the proceeds from the sale of Petroleum for a
Relevant Period delivered to the Grantee is less than the Target Dollar Amount for such
Relevant Period.

“Target Dollar Amount” shall:

	 	(a)	 	for each Settlement Date specified in paragraph (a) of such definition, mean
the Dollar amount set out in Schedule 1 next to the relevant Settlement Date; and

	 	(b)	 	for each Settlement Date set out in paragraph (b) of such definition, be deemed
to be zero.

“Tax Assessment” has the meaning specified in Clause 4.4.

“Termination Amount” means the amount identified as the “Termination Amount” in Schedule 1,
being the sum of all Target Dollar Amounts.

“Unpaid Amount” has the meaning specified in Clause 3.2.

“VAT” means value added tax imposed under the Value Added Tax Act 1994.

	1.2	 	Unless otherwise defined herein, capitalised terms shall have the meaning attributable to
such terms in the Sale and Purchase Agreement.

	1.3	 	All references to Clauses, Schedules and Recitals are, unless otherwise expressly stated,
references to clauses and schedules of and recitals to this Agreement.

	1.4	 	The table of contents and headings in this Agreement are inserted for convenience only and
shall not affect the meaning or construction of this Agreement.

	1.5	 	Any reference to any statute or statutory instrument in this Agreement shall be a reference
to the same as amended, supplemented or re-enacted from time to time.

	1.6	 	Unless the context otherwise requires, reference to the singular shall include the plural and
vice versa, reference to any gender shall include all genders, and references to persons shall
include natural persons, bodies corporate, unincorporated associations, partnerships,
government or state (whether or not having separate legal personality).

	1.7	 	Unless the context otherwise requires, references to documents and agreements shall be
construed as references to those documents or agreements as may have been amended,
supplemented and/or novated from time to time.

	1.8	 	In the event of any inconsistency between the main body of this Agreement and the Sale and
Purchase Agreement in respect of the subject matter hereof, this Agreement shall prevail.

	1.9	 	References in this Agreement to the words “include”, “including” and “other” shall be
construed without limitation.

	2.	 	GRANT OF PRODUCTION PAYMENT

	2.1	 	In consideration for receipt of the Purchase Price allocated to the Licences under clause 2
of the Sale and Purchase Agreement, as of and from the Effective Date the Grantor hereby
grants to the Grantee a production payment equal to the Production Payment Percentage of the
proceeds of the sale of Available Production from the Subject Interests (the “Production
Payment”), free and clear of any and all Encumbrances (except the Permitted Encumbrances) and
all costs, expenses and deductions whatsoever, including all development, production,
operational and Decommissioning Liabilities. As between the Licences, proceeds of the sale of
Available Production produced and saved from the Blocks 22/6c A and 22/6s A of Licence P.255
shall be treated as allocated to the Production Payment for any Relevant Period in priority to
the proceeds of sale of Available Production produced and saved from Block 16/26a A-ALBA of
Licence P.213.

	2.2	 	As and when the aggregate Production Payment paid by the Grantor to the Grantee in free and
clear funds equals the Termination Amount, no Deficiency Amount is outstanding and no other
amount is due and payable or will become due and payable on the last day of the current
Relevant Period under or in connection with this Agreement or the production of Petroleum
permanently ceases from the Subject Interests (whichever is the earlier), the rights and
obligations under this Agreement shall immediately cease and determine and any and all
security or credit support arrangements entered into in connection with this Agreement shall
also cease and determine.

	2.3	 	For the avoidance of doubt, the Production Payment is a non-operating, non-expense and
non-recourse bearing right and interest which does not include, is not subject to, and does
not carry with it, any obligations, liabilities or burdens in relation to the Licences or the
Blocks other than as expressly set out in this Agreement and the Sale and Purchase Agreement.

	2.4	 	The Grantee shall look solely to the proceeds from the sale of Available Production
attributable to the Production Payment Percentage under this Agreement for satisfaction and
discharge of all amounts due pursuant to such Production Payment, and the Grantor shall not be
personally liable for the payment and discharge thereof.

	2.5	 	Nothing in Clause 2.4 above, shall:

	 	(a)	 	relieve the Grantor of its liability to account to the Grantee for the
Production Payment Percentage of the proceeds of sale of Available Production which the
Grantor received from the sale of such Available Production and which the Grantor fails
to deliver to the Grantee in accordance with this Agreement;

	 	(b)	 	relieve the Grantor of any obligation to respond in damages for breach of any
of the warranties, covenants or other obligations set out in this Agreement and
agreements entered into in connection herewith;

	 	(c)	 	relieve the Grantor of its liability to make direct payment to the Grantee of
any and all amounts falling due under and in accordance with Clause 3.2; and

	 	(d)	 	shall prevent the Grantee from being able to enforce its security in accordance
with the terms of the Production Payment Security Documents and to look to the proceeds
of such security for satisfaction and discharge of any and all amounts owing hereunder
and in connection herewith, subject to the principle in Clause 2.4 that the Grantee
shall look solely to the proceeds from the sale of Available Production attributable to
the Production Payment Percentage under this Agreement.

	2.6	 	The Production Payment on Petroleum produced and saved from or allocated to the Subject
Interests shall not be taken in kind by the Grantee and shall be payable only in money.

	3.	 	SALE AND PAYMENT

	3.1	 	With effect on and from the date hereof, the Grantor will be responsible for the marketing
and sale of Available Production attributable to the Production Payment at the Current Market
Value and the Grantor will disburse to the Grantee an amount equal to the sale proceeds
thereof multiplied by the Production Payment Percentage to be paid within twenty (20) days
after the end of each Relevant Period, provided that a sale has been made in such Relevant
Period, by wire transfer to such account as shall be notified in writing by the Grantee to the
Grantor.

	3.2	 	If the Grantor fails to pay any amount payable by it in accordance with Clause 3.1 above on
its due date (the “Unpaid Amount”), it shall become liable to pay forthwith an additional
amount equivalent to 2% (two per cent.) per annum on such Unpaid Amount, payable quarterly in
arrears.

	3.3	 	At the time of payment, the Grantor shall provide to the Grantee a detailed statement showing
the quantity and kind of Petroleum produced from or allocated to the Blocks in the Relevant
Period, the Current Market Value, together with a calculation of the Production Payment for
such Relevant Period and any other information that the Grantee and/or the Grantor shall deem
reasonably necessary to confirm the Grantee’s entitlement.

	3.4	 	The Grantor shall ensure that all proceeds it receives from or in connection with the sale of
its share of Petroleum allocated to the Subject Interests for each Relevant Period is
deposited directly by the relevant contract counterparties into the Payment Account.

	3.5	 	If the Grantor shall wish to sell any Petroleum attributable to the Production Payment for
less than the Current Market Value, the Parties shall agree upon the fair market value at
which such Petroleum may be sold and such fair market value shall be adopted (and shall
replace the Current Market Value) for the purposes of quantifying the Production Payment
relating to such Available Production.

	3.6	 	If the Parties are unable to agree upon the fair market value or on a mechanism for
determining the same pursuant to Clause 3.4 within seven (7) days, the matter may be referred
by the Grantee to an independent expert pursuant to Clause 14, provided that in making such
determination the independent expert will have regard to the principle that the Grantee should
not be required to accept any price or mechanism if and to the extent that the application of
the same would result in the Grantee receiving a lower price for the Production Payment than
would otherwise have been the case if the same were sold on an open market, arm’s length
basis.

	3.7	 	The Parties hereby agree that the Grantor shall be entitled to enter into any forward sale,
pre-payment or other similar arrangements without the prior consent of the Grantee provided
that at any one time the aggregate Dollar value, based on the price actually payable under the
relevant transaction, of all Petroleum required to be delivered by the Grantor to
counterparties and outstanding under all such forward sale, pre-payment or other similar
arrangements (including, where applicable, under the Forward Sale Agreement) shall not be in
excess of:

	 	(a)	 	twenty-five million Dollars ($25,000,000) in aggregate in respect of the
Subject Interests; and

	 	(b)	 	twenty-five million Dollars ($25,000,000) in aggregate in respect of the other
assets of the Grantor,

at any one time other than with the prior written consent of the Grantee.

	4.	 	TAX

Tax indemnity

	4.1	 	Subject to Clause 4.2, if the Grantee suffers a UK tax liability as a result of entering into
the Sale and Purchase Agreement or the transactions contemplated by this Agreement, the
Grantor shall indemnify the Grantee for such UK tax liability (including any interest and
penalties), such indemnity to be satisfied by way of an increase in the Production Payment
Percentage so that, overall, the Grantee is in no better or worse position than it would have
been had no such UK tax liability been imposed.

	4.2	 	Clause 4.1 above shall not apply:

	 	(a)	 	to the extent the Tax liability arises as a result of:

	 	(i)	 	the Grantee being resident for tax purposes in the UK; or

	 	(ii)	 	the Grantee having a permanent establishment in the UK (other
than a permanent establishment which arises solely as a result of the
transactions contemplated by this Agreement); or

	 	(iii)	 	the Grantee becoming resident for tax purposes in any
jurisdiction other than Luxembourg other than as a result of the capitalisation
or capital structure of the Grantee or the transactions contemplated by the
Deed of Novation and Amendment.; or

	 	(b)	 	to the extent the tax liability would not have arisen had the Grantee complied
with its obligations under Clause 4.11 or Clause 4.12.

	4.3	 	Any increase in the Production Payment Percentage pursuant to Clause 4.1 shall be satisfied
on the Settlement Date immediately following the date on which the tax in question becomes
recoverable by HMRC.

	4.4	 	In the event the Grantor is required to indemnify the Grantee pursuant to Clause 4.1, the
Grantee shall take such action, at the sole cost and expense of the Grantor, as the Grantor
may reasonably request to avoid, dispute, resist, appeal, compromise or defend any assessment
(a “Contest”) of the Grantee to tax by HMRC (the “Tax Assessment”). The Grantor shall have
the right to control any proceedings taken in connection with the Tax Assessment and agrees to
pay directly to the taxing authority any required payments of tax, interest and penalties that
are required to be paid in connection with, or as a precondition to, such Contest. The Grantee
shall provide the Grantor with copies of all correspondence and documentation relating to the
Tax Assessment and such other information, assistance and access to records and personnel as
it reasonably requires. The Grantee shall procure that no tax claim, action or issue in
respect of which the Grantor could be required to make a payment under this Agreement is
settled or otherwise compromised without the Grantor’s prior written consent (not to be
unreasonably withheld).

	4.5	 	Notwithstanding the foregoing, the Grantee shall not be required to Contest or continue any
Contest of a Tax Assessment if:

	 	(a)	 	the Grantee considers (acting reasonably) that it will not be properly
reimbursed for costs and expenses already incurred in connection with the Contest of
such Tax Assessment;

	 	(b)	 	the Grantor has not furnished the Grantee with written advice from a law firm
practicing in relation to English law in form and substance reasonably satisfactory to
the Grantee to the effect that there is a reasonable basis for the Contest; or

	 	(c)	 	the Grantee considers, in its reasonable discretion, such Contest might
materially prejudice it or any Cyan affiliated entity.

	4.6	 	The Grantor shall indemnify the Grantee for its reasonable costs and expenses properly
incurred in connection with any such action or proceedings as are referred to in Clause 4.4,
such indemnity to be satisfied by way of an increase in the Production Payment Percentage.

	 	 	 	Withholding tax and gross up

	4.7	 	All sums payable under this Agreement shall be paid free and clear of all deductions or
withholdings whatsoever, save only as provided in this Agreement or as required by law.

	4.8	 	If the Grantor becomes aware that any deduction or withholding is required by law from any
payment under this Agreement, then:

	 	(a)	 	the Grantor shall notify the Grantee of the requirement to deduct or withhold
an amount;

	 	(b)	 	the Grantor and the Grantee shall use reasonable endeavours so that payment can
be made without such a withholding or deduction;

	 	(c)	 	in the event a withholding or deduction is required, the Grantor and the
Grantee shall agree to increase the Production Payment Percentage so that, overall, the
Grantee is in no better or worse position than it would have been had no withholding or
deduction been imposed.

	4.9	 	Clause 4.8(c) shall not apply to the extent that the deduction or withholding would not have
arisen but for an assignment by the Grantee of any of its rights under this Agreement.

FATCA

	4.10	 	Any payer of an amount under this Agreement (the “Payer”), if requested by the payee of such
amount (the “Payee”), shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Payer as will enable the Payer to determine whether or not the
Payee is subject to United States backup withholding or information reporting requirements or
obligations to deduct or withhold amounts 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).

Co-operation

	4.11	 	The Parties shall co-operate in completing any procedural formalities which the Grantor
concludes is necessary in relation to obtaining relief under any applicable double taxation
treaty in relation to any payments made under this Agreement which are subject to UK taxation.

	4.12	 	If requested by the Grantor, the Grantee shall use all reasonable endeavours to satisfy and
maintain its tax residence for the purposes of any applicable double taxation treaty between
the UK and the jurisdiction of incorporation of the Grantee, provided that the Grantee shall
not be required to do so if it would cause financial loss for it or any Cyan affiliated entity
(unless the Grantor indemnifies the Grantee in respect of such loss). If the Grantee
considers that maintaining its tax residence in such manner would cause such financial loss,
the Grantee shall notify the Grantor.

VAT

	4.13	 	All sums payable under or pursuant to this Agreement are (unless expressly stated otherwise)
exclusive of any applicable VAT which shall be payable upon receipt of a valid VAT invoice.

General

	4.14	 	Unless otherwise provided, each Party shall be responsible for reporting and discharging its
own tax measured by the income, profit or gains of that Party.

Intention of the Parties

	4.15	 	It is the intention of the Parties that the Production Payment be treated as “carve-out
production payment” within the meaning of section 636(a) of the U.S. Internal Revenue Code of
1986, as amended (the “Code”) and a “contingent payment debt instrument” that is subject to
the “noncontingent bond method” within the meaning of Treasury Regulation Section 1.1275-4(b)
(the “CPDI Regulation”).

Reporting

	4.16	 	The “issue price”, “comparable” and “projected yield”, each as defined in the CPDI
Regulation, are set forth on Schedule 2 to this Agreement.

	4.17	 	Subject to Clause 2.4, the indemnities contained in this Agreement shall survive in full
force for a period of six years after the termination hereof in accordance with Clause 2.2.

	5.	 	MAINTENANCE OF THE LICENCES AND CONDUCT OF OPERATIONS

	5.1	 	The Grantor shall comply with all the covenants and conditions contained in the Licences and
the JOAs and shall not exercise any right to surrender, determine, wholly relinquish,
terminate or abandon the Subject Interests or sell, transfer or otherwise dispose of the whole
or any portion of the Subject Interests other than with the prior consent of the Grantee (such
consent not to be unreasonably withheld or delayed).

	5.2	 	The Grantor shall take all reasonable and practical steps to enforce its rights and pursue
any and all claims and remedies under the JOAs and in respect of the Licences and shall
exercise its material discretions under the JOAs, all as a non-operator consistent with good
United Kingdom North Sea oil field practice.

	5.3	 	To the extent that the Grantor is entitled to influence the operations carried out in the
Blocks under the JOAs, the Grantor shall carry on (and shall cause the relevant operator under
the JOAs to carry on) all operations in the Blocks diligently and in a good and workmanlike
manner consistent with good United Kingdom North Sea oil field practice. However, the nature
and extent of such operations shall be determined by the Grantor at its sole discretion.

	6.	 	RIGHT TO AUDIT

	6.1	 	The Grantee shall have the right for a period of twelve (12) months after the end of each
calendar year, during reasonable working hours, to audit those books and records maintained by
the Grantor insofar as they relate to any matter or item required to determine the accuracy of
any statements or payments made with respect to the Production Payment during the preceding
calendar year. Such audit shall be at the sole expense of the Grantee who shall give no less
than thirty (30) days’ notice to the Grantor of its intention to conduct such an audit.

	6.2	 	At the conclusion of the audit, the Parties shall use all reasonable endeavours to settle all
or any issues arising from the audit within ninety (90) days after the conclusion of each
audit.

	6.3	 	The Parties shall have the right, on written notice given to the other Party, to refer for
expert determination pursuant to Clause 14 any matters which cannot be resolved within such
ninety (90) day period.

	6.4	 	The Grantor shall, subject to all obligations of confidentiality to which is bound, including
under the Licences and the JOAs, provide copies of the following to the Grantee as soon as
reasonably practicable:

	 	(a)	 	estimates of Available Production in the forthcoming month and expected
prevailing market prices during said month;

	 	(b)	 	material notices received from (i) the Secretary in relation to the Licences
and (ii) the operator and any other participant under the JOAs; and

	 	(c)	 	all information relating to any event or proceeding which is expected to (i)
have a material adverse effect on the Subject Interests or (ii) cause a cessation in
Available Production.

	7.	 	MEASUREMENT METHODS

	7.1	 	Subject to Clause 7.2, for the proper measurement of all Petroleum produced and saved from
the Blocks, the Grantor shall use methods consistent with good oilfield practice as set out in
the DECC Measurement Guidance.

	7.2	 	The Grantor may use alternative techniques to those identified in the DECC Measurement
Guidance provided that they can be shown to give a similar or greater level of accuracy and
reliability and provided that the proposed method of measurement is acceptable to the
Department for Energy & Climate Change.

	8.	 	UNITISATION

The Grantee acknowledges that the Grantor may, at any time and from time to time, unitise
either or both Blocks with any other blocks, if such unitisation becomes necessary or
desirable at the sole discretion of the Grantor. The basis and manner of such unitisation,
the manner of allocating unitised production among the several tracts of unitised lands, and
the contents of any such unitisation agreement shall be in the sole discretion and
determination of the Grantor, exercised reasonably and in good faith and, when so
determined, shall be binding upon the Grantee. Upon any such unitisation, the Production
Payment shall be paid on the basis of the Grantor’s share of production allocated to the
Block(s) under the plan of unitisation and not upon the basis of actual production from the
Block(s). A copy of the unitisation agreement affecting the Block(s) shall be promptly
provided to the Grantee.

	9.	 	DEVELOPMENT

Save for the obligations of the Grantor expressly set out in Clauses 5.2 and 5.3, the
Grantor shall be under no obligation to the Grantee to develop the Blocks or any part
thereof or to produce Petroleum which may be within, upon or under the Blocks.

	10.	 	CONFIDENTIALITY

The provisions of clause 9 of the Sale and Purchase Agreement shall be incorporated into
this Agreement mutatis mutandis.

	11.	 	NOTICES

The provisions of clause 12 of the Sale and Purchase Agreement shall be incorporated into
this Agreement mutatis mutandis.

	12.	 	ASSIGNMENT

	12.1	 	Subject to Clause 12.1, neither Party may assign, or grant any Encumbrance (other than any
Encumbrances granted by the Grantee to its investors) over or deal in any way with any of its
rights under this Agreement, without the prior written consent of the other Party (such
consent not to unreasonably withheld or delayed).

	12.2	 	In the event that the Grantor sells, transfers or otherwise disposes of the whole or any part
of the Subject Interests and such sale, transfer or disposal has been consented to by the
Grantee pursuant to Clause 5.1, the Parties shall in good faith and using all reasonable
endeavours agree upon a corresponding proportion of the rights, liabilities and obligations
under this Agreement which shall be transferred to and assumed by the purchaser. The Buyer
shall, without warranty or representation and at the expense of the Seller, execute (i) such
documents and agreements as may be required to novate the released obligations to the
purchaser of the Subject Interests (or part thereof) and (ii) any and all necessary documents
required to unconditionally release the Seller and each of its Affiliates from any security or
credit support obligations granted in connection with such released obligations, so that the
Seller can transfer the Subject Interests (or part thereof) to the purchaser free and clear of
all Encumbrances.

	13.	 	GOVERNING LAW AND JURISDICTION

	13.1	 	This Agreement and any non-contractual obligations arising out of or in connection with it
are governed by English law.

	13.2	 	Subject to Clause 14, the courts of England have exclusive jurisdiction to settle any dispute
arising out of or in connection with this Agreement (including a dispute relating to the
existence, validity or termination of this Agreement or any non-contractual obligation arising
out of or in connection with this Agreement) (a “Dispute”) and the Parties agree that the
courts of England are the most appropriate and convenient forum to settle Disputes and
accordingly no Party will argue to the contrary.

	14.	 	EXPERT DETERMINATION

	14.1	 	In the event of a request for expert determination pursuant to either Clause 3.6 or Clause
6.3, each matter of dispute shall be finally resolved and determined by a mutually acceptable
partner in the London office of a leading international firm of chartered accountants, which
individual shall have not less than ten (10) years of experience in the United Kingdom North
Sea oil and gas industry. If the Parties are unable to agree such appointment within a period
of thirty (30) days after the date of any referral by the relevant Party, then either Party
may request in writing such appointment be made by the President for the time being of the
Institute of Chartered Accountants for England and Wales.

	14.2	 	Any such independent chartered account appointed hereunder shall act as an expert and not as
an arbitrator. The Parties shall cooperate fully with any such independent chartered
accountant and for this purpose shall make available to such independent chartered accountant
all such books, records and statements of account as he or she may reasonably require in order
to reach a determination hereunder. The decision of the independent chartered accountant
shall be given in writing within sixty (60) days after the date of his or her appointment and,
in the absence of fraud, mistake of fact or law or other manifest error, will be final and
binding on the Parties. The costs of the independent chartered accountant shall be borne by
the Parties in such proportion as the independent chartered accountant shall determine and in
the absence of such determination shall be borne equally.

	15.	 	GENERAL

	15.1	 	The Parties shall, from time to time and at all times, do all such further acts and execute
and deliver all such further deeds and documents as shall be reasonably required by the other
Party in order to fully perform and carry out the terms of this Agreement.

	15.2	 	This Agreement shall inure to the benefit of and be binding upon the Parties and their
successors and permitted assigns.

	15.3	 	No supplement to or modification of any provision of this Agreement shall be binding unless
executed in writing by each Party.

	15.4	 	No waiver by either Party of any breach of a provision of this Agreement shall be binding
unless made expressly in writing. Any such waiver shall relate only to the breach to which it
expressly relates and shall not apply to any subsequent or other breach.

	15.5	 	This Agreement, the Sale and Purchase Agreement and the Completion Documents replace and
supersede any and all previous agreements, whether written or oral, between the Parties with
respect to the Subject Interests insofar as such agreements pertain to the payment to the
Grantee by the Grantor of the Production Payment.

	15.6	 	Nothing in this Agreement shall be construed as creating a partnership, association or trust
of any kind or as imposing any partnership duty, liability or obligation.

	15.7	 	If any provision of this Agreement (or part of a provision) is found by any court or
administrative body of competent jurisdiction to be invalid, unenforceable or illegal, the
other provisions shall remain in force. If any invalid, unenforceable or illegal provision
would be valid, enforceable or legal if some part of it were deleted, the provision shall
apply with whatever modification is necessary to give effect to the commercial intention of
the Parties.

	15.8	 	The operation of the Contracts (Rights of Third Parties) Act 1999 is hereby excluded and no
term of this Agreement is intended to be enforceable by any person who is not a party to this
Agreement, notwithstanding that any such term of this Agreement may purport to confer, or may
be construed as conferring any benefit on such person and irrespective of whether such person
is identified in this Agreement.

	15.9	 	This Agreement may be executed in any number of counterparts, each of which is an original
and which together have the same effect as if each Party had signed the same document,
provided, however, that none of the counterparts will be effective until both Parties have
executed a counterpart hereof.

	15.10	 	The Grantor shall, on demand, pay to the Grantee the amount of all costs and expenses
(including legal fees) incurred by the Grantee in connection with the enforcement of or
preservation of any rights under this Agreement.

AS WITNESS WHEREOF this Agreement has been executed and delivered as a deed by the Parties
on the day and year first above written.

	 	 	 
	EXECUTED and DELIVERED

as a Deed for and on behalf of:

	 	.../s/ Catherine Stubbs............. (signature)

	ENDEAVOUR ENERGY UK LIMITED

acting by Catherine Stubbs, a

director of ENDEAVOUR ENERGY UK

LIMITED

	 	

	In the presence of:

	 	

	/s/ Rosalie T. VanderMolen

Signature of Witness

Rosalie T. VanderMolen

Name of Witness

811 Main St., Suite 2100, Houston,

TX 77002

Address of Witness

Certified Public Accountant

Occupation of Witness

	 	

	EXECUTED and DELIVERED

as a deed by:

	 	.../s/ Onno Bouwmeister....... (signature)

	CIDOVAL S.À R.L. in accordance with

the laws of the jurisdiction of its

incorporation, in the presence of:

	 	

/s/ Peter Van Opstal

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

Signature of Witness

Peter VAN OPSTAL

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

Name of Witness

40avenue Monteray

L-3163 Luxembourg

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

Address of Witness

Manager

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

Occupation of Witness

1

Schedule 1

	 	 	 	 	 
	Settlement Date	 	Target Dollar Amount ($)
	30-Jun-13

	 	 	6,103,611.11	 
	 

	 	 	 	 
	30-Sep-13

	 	 	6,238,981.48	 
	 

	 	 	 	 
	31-Dec-13

	 	 	6,147,407.41	 
	 

	 	 	 	 
	31-Mar-14

	 	 	6,002,083.33	 
	 

	 	 	 	 
	30-Jun-14

	 	 	5,938,379.63	 
	 

	 	 	 	 
	30-Sep-14

	 	 	5,872,685.19	 
	 

	 	 	 	 
	31-Dec-14

	 	 	45,197,777.78	 
	 

	 	 	 	 
	31-Mar-15

	 	 	44,075,000.00	 
	 

	 	 	 	 
	
 
	 	Termination Amount: $125,575,925.93

	
 
	 	 	 	 

The Target Dollar Amounts and the Termination Amount will need to be amended by the Parties upon
the operation of clause 5.3(b) of the Sale and Purchase Agreement and reduced by the Reduced
Proportion (as defined in the Sale and Purchase Agreement).

2

Schedule 2

	 	 	 	 	 	 	 	 	 	 	 
	DRAFT AGREED 4/30/2013
	In accordance with Section 4.15 of this Agreement, the parties to the
	Agreement intend for the Production Payment to be treated as a “contingent
	payment debt instrument” within the meaning of United States Treasury
	Regulations Section 1.1275-4 for U.S. federal income tax purposes.
	The debt instrument reflected by the Production Payment will be issued with
	“original issue discount.” The issue price is $106,425,000, total amount of
	original issue discount is $19,150,926, the issue date is April 30, 2013, and
	the comparable yield on the issue date is 11.77590%, compounded quarterly.
	 	 	Projected Payment Schedule
	 	 	 	 
	 	 	Date of Projected

Payment

	 	

Noncontingent Payment
	 	

Contingent Payment

	 	 	 

	 	 	 	 	 	 	 	 
	 	 	04/30/13

	 	 	 	 	 	$	(106,425,000.00	)
	 	 	06/30/13

	 	$	0.00	 	 	 	6,103,611.11	 
	 	 	09/30/13

	 	$	0.00	 	 	 	6,238,981.48	 
	 	 	12/31/13

	 	$	0.00	 	 	 	6,147,407.41	 
	 	 	03/31/14

	 	$	0.00	 	 	 	6,002,083.33	 
	 	 	06/30/14

	 	$	0.00	 	 	 	5,938,379.63	 
	 	 	09/30/14

	 	$	0.00	 	 	 	5,872,685.19	 
	 	 	12/31/14

	 	$	0.00	 	 	 	45,197,777.78	 
	 	 	03/31/15

	 	$	0.00	 	 	 	44,075,000.00	 
	 	 	
 
	 	 	 	 	 	$	125,575,926	 

3

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