Exhibit
2.1
AMENDMENT NO. 1 TO
ASSET SALE AND PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO ASSET SALE AND PURCHASE AGREEMENT
(this “
Amendment
”) is made
and entered into as of this 1st day of December, 2009 by and between
HOLLY REFINING &
MARKETING-TULSA LLC
, a limited liability company organized and existing under the laws of Delaware
(“
Holly Tulsa
” or a “
Buyer
”),
HEP TULSA LLC
, a limited liability company organized
and existing under the laws of Delaware (“
HEP Tulsa
,” or a “
Buyer
” and together
with Holly Tulsa, the “
Buyers
”), and
SINCLAIR TULSA REFINING COMPANY
, a corporation
organized and existing under the laws of the State of Wyoming (the “
Seller
”). Seller and
the Buyers are referred to individually as a “
Party
” and collectively as the
“
Parties
.”
WHEREAS
, the Parties entered into that certain Asset Sale and Purchase Agreement, dated as of
October 19, 2009 (as amended hereby, the “
Agreement
”), and now desire to amend certain
provisions of such Agreement prior to the Closing, as set forth herein. Capitalized terms used,
but not defined, herein shall have the meanings given to them in the Agreement.
NOW
,
THEREFORE
, in consideration of the foregoing recitals and the agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:
1.
Key Material Contracts; Excluded Contracts
. The Parties agree that the contract
referenced as item #53 (the Axens contract) on
Exhibit A
to
Schedule 2.1.7
of the
Disclosure Schedules to the Agreement is hereby removed from the definition of Key Material
Contracts set forth in Section 1.1 of the Agreement, and is removed from Exhibit A to Schedule
2.1.7 of the Disclosure Schedules and shall be an “Excluded Contract” pursuant to the Agreement and
shall be deemed to be included on
Schedule 2.2.10
of the Disclosure Schedules to the
Agreement. The Parties also agree that the contract referenced as item #51 (Albemarle contract) on
Exhibit A
to
Schedule 2.1.7
of the Disclosure Schedules to the Agreement is hereby
removed from such Exhibit and Schedule.
2.
Closing Credit
. The Parties agree that Holly Tulsa shall receive a credit at
Closing of Sixty-Eight Thousand One Hundred Fifty-Four Dollars and Five Cents ($68,154.05), to
address certain pre-Closing matters, to be applied toward the cash amounts payable by Holly Tulsa
to Seller at the Closing pursuant to Section 2.6.1.2(1), as such amounts have been agreed upon by
the Parties and set forth in a certain spreadsheet distributed between them addressing such matter.
3.
Hydrocarbon Inventory Valuation and Measurement
. The Parties agree that the
Hydrocarbon Inventory measurement and valuation procedures to be used in connection with
Sections 2.6.3.2
and
2.6.3.3
of the Agreement shall be as set forth on the attached
Annex A
, comprised of “Part I. Hydrocarbon Inventory Quantification Procedures” and “Part
II. Hydrocarbon Inventory Valuation Methodology.” Such Part II document replaces the
methodology set forth as
Exhibit A
to
Schedule 2.6.3.2
of the Disclosure Schedules
to the Agreement.
4.
Section 6.3.2
. The Parties agree that the words “21 days” set forth in the second
sentence of
Section 6.3.2
shall be deleted and replaced with “15 days,” so that such second
sentence of
Section 6.3.2
now reads in its entirety as follows: “At least 15 days prior to
the Closing Date (but in no event sooner than November 1, 2009), each of the Buyers shall make
offers of employment, effective as of the Closing Date and contingent upon the occurrence of the
Closing, to those Current Employees to whom such Buyer has elected to extend an offer;
provided
,
however
, that for purposes of clarity, it is hereby noted that offers of employment shall not be
made to the employees listed on the Excluded Employee List.”
5.
Section 6.3.2 of the Agreement
. The Parties have agreed that the bracketed clause
below shall be added to
Section 6.3.2
of the Agreement, such that the second-to-last
sentence of such Section shall now read as follows (without the brackets):
“Any Selected Employee who accepts a Buyer’s offer of employment and who on the Closing Date
is on a leave of absence or short-term disability leave consistent with Seller’s or an
Affiliate of Seller’s established policies and practices that was authorized by Seller or an
Affiliate of Seller prior to the Closing Date, including any FMLA leave or military leave,
and returns to work at the end of such authorized leave, [which shall not be longer than six
(6) months after the Closing Date, unless applicable Law gives the Current Employee a longer
period for returning to work,] shall become employed by the applicable Buyer as of the date
of his or her return to work with such date being deemed the Employment Date for such
employee;
provided
that any such Selected Employee shall be required to comply with the
applicable Buyer’s return-to-work policies and practices, including, but not limited to, any
requirement that the employee establish he or she is able to perform the essential functions
of the position, with or without reasonable accommodation.”
6.
Section 7.1.7 of the Agreement
. The Parties acknowledge and agree that all of the
consents and authorizations from Governmental Authorities specified in
Schedule 7.1.7
of
the Disclosure Schedules to the Agreement are intended to be and shall be “required for
consummation of the transactions contemplated by [the] Agreement,” and as such are part of Buyers’
conditions to Closing pursuant to
Section 7.1
of the Agreement.
7.
Union Pacific Property
. Seller agrees to execute and deliver to Holly Tulsa at
Closing a quit-claim deed conveying to Holly Tulsa any and all right, title or interest of Seller
in and to that certain real property purportedly retained by Union Pacific Railroad Company, which
real property bisects the Owned Real Property and was described as the “Excepting therefrom” parcel
on Exhibit A to that certain Quitclaim Deed from Union Pacific Railroad Company to Sinclair Tulsa
Refining Company, dated April 29, 2008, and filed in the office of the Tulsa
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County Recorder on May 1, 2008 as Document No. 2008044833. The form of quit-claim deed will be
agreed upon by the parties.
8.
Exchange Agreement
. The Parties agree that all of the finished gasoline and diesel
fuel located at the Tulsa Refinery which are within the definition of “Excluded Hydrocarbon
Inventory” shall be transferred to Holly Tulsa at Closing pursuant to an Exchange Agreement between
Holly Tulsa and Sinclair Oil Corporation, the form of which shall be agreed upon by the Parties.
9.
Terminalling Agreement
. The Parties have agreed that
Section 2.9.1.16
of
the Agreement shall be deleted and replaced in its entirety with the following:
2.9.1.16 terminalling agreements (collectively, the “Terminalling Agreement”) in
mutually agreed upon forms between Holly Tulsa and Seller or SOC, as applicable; and
10.
Maximo Contract
. The Parties have agreed that Seller shall continue in force, and
provide to the Buyers for ninety (90) days following the Closing Date, the services provided to
Seller (or its affiliates, as applicable) pursuant to that certain Maximo Strategic Asset and
Service Management Purchase Order (which contract is set forth as item #8 on
Schedule
2.2.10
) and to include such services provided under such contract as a Transition Service under
the Transition Services Agreement.
11.
Severance Costs
. With respect to
Section 6.3.3
of the Agreement, the
Parties agree that there are no “Severance Costs” in excess of the agreed threshold, as referenced
in clause “(b)” included within such Section, and that no amounts are due to Seller pursuant
thereto.
12.
Stipulated Value of Owned Real Property
. The Parties hereby stipulate that the
value of the Owned Real Property, for purposes of the Oklahoma state documentary stamp tax only, is
Fourteen Million Four Hundred Fifty Thousand Dollars ($14,450,000). The Parties further agree that
the foregoing stipulated value shall not be utilized in connection with any other valuation of the
Owned Real Property or the Assets, and that the stipulated value set forth above shall not be
considered, relied upon or otherwise taken into account with respect to the valuation and
allocation contemplated by
Section 2.6.2
of the Agreement (or for any other similar
purposes), it being the intent of the Parties that such valuation shall be completely independent
of the valuation of the Owned Real Property for purposes of documentary stamp tax.
13.
Sections 6.5.1 and 6.5.3
. The first word in
Section 6.5.1
of the
Agreement, “Promptly”, shall be deleted and replaced with “Within 180 days,” so that the sentence
now begins “Within 180 days after the Closing, . . .”. With respect to
Section 6.5.3
of
the Agreement, Holly Tulsa and HEP Tulsa have determined that all of the obligations referred to
therein shall be allocated to Holly Tulsa.
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14.
Section 2.9.1.3
. The word “and” immediately preceding and the semicolon at the
end of sub-section (iii) of Section 2.9.1.3 shall be deleted, and the following shall be added to
the end of Section 2.9.1.3: “; (iv) a Blanket Assignment (the “
Union Pacific Blanket
Assignment
”), substantially in the form attached hereto as
Exhibit B(4)
, pursuant to
which the Seller conveys and assigns (or causes its Affiliates to convey and assign, as applicable)
to Holly Tulsa all right, title and interest in and to the licenses and crossing agreements
identified as A-2 through and including A-18, A-20 through and including A-23, A-26, A-27, A-29
through and including A-37, A-39 and A-40 on “Exhibit A” to that certain Assignment of Licenses,
Easements, Rights of Way, Leases and Uses, dated July 29, 1983, between Texaco Inc., as Assignor,
and Sinclair Oil Corporation, as Assignee (the “
Texaco Assignment
”); (v) a Quit Claim
Assignment (the “
Quit Claim Assignment
”), substantially in the form attached hereto as
Exhibit B(5)
, pursuant to which the Seller shall quit claim and assign (or causes its
Affiliates to quit claim and assign, as applicable) to Holly Tulsa all right, title and interest in
and to the licenses, crossing agreements and lease identified as A-1, A-19, A-24, A-25, A-28 and
D-1 on
“Exhibit A” to the Texaco Assignment, as well as all items listed on the pages entitled “F. ORAL
LICENSES OR USES BY TEXACO WHICH MAY OR MAY NOT BE VALID AND ENFORCEABLE GRANTS OF EASEMENTS,
RIGHTS OF WAY, OR INTERESTS IN LAND” on “Exhibit A” of the Texaco Assignment; (vi) an Assignment
(the “Strong Capital Assignment) substantially in the form attached hereto as
Exhibit B(6)
,
pursuant to which the Seller conveys and assigns (or causes its Affiliates to convey and assign, as
applicable) to Holly Tulsa all right, title and interest in and to the license and crossing
agreement identified as A-38 on “Exhibit A” of the Texaco Assignment; (vii) an Assignment of
Recorded Easement (the “
Assignment of Recorded Easement
”), substantially in the form
attached hereto as
Exhibit B(7)
, pursuant to which the Seller shall convey and assign (or
causes its Affiliates to convey and assign, as applicable) to Holly Tulsa all right, title and
interest in and to the Easement Agreement identified as A-42 on “Exhibit A” of the Texaco
Assignment; and (vii) an Assignment of Un-Recorded Easement (the “
Assignment of Un-Recorded
Easement
”), substantially in the form attached hereto as
Exhibit B(8)
, pursuant to
which the Seller shall convey and assign (or causes its Affiliates to convey and assign, as
applicable) to Holly Tulsa all right, title and interest in and to the Easement Agreement
identified as A-41 on “Exhibit A” of the Texaco Assignment.” In connection with the foregoing
amendment, the definition of “Railroad Agreement” shall be revised to delete items A-1, A-19, A-24,
A-25 and D-1 on “Exhibit A” to the Texaco Assignment, as well as all items listed on the pages
entitled “F. ORAL LICENSES OR USES BY TEXACO WHICH MAY OR MAY NOT BE VALID AND ENFORCEABLE GRANTS
OF EASEMENTS, RIGHTS OF WAY, OR INTERESTS IN LAND on “Exhibit A” to the Texaco Assignment, which
items shall be conveyed to Buyers pursuant to the Quit Claim Assignment in accordance with the
requirements of Section 2.9.1.3.”
15.
WGS Matters
. The Parties agree that the Wet Gas Scrubber for the FCC Unit that is
included as a part of the Environmental Compliance Projects (the “
WGS
”) has certain design
deficiencies (collectively, the “
Design Deficiencies
”), primarily those related to the
failure to
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design the WGS to operate at a maximum of a two (2) pound (psi) pressure drop. The Parties
disagree as to whether the Design Deficiencies adversely affect the operation or performance of the
WGS or the FCC Unit. Notwithstanding that disagreement, the Parties have agreed to proceed with the
Closing as of December 1, 2009, based on the following provisions and subject to the other terms
and conditions of the Agreement:
A.
Escrow Account
. At the Closing, Holly Tulsa will holdback the sum of TEN MILLION
DOLLARS ($10,000,000) (the “
Escrow Amount
”) of the Holly Tulsa portion of the cash
portion of the Purchase Price payable to Seller pursuant to this Agreement at the Closing. As
soon as practical but in any event within ten (10) days after the Closing Date, the Parties will
establish an interest bearing escrow account (the “
Escrow Account
”) with a mutually
acceptable national bank (the ‘
Escrow Agent
”) that either (i) has no relationship with
any Party or (ii) waives all rights to the escrow as collateral for any loan with any of the
Parties and agrees to hold the Escrow Amount merely as a trust agent. The form of the escrow
agreement entered into in connection with the establishment of the Escrow Account shall be
reasonably acceptable to both Seller and Holly Tulsa. Concurrently with the entry into the
escrow agreement, Holly Tulsa shall deposit the Escrow Amount into the Escrow Account. The
Parties agree that no portion of the Escrow Amount will be available for use by Seller in paying
for the costs of the Corrective Work (as defined below) and that the Corrective Work will be
funded directly by Seller. Any fees and expenses charged by the Escrow Agent to establish and
maintain the Escrow Account shall be paid equally by Seller and Holly Tulsa. The Escrow Amount
is in addition to, and not in lieu of, the amounts provided for in
Section 6.7.1.3
of
the Agreement.
B.
Environmental Compliance Projects
. Notwithstanding the reference in subpart (ii) of
the definition of Final Completion in the Agreement, Holly Tulsa agrees not to assert that the
Design Deficiencies mean that Mechanical Completion or Final Completion of the Environmental
Compliance Projects has not occurred or may not occur; provided that Holly Tulsa reserves the
right to assert that Mechanical Completion or Final Completion has not occurred for any other
reason provided for in the Agreement.
C.
Corrective Work
. Seller shall retain, at Seller’s sole cost and expense, MECS, Inc.,
a professional engineering firm, (“
MECS
”) to identify the Design Deficiencies and to
design and engineer changes to the WGS that are mutually acceptable to Seller and Holly Tulsa to
resolve such Design Deficiencies, including but not limited to, the redesign and modification of
the WGS to operate with a maximum of a two (2) pound (psi) pressure drop and to meet all
applicable requirements for Final Completion, as defined in the Agreement but subject to Section
15.B. (collectively, the “
Corrective Work
”). Seller shall instruct MECS to design the
Corrective Work in accordance with prudent industry standards taking into account the goal of
minimizing the aggregate amount of Corrective Costs (as defined in 15.D below), Economic Damages
(as defined in Section 15.F), if any, and short-term and long-term
5
operating and maintenance costs. If Seller or Holly Tulsa disagrees with the recommendations of
MECS, such disagreement shall be resolved as set forth in Section 15.I below.
D.
Corrective Costs
. After the Corrective Work has been agreed upon by the Seller and
Holly Tulsa or resolved pursuant to Section 15.I below, Seller shall proceed to promptly and
expeditiously perform and provide or arrange for the provision of, at Seller’s sole cost and
expense (the “
Corrective Costs
”), all construction, installation, labor, equipment,
materials, services and technology necessary to complete the Corrective Work as soon as
practicable but in no event later than the end of any turnaround that Holly Tulsa makes
available for the Corrective Work to be performed (as long as any such turnaround does not occur
so soon after the date hereof that Seller has not had a reasonable opportunity to prepare for
such Corrective Work). Holly Tulsa shall permit Seller to complete the Corrective Work in the
first turnaround of the Tulsa Refinery after the date hereof which involves the FCC Unit. In
the event that Seller fails to complete the Corrective Work as required above for reasons not
attributable to Buyers, Holly Tulsa shall have the right to take over the performance of such
Corrective Work and all reasonably incurred Corrective Costs shall be paid by Seller. Seller
and its contractors shall have a license to enter on the Owned Real Property for the purpose of
effecting the Corrective Work subject to terms and conditions consistent with those set forth in
Section 6.7.1.10 of the Agreement, and Holly Tulsa shall cooperate with Seller’s reasonable
requests in connection with the Corrective Work. Notwithstanding the foregoing, Seller agrees
that Holly Tulsa has no obligation to perform a turnaround of the FCC Unit prior to the
turnaround that is currently scheduled for December 2010 (the “
Scheduled Turnaround
”),
but which may be accelerated or delayed in Holly Tulsa’s sole discretion; provided, however,
that if Holly Tulsa elects to delay the Scheduled Turnaround beyond December 2010, then Seller
shall have no responsibility for Economic Damages, if any, after December 2010; and provided
further, that Holly Tulsa’s right to recover Economic Damages, if any, may be limited as
provided in Section 15.G below if Holly Tulsa refuses to accelerate the Scheduled Turnaround as
provided in Section 15.G.
E.
Payment of Economic Damages
. Until the Corrective Work has been completed, if the
Parties mutually agree or if the Economic Consultant determines that Holly Tulsa has incurred
Economic Damages (as defined in 15.F below), then within ten (10) Business Days thereafter
Seller shall pay Holly Tulsa the full amount of such Economic Damages, such payment to be made
first from the Escrow Account and, if the Escrow Account has been exhausted, then directly from
Seller. Seller and Holly Tulsa shall promptly execute an order to the Escrow Agent directing
the Escrow Agent to promptly pay the amount of Economic Damages, if any, agreed upon by the
Parties or certified by the Economic Consultant.
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F.
Determination of Economic Damages
. As used herein, the term “
Economic
Damages
” means adverse economic costs to Buyers, if any, caused by (i) the Design
Deficiencies, (ii) any shutdown other than the Scheduled Turnaround required for the Corrective
Work, or (iii) any unintended shutdown of the FCC Unit caused by the Design Deficiencies.
Economic Damages include, without limitation, any economic consequences to Buyers of the
following items, without duplication, in each case to the extent caused by the matters referred
to in clauses (i), (ii) or (iii) of the preceding sentence: increased engineering, construction,
repair, maintenance, operation and downtime costs and expenses, and other incremental
operational costs, Damages, lost income, consequential damages and other negative effects,
including any lost income, costs associated with maintenance to restart the unit, product
commitment coverage and resale of crude oil already purchased in connection with any unintended
or unscheduled turnaround. Economic Damages shall not duplicate Corrective Costs. If Holly
Tulsa has not operated the Tulsa Refinery in a prudent manner consistent with industry standards
and in a manner otherwise consistent with the manner Holly Tulsa would have operated the Tulsa
Refinery if it had no recourse against Seller pursuant to this Section 15 (the “
Applicable
Standard
”), then Economic Damages shall be reduced to the amount the Economic Damages would
have applied if Holly Tulsa operated the Tulsa Refinery consistent with the Applicable Standard.
G.
Timing of Corrective Work
. Seller shall have the right to request Holly Tulsa to
allow Seller to effect the Corrective Work at any time that Seller believes will result in the
lowest aggregate amount of Corrective Costs and Economic Damages, if any. If effecting the
Corrective Work at such requested time will result in a temporary shutdown or unscheduled
turnaround, then Seller shall be responsible for the Economic Damages caused by such shutdown or
turnaround. If Holly Tulsa refuses to allow Seller to effect the Corrective Work at the
requested time (unless allowing the Corrective Work at such time would not be prudent for
reasons other than the Economic Damages for which Seller must make Holly Tulsa whole), then
Seller shall thereafter not be responsible for Economic Damages greater than it would have
incurred had it been permitted to effect the Corrective Work at the requested time. If the
Parties cannot agree as to whether the shutdown or turnaround at the requested time is prudent,
such dispute shall be resolved by the Economic Consultant.
H.
Economic Consultant
. Within ten (10) Business Days after Closing, Seller and Holly
Tulsa shall agree upon a professional engineering firm (the “
Economic Consultant
”) to
determine at the end of each calendar month the amount of Economic Damages, if any. The
Economic Consultant shall have experience in fluid catalytic cracker unit and petroleum refinery
operations and economics and the expertise to determine the Economic Damages, if any. The
Economic Consultant shall not have any existing relationship with either Seller or Buyers
(unless such relationship is fully disclosed to the other Parties and is approved by such other
Parties in their sole discretion). The Economic Consultant’s decision as to the
7
timing of a shutdown or turnaround, or the amount of the Economic Damages, if any, shall be
final and binding on the Parties and is not appealable. The fees and expenses of the Economic
Consultant shall be shared equally by the Parties. In the event that the Parties are unable to
agree upon the Economic Consultant within such ten (10) Business Day period, then within twenty
(20) Business Days following the end of such period, each of Holly Tulsa and Seller shall
propose an engineering firm which such proposing Party in good faith believes has such
qualifications, and such two named firms shall name a third engineering firm that has such
expertise, and such named firm shall be the Economic Consultant.
I.
Dispute Resolution for Design Deficiencies.
If the Parties are unable to agree on
the nature or scope of the Corrective Work necessary to resolve the Design Deficiencies as
recommended by MECS or whether the Corrective Work has been completed, then within ten (10)
Business Days Seller and Holly Tulsa shall agree upon a professional engineering firm (the
“
Design Consultant
” and together with the Economic Consultant, the “
Consultants
”
or individually, a “
Consultant
”) to determine the nature and scope of the Corrective
Work or whether the Corrective Work has been completed, as applicable. The Design Consultant
shall have expertise in FCC Unit and Wet Gas Scrubber design, engineering and operations. The
Design Consultant shall not have any existing relationship with either Seller or Buyers (unless
such relationship is fully disclosed to the other Parties and is approved by such other Parties
in their sole discretion). In the event that the Parties are unable to agree upon the Design
Consultant within such ten (10) Business Day period, then within twenty (20) Business Days
following the end of such period, each of Holly Tulsa and Seller shall propose an engineering
firm which such proposing Party in good faith believes has such qualifications, and such two
named firms shall name a third engineering firm that has such expertise, and such named firm
shall be the Design Consultant. The Design Consultant’s decision as to the Corrective Work shall
be final and binding on the Parties and is not appealable. The fees and expenses of the Design
Consultant shall be the shared equally by the Parties.
J.
Access and Submissions
. Seller and Holly Tulsa may, and shall upon the request of a
Consultant, submit analysis and other documentation to such Consultant and the other Party for
consideration. In addition, Holly Tulsa shall make available to Seller and the Consultants, and
Seller shall make available to Holly Tulsa and Consultants, non-privileged data and other
non-privileged documentation with respect to the performance of the Tulsa Refinery that is
relevant to such Consultant’s determination. Seller and the Consultants shall have reasonable
access to the Tulsa Refinery in the manner contemplated by Section 6.7.1.10 of the Agreement for
purposes of gathering information that can only be obtained with a site visit and that is
relevant to the Consultants’ determinations. All such information shall be subject to the
confidentiality provisions of the Agreement, which provisions shall survive the
8
Closing. All Consultants will be required to execute appropriate confidentiality agreements.
All such access and disclosure of such information shall be subject to applicable Laws.
K.
Inapplicability of Certain Limitations
. The Minor Claims, Threshold Amount and
Indemnity Cap Limitations on indemnification under
Section 8.4
of the Agreement shall
not apply to this
Section 15
. The remedy provided by this
Section 15
shall be
in addition to the other remedies provided by
Section 8.5
of the Agreement. The
Economic Consultant’s determination of Economic Damages, if any, shall not be limited by
Section 8.9
of the Agreement or otherwise.
L.
Excluded Assets
. The definition of Excluded Assets shall be amended to add as an
Excluded Asset all claims, demands, causes of action, rights of recovery and similar rights in
favor of the Seller or any Affiliate of the Seller of any kind (including amounts collected in
connection therewith) to the extent but only to the extent (i) related to the provision of any
goods or services that relate to the FCC Unit or the related Wet Gas Scrubber and (ii) such
claims may be asserted by Seller against the provider of such goods or services (other than
Buyers or their Affiliates) for Corrective Costs incurred by Seller and/or Economic Damages, if
any, paid by Seller to Holly Tulsa from the Escrow Account or otherwise. Holly Tulsa agrees to
cooperate with Seller’s reasonable requests for assistance in pursuing any such rights against
any such provider; provided that Holly Tulsa shall not be obligated to incur any costs or
liability in connection with any such assistance.
M.
Completion of Corrective Work
. Seller may notify Holly Tulsa in writing that it
believes the Corrective Work has been completed and the Parties, with the assistance of MECS,
shall attempt to determine whether the Corrective Work has been completed. If the Parties are
unable to agree within ten (10) Business Days after Seller notice whether the Corrective Work
has been completed or not, either Party may give written notice of such disagreement to the
other Party and to the Design Consultant and thereafter the Design Consultant shall determine
whether the Corrective Work has been completed. Seller shall have no responsibility for any
Corrective Costs or Economic Damages on and after the time which the Corrective Work has been
completed (as determined above) other than Corrective Costs and Economic Damages, if any,
incurred prior to such time.
N.
Disbursement of Escrow Account
. Any remaining funds in the Escrow Account shall be
paid to Sinclair only after but promptly after (i) the Corrective Work has been completed (as
determined in accordance with Section 15.M), (ii) Holly Tulsa has been reimbursed for any
Corrective Costs it reasonably incurred, including, but not limited to costs due to Seller’s
non-performance of the Corrective Work and/or non-payment of the Corrective Costs, and (iii) all
Economic Damages, if any, have been paid to Holly Tulsa. The Parties agree to direct the Escrow
Agent to make the payments contemplated herein.
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O.
Notices
. In addition to the notices required under the Agreement, notices regarding
matters covered by this Section 15 shall also be delivered to the following:
Holly Refining & Marketing — Tulsa
1700 South Union Avenue
Tulsa, OK, 74107
Attn: James Resinger
Tel: 918-594-6262
Email: Jim.resinger@hollycorp.com
16.
Corrective Special Warranty Deed
. Due to discrepancies and gaps encountered by
the Title Company in connection with its investigation into Seller’s chain of title with respect to
certain portions of the Owned Real Property, Seller and Buyers have elected to proceed to Closing
utilizing a Special Warranty Deed that excludes certain real property historically subject to
railroad rights-of-way (such railroad rights-of-way to be initially conveyed by Seller to Buyers by
quit claim deed) and reflects certain Permitted Encumbrances that the Title Company expects it will
be able to eliminate or narrow in scope with additional investigation and research. Accordingly,
Seller covenants and agrees that, for a period of ninety (90) days following the Closing, if the
Title Company agrees to insure portions of such railroad rights-of-way or to eliminate Permitted
Encumbrances listed on the Special Warranty Deed delivered at Closing, Seller shall execute and
deliver to the grantee under the Special Warranty Deed a corrective or reformative special warranty
deed reflecting such modifications to the Title Policy. Such corrective or reformative special
warranty deed shall be in the form of the Special Warranty Deed delivered in connection with the
Closing, except for such modifications as are necessary to properly reflect its corrective or
reformative nature consistent with the modifications to the Title Policy.
17.
Final Completion
. For avoidance of doubt, subpart (iv) of the defined term
“Final Completion” is to be demonstrated by Seller achieving each of the items listed in the
Environmental Compliance Projects Agreement executed by the Parties of even date herewith. The
Parties do not intend that the Environmental Compliance Projects Agreement in any way replace
subparts (i), (ii) or (iii) of the definition of “Final Completion.”
18.
CapEx Amounts
. Section 6.7.1.3(a) of the Agreement is amended and restated in its
entirety as follows:
(a) Ten Million Dollars ($10,000,000) payable (i) Eight Million Dollars
($8,000,000) at Closing and (ii) Two Million Dollars ($2,000,000) fifteen (15) days
following Mechanical Completion of each of the following items:
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(I) Safety:
A. Steam tracing and insulation
B. Safety showers
C. Lighting
(II.) DAF project/wastewater treatment plant modifications required by
subsection f. in the definition of “Mechanical Completion”
18.
No Further Amendment; Miscellaneous
. Except as specifically provided in this
Amendment, the remaining provisions of the Agreement remain in effect according to their respective
terms. The “Miscellaneous” provisions set forth in Article 11 of the Agreement, are hereby
incorporated herein by reference.
[
remainder of page intentionally left blank; signature page follows
]
11
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment No. 1 to Asset Sale and
Purchase Agreement as of the date first above written.
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Seller
:
SINCLAIR TULSA REFINING COMPANY
a Wyoming corporation
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By:
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/s/
Ross B. Matthews
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Name:
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Ross B. Matthews
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Title:
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Vice President
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Buyers
:
HOLLY REFINING & MARKETING-TULSA LLC,
a Delaware limited liability company
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By:
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Holly Refining & Marketing Company, Member
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By:
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/s/
George Damiris
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Name:
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George Damiris
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Title:
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Vice President, Supply and Marketing
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HEP TULSA LLC
a Delaware limited liability company
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By:
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By:
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/s/
David G. Blair
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Name:
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David G. Blair
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Title:
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Senior Vice President
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CONSENT
The undersigned Guarantors hereby consent to this Amendment No. 1 to Asset Sale and Purchase
Agreement as of the date first above written.
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HOLLY CORPORATION
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By:
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/s/
David L. Lamp
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Name:
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David L. Lamp
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Title:
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President
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HOLLY ENERGY PARTNERS—OPERATING, L.P.
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By:
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/s/
David G. Blair
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Name:
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David G. Blair
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Title:
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Senior
Vice President
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THE SINCLAIR COMPANIES
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By:
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/s/
Ross B. Matthews
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Name:
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Ross B. Matthews
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Title:
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C.O.O.
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Exhibit
10.1
PIPELINES, TANKAGE AND LOADING RACK
THROUGHPUT AGREEMENT
(TULSA EAST)
This Pipelines, Tankage and Loading Rack Throughput Agreement (this “
Agreement
”) is
dated as of December 1, 2009, by and between Holly Refining & Marketing-Tulsa, LLC (“
Holly
Tulsa
”) and HEP Tulsa LLC (“
HEP Tulsa
”). Each of Holly Tulsa and HEP Tulsa are
individually referred to herein as a “
Party
” and collectively as the “
Parties
.”
RECITALS:
WHEREAS, pursuant to that certain Asset Sale and Purchase Agreement dated as of October 1,
2009 (the “
Purchase Agreement
”) by and among Holly Tulsa, HEP Tulsa and Sinclair Tulsa
Refining Company, Holly Tulsa acquired certain refining assets and other related assets located in
Tulsa, Oklahoma and HEP Tulsa acquired certain assets related to the refining assets acquired by
Holly Tulsa (the “
HEP Purchased Assets
”);
WHEREAS, in connection with the closing of the transactions contemplated by the Purchase
Agreement, Holly Tulsa and HEP Tulsa desire to enter into this Agreement to, among other things,
set forth the terms and conditions under which HEP Tulsa will provide certain transportation,
storage and loading services for Holly Tulsa.
NOW, THEREFORE, in consideration of the covenants and obligations contained herein, the
Parties hereby agree as follows:
Section 1.
Definitions
Capitalized terms used throughout this Agreement and not otherwise defined herein shall have
the meanings set forth below.
“
Affiliate
” means, with to respect to a specified person, any other person
controlling, controlled by or under common control with that first person. As used in this
definition, the term “control” includes (i) with respect to any person having voting securities or
the equivalent and elected directors, managers or persons performing similar functions, the
ownership of or power to vote, directly or indirectly, voting securities or the equivalent
representing 50% or more of the power to vote in the election of directors, managers or persons
performing similar functions, (ii) ownership of 50% or more of the equity or equivalent interest in
any person and (iii) the ability to direct the business and affairs of any person by acting as a
general partner, manager or otherwise. Notwithstanding the foregoing, for purposes of this
Agreement, Holly Tulsa, on the one hand, and HEP Tulsa, on the other hand, shall not be considered
affiliates of each other.
“
Agreement
” has the meaning set forth in the preamble to this Agreement.
“
Applicable Law
” means any applicable statute, law, regulation, ordinance, rule,
judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license,
agreement, requirement, or other governmental restriction or any similar form of decision of, or
any provision or condition of any permit, license or other operating authorization issued under any
of the foregoing by, or any determination of, any Governmental Authority having or
asserting jurisdiction over the matter or matters in question, whether now or hereafter in
effect and in each case as amended (including, without limitation, all of the terms and provisions
of the common law of such Governmental Authority), as interpreted and enforced at the time in
question.
“
Arbitrable Dispute
” means any and all disputes, Claims, controversies and other
matters in question between Holly Tulsa and HEP Tulsa, arising out of or relating to this Agreement
or the alleged breach hereof, or in any way relating to the subject matter of this Agreement
regardless of whether (a) allegedly extra-contractual in nature, (b) sounding in contract, tort or
otherwise, (c) provided for by Applicable Law or otherwise or (d) seeking damages or any other
relief, whether at law, in equity or otherwise.
“
Assumed OPEX
” means the amount set forth on
Schedule IV
attached hereto.
“
bpd
” means barrels per day.
“
Claim
” means any existing or threatened future claim, demand, suit, action,
investigation, proceeding, governmental action or cause of action of any kind or character (in each
case, whether civil, criminal, investigative or administrative), known or unknown, under any
theory, including those based on theories of contract, tort, statutory liability, strict liability,
employer liability, premises liability, products liability, breach of warranty or malpractice.
“
Claimant
” has the meaning set forth in
Section 13(e)
.
“
Closing Date
” has the meaning for such term contained in the Purchase Agreement.
“
Contract Quarter
” means a three-month period that commences on January 1, April 1,
July 1, or October 1 and ends on March 31, June 30, September 30, or December 31, respectively.
“
Control
” (including with correlative meaning, the term “controlled by”) means, as
used with respect to any Person, the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
“
Covered Environmental Losses
” has the meaning set forth in
Section 10(a)
.
“
Damaged Party
” has the meaning set forth in
Section 12(b)
.
“
Deficiency Notice
” has the meaning set forth in
Section 9(a)
.
“
Deficiency Payment
” has the meaning set forth in
Section 9(a)
.
“
DRA
” has the meaning set forth in
Section 2(f)
.
“
Effective Time
” means 12:01 a.m., Dallas, Texas time, on December 1, 2009.
“
Environmental Laws
” means all federal, state, and local laws, statutes, rules,
regulations, orders, and ordinances, now or hereafter in effect, relating to protection of the
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
2
environment including, without limitation, the federal Comprehensive Environmental Response,
Compensation, and Liability Act, the Superfund Amendments Reauthorization Act, the Resource
Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the
Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water Act, the Hazardous
Materials Transportation Act, and other environmental conservation and protection laws, each as
amended from time to time.
“
Force Majeure
” means acts of God, strikes, lockouts or other industrial disturbances,
acts of the public enemy, wars, blockades, insurrections, riots, storms, floods, washouts, arrests,
the order of any Governmental Authority having jurisdiction while the same is in force and effect,
civil disturbances, explosions, breakage, accident to machinery, storage tanks or lines of pipe,
inability to obtain or unavoidable delay in obtaining material or equipment, and any other causes
whether of the kind herein enumerated or otherwise not reasonably within the control of the Party
claiming suspension and which by the exercise of due diligence such Party is unable to prevent or
overcome. Notwithstanding anything in this Agreement to the contrary, inability of a Party to make
payments when due, be profitable or to secure funds, arrange bank loans or other financing, obtain
credit or have adequate capacity or production (other than for reasons of Force Majeure) shall not
be regarded as events of Force Majeure.
“
Force Majeure Notice
” has the meaning set forth in
Section 4(b)
.
“
Governmental Authority
” means any federal, state, local or foreign government or any
provincial, departmental or other political subdivision thereof, or any entity, body or authority
exercising executive, legislative, judicial, regulatory, administrative or other governmental
functions or any court, department, commission, board, bureau, agency, instrumentality or
administrative body of any of the foregoing.
“
Hazardous Substance
” means (a) any substance that is designated, defined, or
classified as a hazardous waste, hazardous material, pollutant, contaminant, or toxic or hazardous
substance, or that is otherwise regulated under any Environmental Law, including, without
limitation, any hazardous substance as defined under the Comprehensive Environmental Response,
Compensation, and Liability Act, and (b) petroleum, crude oil, gasoline, natural gas, fuel oil,
motor oil, waste oil, diesel fuel, jet fuel, and other refined petroleum hydrocarbons.
“
Heavy Products
” means fuel oil, asphalt, coker feed, vacuum tower bottoms,
atmospheric tower bottoms, pitch, or roofing flux.
“
HEP Purchased Assets
” has the meaning set forth in the recitals to this Agreement.
“
HEP Tulsa
” has the meaning set forth in the preamble to this Agreement.
“
HEP Tulsa Payment Obligations
” has the meaning set forth in
Section 15(a)
.
“
Holly
” means Holly Corporation, a Delaware corporation.
“
Holly Tulsa
” has the meaning set forth in the preamble to this Agreement.
“
Holly Tulsa Payment Obligations
” has the meaning set forth in
Section 14(a)
.
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
3
“
Indemnified Party
” means the Persons seeking indemnification in accordance with
Section 10
.
“
Indemnifying Party
” means the Person from whom indemnification may be required in
accordance with
Section 10
.
“
LPG Products
” means propane, refinery grade propylene, normal butane, and isobutane.
“
Loading Racks
” means the light products, asphalt and propane loading racks located at
the Refinery and more specifically described in the Purchase Agreement.
“
Loading Racks Tariff
” means the amount set forth on
Schedule III
attached
hereto.
“
Minimum Loading Racks Revenue Commitment
” has the meaning set forth in
Section
2(c)(i)
.
“
Minimum Loading Racks Throughput
” means 26,000 bpd of Refined Products, LPG Products,
and Heavy Products, in the aggregate, on average for each Contract Quarter.
“
Minimum Pipeline Revenue Commitment
” has the meaning set forth in
Section
2(a)(i)
.
“
Minimum Pipeline Throughput
” means 60,000 bpd of Refined Products, in the aggregate,
on average for each Contract Quarter.
“
Minimum Tankage Revenue Commitment
” has the meaning set forth in
Section
2(b)(i)
.
“
Minimum Tankage Throughput
” means 80,000 bpd of Refined Products, in the aggregate,
on average for each Contract Quarter.
“
Omnibus Agreement
” means the Second Amended and Restated Omnibus Agreement, dated as
of August 1, 2009, by and among Holly, the Partnership and certain of their respective
subsidiaries.
“
Operating Partnership
” means Holly Energy Partners-Operating, L.P., a Delaware
limited partnership.
“
OPEX Recovery Amount
” means an amount equal to (a) the difference between the
percentage increase in PPI for a given year minus seven percent (7%) multiplied by (b) the
then-current Assumed OPEX.
“
Parties
” or “
Party
” has the meaning set forth in the preamble to this
Agreement.
“
Partnership
” means Holly Energy Partners, L.P., a Delaware limited partnership.
“
Person
” means an individual or a corporation, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, government agency or political
subdivision thereof or other entity.
“
Pipeline Tariff
” means the amount set forth on
Schedule I
attached hereto.
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
4
“
Pipelines
” means those two (2) product delivery lines extending from the Tankage to
interconnection points with the Magellan pipeline.
“
PPI
” has the meaning set forth in
Section 2(a)(ii)
.
“
Prime Rate
” means the prime rate per annum announced by Union Bank, N.A., or if Union
Bank, N.A. no longer announces a prime rate for any reason, the prime rate per annum announced by
the largest U.S. bank measured by deposits from time to time as its base rate on corporate loans,
automatically fluctuating upward or downward with each announcement of such prime rate.
“
Products
” means Refined Products, LPG Products and Heavy Products.
“
Prudent Industry Practice
” means such practices, methods, acts, techniques, and
standards as are in effect at the time in question that are consistent with (a) the standards
generally followed by the United States pipeline and terminalling industries or (b) such higher
standards as may be applied or followed by Holly Tulsa and its Affiliates in the performance of
similar tasks or projects, or by HEP Tulsa and its Affiliates in the performance of similar tasks
or projects.
“
Purchase Agreement
” has the meaning set forth in the recitals to this Agreement.
“
Refined Products
” means gasoline, kerosene, ethanol, naphtha, gas oil, LEF (lube
extraction feedstocks), and diesel fuel, except high sulfur diesel fuel that Holly Tulsa may
transport from its existing Tulsa refinery through the Tankage for processing in the Refinery’s
distillate hydrotreater. For the avoidance of doubt, any such high sulfur diesel fuel movements
shall not be subject to any Tankage tariff, but the resulting ultra low sulfur diesel fuel produced
from the high sulfur diesel fuel and then shipped from the Refinery via either the Pipelines or the
Loading Racks shall be subject to the applicable Tankage tariffs.
“
Refinery
” means the refinery formerly owned by Sinclair Tulsa Refining Company
located in Tulsa, Oklahoma.
“
Refund
” has the meaning set forth in
Section 9(c)
.
“
Related Indemnified Parties
” means, with respect to each Party hereto, such Party’s
Affiliates, such Party and its Affiliates’ successors and assigns, and each of the respective
directors and officers (or Persons in any similar capacity if such Person is not a corporation),
employees, consultants and agents of such Party, its Affiliates and their respective successors and
assigns.
“
Respondent
” has the meaning set forth in
Section 13(e)
.
“
Tankage
” means the tanks set forth on
Exhibit A
attached hereto.
“
Tankage Base Tariff
” means the amount set forth on
Schedule II
attached
hereto.
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
5
“
Tankage Excess Throughput
” means 120,000 bpd of Refined Products, in the aggregate,
on average for each Contract Quarter.
“
Tankage Excess Tariff
” means the amount set forth on
Schedule II
attached
hereto.
“
Tankage Incentive Tariff
” means the amount set forth on
Schedule II
attached
hereto.
“
Term
” has the meaning set forth in
Section 6
.
“
Toxic Tort
” means a claim or cause of action arising from personal injury or property
damage incurred by the plaintiff that is alleged to have been caused by exposure to, or
contamination by, Hazardous Substances that have been released into the environment by or as a
result of the actions or omissions of the defendant.
Section 2.
Agreement to Use Services Relating to Pipelines, Tankage and Loading
Racks
.
The Parties intend to be strictly bound by the terms set forth in this Agreement, which sets
forth revenues to HEP Tulsa to be paid by Holly Tulsa and requires HEP Tulsa to provide certain
transportation, storage and loading services to Holly Tulsa. The principal objective of HEP Tulsa
is for Holly Tulsa to meet or exceed its obligations with respect to the Minimum Pipeline Revenue
Commitment, to meet or exceed its obligations with respect to the Minimum Tankage Revenue
Commitment, and to meet or exceed its obligations with respect to the Minimum Loading Racks Revenue
Commitment. The principal objective of Holly Tulsa is for HEP Tulsa to provide services to Holly
Tulsa in a manner that enables Holly Tulsa to operate the Refinery.
(a)
Minimum Pipeline Revenue Commitment
. During the Term and subject to the terms and
conditions of this Agreement, Holly Tulsa agrees as follows:
(i) Subject to
Section 4
, Holly Tulsa shall pay HEP Tulsa throughput fees
associated with the Pipelines that will satisfy the Minimum Pipeline Revenue Commitment in
exchange for HEP Tulsa providing Holly Tulsa a minimum of 60,000 barrels per day of
aggregate capacity in the Pipelines. The “
Minimum Pipeline Revenue Commitment
”
shall be an amount of revenue to HEP Tulsa for each Contract Quarter determined by
multiplying the Minimum Pipeline Throughput by the Pipeline Tariff as such Pipeline Tariff
may be revised pursuant to
Section 2(a)(ii)
. Holly Tulsa will pay HEP Tulsa the
Pipeline Tariff for all quantities of Refined Products shipped on the Pipelines.
Notwithstanding the foregoing, in the event that the Effective Time is any date other than
the first day of a Contract Quarter, then the Minimum Pipeline Revenue Commitment for the
initial Contract Quarter shall be prorated based upon the number of days actually in such
contract quarter and the initial Contract Quarter.
(ii) The Pipeline Tariff shall be adjusted on July 1 of each calendar year commencing
on July 1, 2011, by an amount equal to the upper change in the annual change rounded to four
decimal places of the Producers Price Index-Commodities- Finished Goods, (PPI), et al. (“
PPI
”), produced by the U.S. Department of
Labor, Bureaus of Labor Statistics; provided that the Pipeline Tariff shall never be
increased by
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
6
more than 3% for any such calendar year. The series ID is WPUSOP3000 as of
September 7, 2009 — located at
http://www.bls.gov/data/
. The change factor shall be
calculated as follows: annual PPI index (most current year)
less
annual PPI index
(most current year minus 1)
divided
by annual PPI index (most current year minus 1).
An example for year 2009 change is: [PPI (2008) — PPI (2007)] / PPI (2007) or (177.1 —
166.6) / 166.6 or .063 or 6.3%. If the PPI index change is negative in a given year then
there will be no change in the Pipeline Tariff. If the above index is no longer published,
then Holly Tulsa and HEP Tulsa shall negotiate in good faith to agree on a new index that
gives comparable protection against inflation, and the same method of adjustment for
increases in the new index shall be used to calculate increases in the Pipeline Tariff. If
Holly Tulsa and HEP Tulsa are unable to agree, a new index will be determined by binding
arbitration in accordance with
Section 13(e)
, and the same method of adjustment for
increases in the new index shall be used to calculate increases in the Pipeline Tariff. To
evidence the Parties’ agreement to each adjusted Pipeline Tariff, the Parties shall execute
an amended, modified, revised or updated
Schedule I
and attach it to this Agreement.
Such amended, modified, revised or updated
Schedule I
shall be sequentially
numbered (e.g.
Schedule I-1
,
Schedule I-2
, etc.), dated and appended as an
additional schedule to this Agreement and shall replace the prior version of
Schedule
I
in its entirety.
(iii) If Holly Tulsa is unable to transport on the Pipelines the volumes of Refined
Products required to meet the Minimum Pipeline Revenue Commitment as a result of HEP Tulsa’s
operational difficulties, prorationing, or the inability to provide sufficient capacity for
the Minimum Pipeline Throughput, then the Minimum Pipeline Revenue Commitment applicable to
the Contract Quarter during which Holly Tulsa is unable to transport such volumes of Refined
Products will be reduced by an amount equal to: (A) the volume of Refined Products that
Holly Tulsa was unable to transport on the Pipelines (but not to exceed the Minimum Pipeline
Throughput), as a result of HEP Tulsa’s operational difficulties, prorationing or inability
to provide sufficient capacity on the Pipelines to achieve the Minimum Pipeline Throughput,
multiplied by (B) the Pipeline Tariff. This
Section 2(a)(iii)
shall not apply in
the event HEP Tulsa gives notice of a Force Majeure event in accordance with
Section
4
, in which case the Minimum Pipeline Revenue Commitment shall be suspended in
accordance with and as provided in
Section 4
.
(b)
Minimum Tankage Revenue Commitment; Tankage Tariffs
. During the Term and subject
to the terms and conditions of this Agreement, Holly Tulsa agrees as follows:
(i) Subject to
Section 4
, Holly Tulsa shall pay HEP Tulsa throughput fees
associated with the Tankage that will satisfy the Minimum Tankage Revenue Commitment in
exchange for HEP Tulsa providing Holly Tulsa a minimum of 1,362,500 barrels of aggregate
capacity in the Tankage. The “
Minimum Tankage Revenue Commitment
” shall be an
amount of revenue to HEP Tulsa for each Contract Quarter determined by multiplying the
Minimum Tankage Throughput by the Tankage Base Tariff as such Tankage Base Tariff may be
revised pursuant to
Section 2(b)(iii)
. Notwithstanding the foregoing, in the event that the Effective Time is any date other
than the first day of a Contract Quarter, then the Minimum Tankage Revenue Commitment for
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
7
the initial Contract Quarter shall be prorated based upon the number of days actually in
such contract quarter and the initial Contract Quarter. Subject to (i) any Applicable Law
and (ii) technical specifications of the Tankage, Holly Tulsa may request that HEP Tulsa
change the service of any of the Tankage from storage of one Product to storage of a
different Product;
provided
,
however
, that Holly Tulsa shall indemnify and hold HEP Tulsa
harmless from and against all costs and expenses associated with any such changing of
service including but not limited to costs of complying with any Applicable Law affecting
such change of service.
(ii) Tankage throughput shall be determined by the sum of Refined Products shipped on
the Pipelines and loaded at the Loading Racks. If the average throughput for any Contract
Quarter exceeds the Minimum Tankage Throughput attributable to such Contract Quarter then,
(i) for each throughput barrel in excess of the Minimum Tankage Throughput but less than or
equal to the Tankage Excess Throughput, Holly Tulsa shall pay HEP Tulsa throughput fees in
the amount of the Tankage Incentive Tariff as such amount may be revised pursuant to
Section 2(b)(iii)
and (ii) for each throughput barrel in excess of the Tankage
Excess Throughput, Holly Tulsa shall pay HEP Tulsa throughput fees in the amount of the
Tankage Excess Tariff as such amount may be revised pursuant to
Section 2(b)(iii)
.
(iii) The Tankage Base Tariff, Tankage Incentive Tariff, and Tankage Excess Tariff
shall each be adjusted on July 1 of each calendar year commencing on July 1, 2011, by an
amount equal to the upper change in the annual change rounded to four decimal places of the
PPI following the same procedure as set forth in
Section 2(a)(ii)
above (including
the provisions regarding binding arbitration); provided that the Tankage Base Tariff,
Tankage Incentive Tariff, and Tankage Excess Tariff shall never be increased by more than 3%
for any such calendar year. To evidence the Parties’ agreement to each adjusted Tankage
Base Tariff, Tankage Incentive Tariff, and Tankage Excess Tariff, the Parties shall execute
an amended, modified, revised or updated
Schedule II
and attach it to this
Agreement. Such amended, modified, revised or updated
Schedule II
shall be
sequentially numbered (e.g.
Schedule II-1
,
Schedule II-2
, etc.), dated and
appended as an additional schedule to this Agreement and shall replace the prior version of
Schedule II
in its entirety.
(iv) If Holly Tulsa is unable to deliver to the Tankage the volumes of Refined Products
required to meet the Minimum Tankage Revenue Commitment as a result of HEP Tulsa’s
operational difficulties, prorationing or the inability to provide sufficient capacity, then
the Minimum Tankage Revenue Commitment applicable to the Contract Quarter during which Holly
Tulsa is unable to deliver such volumes of Refined Products will be reduced by an amount
equal to: (A) the volume of Refined Products that Holly Tulsa was unable to deliver to the
Tankage (but not to exceed the Minimum Tankage Throughput), as a result of HEP Tulsa’s
operational difficulties, prorationing or inability to provide sufficient capacity to
achieve the Minimum Tankage Throughput, multiplied by (B) the Tankage Base Tariff. This
Section 2(b)(iv)
shall not apply in the event HEP Tulsa gives notice of a Force
Majeure event in accordance with
Section 4
, in which case
the Minimum Tankage Revenue Commitment shall be suspended in accordance with and as
provided in
Section 4
.
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
8
(c)
Minimum Loading Racks Revenue Commitment
.
(i) Subject to
Section 4
, Holly Tulsa shall pay HEP Tulsa throughput fees
associated with the Loading Racks that will satisfy the Minimum Loading Racks Revenue
Commitment in exchange for HEP Tulsa providing Holly Tulsa a minimum of 26,000 barrels per
day of aggregate capacity at the Loading Racks. The “
Minimum Loading Racks Revenue
Commitment
” shall be an amount of revenue to HEP Tulsa for each Contract Quarter
determined by multiplying the Minimum Loading Racks Throughput by the Loading Racks Tariff
as such Loading Racks Tariff may be revised pursuant to
Section 2(c)(ii)
. Holly
Tulsa will pay HEP Tulsa the Loading Racks Tariff for all quantities of Refined Products ,
LPG Products, and Heavy Products loaded at the Loading Racks. Notwithstanding the foregoing,
in the event that the Effective Time is any date other than the first day of a Contract
Quarter, then the Minimum Loading Racks Revenue Commitment for the initial Contract Quarter
shall be prorated based upon the number of days actually in such contract quarter and the
initial Contract Quarter.
(ii) The Loading Racks Tariff shall be adjusted on July 1 of each calendar year
commencing on July 1, 2011, by an amount equal to the upper change in the annual change
rounded to four decimal places of the PPI following the same procedure as set forth in
Section 2(a)(ii)
above (including the provisions regarding binding arbitration);
provided that the Loading Racks Tariff shall never be increased by more than 3% for any such
calendar year. To evidence the Parties’ agreement to each adjusted Loading Racks Tariff,
the Parties shall execute an amended, modified, revised or updated
Schedule III
and
attach it to this Agreement. Such amended, modified, revised or updated
Schedule
II
I shall be sequentially numbered (e.g.
Schedule III-1
,
Schedule III-2
,
etc.), dated and appended as an additional schedule to this Agreement and shall replace the
prior version of
Schedule III
in its entirety.
(iii) If Holly Tulsa is unable to load at the Loading Racks the volumes of Refined
Products, LPG Products, or Heavy Products, in the aggregate, required to meet the Minimum
Loading Racks Revenue Commitment as a result of HEP Tulsa’s operational difficulties,
prorationing or the inability to provide sufficient capacity, then the Minimum Loading Racks
Revenue Commitment applicable to the Contract Quarter during which Holly Tulsa is unable to
load such volumes of Refined Products, LPG Products, or Heavy Products will be reduced for
such period of time by an amount equal to: (A) the volume of Refined Products, LPG Products,
or Heavy Products, in the aggregate, that Holly Tulsa was unable to load at the Loading
Racks (but not to exceed the Minimum Loading Racks Throughput), as a result of HEP Tulsa’s
operational difficulties, prorationing or inability to provide sufficient capacity to
achieve the Minimum Loading Racks Throughput, multiplied by (B) the Loading Racks Tariff.
This
Section 2(c)(iii)
shall not apply in the event HEP Tulsa gives notice of a
Force Majeure event in accordance with
Section 4
, in which case the Minimum Loading
Racks Revenue Commitment shall be suspended in accordance with and as provided in
Section 4
.
(d)
Volumetric Gains and Losses
. Holly Tulsa shall, during the Term, (i) absorb all
volumetric gains in the Pipelines, and (ii) be responsible for all volumetric losses in the
Pipelines
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Tankage and Loading Rack Throughput Agreement (Tulsa East)
9
up to a maximum of 0.5%. HEP Tulsa shall be responsible for all volumetric losses in
excess of 0.5% in the Pipelines during the Term.
(e)
Obligations of HEP Tulsa
. During the Term and subject to the terms and conditions
of this Agreement, including
Section 13(b)
, HEP Tulsa agrees to: (i) own or lease, operate
and maintain the Pipelines, Tankage, and Loading Racks and all related assets necessary to handle
the Products from Holly Tulsa; (ii) provide the services required under this Agreement and perform
all operations relating the Pipelines, Tankage, and Loading Racks including, but not limited to,
tank gauging, tank maintenance, tank dike maintenance, loading trucks, interaction with third party
pipelines, and customer interface for access agreements; and (iii) maintain adequate property and
liability insurance covering the Pipelines, Tankage, Loading Racks and any related assets owned by
HEP and necessary for the operation of the Pipelines, Tankage, and Loading Racks. Notwithstanding
the preceding sentence, subject to
Section 13(b)
of this Agreement and Article V of the
Omnibus Agreement, HEP Tulsa is free to sell any of its assets, including assets that provide
services under this Agreement, and Holly Tulsa is free to merge with another entity and to sell all
of its assets or equity to another entity at any time.
(f)
Drag Reducing Agents and Additives
. If HEP Tulsa determines that adding drag
reducing agents (“
DRA
”) to the Refined Products is reasonably required to move Refined
Products in the quantities necessary to meet Holly Tulsa’s schedule or as may be otherwise be
required to safely move such quantities of Refined Products, HEP Tulsa shall provide Holly Tulsa
with an analysis of the proposed cost and benefits thereof. In the event that Holly Tulsa agrees
to use such additives as proposed by HEP Tulsa, Holly Tulsa shall reimburse HEP Tulsa for the costs
of adding any DRA to the and Refined Products.
(g)
Change in Pipeline Direction; Product Service or Origination and Destination
.
Without Holly Tulsa’s prior written consent, HEP Tulsa shall not (i) reverse the direction of any
of the Pipelines; (ii) change, alter or modify the product service of any of the Pipelines; or
(iii) change, alter or modify the origination or destination of any of the Pipelines;
provided
,
however
, that HEP Tulsa may take any necessary emergency action to prevent or remedy a release of
Refined Products from any of the Pipelines without obtaining the consent required by this
Section 2(g)
. Holly Tulsa shall have the right to reverse the direction of any of the
Pipelines if Holly Tulsa agrees to (i) reimburse HEP Tulsa for the additional costs and expenses
incurred by HEP Tulsa as a result of such change in direction (both to reverse and re-reverse);
(ii) reimburse the HEP Tulsa for all costs arising out of HEP Tulsa’s inability to perform under
any transportation service contract due to the reversal of the direction of the Pipelines; and
(iii) pay the Pipeline Tariff set forth on
Schedule I
, as it may be amended from
time-to-time in accordance with this Agreement, for any such flow reversal.
(h)
Notification of Utilization
. Upon request by HEP Tulsa, Holly Tulsa will provide
to HEP Tulsa written notification of Holly Tulsa’s reasonable good faith estimate of their
anticipated future utilization of Pipelines, Tankage, and Loading Racks as soon as reasonably
practicable after receiving such request.
(i)
Scheduling and Accepting Movement
. HEP Tulsa will use its reasonable commercial
efforts to schedule movement and accept movements of Products in a manner that is
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
10
consistent with the historical dealings between the Parties, as such dealings may change from time to time.
(j)
Taxes
. Holly Tulsa will pay all taxes, import duties, license fees and other
charges by any Governmental Authority levied on or with respect to the Products handled by Holly
Tulsa for transportation, storage or loading by HEP Tulsa. Should any Party be required to pay or
collect any taxes, duties, charges and or assessments pursuant to any Applicable Law or authority
now in effect or hereafter to become effective which are payable by the any other Party pursuant to
this
Section 2(j)
the proper Party shall promptly reimburse the other Party therefor.
(k)
Timing of Payments
. Holly Tulsa will make payments to HEP Tulsa by electronic
payment with immediately available funds on a monthly basis during the Term with respect to
services rendered or reimbursable costs or expenses incurred by HEP Tulsa under this Agreement in
the prior month. Payments not received by HEP Tulsa on or prior to the applicable payment date
will accrue interest at the Prime Rate from the applicable payment date until paid.
(l)
Increases in Tariff Rates
. If new Applicable Laws are enacted that require HEP
Tulsa to make capital expenditures with respect to the Pipelines, Tankage or Loading Racks, HEP
Tulsa may amend the Pipeline Tariff, Tankage Base Tariff, and Loading Racks Tariff, as applicable,
in order to recover HEP Tulsa’s cost of complying with these Applicable Laws (as determined in good
faith and including a reasonable return);
provided
,
however
, that HEP Tulsa may not
amend the Pipeline Tariff, Tankage Base Tariff, or Loading Racks Tariff pursuant to this
Section 2(l)
unless and until HEP Tulsa has made capital expenditures of $2,000,000.00 in
the aggregate with respect to the Pipelines, Tankage or Loading Racks in order to comply with such
new Applicable Laws. Holly Tulsa and HEP Tulsa shall use their reasonable commercial efforts to
comply with these Applicable Laws, and shall negotiate in good faith to mitigate the impact of
these Applicable Laws and to determine the amount of the new tariff rates. If Holly Tulsa and HEP
Tulsa are unable to agree on the amount of the new tariff rates that HEP Tulsa will charge, such
tariff rates will be determined by binding arbitration in accordance with
Section 13(e)
.
Schedule I
,
Schedule II
,
Schedule III
or any other applicable exhibit or
schedule to this Agreement will be updated, amended or revised, as applicable, in accordance with
this Agreement to reflect any changes in tariff rates agreed to in accordance with this
Section
2(l)
.
(m)
Reimbursement of Operating Expenses
. At the end of the first four (4) Contract
Quarters, HEP Tulsa shall calculate its aggregate operating expenses incurred in the operation of
the Pipelines, Tankage and Loading Racks pursuant to this Agreement. In the event that such
aggregate operating expenses exceed the Assumed OPEX, (i) Holly Tulsa shall reimburse HEP Tulsa for
such operating expenses incurred in excess of the Assumed OPEX, and (ii) HEP Tulsa shall increase
the Tankage Base Tariff by the amount necessary to increase the Minimum Tankage Revenue Commitment
by an amount equal to such aggregate operating expenses in excess of the Assumed OPEX for the
remainder of the Term, and the Parties shall execute an amended, modified, revised or updated
Schedule IV
reflecting such aggregate operating expenses as the new Assumed OPEX. In the
event that such aggregate operating expenses are less than the Assumed OPEX, HEP Tulsa shall
decrease the Tankage Base Tariff by the amount necessary to decrease the Minimum Tankage Revenue
Commitment by an amount equal to the difference between the Assumed OPEX and such actual operating expenses for the remainder of
the Term, and the Parties shall execute an amended, modified, revised or updated
Schedule
IV
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
11
reflecting such aggregate operating expenses as the new Assumed OPEX. In the event that the
PPI increase for any given year is greater than seven percent (7%), then, in addition to any other
applicable increases during such year, HEP Tulsa shall increase the Tankage Base Tariff by an
additional amount necessary to increase the Minimum Tankage Revenue Commitment by the OPEX Recovery
Amount. Such OPEX Recovery Amount shall be added to the then-current Assumed OPEX, and the Parties
shall execute an amended, modified, revised or updated
Schedule IV
reflecting the addition
of such OPEX Recovery Amount to the Assumed OPEX.
Section 3.
Agreement to Remain Shipper
With respect to any Products that are transported, stored or handled in connection with the
Pipelines, Tankage or Loading Racks, as applicable, Holly Tulsa agrees that it will continue acting
in the capacity of the shipper of any such Products for its own account at all times that such
Products are being transported, stored or handled in the Pipelines, Tankage, or Loading Racks, as
the case may be.
Section 4.
Notification of Shut-down or Reconfiguration; Force Majeure
(a) Holly Tulsa must deliver to HEP Tulsa at least six months advance written notice of any
planned shut down or reconfiguration (excluding planned maintenance turnarounds) of the Refinery or
any portion of the Refinery that would reduce the Refinery’s output. Holly Tulsa will use its
commercially reasonable efforts to mitigate any reduction in revenues or throughput obligations
under this Agreement that would result from such a shut down or reconfiguration. If Holly Tulsa
shuts down or reconfigures the Refinery or any portion of the Refinery (excluding planned
maintenance turnarounds) and reasonably believes in good faith that such shut down or
reconfiguration will jeopardize its ability to satisfy its Minimum Pipeline Revenue Commitment,
Minimum Tankage Revenue Commitment, or Minimum Loading Racks Revenue Commitment under this
Agreement, then within 90 days of the delivery of the written notice of the planned shut down or
reconfiguration, Holly Tulsa shall (i) propose a new Minimum Pipeline Revenue Commitment, Minimum
Tankage Revenue Commitment, or Minimum Loading Racks Revenue Commitment under this Agreement, as
applicable, such that the ratio of the new Minimum Pipeline Revenue Commitment, Minimum Tankage
Revenue Commitment, or Minimum Loading Racks Revenue Commitment under this Agreement over the
anticipated production level following the shut down or reconfiguration will be approximately equal
to the ratio of the original Minimum Pipeline Revenue Commitment, Minimum Tankage Revenue
Commitment, or Minimum Loading Racks Revenue Commitment under this Agreement over the original
production level and (ii) propose the date on which the new Minimum Pipeline Revenue Commitment,
Minimum Tankage Revenue Commitment, or Minimum Loading Racks Revenue Commitment under this
Agreement shall take effect. Unless objected to by HEP Tulsa within 60 days of receipt by HEP
Tulsa of such proposal, such new Minimum Pipeline Revenue Commitment, Minimum Tankage Revenue
Commitment, or Minimum Loading Racks Revenue Commitment under this Agreement shall become effective
as of the date proposed by Holly Tulsa. To the extent that HEP Tulsa does not agree with Holly
Tulsa’s proposal, any changes in Holly Tulsa’s obligations under this Agreement, or the date on
which such changes will take effect, will be determined by binding arbitration in accordance with
Section 13(e)
. Schedule I, Schedule II, or Schedule III or any other applicable exhibit or schedule to this Agreement
will be updated, amended or revised, as applicable, in accordance
with this Agreement to reflect any
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
12
change in the Minimum Pipeline Revenue Commitment, Minimum Tankage Revenue Commitment, or
Minimum Loading Racks Revenue Commitment under this Agreement agreed to in accordance with this
Section 4(a)
.
(b) In the event that any Party is rendered unable, wholly or in part, by a Force Majeure
event from performing its obligations under this Agreement for a period of more than thirty (30)
consecutive days, then, upon the delivery of notice and full particulars of the Force Majeure event
in writing within a reasonable time after the occurrence of the Force Majeure event relied on
(“
Force Majeure Notice
”), the obligations of the Parties, so far as they are affected by
the Force Majeure event, shall be suspended for the duration of any inability so caused. Any
suspension of the obligations of the Parties as a result of this
Section 4(b)
shall extend
the Term (to the extent so affected) for a period equivalent to the duration of the inability set
forth in the Force Majeure Notice. Holly Tulsa will be required to pay any amounts accrued and due
under this Agreement at the time of the Force Majeure event. The cause of the Force Majeure event
shall so far as possible be remedied with all reasonable dispatch, except that no Party shall be
compelled to resolve any strikes, lockouts or other industrial disputes other than as it shall
determine to be in its best interests. In the event a Force Majeure event prevents HEP Tulsa or
Holly Tulsa from performing substantially all of their respective obligations under this Agreement
for a period of more than one (1) year, this Agreement may be terminated by HEP Tulsa or Holly
Tulsa by providing written notice thereof to the other Party.
Section 5.
Agreement Not to Challenge Tariffs
Holly Tulsa agrees to any tariff rate changes for the Pipelines in accordance with this
Agreement. Holly Tulsa agrees (a) not to challenge, nor to cause their Affiliates to challenge,
nor to encourage or recommend to any other Person that it challenge, or voluntarily assist in any
way any other Person in challenging, in any forum, tariffs (including joint tariffs) of HEP Tulsa
that HEP Tulsa has filed or may file containing rates, rules or regulations that are in effect at
any time during the Term and regulate the transportation of the Refined Products, and (b) not to
protest or file a complaint, nor cause their Affiliates to protest or file a complaint, nor
encourage or recommend to any other Person that it protest or file a complaint, or voluntarily
assist in any way any other Person in protesting or filing a complaint, with respect to regulatory
filings that the HEP Tulsa has made or may make at any time during the Term to change tariffs
(including joint tariffs) for transportation of Refined Products in each case so long as such
tariffs, regulatory filings or rates changed do not conflict with the terms of this Agreement.
Section 6.
Effectiveness and Term
This Agreement shall be effective as of the Effective Time, and shall terminate at 12:01 a.m.
Dallas, Texas, time on December 1, 2024, unless extended by written mutual agreement of the Parties
or as set forth in
Section 7
(the “
Term
). The Party(ies) desiring to extend this
Agreement pursuant to this
Section 6
shall provide prior written notice to the other
Parties of its desire to so extend this Agreement; such written notice shall be provided not more
than twenty-four (24) months and not less than the later of twelve (12) months prior to the date of
termination or ten (10) days after receipt of a written request from another Party (which request
may be delivered no earlier than twelve (12) months prior to the date of termination) to provide any
such notice or lose such right.
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
13
Section 7.
Right to Enter into a New Agreement
(a) In the event that Holly Tulsa provides prior written notice to HEP Tulsa of the desire of
Holly Tulsa to extend this Agreement by written mutual agreement of the Parties, the Parties shall
negotiate in good faith to extend this Agreement by written mutual agreement, but, if such
negotiations fail to produce a written mutual agreement for extension by a date six months prior to
the termination date, then HEP Tulsa shall have the right to negotiate to enter into one or more
pipelines, tankage and loading agreements with one or more third parties to begin after the date of
termination, provided that until the end of one year following termination without renewal of this
Agreement, Holly Tulsa will have the right to enter into a new pipelines, tankage and loading
agreement with HEP Tulsa on commercial terms that substantially match the terms upon which HEP
Tulsa propose to enter into an agreement with a third party for similar services with respect to
all or a material portion of the Pipelines, Tankage, or Loading Racks. In such circumstances, HEP
Tulsa shall give Holly Tulsa forty-five (45) days prior written notice of any proposed new
pipelines, tankage and loading agreement with a third party, and such notice shall inform Holly
Tulsa of the fee schedules, tariffs, duration and any other terms of the proposed third party
agreement and Holly Tulsa shall have forty-five (45) days following receipt of such notice to agree
to the terms specified in the notice or Holly Tulsa shall lose the rights specified by this
Section 7(a)
with respect to the assets that are the subject of such notice.
(b) In the event that Holly Tulsa fails to provide prior written notice to HEP Tulsa of the
desire of Holly Tulsa to extend this Agreement by written mutual agreement of the Parties pursuant
to
Section 6
, HEP Tulsa shall have the right, during the period from the date of Holly
Tulsa’s failure to provide written notice pursuant to
Section 6
to the date of termination
of this Agreement, to negotiate to enter into a new pipelines, tankage and loading agreement with a
third party;
provided, however
, that at any time during the twelve (12) months prior to the
expiration of the Term, Holly Tulsa will have the right to enter into a new pipelines, tankage and
loading agreement with HEP Tulsa on commercial terms that substantially match the terms upon which
HEP Tulsa propose to enter into an agreement with a third party for similar services with respect
to all or a material portion of the Pipelines, Tankage, or Loading Racks. In such circumstances,
HEP Tulsa shall give Holly Tulsa forty-five (45) days prior written notice of any proposed new
pipelines, tankage and loading agreement with a third party, and such notice shall inform Holly
Tulsa of the fee schedules, tariffs, duration and any other terms of the proposed third party
agreement and Holly Tulsa shall have forty-five (45) days following receipt of such notice to agree
to the terms specified in the notice or Holly Tulsa shall lose the rights specified by this
Section 7(b)
with respect to the assets that are the subject of such notice.
Section 8.
Notices
(a) Any notice or other communication given under this Agreement shall be in writing and shall
be (i) delivered personally, (ii) sent by documented overnight delivery service, (iii) sent by
email transmission, or (iv) sent by first class mail, postage prepaid (certified or registered
mail, return receipt requested). Such notice shall be deemed to have been duly given (x) if
received, on the date of the delivery, with a receipt for delivery, (y) if refused, on the date
of the refused delivery, with a receipt for refusal, or (z) with respect to email
transmissions, on the date the recipient confirms receipt. Notices or other communications shall
be directed to the following addresses:
Pipelines,
Tankage and Loading Rack Throughput Agreement (Tulsa East)
14
Notices to Holly Tulsa:
c/o Holly Corporation
100 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: David L. Lamp
Email address:
president@hollycorp.com
with a copy, which shall not constitute notice, but is required in order to
give proper notice, to:
c/o Holly Corporation
100 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: General Counsel
Email address:
generalcounsel@hollycorp.com
Notices to HEP Tulsa:
c/o Holly Energy Partners, L.P.
100 Crescent Court, Suite 1600
Dallas, TX 75201
Attn: David G. Blair
Email address:
SVP-HEP@hollyenergy.com
with
a copy, which shall not constitute notice, but is required in order to give proper notice, to:
c/o Holly Energy Partners, L.P.
100 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: General Counsel
Email address:
generalcounsel@hollycorp.com
(b) Any Party may at any time change its address for service from time to time by giving
notice to the other Parties in accordance with this
Section 8
.
Section 9.
Deficiency Payments
(a) As soon as practicable following the end of each Contract Quarter under this Agreement,
HEP Tulsa shall deliver to Holly Tulsa a written notice (the “
Deficiency Notice
”) detailing
any failure of Holly Tulsa to meet their obligations under
Section 2(a)(i)
,
Section
2(b)(i)
, and
Section 2(c)(i)
;
provided
,
however
, that Holly Tulsa’s
obligations pursuant to the Minimum Pipeline Revenue Commitment, Minimum Tankage Revenue Commitment, and the Minimum
Loading Racks Revenue Commitment shall, in each case, be assessed on a quarterly basis for the
purposes of this
Section 9
. Notwithstanding the previous sentence, any deficiency owed by
Holly Tulsa due to its failure to satisfy the Minimum Pipeline Revenue Commitment,
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Tankage and Loading Rack Throughput Agreement (Tulsa East)
15
Minimum Tankage
Revenue Commitment, or the Minimum Loading Racks Revenue Commitment in any Contract Quarter shall
be offset by any revenue owed to HEP Tulsa in excess of the Minimum Pipeline Revenue Commitment,
Minimum Tankage Revenue Commitment, or the Minimum Loading Racks Revenue Commitment for such
Contract Quarter. The Deficiency Notice shall (i) specify in reasonable detail the nature of any
deficiency and (ii) specify the approximate dollar amount that HEP Tulsa believes would have been
paid by Holly Tulsa to HEP Tulsa if Holly Tulsa had complied with its obligations pursuant to
Section 2(a)(i)
,
Section 2(b)(i)
, and
Section 2(c)(i)
, as applicable (the
“
Deficiency Payment
”). Holly Tulsa shall pay the Deficiency Payment to HEP Tulsa upon the
later of: (A) ten (10) days after their receipt of the Deficiency Notice and (B) thirty (30) days
following the end of the related Contract Quarter.
(b) If Holly Tulsa disagrees with the Deficiency Notice, then, following the payment of the
undisputed portion of the Deficiency Payment to HEP Tulsa, if any, Holly Tulsa shall send written
notice thereof regarding the disputed portion of the Deficiency Payment to HEP Tulsa and a senior
officer of Holly (on behalf of Holly Tulsa) and a senior officer of the Partnership (on behalf of
HEP Tulsa) shall meet or communicate by telephone at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary and shall negotiate in good faith to attempt
to resolve any differences that they may have with respect to matters specified in the Deficiency
Notice. During the 30-day period following the payment of the Deficiency Payment, Holly Tulsa
shall have access to the working papers of HEP Tulsa relating to the Deficiency Notice. If such
differences are not resolved within thirty (30) days following Holly Tulsa’s receipt of the
Deficiency Notice, Holly Tulsa and HEP Tulsa shall, within forty-five (45) days following Holly
Tulsa’s receipt of the Deficiency Notice, submit any and all matters which remain in dispute and
which were properly included in the Deficiency Notice to arbitration in accordance with
Section
13(e)
.
(c) If it is finally determined pursuant to this
Section 9
that Holly Tulsa is
required to pay any or all of the disputed portion of the Deficiency Payment, Holly Tulsa shall
promptly pay such amount to HEP Tulsa, together with interest thereon at the Prime Rate, in
immediately available funds.
(d) The Parties acknowledge and agree that there shall be no carry-over of deficiency volumes
with respect to the Minimum Pipeline Revenue Commitment, the Minimum Tankage Revenue Commitment, or
Minimum Loading Racks Revenue Commitment.
(e) The Parties acknowledge and agree that the Minimum Pipeline Revenue Commitment, the
Minimum Tankage Revenue Commitment, or Minimum Loading Racks Revenue Commitment shall not be
aggregated for purposes of determining any deficiency pursuant to this
Section 9
.
Section 10.
Indemnification
(a)
Environmental Indemnification
(i)
Indemnification of HEP Tulsa
. From and after the Closing Date, Holly Tulsa
shall indemnify, defend and hold harmless HEP Tulsa and its Related Indemnified
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Tankage and Loading Rack Throughput Agreement (Tulsa East)
16
Parties from and against environmental and Toxic Tort losses (including, without limitation, economic
losses, diminution in value suffered by third parties, and lost profits), damages, injuries
(including, without limitation, personal injury and death), liabilities, claims, demands,
causes of action, judgments, settlements, fines, penalties, costs, and expenses (including,
without limitation, court costs and reasonable attorney’s and expert’s fees) of any and
every kind or character, known or unknown, fixed or contingent, suffered or incurred by HEP
Tulsa or its Related Indemnified Parties or any third party to the extent arising out of:
(A) any violation or correction of violation of Environmental Laws
associated with the ownership or operation of the HEP Purchased
Assets, or
(B) any event or condition associated with ownership or operation of
the HEP Purchased Assets (including, without limitation, the presence
of Hazardous Substances on, under, about or migrating to or from the
HEP Purchased Assets or the disposal or release of Hazardous
Substances generated by operation of the HEP Purchased Assets at
non-HEP Purchased Asset locations), including, without limitation,
(1) the cost and expense of any investigation, assessment,
evaluation, monitoring, containment, cleanup, repair, restoration,
remediation, or other corrective action required or necessary under
Environmental Laws, (2) the cost or expense of the preparation and
implementation of any closure, remedial, corrective action, or other
plans required or necessary under Environmental Laws, and (3) the
cost and expense for any environmental or Toxic Tort pre-trial,
trial, or appellate legal or litigation support work;
but only to the extent that such violation complained of under
Section 10(a)(i)(A)
or such events or conditions included under Section 10(a)(i)
(B)
occurred before the
Closing Date (collectively, “
Covered Environmental Losses
”); or
(ii)
Burden of Proof for Tank Claims
. To the extent that a good faith claim by
HEP Tulsa or its Related Indemnified Parties for indemnification under
Section
10(a)(i)(A)
or
Section 10(a)(i)(B)
arises from events or conditions at the tanks
included in the HEP Purchased Assets or the soil immediately underneath such tanks or such
tanks’ secondary containment, and Holly Tulsa refuses to provide such indemnification, then
the burden of proof shall be on Holly Tulsa to demonstrate that the events or conditions
giving rise to the claim arose after the Closing Date.
(iii)
Indemnification of Holly Tulsa
. HEP Tulsa shall indemnify, defend and
hold harmless Holly Tulsa and its Related Indemnified Parties from and against environmental
and Toxic Tort losses (including, without limitation, economic losses, diminution in value
and lost profits suffered by third parties), damages, injuries (including, without
limitation, personal injury and death), liabilities, claims, demands, causes of action,
judgments, settlements, fines, penalties, costs, and expenses (including,
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17
without limitation, court costs and reasonable attorney’s and expert’s fees) of any and every kind
or character, known or unknown, fixed or contingent, suffered or incurred by Holly Tulsa and
its Related Indemnified Parties or any third party to the extent arising out of:
(A) any violation or correction of violation of Environmental Laws
associated with the operation of the HEP Purchased Assets by a Person
other than a Holly Entity or ownership and operation of the HEP
Purchased Assets by a Person other than a Holly Entity, or
(B) any event or condition associated with the operation of the HEP
Purchased Assets by a Person other than Holly Tulsa and its
Affiliates or ownership and operation of the HEP Purchased Assets by
a Person other than Holly Tulsa and its Affiliates (including, but
not limited to, the presence of Hazardous Substances on, under, about
or migrating to or from the HEP Purchased Assets or the disposal or
release of Hazardous Substances generated by operation of the HEP
Purchased Assets at non-HEP Purchased Asset locations) except, where
Holly Tulsa or one of its Affiliates is operating an HEP Purchased
Asset, to the extent resulting from the negligent acts or omissions
or willful misconduct of Holly Tulsa or such Affiliate including,
without limitation, (1) the cost and expense of any investigation,
assessment, evaluation, monitoring, containment, cleanup, repair,
restoration, remediation, or other corrective action required or
necessary under Environmental Laws, (2) the cost or expense of the
preparation and implementation of any closure, remedial, corrective
action, or other plans required or necessary under Environmental
Laws, and (3) the cost and expense for any environmental or Toxic
Tort pre-trial, trial, or appellate legal or litigation support work;
but only to the extent such violation complained of under
Section 10(a)(iii)(A)
or
such events or conditions included under
Section 10(a)(iii)(B)
occurred after the
Closing Date;
provided
,
however
, that nothing stated above shall make HEP
Tulsa responsible for any post-Closing Date negligent actions or omissions or willful
misconduct by Holly Tulsa or its Affiliates.
(b)
Indemnification Procedures
.
(i) The Indemnified Party agrees that promptly after it becomes aware of facts giving
rise to a claim for indemnification under this Agreement, it will provide notice thereof in
writing to the Indemnifying Party, specifying the nature of and specific basis for such
claim.
(ii) The Indemnifying Party shall have the right to control all aspects of the defense
of (and any counterclaims with respect to) any claims brought against the
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Tankage and Loading Rack Throughput Agreement (Tulsa East)
18
Indemnified Party that are covered by the indemnification under this Agreement, including, without limitation,
the selection of counsel, determination of whether to appeal any decision of any court and
the settling of any such matter or any issues relating thereto; provided, however, that no
such settlement shall be entered into without the consent of the Indemnified Party unless it
includes a full release of the Indemnified Party from such matter or issues, as the case may
be.
(iii) The Indemnified Party agrees to cooperate fully with the Indemnifying Party, with
respect to all aspects of the defense of any claims covered by the indemnification under
this Agreement, including, without limitation, the prompt furnishing to the Indemnifying
Party of any correspondence or other notice relating thereto that the Indemnified Party may
receive, permitting the name of the Indemnified Party to be utilized in connection with such
defense, the making available to the Indemnifying Party of any files, records or other
information of the Indemnified Party that the Indemnifying Party considers relevant to such
defense and the making available to the Indemnifying Party of any employees of the
Indemnified Party;
provided
,
however
, that in connection therewith the
Indemnifying Party agrees to use reasonable efforts to minimize the impact thereof on the
operations of the Indemnified Party and further agrees to maintain the confidentiality of
all files, records, and other information furnished by the Indemnified Party pursuant to
this
Section 10(b)
. In no event shall the obligation of the Indemnified Party to
cooperate with the Indemnifying Party as set forth in the immediately preceding sentence be
construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel
in connection with the defense of any claims covered by the indemnification set forth in
this Agreement;
provided
,
however
, that the Indemnified Party may, at its
own option, cost and expense, hire and pay for counsel in connection with any such defense.
The Indemnifying Party agrees to keep any such counsel hired by the Indemnified Party
informed as to the status of any such defense, but the Indemnifying Party shall have the
right to retain sole control over such defense.
(iv) In determining the amount of any loss, cost, damage or expense for which the
Indemnified Party is entitled to indemnification under this Agreement, the gross amount of
the indemnification will be reduced by all amounts recovered by the Indemnified Party under
contractual indemnities (other than insurance policies) from third Persons. An Indemnified
Party shall be obligated to pursue all contractual indemnities that such Indemnified Party
has with third Persons outside of this Agreement,
provided
,
however
, if the
Indemnified Party’s right to such indemnification is assignable, the Indemnified Party may,
in its sole discretion and in lieu of pursuing such claim, elect to assign such
indemnification claim to the Indemnifying Party to pursue and shall reasonably cooperate
with the Indemnifying Party (including, without limitation, making its relevant books,
records, officers, information and testimony reasonably available to
the Indemnifying Party) in the Indemnifying Party’s pursuit of such claim. In the
event the Indemnified Party recovers under a contractual indemnity from a third Person
outside of this Agreement, the amount recovered, less the reasonable out-of-pocket fees and
expenses incurred by the Indemnified Party in recovering such amounts, shall reduce the
amount such Indemnified Party may recover under this Agreement and if the Indemnified Party
receives any such amounts subsequent to an indemnification payment by the Indemnifying Party
in respect of such losses, then such Indemnified Party shall promptly
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19
reimburse the Indemnifying Party for any payment made or expense incurred by such Indemnifying Party in
connection with providing such indemnification payment up to the amount so received by the
Indemnified Party.
(v) The date on which notification of a claim for indemnification is received by the
Indemnifying Party shall determine whether such claim is timely made.
(c)
Survival of Indemnification
. The provisions of this
Section 10
shall
survive the termination of this Agreement (including any termination following the sale of the HEP
Purchased Assets).
Section 11.
Right of First Refusal.
The Parties acknowledge the right of
first refusal of Holly Tulsa with respect to the Pipelines, Tankage, and Loading Racks provided in
the Omnibus Agreement.
Section 12.
Limitation of Damages.
(a) NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS
AGREEMENT AND EXCEPT FOR CLAIMS MADE BY THIRD PARTIES WHICH SHALL NOT BE LIMITED BY THIS PARAGRAPH,
THE PARTIES AGREE THAT THE RECOVERY BY ANY PARTY OF ANY LIABILITIES, DAMAGES, COSTS OR OTHER
EXPENSES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH OR NONFULFILLMENT BY A PARTY OF ANY
OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS OR OTHER OBLIGATIONS UNDER THIS
AGREEMENT, SHALL BE LIMITED TO ACTUAL DAMAGES AND SHALL NOT INCLUDE OR APPLY TO, NOR SHALL ANY
PARTY BE ENTITLED TO RECOVER, ANY INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES
(INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS
INTERRUPTION OR DIMINUTION IN VALUE) SUFFERED OR INCURRED BY ANY PARTY;
PROVIDED
,
HOWEVER
, THAT SUCH RESTRICTION AND LIMITATION SHALL NOT APPLY (x) AS A RESULT OF A THIRD
PARTY CLAIM FOR SUCH INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES OR (y) TO INDIRECT,
CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT
OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) THAT ARE A RESULT
OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE BREACHING OR NONFULFILLING PARTY OR ITS
AFFILIATES.
(b) Notwithstanding anything in this Agreement to the contrary and solely for the purpose of
determining which of Holly Tulsa or HEP Tulsa, as applicable, shall be liable in a particular
circumstance, no Party shall be liable to another Party for any loss, damage, injury, judgment,
claim, cost, expense or other liability suffered or incurred by such Party (the “
Damaged
Party
”) except to the extent that the Party causes such loss, damage, injury, judgment, claim,
cost, expense or other liability suffered or incurred by the Damaged Party or owns or operates the
Pipelines, Tankage, or Loading Racks or other property in question responsible for
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causing such loss, damage, injury, judgment, claim, cost, expense or other liability suffered or incurred by the
Damaged Party.
Section 13.
Miscellaneous
(a) Amendments and Waivers. No amendment or modification of this Agreement shall be valid
unless it is in writing and signed by the Parties. No waiver of any provision of this Agreement
shall be valid unless it is in writing and signed by the Party against whom the waiver is sought to
be enforced. Any of the exhibits or schedules to this Agreement may be amended, modified, revised
or updated by the Parties if each of the Parties executes an amended, modified, revised or updated
exhibit or schedule, as applicable, and attaches it to this Agreement. Such amended, modified,
revised or updated exhibits or schedules shall be sequentially numbered (e.g. Schedule I-1,
Schedule I-2, etc.), dated and appended as an additional exhibit or schedule to this Agreement and
shall replace the prior exhibit or schedule, as applicable, in its entirety, except as specified
therein. No failure or delay in exercising any right hereunder, and no course of conduct, shall
operate as a waiver of any provision of this Agreement. No single or partial exercise of a right
hereunder shall preclude further or complete exercise of that right or any other right hereunder.
(b) Successors and Assigns. This Agreement shall inure to the benefit of, and shall be
binding upon, Holly Tulsa, HEP Tulsa and their respective successors and permitted assigns.
Neither this Agreement nor any of the rights or obligations hereunder shall be assigned without the
prior written consent of Holly Tulsa (in the case of any assignment by HEP Tulsa) or HEP Tulsa (in
the case of any assignment by Holly Tulsa), in each case, such consent is not to be unreasonably
withheld or delayed;
provided
,
however
, that (i) HEP Tulsa may make such an assignment (including a
partial pro rata assignment) to an Affiliate of HEP Tulsa without Holly Tulsa’s consent, (ii) Holly
Tulsa may make such an assignment (including a pro rata partial assignment) to an Affiliate of
Holly Tulsa without HEP Tulsa’s consent, (iii) Holly Tulsa may make a collateral assignment of
their rights and obligations hereunder, and (iv) HEP Tulsa may make a collateral assignment of
their rights hereunder and/or grant a security interest in all or a portion of the Pipelines,
Tankage, and Loading Racks to a bona fide third party lender or debt holder, or trustee or
representative for any of them, without Holly Tulsa’s consent, if such third party lender, debt
holder or trustee shall have executed and delivered to Holly Tulsa a non-disturbance agreement in
such form as is reasonably satisfactory to Holly Tulsa and Holly Tulsa executes an acknowledgement
of such collateral assignment in such form as may from time to time be reasonably requested. Any
attempt to make an assignment otherwise than as permitted by the foregoing shall be null and void.
The Parties agree to require their respective successors, if any, to expressly assume, in a form of
agreement reasonably acceptable to the other Parties, their obligations under this Agreement.
(c)
Severability
. If any provision of this Agreement shall be held invalid or
unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this
Agreement shall remain in full force and effect.
(d)
Choice of Law
. This Agreement shall be subject to and governed by the laws of the
State of Delaware, excluding any conflicts-of-law rule or principle that might refer the
construction or interpretation of this Agreement to the laws of another state.
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(e)
Arbitration Provision
. Any and all Arbitrable Disputes must be resolved through
the use of binding arbitration using three arbitrators, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, as supplemented to the extent necessary
to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United
States Code). If there is any inconsistency between this
Section 13(e)
and the Commercial
Arbitration Rules or the Federal Arbitration Act, the terms of this
Section 13(e)
will
control the rights and obligations of the Parties. Arbitration must be initiated within the time
limits set forth in this Agreement, or if no such limits apply, then within a reasonable time or
the time period allowed by the applicable statute of limitations. Arbitration may be initiated by
a Party (“
Claimant
”) serving written notice on the other Party (“
Respondent
”) that
the Claimant elects to refer the Arbitrable Dispute to binding arbitration. Claimant’s notice
initiating binding arbitration must identify the arbitrator Claimant has appointed. The Respondent
shall respond to Claimant within thirty (30) days after receipt of Claimant’s notice, identifying
the arbitrator Respondent has appointed. If the Respondent fails for any reason to name an
arbitrator within the 30-day period, Claimant shall petition the American Arbitration Association
for appointment of an arbitrator for Respondent’s account. The two arbitrators so chosen shall
select a third arbitrator within thirty (30) days after the second arbitrator has been appointed.
The Claimant will pay the compensation and expenses of the arbitrator named by it, and the
Respondent will pay the compensation and expenses of the arbitrator named by or for it. The costs
of petitioning for the appointment of an arbitrator, if any, shall be paid by Respondent. The
Claimant and Respondent will each pay one-half of the compensation and expenses of the third
arbitrator. All arbitrators must (i) be neutral parties who have never been officers, directors or
employees of any of Holly Tulsa, HEP Tulsa or any of their Affiliates and (ii) have not less than
seven (7) years experience in the petroleum transportation industry. The hearing will be conducted
in Dallas, Texas and commence within thirty (30) days after the selection of the third arbitrator.
Holly Tulsa, HEP Tulsa and the arbitrators shall proceed diligently and in good faith in order that
the award may be made as promptly as possible. Except as provided in the Federal Arbitration Act,
the decision of the arbitrators will be binding on and non-appealable by the Parties hereto. The
arbitrators shall have no right to grant or award indirect, consequential, punitive or exemplary
damages of any kind. The Arbitrable Disputes may be arbitrated in a common proceeding along with
disputes under other agreements between Holly Tulsa, HEP Tulsa or their Affiliates to the extent
that the issues raised in such disputes are related. Without the written consent of the Parties,
no unrelated disputes or third party disputes may be joined to an arbitration pursuant to this
Agreement.
(f)
Rights of Limited Partners
. The provisions of this Agreement are enforceable
solely by the Parties, and no limited partner of the Partnership shall have the right, separate and
apart from the Partnership, to enforce any provision of this Agreement or to compel any Party to
comply with the terms of this Agreement.
(g)
Further Assurances
. In connection with this Agreement and all transactions
contemplated by this Agreement, each signatory Party hereto agrees to execute and deliver such
additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of
this Agreement and all such transactions.
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22
(h)
Headings
. Headings of the Sections of this Agreement are for convenience of the
Parties only and shall be given no substantive or interpretative effect whatsoever. All references
in this Agreement to Sections are to Sections of this Agreement unless otherwise stated.
Section 14.
Guarantee by Holly
(a)
Payment and Performance Guaranty
. Holly unconditionally, absolutely, continually
and irrevocably guarantees, as principal and not as surety, to HEP Tulsa the punctual and complete
payment in full when due of all amounts due from Holly Tulsa under the Agreement (collectively, the
“
Holly Tulsa Payment Obligations
”). Holly agrees that HEP Tulsa shall be entitled to
enforce directly against Holly any of the Holly Tulsa Payment Obligations.
(b)
Guaranty Absolute
. Holly hereby guarantees that the Holly Tulsa Payment
Obligations will be paid strictly in accordance with the terms of the Agreement. The obligations
of Holly under this Agreement constitute a present and continuing guaranty of payment, and not of
collection or collectability. The liability of Holly under this Agreement shall be absolute,
unconditional, present, continuing and irrevocable irrespective of:
(i) any assignment or other transfer of the Agreement or any of the rights thereunder
of HEP Tulsa;
(ii) any amendment, waiver, renewal, extension or release of or any consent to or
departure from or other action or inaction related to the Agreement;
(iii) any acceptance by HEP Tulsa of partial payment or performance from Holly Tulsa;
(iv) any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment,
dissolution, liquidation or other like proceeding relating to Holly Tulsa or any action
taken with respect to the Agreement by any trustee or receiver, or by any court, in any such
proceeding;
(v) any absence of any notice to, or knowledge of, Holly, of the existence or
occurrence of any of the matters or events set forth in the foregoing subsections (i)
through (iv); or
(vi) any other circumstance which might otherwise constitute a defense available to, or
a discharge of, a guarantor.
The obligations of Holly hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of
the Holly Tulsa Payment Obligations or otherwise.
(c)
Waiver
. Holly hereby waives promptness, diligence, all setoffs, presentments,
protests and notice of acceptance and any other notice relating to any of the Holly Tulsa Payment
Obligations and any requirement for HEP Tulsa to protect, secure, perfect or insure any security
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interest or lien or any property subject thereto or exhaust any right or take any action
against Holly Tulsa, any other entity or any collateral.
(d)
Subrogation Waiver
. Holly agrees that for so long as there is a current or
ongoing default or breach of this Agreement by Holly Tulsa, Holly shall not have any rights (direct
or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of
payment or recovery from Holly Tulsa for any payments made by Holly under this
Section 14
,
and Holly hereby irrevocably waives and releases, absolutely and unconditionally, any such rights
of subrogation, contribution, reimbursement, indemnification and other rights of payment or
recovery it may now have or hereafter acquire against Holly Tulsa during any period of default or
breach of this Agreement by Holly Tulsa until such time as there is no current or ongoing default
or breach of this Agreement by Holly Tulsa.
(e)
Reinstatement
. The obligations of Holly under this
Section 14
shall
continue to be effective or shall be reinstated, as the case may be, if at any time any payment of
any of the Holly Tulsa Payment Obligations is rescinded or must otherwise be returned to Holly
Tulsa or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition,
liquidation or reorganization of Holly Tulsa or such other entity, or for any other reason, all as
though such payment had not been made.
(f)
Continuing Guaranty
. This
Section 14
is a continuing guaranty and shall
(i) remain in full force and effect until the first to occur of the indefeasible payment in full of
all of the Holly Tulsa Payment Obligations, (ii) be binding upon Holly, its successors and assigns
and (iii) inure to the benefit of and be enforceable by HEP Tulsa and its respective successors,
transferees and assigns.
(g)
No Duty to Pursue Others
. It shall not be necessary for HEP Tulsa (and Holly
hereby waives any rights which Holly may have to require HEP Tulsa), in order to enforce such
payment by Holly, first to (i) institute suit or exhaust its remedies against Holly Tulsa or others
liable on the Holly Tulsa Payment Obligations or any other person, (ii) enforce HEP Tulsa’s rights
against any other guarantors of the Holly Tulsa Payment Obligations, (iii) join Holly Tulsa or any
others liable on the Holly Tulsa Payment Obligations in any action seeking to enforce this
Section 14
, (iv) exhaust any remedies available to HEP Tulsa against any security which
shall ever have been given to secure the Holly Tulsa Payment Obligations, or (v) resort to any
other means of obtaining payment of the Holly Tulsa Payment Obligations.
Section 15.
Guarantee by the Partnership and Operating Partnership
.
(a)
Payment and Performance Guaranty
. Each of the Partnership and the Operating
Partnership unconditionally, absolutely, continually and irrevocably guarantees, as principal and
not as surety, to Holly Tulsa the punctual and complete payment in full when due of all amounts due
from HEP Tulsa under the Agreement (collectively, the “
HEP Tulsa Payment Obligations
”).
Each of the Partnership and the Operating Partnership agrees that Holly Tulsa shall be entitled to
enforce directly against the Partnership and the Operating Partnership any of the HEP Tulsa Payment
Obligations.
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ankage and
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(b)
Guaranty Absolute
. Each of the Partnership and the Operating Partnership hereby
guarantees that the HEP Tulsa Payment Obligations will be paid strictly in accordance with the
terms of the Agreement. The obligations of each of the Partnership and the Operating Partnership
under this Agreement constitute a present and continuing guaranty of payment, and not of collection
or collectability. The liability of each of the Partnership and the Operating Partnership under
this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective
of:
(i) any assignment or other transfer of the Agreement or any of the rights thereunder
of Holly Tulsa;
(ii) any amendment, waiver, renewal, extension or release of or any consent to or
departure from or other action or inaction related to the Agreement;
(iii) any acceptance by Holly Tulsa of partial payment or performance from HEP Tulsa;
(iv) any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment,
dissolution, liquidation or other like proceeding relating to HEP Tulsa or any action taken
with respect to the Agreement by any trustee or receiver, or by any court, in any such
proceeding;
(v) any absence of any notice to, or knowledge of, the Partnership or the Operating
Partnership, of the existence or occurrence of any of the matters or events set forth in the
foregoing subsections (i) through (iv); or
(vi) any other circumstance which might otherwise constitute a defense available to, or
a discharge of, a guarantor.
The obligations of each of the Partnership and the Operating Partnership hereunder shall not
be subject to any reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the HEP Tulsa Payment Obligations or otherwise.
(c)
Waiver
. Each of the Partnership and the Operating Partnership hereby waives
promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other
notice relating to any of the HEP Tulsa Payment Obligations and any requirement for Holly Tulsa to
protect, secure, perfect or insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against HEP Tulsa, any other entity or any collateral.
(d)
Subrogation Waiver
. Each of the Partnership and the Operating Partnership agrees
that for so long as there is a current or ongoing default or breach of this Agreement by HEP Tulsa,
the Partnership and the Operating Partnership shall not have any rights (direct or indirect) of
subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery
from HEP Tulsa for any payments made by the Partnership or the Operating Partnership under this
Section 15
, and each of the Partnership and the Operating Partnership
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hereby irrevocably waives and releases, absolutely and unconditionally, any such rights of
subrogation, contribution, reimbursement, indemnification and other rights of payment or recovery
it may now have or hereafter acquire against HEP Tulsa during any period of default or breach of
this Agreement by HEP Tulsa until such time as there is no current or ongoing default or breach of
this Agreement by HEP Tulsa.
(e)
Reinstatement
. The obligations of the Partnership and the Operating Partnership
under this
Section 15
shall continue to be effective or shall be reinstated, as the case
may be, if at any time any payment of any of the HEP Tulsa Payment Obligations is rescinded or must
otherwise be returned to HEP Tulsa or any other entity, upon the insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation or reorganization of HEP Tulsa or such other
entity, or for any other reason, all as though such payment had not been made.
(f)
Continuing Guaranty
. This
Section 15
is a continuing guaranty and shall
(i) remain in full force and effect until the first to occur of the indefeasible payment in full of
all of the HEP Tulsa Payment Obligations, (ii) be binding upon the Partnership, the Operating
Partnership, and each of their respective successors and assigns and (iii) inure to the benefit of
and be enforceable by Holly Tulsa and their respective successors, transferees and assigns.
(g)
No Duty to Pursue Others
. It shall not be necessary for Holly Tulsa (and each of
the Partnership and the Operating Partnership hereby waives any rights which the Partnership or the
Operating Partnership, as applicable, may have to require Holly Tulsa), in order to enforce such
payment by the Partnership or the Operating Partnership, first to (i) institute suit or exhaust its
remedies against HEP Tulsa or others liable on the HEP Tulsa Payment Obligations or any other
person, (ii) enforce Holly Tulsa’ rights against any other guarantors of the HEP Tulsa Payment
Obligations, (iii) join HEP Tulsa or any others liable on the HEP Tulsa Payment Obligations in any
action seeking to enforce this
Section 15
, (iv) exhaust any remedies available to Holly
Tulsa against any security which shall ever have been given to secure the HEP Tulsa Payment
Obligations, or (v) resort to any other means of obtaining payment of the HEP Tulsa Payment
Obligations.
[Remainder of page intentionally left blank. Signature pages follow.]
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IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of the date first
written above.
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HEP TULSA:
HEP TULSA LLC
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By:
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/s/ David G. Blair
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David G. Blair
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Senior Vice President
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HOLLY TULSA:
HOLLY REFINING & MARKETING
— TULSA LLC
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By:
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/s/ David L. Lamp
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David L. Lamp
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President
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ACKNOWLEDGED AND AGREED
FOR PURPOSES OF
Section 9(b)
AND
Section 14
:
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HOLLY CORPORATION
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By:
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/s/
David L. Lamp
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David L. Lamp
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President
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Signature Page 1 of 2 to the Pipelines, Tankage and Loading Rack Throughput Agreement (Tulsa East)
ACKNOWLEDGED AND AGREED
FOR PURPOSES OF
Section 9(b)
AND
Section 15
:
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HOLLY ENERGY PARTNERS, L.P.
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By:
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HEP Logistics Holdings, L.P.,
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its General Partner
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By:
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Holly Logistic Services, L.L.C.,
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its General Partner
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By:
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/s/ David G. Blair
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David G. Blair
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Senior Vice President
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ACKNOWLEDGED AND AGREED
FOR PURPOSES OF
Section 15
:
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HOLLY ENERGY PARTNERS-OPERATING, L.P.
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By:
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HEP Logistics GP, L.L.C.,
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its General Partner
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By:
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/s/ David G. Blair
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David G. Blair
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Senior Vice President
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Signature Page 2 of 2 to the Pipelines, Tankage and Loading Rack Throughput Agreement (Tulsa East)
SCHEDULE I
PIPELINE TARIFF
Pipeline Tariff
$0.10 per barrel
Schedule I-1
SCHEDULE II
TANKAGE TARIFFS
$0.30 per barrel
$0.10 per barrel
$0.22 per barrel
Schedule II-1
SCHEDULE III
LOADING RACKS TARIFF
$0.30 per barrel
Schedule III-1
SCHEDULE IV
ASSUMED OPEX
$1,702,000.00
Schedule IV-1
EXHIBIT A
TANKAGE
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TANK ID
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REFINED PRODUCT
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CAPACITY (BBLS)
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10
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ULSD #2 (XT)
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37,500
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11
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ULSD #2 (XT)
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37,500
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102
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Kerosene
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37,500
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103
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Kerosene
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37,500
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104
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ULSD #2 (XT)
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37,500
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110
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ULSD #1
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37,500
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111
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Kerosene
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37,500
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115A
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ULSD #2 (XT)
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151,000
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115B
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ULSD #2 (XT)
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151,000
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116
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Kerosene
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37,500
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117
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ULSD #2 (XT)
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63,000
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450
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Premium Unleaded
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12,000
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451
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USLD #2 (XT)
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12,000
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452
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USLD #2 (XT)
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12,000
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464
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Unleaded Regular
|
|
|
80,000
|
|
|
465
|
|
Unleaded Regular
|
|
|
74,000
|
|
|
466
|
|
Unleaded Regular
|
|
|
80,000
|
|
|
467
|
|
Unleaded Regular
|
|
|
80,000
|
|
|
470
|
|
Unleaded Regular
|
|
|
80,000
|
|
|
472
|
|
Unleaded Regular
|
|
|
151,000
|
|
|
473
|
|
Premium Unleaded (ST)
|
|
|
80,000
|
|
|
601
|
|
Unleaded Regular
|
|
|
19,000
|
|
|
602
|
|
Premium Unleaded (ST)
|
|
|
10,000
|
|
|
603
|
|
USLD #2 (XT)
|
|
|
2,000
|
|
|
605
|
|
Ethanol
|
|
|
5,000
|
|
|
606
|
|
Empty
|
|
|
500
|
|
Exhibit A
Exhibit
10.2
INDEMNIFICATION PROCEEDS AND PAYMENTS
ALLOCATION AGREEMENT
This Indemnification Proceeds and Payments Allocation Agreement (this “
Agreement
”) is
dated as of December 1, 2009, by and between Holly Refining & Marketing-Tulsa, LLC (“
Holly
Tulsa
”) and HEP Tulsa LLC (“
HEP Tulsa
”). Each of Holly Tulsa and HEP Tulsa are
individually referred to herein as a “
Party
” and collectively as the “
Parties
.”
RECITALS:
WHEREAS, pursuant to that certain Asset Sale and Purchase Agreement dated as of October 19,
2009 (as the same may be amended or supplemented from time-to-time hereafter, the “
Purchase
Agreement
”) by and among Holly Tulsa, HEP Tulsa and Sinclair Tulsa Refining Company
(“
Sinclair
”), Holly Tulsa and HEP Tulsa each acquired certain refining assets and other
related assets located in Tulsa, Oklahoma;
WHEREAS, the Purchase Agreement has provisions under which (i) Sinclair has agreed to
indemnify HEP Tulsa and Holly Tulsa and certain of related Persons for certain damages and losses
that any of them may suffer or incur, subject to caps and deductibles, and (ii) HEP Tulsa and Holly
Tulsa have agreed to indemnify Sinclair and certain of its related Persons for certain damages and
losses that any of them may suffer or incur, subject to caps and deductibles, all as set forth in
the Purchase Agreement;
WHEREAS, after negotiation, Sinclair has refused to provide for caps and deductibles that
would apply separately to HEP Tulsa and its related Persons and Holly Tulsa and its related
Persons; and
WHEREAS, in order to avoid conflicts of interests that may arise in the process of HEP Tulsa
and Holly Tulsa paying or seeking payment for indemnification claims as the result of the
application of the single caps and deductibles set forth in the Purchase Agreement, Holly Tulsa and
HEP Tulsa desire to enter into this Agreement to, among other things, set forth in advance the
terms and conditions under which each will allocate indemnification proceeds received from Sinclair
and allocate indemnification amounts paid to Sinclair.
NOW, THEREFORE, in consideration of the covenants and obligations contained herein, the
Parties hereby agree as follows:
Section 1.
Definitions
As used in this Agreement, the following terms shall have the meanings indicated below.
Capitalized terms used throughout this Agreement and not otherwise defined herein shall have the
meaning given them in the Purchase Agreement.
“
Affiliate
” means, with to respect to a specified person, any other person
controlling, controlled by or under common control with that first person. As used in this
definition, the term “control” includes (i) with respect to any person having voting securities or
the equivalent and
elected directors, managers or persons performing similar functions, the ownership of or power
to vote, directly or indirectly, voting securities or the equivalent representing 50% or more of
the power to vote in the election of directors, managers or persons performing similar functions,
(ii) ownership of 50% or more of the equity or equivalent interest in any person and (iii)the
ability to direct the business and affairs of any person by acting as a general partner, manager or
otherwise. Notwithstanding the foregoing, for purposes of this Agreement, Holly Tulsa, on the one
hand, and HEP Tulsa, on the other hand, shall not be considered affiliates of each other and
subsidiaries of HEP Tulsa shall not be considered affiliates of Holly Tulsa.
“
Agreement
” has the meaning set forth in the preamble to this Agreement.
“
Applicable Law
” means any applicable statute, law, regulation, ordinance, rule,
judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license,
agreement, requirement, or other governmental restriction or any similar form of decision of, or
any provision or condition of any permit, license or other operating authorization issued under any
of the foregoing by, or any determination of, any Governmental Authority having or asserting
jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each
case as amended (including, without limitation, all of the terms and provisions of the common law
of such Governmental Authority), as interpreted and enforced at the time in question.
“
Arbitrable Dispute
” means any and all disputes, Claims, controversies and other
matters in question between Holly Tulsa and HEP Tulsa, arising out of or relating to this Agreement
or the alleged breach hereof, or in any way relating to the subject matter of this Agreement
regardless of whether (a) allegedly extra-contractual in nature, (b) sounding in contract, tort or
otherwise, (c) provided for by Applicable Law or otherwise or (d) seeking damages or any other
relief, whether at law, in equity or otherwise.
“
Claim
” means any existing or threatened future claim, demand, suit, action,
investigation, proceeding, governmental action or cause of action of any kind or character (in each
case, whether civil, criminal, investigative or administrative), known or unknown, under any
theory, including those based on theories of contract, tort, statutory liability, strict liability,
employer liability, premises liability, products liability, breach of warranty or malpractice.
“
Claimant
” has the meaning set forth in
Section 10(e)
.
“
Fundamental Representation Payments
” has the meaning set forth in
Section
2(b)(iii)
.
“
Fundamental Representation Proceeds
” has the meaning set forth in
Section
2(b)(i)
.
“
General Payments
” has the meaning set forth in
Section 2(b)(iv)
.
“
General Proceeds
” has the meaning set forth in
Section 2(b)(ii)
.
“
Governmental Authority
” means any federal, state, local or foreign government or any
provincial, departmental or other political subdivision thereof, or any entity, body or authority
exercising executive, legislative, judicial, regulatory, administrative or other governmental
Indemnification Proceeds and Payments Allocation Agreement
2
functions or any court, department, commission, board, bureau, agency, instrumentality or
administrative body of any of the foregoing.
“
HEP Tulsa
” has the meaning set forth in the preamble to this Agreement.
“
HEP Tulsa Payment Obligations
” has the meaning set forth in
Section 12(a)
.
“
Holly
” means Holly Corporation, a Delaware corporation.
“
Holly Tulsa
” has the meaning set forth in the preamble to this Agreement.
“
Holly Tulsa Payment Obligations
” has the meaning set forth in
Section 11(a)
.
“
Measurement Period
” has the meaning set forth in
Section 2(a)
.
“
Purchase Agreement
” has the meaning set forth in the recitals to this Agreement.
“
Operating Partnership
” means Holly Energy Partners-Operating, L.P., a Delaware
limited partnership.
“
Parties
” or “
Party
” has the meaning set forth in the preamble to this
Agreement.
“
Partnership
” means Holly Energy Partners, L.P., a Delaware limited partnership.
“
Payments
” means any and all payments made by a Party pursuant to the indemnification
provisions of the Purchase Agreement. For all purposes under this Agreement, including for the
purposes of calculating or reporting Payments, any amounts paid by an Affiliate of such Party in
its capacity as a guarantor or other surety of such Party for its indemnification obligations under
the Purchase Agreement shall constitute payments made by such Party.
“
Person
” means an individual or a corporation, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, government agency or political
subdivision thereof or other entity.
“
Prime Rate
” means the prime rate per annum announced by Union Bank, N.A., or if Union
Bank, N.A. no longer announces a prime rate for any reason, the prime rate per annum announced by
the largest U.S. bank measured by deposits from time to time as its base rate on corporate loans,
automatically fluctuating upward or downward with each announcement of such prime rate.
“
Proceeds
” means any and all indemnification payments received by a Party or its
Related Indemnified Parties (to the extent such payment was received by such Related Indemnified
Party in its capacity as a Related Indemnified Party of such Party in accordance with
the definition of Related Indemnified Parties) pursuant to the indemnification provisions of the
Purchase Agreement.
“
Related Indemnified Parties
” means, with respect to each Party hereto, such Party’s
Affiliates, such Party and its Affiliates’ successors and assigns, and each of the respective
Indemnification Proceeds and Payments Allocation Agreement
3
directors and officers (or Persons in any similar capacity if such Person is not a corporation),
employees, consultants and agents of such Party, its Affiliates and their respective successors and
assigns;
provided
,
however
, that if any Related Indemnified Party is a Related
Indemnified Party of both Holly Tulsa and HEP Tulsa, then, for the purposes of reporting and
calculating the Proceeds received by a Party hereto and its Related Indemnified Parties under
Section 2
of this Agreement, then such Person shall be deemed to be a Related Indemnified
Party of such Party to the extent of the Proceeds received by such Person as a result of it acting
in its capacity as a director, officer, employee, consultant, agent or other capacity for or on
behalf of such Party.
“
Refinery
” means the refinery located at Tulsa, Oklahoma and formerly owned by
Sinclair.
“
Respondent
” has the meaning set forth in
Section 10(e)
.
“
Retention Amount
” has the meaning set forth in
Section 6(d)
.
“
Sinclair
” has the meaning set forth in the recitals to this Agreement.
“
Term
” has the meaning set forth in
Section 7
.
Section 2.
Measurement Periods and Reporting.
(a)
Measurement Periods
. Each one-year period during the Term (each being a
“
Measurement Period
”) shall begin on the Effective Date or anniversary of the Effective
Date, as applicable, and shall end at midnight on the day immediately preceding the next
anniversary of the Effective Date. The final day of each Measurement Period shall be referred to
as a “
Measurement Date
.”
(b)
Reporting of Proceeds Received and Payments Made
. On the fifth (5
th
)
business day following each Measurement Date during the Term, if a Party or its Related Indemnified
Parties have, during the Measurement Period ending on such Measurement Date, (x) received any
Proceeds, (y) made any Payments, or (z) made or received a claim for indemnification for Damages
under the Purchase Agreement during such Measurement Period that was not paid as a result of the
operation of the caps, baskets, deductibles or similar limitations imposed under the Purchase
Agreement, such Party shall notify the other Party in writing of the total amount of all such
Payments or Proceeds (or the amounts that would have constituted Payments or Proceeds but for the
operation of the caps, baskets, deductibles or similar limitations imposed under the Purchase
Agreement) and shall specify:
(i) the amount of any such Proceeds constituting payments received for breaches of
Fundamental Representations (such Proceeds being “
Fundamental Representation
Proceeds
”);
(ii) the amount of any such Proceeds that were other than Fundamental Representation
Proceeds (any such other Proceeds being “
General Proceeds
”);
Indemnification Proceeds and Payments Allocation Agreement
4
(iii) the amount of any such Payments constituting payments made for breaches of
Fundamental Representations (such Payments being “
Fundamental Representation
Payments
”);
(iv) the amount of any such Payments that were other than Fundamental Representation
Payments (any such other Payments being “
General Payments
”); and
(v) the amount by which such Proceeds or Payments described in (i) through (iv) above
were reduced by the application of caps, baskets, deductibles or similar limitations imposed
pursuant to the Purchase Agreement.
(c)
Disregard of Minor Claims and Certain Proceeds
. Any (i) Minor Claims, and (ii)
Proceeds received as a result of indemnification payments that are not subject to any caps, baskets
or thresholds pursuant to
Section 8.4.10
of the Purchase Agreement, shall be disregarded
for all purposes in this Agreement, including for the purpose of calculating payments to be made
pursuant to this Agreement.
Section 3.
Re-Allocation Payments Regarding Indemnification Proceeds Received
.
(a)
Reallocation of Fundamental Representation Proceeds
. If, as of any Measurement
Date, the total amount of all Fundamental Representation Proceeds received by any Party and its
Related Indemnified Parties since the Effective Date (including any prior amounts received by such
Party and its Related Indemnified Parties pursuant to this
Section 3(a)
) exceeds such
Party’s and its Related Indemnified Parties’ Pro-Rata Portion of such Fundamental Representation
Proceeds, then such Party shall pay such excess amount to the other Party.
(b)
Reallocation of General Proceeds
. If, as of any Measurement Date, the total
amount of all General Proceeds received by any Party and its Related Indemnified Parties since the
Effective Date (including any prior amounts received by such Party and its Related Indemnified
Parties pursuant to this
Section 3(b)
) exceeds such Party’s and its Related Indemnified
Parties’ Pro-Rata Portion of such General Proceeds, then such Party shall pay such excess amount to
the other Party.
(c)
Calculation of Pro-Rata Portion of Proceeds
.
(i)
Calculation of Pro-Rata Portion of Fundamental Representation Proceeds
. A
Party’s and its Related Indemnified Parties’ “
Pro-Rata Portion
” of the Fundamental
Representation Proceeds as of any Measurement Date means the amount obtained by using the
following formula:
FPr = A x (B/C)
where:
FPr
is a Party’s and its Related Indemnified Parties’ Pro-Rata Portion
of the Fundamental Representation Proceeds;
Indemnification Proceeds and Payments Allocation Agreement
5
A
= the total amount of all Fundamental Representation Proceeds
received by all Parties and their Related Indemnified Parties from the
Seller (or paid on behalf of or for the account of Seller) since the
Effective Date;
B
= the total value of all Damages attributable to breaches of
Fundamental Representations for which such Party and its Related Indemnified
Parties would be entitled to indemnification pursuant to the Purchase
Agreement if no deductibles, caps, baskets or similar limitations were
imposed under the Purchase Agreement; and
C
= the total value of all Damages attributable to breaches of
Fundamental Representations for which all Parties and their Related
Indemnified Parties are entitled to indemnification pursuant to the Purchase
Agreement if no deductibles, caps, baskets or similar limitations were
imposed under the Purchase Agreement.
(ii)
Calculation of Pro-Rata Portion of General Proceeds
. A Party’s and its
Related Indemnified Parties’ “
Pro-Rata Portion
” of the General Proceeds as of any
Measurement Date means the amount obtained by using the following formula:
GPr = D x (E/F)
where:
GPr
is a Party’s and its Related Indemnified Parties’ Pro-Rata Portion of the
General Proceeds;
D
= the total amount of all General Proceeds received by all Parties and their
Related Indemnified Parties from the Seller (or paid on behalf of or for the account
of Seller) since the Effective Date;
E
= the total value of all Damages attributable to matters for which such Party
and its Related Indemnified Parties would be entitled to indemnification pursuant to
the Purchase Agreement if no deductibles, caps, baskets or similar limitations were
imposed under the Purchase Agreement, other than Damages for breaches of Fundamental
Representations; and
F
= the total value of all Damages attributable to matters for which all
Parties and their Related Indemnified Parties would be entitled to indemnification
pursuant to the Purchase Agreement if no deductibles, caps, baskets or similar
limitations were imposed under the Purchase Agreement, other than Damages for
breaches of Fundamental Representations.
Indemnification Proceeds and Payments Allocation Agreement
6
Section 4.
Re-Allocation Payments Regarding Indemnification Payments Made
.
(a)
Reallocation of Fundamental Representation Payments
. If, as of any Measurement
Date, the total amount of all Fundamental Representation Payments paid by any Party since the
Effective Date (including any prior amounts paid by such Party pursuant to this
Section
4(a)
) is less than such Party’s Pro-Rata Portion of such Fundamental Representation Payments,
then such Party shall pay the amount of such shortfall to the other Party.
(b)
Reallocation of General Payments
. If, as of any Measurement Date, the total
amount of all General Payments paid by any Party since the Effective Date (including any prior
amounts paid by such Party pursuant to this
Section 4(b)
) is less than such Party’s
Pro-Rata Portion of such General Payments, then such Party shall pay the amount of such shortfall
to the other Party.
(c)
Calculation of Pro-Rata Portion of Payments
.
(i)
Calculation of Pro-Rata Portion of Fundamental Representation Payments
. A
Party’s “
Pro-Rata Portion
” of the Fundamental Representation Payments as of any
Measurement Date means the amount obtained by using the following formula:
FPa = H x (I/J)
where:
FPa
is a Party’s Pro-Rata Portion of the Fundamental Representation
Payments;
H
= the total amount of all Fundamental Representation Payments made by
all Parties (or paid on behalf of or for the account of a Party) to the
Seller Indemnified Parties since the Effective Date;
I
= the total value of all Damages attributable to breaches of
Fundamental Representations for which such Party would be required to
indemnify the Seller Indemnified Parties pursuant to the Purchase Agreement
if no deductibles, caps, baskets or similar limitations were imposed under
the Purchase Agreement; and
J
= the total value of all Damages attributable to breaches of
Fundamental Representations for which all Parties would be required to
indemnify the Seller Indemnified Parties pursuant to the Purchase Agreement
if no deductibles, caps, baskets or similar limitations were imposed under
the Purchase Agreement.
(ii)
Calculation of Pro-Rata Portion of General Payments
. A Party’s
“
Pro-Rata Portion
” of the General Payments as of any Measurement Date means the
amount obtained by using the following formula:
GPa = K x (L/M)
Indemnification Proceeds and Payments Allocation Agreement
7
where:
GPa
is a Party’s Pro-Rata Portion of the General Payments;
K
= the total amount of all General Payments made by all Parties (or paid on
behalf of or for the account of a Party) to the Seller Indemnified Parties since the
Effective Date;
L
= the total value of all Damages for which such Party would be required to
indemnify the Seller Indemnified Parties pursuant to the Purchase Agreement if no
deductibles, caps, baskets or similar limitations were imposed under the Purchase
Agreement, other than Damages for breaches of Fundamental Representations; and
M
= the total value of all Damages for which all Parties would be required to
indemnify the Seller Indemnified Parties pursuant to the Purchase Agreement if no
deductibles, caps, baskets or similar limitations were imposed under the Purchase
Agreement, other than Damages for breaches of Fundamental Representations.
Section 5.
Cooperation to Calculate Payment Amounts; Valuation of Claims; Dispute
of Payment Amounts
.
(a)
Cooperation to Calculate Payments
. The Parties shall use commercially reasonable
efforts and shall act in good faith to calculate any payments due under
Section 3
or
Section 4
, and shall provide to the other Party and its Representatives evidence and
records reasonably requested by the other Party and shall makes its personnel reasonably available
in such effort. Unless otherwise agreed by the Parties, representatives of the Parties shall meet
or communicate promptly following delivery of the notices required under
Section 2
to
calculate the amounts due to each Party, if any, pursuant to
Section 3
or
Section
4
.
(b)
Valuation of Damages
.
(i) If a claim for Damages under the Purchase Agreement is paid in full and not reduced
or limited by the operation of the caps, baskets, deductibles or similar limitations imposed
under the Purchase Agreement, the value of such Damages for the purposes of calculating the
amounts due under
Section 3
or
Section 4
shall be the amount so paid or
received by the Parties and their Related Indemnified Parties, as applicable.
(ii) If a claim for Damages under the Purchase Agreement is
not
paid in full as
a result of the operation of the caps, baskets, deductibles or similar limitations imposed
under the Purchase Agreement, then the Parties shall negotiate in good faith to calculate
the total value of such Damages for the purposes of calculating the amounts due under
Section 3
or
Section 4
and shall cooperate in such efforts and provide to
the other Party and its Representatives evidence and records reasonably requested by the
other Party and make its personnel reasonably available for such purpose. In the event the
Parties are unable to agree to such value by the date a payment required by
Section
3
or
Section 4
Indemnification Proceeds and Payments Allocation Agreement
8
would normally be due pursuant to
Section 6
, the parties shall submit the
valuation of such Damages to a mutually agreed damages valuation expert, who shall act as an
expert and not as an arbitrator and whose valuation shall be final and binding on the
parties hereto. If the parties are unable to agree upon a damages valuation expert by the
fifteenth (15
th
) business day following the Measurement Date for which a notice
has been delivered pursuant to
Section 2
, then the Parties shall submit the
selection of a damages valuation expert to arbitration pursuant to
Section 10(e)
.
(c)
Disputes
. If the Parties are unable to agree to the amount of any payment due
under this Agreement by the time such payment would normally be due pursuant to
Section 6
and the dispute relates solely to the inability to agree upon the value of Damages not paid in
full, then such dispute shall be resolved in accordance with
Section 5(b)
above. If
parties are unable to agree to the amount of any payment due under this Agreement by the time such
payment would normally be due under
Section 6
, and the dispute is
other than
one
relating solely to the inability to agree upon the value of Damages not paid in full, then the
Parties shall negotiate in good faith to resolve such dispute. If the dispute referred to in the
immediately preceding sentence is not resolved by the fifteenth (15
th
) day following the
Measurement Date to which such payment relates, then the parties shall resolve such dispute in
accordance with
Section 10(e)
.
Section 6.
Timing and Method of Payments; Offset; Obligation to Retain Certain
Proceeds
.
(a)
Timing and Method
. If any payments are required to be made with respect to a
Measurement Period, all such payments shall be made on the tenth (10
th
) business day
following the Measurement Date on which such Measurement Period ends in immediately available funds
by wire transfer to an account specified by the receiving Party, or by such other method as the
Parties may agree, unless the amount of such payments is being disputed in accordance with
Section 5(b)
or
Section 5(c)
, in which case the payment shall be made promptly
following resolution of the amount to be paid.
(b)
Offset of Current Amounts
. If the total amount of any undisputed payments owed by
a Party under
Section 3
and
Section 4
with respect to a Measurement Period exceed
the amount of undisputed payments that it owes to the other Party with respect to such Measurement
Period at the time such payments are being made, then, in lieu of each party making payments to
each other in the amounts owed, the amount so owed by the party owing the most shall be reduced by
the amount that it is so owed and it shall pay the difference to the other Party and the other
Party shall make no payment, though it shall be deemed for all purposes under this Agreement and
otherwise that each Party hereto paid the full amount of undisputed payments that it so owed prior
to such reduction and offset as provided in this
Section 6(b)
.
(c)
Interest on Delayed Payments
. In the event a payment that would ordinarily be due
on the tenth (10
th
) business day following the Measurement Date is not paid by such
tenth (10
th
) business day, whether the delay in payment is due to the dispute of the
amount of such payment or otherwise, then all unpaid amounts shall earn interest at the Prime Rate
from such tenth (10
th
) business day through and including the date of payment, but such
interest shall not constitute liquidated damages or the sole remedy available to a Party as a
result of a failure to
Indemnification Proceeds and Payments Allocation Agreement
9
timely pay amounts due hereunder, or an election of remedies by the Party receiving such
interest payment.
(d)
Obligation to Retain Certain Proceeds
. In the event a Party receives Proceeds and
those Proceeds, along will all other Proceeds received by such Party and its Related Indemnified
Parties since the Effective Date (including Proceeds received from the other Party pursuant to
Section 3
of this Agreement), exceeds the Retention Amount for such Party, then such Party
shall reserve and retain such excess amounts by depositing them in a segregated account at a
nationally recognized banking institution with deposit assets in excess of $1 billion and shall
remove and release such amounts so deposited from such account only (i) in order to make payments
to the other Party pursuant to this Agreement; or (ii) upon the expiration of the Term. For the
purposes of this
Section 6(d)
, the term “Retention Amount” shall mean $15 million with
respect to HEP Tulsa, and shall mean $30 million with respect to Holly Tulsa.
Section 7.
Effectiveness and Term
This Agreement shall be effective as of the Effective Time, and shall terminate at 12:01 a.m.
Dallas, Texas, time on the ninetieth (90
th
) day following final payment of all amounts
due with respect to the fourth (4
th
) full Measurement Period (the “
Term
).
Section 8.
Taxes
.
Any reallocation payments made under this Agreement shall be treated as purchase price
adjustments under the Purchase Agreement for tax purposes to the extent permitted under applicable
laws and regulations.
Section 9.
Notices
(a) Any notice or other communication given under this Agreement shall be in writing and shall
be (i) delivered personally, (ii) sent by documented overnight delivery service, (iii) sent by
email transmission, or (iv) sent by first class mail, postage prepaid (certified or registered
mail, return receipt requested). Such notice shall be deemed to have been duly given (x) if
received, on the date of the delivery, with a receipt for delivery, (y) if refused, on the date of
the refused delivery, with a receipt for refusal, or (z) with respect to email transmissions, on
the date the recipient confirms receipt. Notices or other communications shall be directed to the
following addresses:
Indemnification Proceeds and Payments Allocation Agreement
10
Notices to Holly Tulsa:
c/o Holly Corporation
100 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: David L. Lamp
Email address:
president@hollycorp.com
with
a copy, which shall not constitute notice, but is required in order to give proper notice, to:
c/o Holly Corporation
100 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: General Counsel
Email address:
generalcounsel@hollycorp.com
Notices to HEP Tulsa:
c/o Holly Energy Partners, L.P.
100 Crescent Court, Suite 1600
Dallas, TX 75201
Attn: David G. Blair
Email address:
SVP-HEP@hollyenergy.com
with
a copy, which shall not constitute notice, but is required in order to give proper notice, to:
c/o Holly Energy Partners, L.P.
100 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: General Counsel
Email address:
generalcounsel@hollycorp.com
(b) Any Party may at any time change its address for service from time to time by giving
notice to the other Parties in accordance with this
Section 9
.
Section 10.
Miscellaneous
(a)
Amendments and Waivers
. No amendment or modification of this Agreement shall be
valid unless it is in writing and signed by the Parties. No waiver of any provision of this
Agreement shall be valid unless it is in writing and signed by the Party against whom the waiver is
sought to be enforced. No failure or delay in exercising any right hereunder, and no course of
conduct, shall operate as a waiver of any provision of this Agreement. No single or partial
exercise of a right hereunder shall preclude further or complete exercise of that right or any
other right hereunder.
Indemnification Proceeds and Payments Allocation Agreement
11
(b)
Successors and Assigns
. This Agreement shall inure to the benefit of, and shall
be binding upon, Holly Tulsa, HEP Tulsa and their respective successors and permitted assigns.
Neither this Agreement nor any of the rights or obligations hereunder shall be assigned without the
prior written consent of Holly Tulsa (in the case of any assignment by HEP Tulsa) or HEP Tulsa (in
the case of any assignment by Holly Tulsa), in each case, such consent is not to be unreasonably
withheld or delayed;
provided
,
however
, that (i) HEP Tulsa may make such an
assignment (including a partial pro rata assignment) to an Affiliate of HEP Tulsa without Holly
Tulsa’s consent, (ii) Holly Tulsa may make such an assignment (including a pro rata partial
assignment) to an Affiliate of Holly Tulsa without HEP Tulsa’s consent, (iii) Holly Tulsa may make
a collateral assignment of its rights and obligations hereunder to a bona fide third party lender
or debt holder, or trustee or representative of any of them, without HEP Tulsa’s consent, and (iv)
HEP Tulsa may make a collateral assignment of its rights hereunder, to a bona fide third party
lender or debt holder, or trustee or representative for any of them, without Holly Tulsa’s consent.
Any attempt to make an assignment otherwise than as permitted by the foregoing shall be null and
void. The Parties agree to require their respective successors, if any, to expressly assume, in a
form of agreement reasonably acceptable to the other Parties, their obligations under this
Agreement.
(c)
Severability
. If any provision of this Agreement shall be held invalid or
unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this
Agreement shall remain in full force and effect.
(d)
Choice of Law
. This Agreement shall be subject to and governed by the laws of the
State of Delaware, excluding any conflicts-of-law rule or principle that might refer the
construction or interpretation of this Agreement to the laws of another state.
(e)
Arbitration Provision
. Any and all Arbitrable Disputes must be resolved through
the use of binding arbitration using three arbitrators, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, as supplemented to the extent necessary
to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United
States Code). If there is any inconsistency between this
Section 10(e)
and the Commercial
Arbitration Rules or the Federal Arbitration Act, the terms of this
Section 10(e)
will
control the rights and obligations of the Parties. Arbitration must be initiated within the time
limits set forth in this Agreement, or if no such limits apply, then within a reasonable time or
the time period allowed by the applicable statute of limitations. Arbitration may be initiated by
a Party (“
Claimant
”) serving written notice on the other Party (“
Respondent
”) that
the Claimant elects to refer the Arbitrable Dispute to binding arbitration. Claimant’s notice
initiating binding arbitration must identify the arbitrator Claimant has appointed. The Respondent
shall respond to Claimant within thirty (30) days after receipt of Claimant’s notice, identifying
the arbitrator Respondent has appointed. If the Respondent fails for any reason to name an
arbitrator within the 30-day period, Claimant shall petition the American Arbitration Association
for appointment of an arbitrator for Respondent’s account. The two arbitrators so chosen shall
select a third arbitrator within thirty (30) days after the second arbitrator has been appointed.
The Claimant will pay the compensation and expenses of the arbitrator named by it, and the
Respondent will pay the compensation and expenses of the arbitrator named by or for it. The costs
of petitioning for the appointment of an arbitrator, if any, shall be paid by Respondent. The
Claimant and
Indemnification Proceeds and Payments Allocation Agreement
12
Respondent will each pay one-half of the compensation and expenses of the third arbitrator.
All arbitrators must (i) be neutral parties who have never been officers, directors or employees of
any of Holly Tulsa, HEP Tulsa or any of their Affiliates and (ii) have not less than seven (7)
years experience in the energy industry. The hearing will be conducted in Dallas, Texas and
commence within thirty (30) days after the selection of the third arbitrator. Holly Tulsa, HEP
Tulsa and the arbitrators shall proceed diligently and in good faith in order that the award may be
made as promptly as possible. Except as provided in the Federal Arbitration Act, the decision of
the arbitrators will be binding on and non-appealable by the Parties hereto. The arbitrators shall
have no right to grant or award indirect, consequential, punitive or exemplary damages of any kind.
The Arbitrable Disputes may be arbitrated in a common proceeding along with disputes under other
agreements between Holly Tulsa, HEP Tulsa or their Affiliates to the extent that the issues raised
in such disputes are related. Without the written consent of the Parties, no unrelated disputes or
third party disputes may be joined to an arbitration pursuant to this Agreement.
(f)
Rights of Limited Partners
. The provisions of this Agreement are enforceable
solely by the Parties, and no limited partner of the Partnership or Related Indemnified Party of
either Party shall have the right, separate and apart from the Partnership, to enforce any
provision of this Agreement or to compel any Party to comply with the terms of this Agreement.
(g)
Further Assurances
. In connection with this Agreement and all transactions
contemplated by this Agreement, each signatory Party hereto agrees to execute and deliver such
additional documents and instruments and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of
this Agreement and all such transactions.
(h)
Headings
. Headings of the Sections of this Agreement are for convenience of the
Parties only and shall be given no substantive or interpretative effect whatsoever. All references
in this Agreement to Sections are to Sections of this Agreement unless otherwise stated.
Section 11.
Guarantee by Holly
(a)
Payment and Performance Guaranty
. Holly unconditionally, absolutely, continually
and irrevocably guarantees, as principal and not as surety, to HEP Tulsa the punctual and complete
payment in full when due of all amounts due from Holly Tulsa under the Agreement (collectively, the
“
Holly Tulsa Payment Obligations
”). Holly agrees that HEP Tulsa shall be entitled to
enforce directly against Holly any of the Holly Tulsa Payment Obligations.
(b)
Guaranty Absolute
. Holly hereby guarantees that the Holly Tulsa Payment
Obligations will be paid strictly in accordance with the terms of the Agreement. The obligations
of Holly under this Agreement constitute a present and continuing guaranty of payment, and not of
collection or collectability. The liability of Holly under this Agreement shall be absolute,
unconditional, present, continuing and irrevocable irrespective of:
(i) any assignment or other transfer of the Agreement or any of the rights thereunder
of HEP Tulsa;
Indemnification Proceeds and Payments Allocation Agreement
13
(ii) any amendment, waiver, renewal, extension or release of or any consent to or
departure from or other action or inaction related to the Agreement;
(iii) any acceptance by HEP Tulsa of partial payment or performance from Holly Tulsa;
(iv) any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment,
dissolution, liquidation or other like proceeding relating to Holly Tulsa or any action
taken with respect to the Agreement by any trustee or receiver, or by any court, in any such
proceeding;
(v) any absence of any notice to, or knowledge of, Holly, of the existence or
occurrence of any of the matters or events set forth in the foregoing subsections (i)
through (iv); or
(vi) any other circumstance which might otherwise constitute a defense available to, or
a discharge of, a guarantor.
The obligations of Holly hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of
the Holly Tulsa Payment Obligations or otherwise.
(c)
Waiver
. Holly hereby waives promptness, diligence, all setoffs, presentments,
protests and notice of acceptance and any other notice relating to any of the Holly Tulsa Payment
Obligations and any requirement for HEP Tulsa to protect, secure, perfect or insure any security
interest or lien or any property subject thereto or exhaust any right or take any action against
Holly Tulsa, any other entity or any collateral.
(d)
Subrogation Waiver
. Holly agrees that for so long as there is a current or
ongoing default or breach of this Agreement by Holly Tulsa, Holly shall not have any rights (direct
or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of
payment or recovery from Holly Tulsa for any payments made by Holly under this
Section 11
,
and Holly hereby irrevocably waives and releases, absolutely and unconditionally, any such rights
of subrogation, contribution, reimbursement, indemnification and other rights of payment or
recovery it may now have or hereafter acquire against Holly Tulsa during any period of default or
breach of this Agreement by Holly Tulsa.
(e)
Reinstatement
. The obligations of Holly under this
Section 11
shall
continue to be effective or shall be reinstated, as the case may be, if at any time any payment of
any of the Holly Tulsa Payment Obligations is rescinded or must otherwise be returned to Holly
Tulsa or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition,
liquidation or reorganization of Holly Tulsa or such other entity, or for any other reason, all as
though such payment had not been made.
Indemnification Proceeds and Payments Allocation Agreement
14
(f)
Continuing Guaranty
. This
Section 11
is a continuing guaranty and shall
(i) remain in full force and effect until the first to occur of the indefeasible payment in full of
all of the Holly Tulsa Payment Obligations, (ii) be binding upon Holly, its successors and assigns
and (iii) inure to the benefit of and be enforceable by HEP Tulsa and its respective successors,
transferees and assigns.
(g)
No Duty to Pursue Others
. It shall not be necessary for HEP Tulsa (and Holly
hereby waives any rights which Holly may have to require HEP Tulsa), in order to enforce such
payment by Holly, first to (i) institute suit or exhaust its remedies against Holly Tulsa or others
liable on the Holly Tulsa Payment Obligations or any other person, (ii) enforce HEP Tulsa’s rights
against any other guarantors of the Holly Tulsa Payment Obligations, (iii) join Holly Tulsa or any
others liable on the Holly Tulsa Payment Obligations in any action seeking to enforce this
Section 11
, (iv) exhaust any remedies available to HEP Tulsa against any security which
shall ever have been given to secure the Holly Tulsa Payment Obligations, or (v) resort to any
other means of obtaining payment of the Holly Tulsa Payment Obligations.
Section 12.
Guarantee by the Partnership and Operating Partnership
.
(a)
Payment and Performance Guaranty
. Each of the Partnership and the Operating
Partnership unconditionally, absolutely, continually and irrevocably guarantees, as principal and
not as surety, to Holly Tulsa the punctual and complete payment in full when due of all amounts due
from HEP Tulsa under the Agreement (collectively, the “
HEP Tulsa Payment Obligations
”).
Each of the Partnership and the Operating Partnership agrees that Holly Tulsa shall be entitled to
enforce directly against the Partnership and the Operating Partnership any of the HEP Tulsa Payment
Obligations.
(b)
Guaranty Absolute
. Each of the Partnership and the Operating Partnership hereby
guarantees that the HEP Tulsa Payment Obligations will be paid strictly in accordance with the
terms of the Agreement. The obligations of each of the Partnership and the Operating Partnership
under this Agreement constitute a present and continuing guaranty of payment, and not of collection
or collectability. The liability of each of the Partnership and the Operating Partnership under
this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective
of:
(i) any assignment or other transfer of the Agreement or any of the rights thereunder
of Holly Tulsa;
(ii) any amendment, waiver, renewal, extension or release of or any consent to or
departure from or other action or inaction related to the Agreement;
(iii) any acceptance by Holly Tulsa of partial payment or performance from HEP Tulsa;
(iv) any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment,
dissolution, liquidation or other like proceeding relating to HEP Tulsa or any action taken
with respect to the Agreement by any trustee or receiver, or by any court, in any such
proceeding;
Indemnification Proceeds and Payments Allocation Agreement
15
(v) any absence of any notice to, or knowledge of, the Partnership or the Operating
Partnership, of the existence or occurrence of any of the matters or events set forth in the
foregoing subsections (i) through (iv); or
(vi) any other circumstance which might otherwise constitute a defense available to, or
a discharge of, a guarantor.
The obligations of each of the Partnership and the Operating Partnership hereunder shall not
be subject to any reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the HEP Tulsa Payment Obligations or otherwise.
(c)
Waiver
. Each of the Partnership and the Operating Partnership hereby waives
promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other
notice relating to any of the HEP Tulsa Payment Obligations and any requirement for Holly Tulsa to
protect, secure, perfect or insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against HEP Tulsa, any other entity or any collateral.
(d)
Subrogation Waiver
. Each of the Partnership and the Operating Partnership agrees
that for so long as there is a current or ongoing default or breach of this Agreement by HEP Tulsa,
the Partnership and the Operating Partnership shall not have any rights (direct or indirect) of
subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery
from HEP Tulsa for any payments made by the Partnership or the Operating Partnership under this
Section 12
, and each of the Partnership and the Operating Partnership hereby irrevocably
waives and releases, absolutely and unconditionally, any such rights of subrogation, contribution,
reimbursement, indemnification and other rights of payment or recovery it may now have or hereafter
acquire against HEP Tulsa during any period of default or breach of this Agreement by HEP Tulsa.
(e)
Reinstatement
. The obligations of the Partnership and the Operating Partnership
under this
Section 12
shall continue to be effective or shall be reinstated, as the case
may be, if at any time any payment of any of the HEP Tulsa Payment Obligations is rescinded or must
otherwise be returned to HEP Tulsa or any other entity, upon the insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation or reorganization of HEP Tulsa or such other
entity, or for any other reason, all as though such payment had not been made.
(f)
Continuing Guaranty
. This
Section 12
is a continuing guaranty and shall
(i) remain in full force and effect until the first to occur of the indefeasible payment in full of
all of the HEP Tulsa Payment Obligations, (ii) be binding upon the Partnership, the Operating
Partnership, and each of their respective successors and assigns and (iii) inure to the benefit of
and be enforceable by Holly Tulsa and their respective successors, transferees and assigns.
(g)
No Duty to Pursue Others
. It shall not be necessary for Holly Tulsa (and each of
the Partnership and the Operating Partnership hereby waives any rights which the Partnership or the
Operating Partnership, as applicable, may have to require Holly Tulsa), in order to enforce
Indemnification Proceeds and Payments Allocation Agreement
16
such payment by the Partnership or the Operating Partnership, first to (i) institute suit or
exhaust its remedies against HEP Tulsa or others liable on the HEP Tulsa Payment Obligations or any
other person, (ii) enforce Holly Tulsa’ rights against any other guarantors of the HEP Tulsa
Payment Obligations, (iii) join HEP Tulsa or any others liable on the HEP Tulsa Payment Obligations
in any action seeking to enforce this
Section 12
, (iv) exhaust any remedies available to
Holly Tulsa against any security which shall ever have been given to secure the HEP Tulsa Payment
Obligations, or (v) resort to any other means of obtaining payment of the HEP Tulsa Payment
Obligations.
[Remainder of page intentionally left blank. Signature pages follow.]
Indemnification Proceeds and Payments Allocation Agreement
17
IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of the date first
written above.
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HEP TULSA:
HEP TULSA LLC
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By:
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/s/ David G. Blair
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David G. Blair
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Senior Vice President
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HOLLY TULSA:
HOLLY REFINING & MARKETING
— TULSA LLC
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By:
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/s/ David L. Lamp
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David L. Lamp
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President
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ACKNOWLEDGED AND AGREED
FOR PURPOSES OF AND
Section 11
:
HOLLY CORPORATION
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By:
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/s/ David L. Lamp
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David L. Lamp
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President
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Signature Page to Indemnification Proceeds and Payments Allocation Agreement
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ACKNOWLEDGED AND AGREED
FOR PURPOSES OF
Section 12
:
HOLLY ENERGY PARTNERS, L.P.
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By:
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HEP Logistics Holdings, L.P.,
its General Partner
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By:
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Holly Logistic Services, L.L.C.,
its General Partner
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By:
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/s/ David G. Blair
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David G. Blair
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Senior Vice President
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ACKNOWLEDGED AND AGREED
FOR PURPOSES OF
Section 12
:
HOLLY ENERGY PARTNERS-OPERATING, L.P.
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By:
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HEP Logistics GP, L.L.C.,
its General Partner
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By:
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/s/ David G. Blair
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David G. Blair
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Senior Vice President
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Signature Page to Indemnification Proceeds and Payments Allocation Agreement
Exhibit
10.3
LEASE AND ACCESS AGREEMENT
(East Tulsa)
BETWEEN
HOLLY REFINING & MARKETING-TULSA LLC,
AS LESSOR
AND
HEP TULSA LLC,
AS LESSEE
December 1, 2009
TABLE OF CONTENTS
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Page No.
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ARTICLE I
DEFINITIONS AND CONSTRUCTION
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1.1 Certain Defined Terms
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1
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1.2 References
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4
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1.3 Headings
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5
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ARTICLE II
DEMISE OF PREMISES AND TERM
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2.1 Demise of Premises and Term.
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5
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2.2 Access.
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5
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2.3 Rent
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6
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2.4 Place of Payment
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6
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2.5 Net Lease
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6
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ARTICLE III
CONDUCT OF BUSINESS
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3.1 Use of Premises
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6
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3.2 Waste
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6
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3.3 Governmental Regulations
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6
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3.4 Air Quality Permits
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7
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3.5 Utilities
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7
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ARTICLE IV
ALTERATIONS, ADDITIONS AND IMPROVEMENTS
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ARTICLE V
MAINTENANCE OF PREMISES
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5.1 Maintenance by Lessee
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8
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5.2 Operation of Premises
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8
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5.3 Surrender of Premises
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8
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5.4 Release of Hazardous Substances
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8
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ARTICLE VI
TAXES, ASSESSMENTS
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6.1 Lessee’s Obligation to Pay
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9
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6.2 Manner of Payment
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9
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i
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Page No.
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ARTICLE VII
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EMINENT DOMAIN; CASUALTY; INSURANCE
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7.1 Total Condemnation of Premises
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10
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7.2 Partial Condemnation
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10
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7.3 Damages and Right to Additional Property
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10
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7.4 Insurance
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10
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ARTICLE VIII
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ASSIGNMENT AND SUBLETTING
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8.1 Assignment and Subletting
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11
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8.2 Release of Lessor
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11
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8.3 Release of Lessee
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11
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ARTICLE IX
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DEFAULTS; REMEDIES; TERMINATION
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9.1 Default by Lessee
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11
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9.2 Lessor’s Remedies.
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11
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9.3 Default by Lessor
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12
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ARTICLE X
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INDEMNITY
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10.1 Indemnification by Lessor
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12
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10.2 Indemnification by Lessee
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13
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10.3 Matters Involving a Third Party
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13
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10.4 Survival
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14
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10.5 Ancillary Agreements
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ARTICLE XI
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GENERAL PROVISIONS
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11.1 Estoppel Certificates
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11.2 Severability
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14
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11.3 Time of Essence
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14
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11.4 Captions
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14
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11.5 Entire Agreement; Amendment
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14
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11.6 Schedules and Exhibits
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14
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11.7 Notices
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11.8 Waivers
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11.9 No Partnership
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11.10 No Third Party Beneficiaries
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11.11 Waiver of Landlord’s Lien
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11.12 Mutual Cooperation; Further Assurances
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11.13 Recording
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11.14 Binding Effect
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11.15 Choice of Law
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11.16 Warranty of Peaceful Possession
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ii
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Page No.
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11.17 Force Majeure
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11.18 Survival
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11.19 AS IS, WHERE IS
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11.20 Relocation of Pipelines; Amendment
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11.21 Option
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iii
EXHIBITS AND SCHEDULES
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Exhibits
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Exhibit A
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—
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Description of Premises
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Exhibit B
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—
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Memorandum of Lease
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Schedules
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Schedule 1.1(b)
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—
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Matters which are not part of the Premises
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Schedule 7.4
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—
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Insurance Requirements
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iv
LEASE AND ACCESS AGREEMENT
(East Tulsa Refinery)
THIS LEASE AND ACCESS AGREEMENT (TULSA) (this “
Lease
”) is made and entered into to be
effective as of the 1st day of December, 2009, between
HOLLY REFINING & MARKETING-TULSA LLC,
a
limited liability company organized and existing under the laws of Delaware (herein called
“
Lessor
”), and
HEP TULSA LLC
, a limited liability company organized and existing under the
laws of Delaware (herein called “
Lessee
”). Lessor and Lessee are referred to individually
as a “
Party
” and collectively as the “
Parties
.”
W
I
T
N
E
S
S
E
T
H
:
WHEREAS, pursuant to the terms of that certain Asset Sale and Purchase Agreement (the
“
Purchase Agreement
”), dated October 19, 2009, among Lessor and Lessee, as Buyers, and
Sinclair Tulsa Refining Company, as Seller, Lessor is acquiring certain refining and other related
assets, and Lessee is acquiring the Relevant Assets (defined below);
WHEREAS, the Relevant Assets (defined below) are located on land within the Refinery Site
(defined below), which land Lessor has agreed to lease to Lessee and Lessee desires to lease from
Lessor; and
WHEREAS, Lessor owns and operates certain facilities and other improvements at the Refinery
Site that are necessary or desirable for Lessee to utilize in Lessee’s operations of the Relevant
Assets but that may also be utilized by Lessor; and
WHEREAS, Lessor has agreed to provide Lessee with access to such facilities and other
improvements in accordance with this Lease and the Site Services Agreement (defined below).
NOW, THEREFORE, for and in consideration of the premises, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and of the mutual
agreements hereinafter set forth, Lessor and Lessee covenant and agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1
Certain Defined Terms
. Unless the context otherwise requires, the following terms
shall have the respective meanings set forth in this
Section 1.1
:
“
Additional Improvements
” shall have the meaning ascribed to such term in
Article
IV
.
“
Affiliates
” shall have the meaning ascribed to such term in the Site Services
Agreement.
“
Ancillary Agreements
” means collectively, the Purchase Agreement, the Site Services
Agreement, the Pipelines Agreement, and any other agreement executed by any of the parties hereto
in connection with the Lessee’s acquisition of the Relevant Assets.
“
Bankruptcy Event
” shall have the meaning ascribed to such term in the Site Services
Agreement.
1
“
Casualty
Event
” shall have the meaning ascribed to such term in
Section 7.3
.
“
Claims
” shall have the meaning ascribed to such term in
Section 10.1
.
“
Commencement Date
” shall have the meaning ascribed to such term in
Section
2.1
.
“
Connection Facilities
” shall have the meaning ascribed to such term in the Site
Services Agreement.
“
Environmental Law
” or “
Environmental Laws
” means all federal, state, and
local laws, statutes, rules, regulations, orders, and ordinances, now or hereafter in effect,
relating to protection of the environment including, without limitation, the federal Comprehensive
Environmental Response, Compensation, and Liability Act, the Superfund Amendments Reauthorization
Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution
Control Act, the Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water Act,
the Hazardous Materials Transportation Act, and other environmental conservation and protection
laws, each as amended from time to time.
“
Force Majeure
” means acts of God, strikes, lockouts or other industrial disturbances,
acts of the public enemy, wars, blockades, insurrections, riots, storms, floods, washouts, arrests,
the order of any Governmental Authority having jurisdiction while the same is in force and effect,
civil disturbances, explosions, breakage, accident to machinery, storage tanks or lines of pipe,
inability to obtain or unavoidable delay in obtaining material or equipment, and any other causes
whether of the kind herein enumerated or otherwise not reasonably within the control of the Party
claiming suspension and which by the exercise of due diligence such Party is unable to prevent or
overcome.
“
Governmental Authority
” means any federal, state, local or foreign government or any
provincial, departmental or other political subdivision thereof, or any entity, body or authority
exercising executive, legislative, judicial, regulatory, administrative or other governmental
functions or any court, department, commission, board, bureau, agency, instrumentality or
administrative body of any of the foregoing.
“
Indemnified Party
” means the Party seeking indemnification under
Section 10.1
or
Section 10.2
.
“
Hazardous Substances
” means (a) any substance that is designated, defined, or
classified as a hazardous waste, hazardous material, pollutant, contaminant, or toxic or hazardous
substance, or that is otherwise regulated under any Environmental Law, including, without
limitation, any hazardous substance as defined under the Comprehensive Environmental Response,
Compensation, and Liability Act, and (b) petroleum, crude oil, gasoline, natural gas, fuel oil,
motor oil, waste oil, diesel fuel, jet fuel, and other refined petroleum hydrocarbons.
“
Indemnifying Party
” means the Party required to provide indemnification under
Section 10.1
or
Section 10.2
.
“
Laws
” means any applicable statute, law, regulation, ordinance, rule, judgment, rule
of law, order, decree, permit, approval, concession, grant, franchise, license, agreement,
2
requirement, or other governmental restriction or any similar form of decision of, or any
provision or condition of any permit, license or other operating authorization issued under any of
the foregoing by, or any determination of, any Governmental Authority having or asserting
jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each
case as amended (including, without limitation, all of the terms and provisions of the common law
of such Governmental Authority), as interpreted and enforced at the time in question.
“
Lease
” shall have the meaning ascribed to such term in the preface to this Lease.
“
Lessee
” shall have the meaning ascribed to such term in the preface to this Lease.
“
Lessee Indemnified Parties
” shall have the meaning ascribed to such term in
Section 10.1
.
“
Lessee Release
” shall have the meaning ascribed to such term in
Section
11.13
.
“
Lessee’s Parties
” shall have the meaning ascribed to such term in
Section
2.2(a)
.
“
Lessor
” shall have the meaning ascribed to such term in the preface to this Lease.
“
Lessor Indemnified Parties
” shall have the meaning ascribed to such term in
Section 10.2
.
“
Lessor’s Parties
” shall have the meaning ascribed to such term in
Section
2.2(b)
.
“
Party”
and
“
Parties
” shall have the meanings ascribed to such term in the preface to
this Lease.
“
Permits
” means all permits, licenses, franchises, authorities, consents, and
approvals, as necessary under applicable Laws, including Environmental Laws, for operating the
Relevant Assets and/or the Premises.
“
Person
” means any individual or entity, including any partnership, corporation,
association, joint stock company, trust, joint venture, limited liability company, unincorporated
organization or Governmental Authority (or any department, agency or political subdivision
thereof).
“
Pipelines Agreement
” means the Pipelines, Tankage and Loading Rack Throughput
Agreement dated as of the date hereof by and between Lessor and Lessee.
“
Post-Maturity Rate
” shall have the meaning ascribed to such term in
Section
9.2
.
“
Premises
” means those certain tracts or parcels of land on which the Relevant Assets
are situated, such land being located in the City of Tulsa, Tulsa County, Oklahoma, more
particularly described or identified on
Exhibit A
attached hereto and made a part hereof
for all purposes together with all right, title and interest, if any, of Lessor in and to all
accretion attaching to the land and any rights to submerged lands or interests in riparian rights
or riparian grants owned by Lessor and adjoining the land shown on said
Exhibit A
, but
excluding (i) the
3
Relevant Assets, (ii) the Additional Improvements, and (iii) those matters set forth on
Schedule 1.1(b)
.
“
Purchase Agreement
” has the meaning set forth in the Recitals.
“
Refinery
” means Lessor’s refinery located at the Refinery Site.
“
Refinery Site
” means that certain tract(s) or parcel(s) of land located in the City
of Tulsa, Tulsa County, Oklahoma, on which the Premises are located.
“
Relevant Assets
” shall mean the HEP Tulsa Assets, as such term is defined in the
Purchase Agreement.
“
Rent
” shall have the meaning ascribed to such term in
Section 2.3
.
“
Shared Access Facilities
” shall have the meaning ascribed to such term in
Section
2.2(a)
.
“
Site Services Agreement
” means that certain Site Services Agreement dated of even
date herewith by and between Lessor and Lessee.
“
SUMF Assets
” shall have the meaning ascribed to such term in the Site Services
Agreement.
“
Taxes
” shall have the meaning ascribed to such term in
Section 6.1
.
“
Term
” shall have the meaning ascribed to such term in
Section 2.1
.
“
Third Party
” shall mean a Person which is not (a) Lessor or an Affiliate of Lessor,
(b) Lessee or an Affiliate of Lessee or (c) a Person that, after the signing of this Lease becomes
a successor entity of Lessor, Lessee or any of their respective Affiliates. An employee of Lessor
or Lessee shall not be deemed an Affiliate.
“
Third-Party Claim
” shall have the meaning ascribed to such term in
Section
10.3
.
1.2
References
. As used in this Lease, unless a clear contrary intention appears:
(a) the singular includes the plural and vice versa; (b) reference to any Person includes such
Person’s successors and assigns but, in the case of a Party, only if such successors and assigns
are permitted by this Lease, and reference to a Person in a particular capacity excludes such
Person in any other capacity; (c) reference to any gender includes each other gender; (d) reference
to any agreement (including this Lease), document or instrument means such agreement, document, or
instrument as amended or modified and in effect from time to time in accordance with the terms
thereof and, if applicable, the terms of this Lease; (e) reference to any Section means such
Section of this Lease, and references in any Section or definition to any clause means such clause
of such Section or definition; (f) “hereunder”, “hereof”, “hereto” and words of similar import will
be deemed references to this Lease as a whole and not to any particular Section or other provision
hereof or thereof; (g) “including” (and with correlative meaning “include”) means including without
limiting the generality of any description preceding such term; and (h) relative to the
4
determination of any period of time, “from” means “from and including,” “to” means “to but
excluding” and ‘through” means “through and including.”
1.3
Headings
. The headings of the Sections of this Lease and of the Schedules and
Exhibits are included for convenience only and shall not be deemed to constitute part of this Lease
or to affect the construction or interpretation hereof or thereof.
ARTICLE II
DEMISE OF PREMISES AND TERM
2.1
Demise of Premises and Term
.
(a) In consideration of the rents, covenants, and agreements set forth herein and subject to
the terms and conditions hereof, Lessor hereby leases to Lessee and Lessee hereby leases from
Lessor, the Premises for a term commencing on the effective date hereof (the “
Commencement
Date
”) and ending at midnight on the date which is fifty (50) years after the date hereof, and
after such date the term of this Lease shall be automatically renewed for a maximum of four (4)
successive ten-year periods thereafter (the “
Term
”); provided, however, Lessee may
terminate this Lease at the end of such initial period or any subsequent ten-year period by
delivering written notice to Lessor, on or before 180 days prior to the end of any such period,
that Lessee has elected to terminate this Lease.
(b) At Lessee’s option, Lessee may terminate this Lease, by providing written notice to Lessor
on or before 180 days prior to the desired termination date if Lessee ceases to operate the
Relevant Assets and Additional Improvements or ceases its business operations. In the event of
such termination pursuant to this
Section 2.1(b)
, Lessor shall retain one half of the
remaining Rent (as defined below) for the then current 12-month rental period as set forth in
Section 2.3
below as its sole and exclusive remedy for such early termination and shall
refund to Lessee the remaining Rent.
2.2
Access
.
(a) Lessor hereby grants to Lessee and its Affiliates, agents, employees and contractors
(collectively, “
Lessee’s Parties
”) free of charge, an irrevocable, non-exclusive right of
access to and use of those portions of the Refinery Site that are reasonably necessary for access
to and/or the operation of the Relevant Assets and Additional Improvements by Lessee as a
stand-alone enterprise, all so long as such access and use by any of Lessee’s Parties does not
unreasonably interfere in any material respect with Lessor’s operations at the Refinery Site and
complies with Lessor’s rules, norms and procedures governing safety and security at the Refinery
Site. The facilities on the Refinery Site that are subject to the access and use rights provided
under this Section, are referred to herein as the “
Shared Access Facilities
”.
Notwithstanding the foregoing, the provisions of this
Section 2.2(a)
shall relate only to
access and use of the Shared Access Facilities, and the Site Services Agreement shall cover all
services that are to be provided by Lessor under the terms of the Site Services Agreement.
(b) Lessor hereby retains for itself and its Affiliates, agents, employees and contractors
(collectively, “
Lessor’s Parties
”), the right of access to all of the Premises and the
Relevant Assets (i) to determine whether the conditions and covenants contained in this Lease
5
are being kept and performed, (ii) to comply with Environmental Laws, and (iii) to inspect,
maintain, repair, improve and operate the SUMF Assets and the Shared Access Facilities and any
assets of Lessor located on the Premises or to install or construct any structures or equipment
necessary for the maintenance, operation or improvement of any such assets or the installation,
construction or maintenance of any Connection Facilities, all so long as such access by Lessor’s
Parties does not unreasonably interfere in any material respect with Lessee’s operations on the
Premises and complies with Lessee’s rules, norms and procedures governing safety and security at
the Premises.
2.3
Rent
. As rental for the Premises during the Term, Lessee agrees to pay to Lessor
for each 12-month period of the Term One Hundred and 00/100 ($100.00) (the “
Rent
”) on or
before the 1st day of each 12-month period, the first such payment being due within 30 days of the
Commencement Date of the Term.
2.4
Place of Payment
. All Rent shall be payable in lawful money of the United States
of America at Lessor’s address set forth in
Section 11.7
.
2.5
Net Lease
. Except as herein otherwise expressly provided in this Lease and in the
Ancillary Agreements, this is a net lease and Lessor shall not at any time be required to pay any
utility charges or any costs associated with the maintenance, repair, alteration or improvement of
the Premises or to provide any services or do any act or thing with respect to the Premises or any
part thereof or any appurtenances thereto, and the Rent reserved herein shall be paid without any
claim on the part of Lessee for diminution, setoff or abatement and nothing shall suspend, abate or
reduce any Rent to be paid hereunder, except as expressly provided herein.
ARTICLE III
CONDUCT OF BUSINESS
3.1
Use of Premises
. Lessee shall have the right to use the Premises for the purpose
of owning, operating, maintaining, repairing, replacing, improving, and expanding the Relevant
Assets and the Additional Improvements and for any other lawful purpose associated with the
operation and ownership of the Relevant Assets and the Additional Improvements.
3.2
Waste
. Subject to the obligations of Lessor under the Ancillary Agreements,
Lessee shall not commit, or suffer to be committed, any waste to the Premises, ordinary wear and
tear or casualty excepted.
3.3
Governmental Regulations
. Subject to the obligations of Lessor to Lessee under
this Lease and the Ancillary Agreements including the indemnity provisions contained in the
Ancillary Agreements, Lessee shall, at Lessee’s sole cost and expense, at all times comply with all
applicable requirements (including requirements under Environmental Laws) of all Governmental
Authorities now in force, or which may hereafter be in force, pertaining to the Premises, and shall
faithfully observe all Laws now in force or which may hereafter be in force pertaining to the
Premises or the use, maintenance or operation thereof. Lessee shall give prompt written notice to
Lessor of Lessee’s receipt from time to time of any notice of non-compliance, order or other
directive from any court or other Governmental Authority under Environmental
Laws relating to the Premises. If Lessor reasonably believes at any time that Lessee is not
6
complying with all applicable legal requirements (including requirements under Environmental Laws)
with respect to the Relevant Assets and Additional Improvements, it will provide reasonable notice
to Lessee of such condition. If Lessee fails to take appropriate action to cause such assets to
comply with applicable Laws or take other actions required under applicable Laws within 30 days of
Lessor’s reasonable notice, Lessor may, without further notice to Lessee, take such actions for
Lessee’s account. Within 30 days following the date Lessor delivers to Lessee evidence of payment
for those actions by Lessor reasonably necessary to cause the Relevant Assets and Additional
Improvements to achieve compliance with applicable Laws because of Lessee’s failure to do so,
Lessee shall reimburse Lessor all amounts paid by Lessor on Lessee’s behalf.
3.4
Environmental Permits
. Notwithstanding Lessee’s
obligation to maintain and operate the Relevant Assets and Additional Improvements and comply with applicable Laws,
Lessor and Lessee acknowledge that Lessor may maintain in its name any air quality permits required by any
applicable Governmental Authorities. Consequently and also for the ease of administration, Lessor may
maintain in its name the air quality permits and other authorizations applicable to all, or part of, the
Relevant Assets and Additional Improvements and may make any reports, notifications or other submissions
to Governmental Authorities pursuant to such permits or Laws; provided that upon Lessor’s
written request Lessee shall apply for, obtain and maintain in Lessee’s name any such permits
and authorizations, and make any submissions, required by Law for the operation of the Relevant Assets
and Additional Improvements, which submissions, permits and authorizations
shall be independent of Lessor’s submissions, permits and authorizations.
Lessee shall (a) within 30 days after the date hereof submit a notice of intent
apply for a storm water discharge permit for the Relevant Assets and Additional Improvements, and
(b) within 180 days of the date hereof prepare a Spill Prevention
Countermeasures and Controls plan as required by EPA regulations (40 CFR Part 112).
Lessor and Lessee shall cooperate and work in good faith with the applicable Governmental
Authorities to obtain any modification or refinement of the air quality permit(s) necessary to
satisfy the requirements of Environmental Law. Except as provided in this paragraph, nothing in this
Lease shall reduce Lessee’s obligations under Laws with respect to the Relevant Assets and Additional Improvements.
3.5
Utilities
. Lessor shall provide all utilities (electricity, natural gas, water,
steam, etc.) necessary for Lessee’s operation of the Relevant Assets and the Additional
Improvements in accordance with the provisions of the Site Services Agreement.
ARTICLE IV
ALTERATIONS, ADDITIONS AND IMPROVEMENTS
Subject to the provisions of this
Article IV
, Lessee may make any alterations,
additions, improvements or other changes to the Premises and the Relevant Assets as may be
necessary or useful in connection with the operation of the Relevant Assets (collectively, the
“
Additional Improvements
”). If such Additional Improvements require alterations, additions
or improvements to the Premises or any of the Shared Access Facilities, Lessee shall notify Lessor
in writing in advance and the parties shall negotiate in good faith any increase to the fees paid
by Lessee under the Site Services Agreement by Lessee or otherwise provide for reimbursement of any
material increase in cost (if any) to Lessor under the Site Services Agreement that results from
any modifications to the Premises or the Shared Access Facilities necessary to accommodate the
Additional Improvements, or as otherwise mutually agreed by the parties. Any alteration, addition,
improvement or other change to the Premises, Relevant Assets or Additional Improvements (and, if
agreed by Lessee and Lessor, to the Shared Access Facilities) by Lessee shall be made in a good and
workmanlike manner and in accordance with all applicable Laws. The Relevant Assets and all
Additional Improvements shall remain the property of Lessee and shall be removed by Lessee within
one (1) year after termination of this Lease (provided that such can be removed by Lessee without
unreasonable damage or harm to the Premises) or, at Lessee’s option exercisable by notice to
Lessor, surrendered to Lessor upon the termination of
this Lease. Lessee shall not have the right or power to create or permit any lien of any kind
or
7
character on the Premises by reason of repair or construction or other work. In the event any
such lien is filed against the Premises, Lessee shall cause such lien to be discharged or bonded
within thirty (30) days of the date of filing thereof.
ARTICLE V
MAINTENANCE OF PREMISES
5.1
Maintenance by Lessee
.
Except as otherwise expressly provided in this
Article V
and
in
Article VII
or elsewhere in this Lease and subject to the
obligations of Lessor and Lessee under the Ancillary Agreements,
including any indemnity provisions contained in the Ancillary Agreements,
Lessee shall at its sole cost, risk and expense at all times maintain the Premises, the
Relevant Assets and Additional Improvements (to the extent such Additional Improvements are located
on the Shared Access Facilities) in compliance with all applicable Laws. When used
in this
Section 5.1
, the term “repairs” shall include all necessary replacements,
renewal, alterations and additions. All repairs made by Lessee shall be made in accordance with
normal and customary practices in the industry, in a good and workmanlike manner, and in
accordance with all applicable Laws. Lessee shall be responsible at its sole cost and expense for
the proper handling, removal and disposal of all materials, debris, waste and Hazardous Substances generated or
resulting from such repair and maintenance activities, all in accordance with applicable Laws.
5.2
Operation of Premises
. Subject to the obligations of Lessor and Lessee in this
Lease and under the Ancillary Agreements, including any indemnity provisions contained in the
Ancillary Agreements, Lessee covenants and agrees to operate the Relevant Assets and Additional
Improvements located on the Premises in accordance with normal and customary practices in the
industry and all applicable Laws and other requirements of applicable Governmental Authorities now
in force, or which may hereafter be in force, pertaining to the Premises or the use or operation
thereof.
5.3
Surrender of Premises
. Lessee shall at the expiration of the Term or at any
earlier termination of this Lease, surrender the Premises to Lessor in as good condition as it
received the same, ordinary wear and tear, and limitations permitted by
Article VII
excepted and in accordance with the provisions of
Article IV
.
5.4
Release of Hazardous Substances
. Lessee shall give prompt notice to Lessor of any
release of any Hazardous Substances on or at the Premises that occur during the Term. Lessor shall immediately take all steps necessary to contain or
remediate (or both) any such release and provide any governmental notifications required by Law.
If Lessor believes at any time that Lessee is failing to contain or remediate in compliance with
all applicable Laws (including Environmental Laws) any release arising from Lessee’s operation of
the Relevant Assets or Additional Improvements or Lessee’s failure to comply with its obligations
pursuant to this Lease, Lessor will provide reasonable notice to Lessee of such failure. If Lessee
fails to take appropriate action to contain or remediate such a release or take other actions
required under applicable Laws or this Lease within 30 days of Lessor’s reasonable notice, Lessor
may, without further notice to Lessee, take such actions for Lessee’s account. Within 30 days
following the date Lessor delivers to Lessee evidence of payment for those actions by Lessor
reasonably necessary to contain or remediate a release or
otherwise achieve compliance with applicable Laws or this Lease because of Lessee’s failure to do so, Lessee shall reimburse Lessor all amounts paid by Lessor on Lessee’s behalf.
8
ARTICLE VI
TAXES, ASSESSMENTS
6.1
Lessee’s Obligation to Pay
. Lessee shall pay during the Term, all federal, state
and local real and personal property ad valorem taxes, assessments, and other governmental charges,
general and special, ordinary and extraordinary, including assessments for public improvements or
benefits assessed against the Premises, or improvements situated thereon, including the Relevant
Assets and all Additional Improvements (but excluding any Shared Access Facilities and any SUMF
Assets) for the period after the Commencement Date, that are payable to any lawful authority
assessed against or with respect to the Premises or the use or operation thereof during the Term,
including any federal, state or local income, gross receipts, withholding, franchise, excise,
sales, use, value added, recording, transfer or stamp tax, levy, duty, charge or withholding of any
kind imposed or assessed by any federal, state or local government, agency or authority, together
with any addition to tax, penalty, fine or interest thereon, other than state or U.S. federal
income tax imposed upon the taxable income of Lessor and any franchise taxes imposed upon Lessor
(such taxes and assessments being hereinafter called “
Taxes
”). In the event that Lessee
fails to pay its share of such Taxes in accordance with the provisions of this
Section 6.1
prior to the time the same become delinquent, Lessor may pay the same and Lessee shall reimburse
Lessor all amounts paid by Lessor on Lessee’s behalf within 30 days following the date Lessor
delivers to Lessee evidence of such payment.
6.2
Manner of Payment
. Upon notice by Lessee to Lessor, Lessor and Lessee shall use
commercially reasonable efforts to cause the Premises and the Relevant Assets (including all
Additional Improvements but excluding Shared Access Facilities and any SUMF Assets) to be
separately assessed for purposes of Taxes as soon as reasonably practicable following the
Commencement Date (to the extent allowed by applicable Law). During the Term but subject to the
provisions of
Section 6.1
, Lessee shall pay all Taxes assessed directly against the
Premises, the Relevant Assets and the Additional Improvements (but excluding the Shared Access
Facilities and any SUMF Assets) directly to the applicable taxing authority prior to delinquency
and shall promptly thereafter provide Lessor with evidence of such payment. Until such time as
Lessor and Lessee can cause the Premises, the Relevant Assets and the Additional Improvements (but
excluding the Shared Access Facilities and any SUMF Assets) to be separately assessed as provided
above, Lessee shall reimburse Lessor, upon request, for any such Taxes paid by Lessor to the
applicable taxing authorities (such reimbursement to be based upon the mutual agreement of the
Lessor and Lessee as to the portion of such Taxes attributable to the Premises, the Relevant Assets
and the Additional Improvements), subject to the terms of
Section 6.1
. The certificate
issued or given by the appropriate officials authorized or designated by law to issue or give the
same or to receive payment of such Taxes shall be prima facie evidence of the existence, payment,
nonpayment and amount of such Taxes. Lessee may contest the validity or amount of any such Taxes
or the valuation of the Premises and/or the Relevant Assets and the Additional Improvements (to the
extent any of the foregoing may be separately issued), at Lessee’s sole cost and expense, by
appropriate proceedings, diligently conducted in good faith in accordance with applicable Law. If
Lessee contests such items then Lessor shall cooperate with Lessee in any such contesting of the
validity or amount of any such Taxes or the valuation of the Premises and/or the Relevant Assets and the Additional Improvements. Taxes for the first and last
years of the Term shall be prorated between the Parties based on the portions of such years that
are coincident with the applicable tax years and for which each applicable Party is responsible.
9
ARTICLE VII
EMINENT DOMAIN; CASUALTY; INSURANCE
7.1
Total Condemnation of Premises
. If the whole of the Premises are acquired or
condemned by eminent domain for any public or quasi-public use or purpose, then this Lease shall
terminate as of the date title vests in any public agency. All rentals and other charges owing
hereunder shall be prorated as of such date.
7.2
Partial Condemnation
. If any part of the Premises is acquired or condemned as set
forth in
Section 7.1
, and if in Lessee’s reasonable opinion such partial taking or
condemnation renders the Premises unsuitable for the business of Lessee, then this Lease shall
terminate at Lessee’s election as of the date title vests in any public agency, provided Lessee
delivers to Lessor written notice of such election to terminate within 60 days following the date
title vests in such public agency. In the event of such termination, all rentals and other charges
owing hereunder shall be prorated as of such effective date of termination.
7.3
Damages and Right to Additional Property
. Lessor shall be entitled to any award
and all damages payable as a result of any condemnation or taking of the fee title of the Premises,
provided that the net amount which may be awarded or tendered to Lessor in such condemnation
proceedings (less all legal and other expenses incurred by Lessor in connection with such taking)
shall (as long as Lessee is not then in default hereunder) be used to pay for any restoration by
Lessee of the Relevant Assets, the Additional Improvements and/or the remainder of the Premises
hereof to the extent Lessee desires any of the same to be restored. Lessee shall have the right to
claim and recover from the condemning authority, but not from Lessor, such compensation as may be
separately awarded or recoverable by Lessee in Lessee’s own right on account of any and all damage
to the Relevant Assets, the Additional Improvements and/or Lessee’s business by reason of the
condemnation, including loss of value of any unexpired portion of the Term, and for or on account
of any cost or loss to which Lessee might be put in removing Lessee’s personal property, fixtures,
leasehold improvements and equipment, including the Relevant Assets and the Additional
Improvements, from the Premises.
During any periods of time during which the Relevant Assets and/or Additional Improvements are
destroyed, damaged, or are being restored or reconstructed (each a “Casualty Event”) under the
terms of this Section, Rent hereunder shall be abated in the proportion that Lessee’s use thereof
is impacted by such Casualty Event, on the condition that Lessee takes commercially reasonable
efforts to mitigate the disruption to its business caused by such Casualty Event.
7.4
Insurance
. Except as otherwise agreed by Lessor and Lessee, Lessee shall, at all
times, maintain or cause to be maintained insurance with respect to the Premises, the Relevant
Assets and the Additional Improvements in accordance with the requirements identified on
Schedule 7.4
hereto.
10
ARTICLE VIII
ASSIGNMENT AND SUBLETTING
8.1
Assignment and Subletting
. This Agreement may be assigned in connection with, and
subject to the terms and conditions set forth in Section 13(b) of, the Pipelines Agreement, which
such terms and conditions are incorporated herein by reference.
8.2
Release of Lessor
. Any assignment of this Lease by Lessor in accordance with
Section 8.1
shall operate to terminate the liability of Lessor for all obligations under
this Lease accruing after the date of any such assignment.
8.3
Release of Lessee
. Any assignment of this Lease by Lessee in accordance with
Section 8.1
shall operate to terminate the liability of Lessee for all obligations under
this Lease accruing after the date of any such assignment.
ARTICLE IX
DEFAULTS; REMEDIES; TERMINATION
9.1
Default by Lessee
. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee:
(a) The failure by Lessee to make when due any payment of Rent or any other payment required
to be made by Lessee hereunder, if such failure continues for a period of 90 days following written
notice from Lessor;
(b) The failure by Lessee to observe or perform any of the other covenants, conditions or
provisions of this Lease to be observed or performed by Lessee, if such failure continues for a
period of 90 days following written notice from Lessor; provided, however, if a reasonable time to
cure such default would exceed 90 days, Lessee shall not be in default so long as Lessee begins to
cure such default within 90 days of receiving written notice from Lessor and thereafter completes
the curing of such default within reasonable period of time (under the circumstances) following the
receipt of such written notice from Lessor; or
(c) The occurrence of any Bankruptcy Event.
9.2
Lessor’s Remedies
.
(a) In the event of any such material default under or material breach of the terms of this
Lease by Lessee, Lessor may, at Lessor’s option, at any time thereafter that such default or breach
remains uncured, without further notice or demand, terminate this Lease and Lessee’s right to
possession of the Premises and forthwith repossess the Premises by any lawful means in which event
Lessee shall immediately surrender possession of the Premises to Lessor; and any such action on the
part of Lessor shall be in addition to any other remedy that may be available to Lessor for arrears
of Rent or breach of contract, or otherwise, including the right of setoff.
(b) If, by the terms of this Lease, Lessee is required to do or perform any act or to pay any
sum to a third party, and fails or refuses to do so, Lessor, after 30 days written
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notice to Lessee, without waiving any other right or remedy hereunder for such default, may do
or perform such act, at Lessee’s expense, or pay such sum for and on behalf of Lessee, and the
amounts so expended by Lessor shall be repayable on demand, and bear interest from the date
expended by Lessor until paid at a rate equal to the lesser of (i) an interest rate equal to the
“Prime Rate” as published in
The Wall Street Journal
, Southwest Edition, in its listing of “Money
Rates” plus two percent (2%) or (ii) the maximum non-usurious rate of interest permitted to be
charged Lessee under applicable Law (the “
Post-Maturity Rate
”). Past due Rent and any
other past due payments required hereunder shall bear interest from maturity until paid at the
Post-Maturity Rate.
9.3
Default by Lessor
. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessor:
(a) The failure by Lessor to observe or perform any of the other covenants, conditions or
provisions of this Lease to be observed or performed by Lessor, if such failure continues for a
period of 30 days following written notice from Lessee; provided, however, if a reasonable time to
cure such default would exceed 30 days, Lessor shall not be in default so long as Lessor begins to
cure such default within 30 days of receiving written notice from Lessee and thereafter completes
the curing of such default within a reasonable period of time following the receipt of such written
notice from Lessee; or
(b) The occurrence of a Bankruptcy Event.
9.4
Lessee’s Remedies
. In the event of any such
material default under or material breach of the terms
of this Lease by Lessor, Lessee may, at Lessee’s option, at any time thereafter that such default
or breach remains uncured, after ten days prior written notice to Lessee, perform any act that
Lessor is required to do or perform any act or to pay any sum to a Third Party, at Lessor’s expense
(to the extent the terms of this Lease require such performance at Lessor’s expense) or pay such
sum for and on behalf of Lessor, and the amounts so expended by Lessee shall be repayable on
demand, and bear interest from the date expended by Lessee until paid at the Post-Maturity Rate.
Lessee may, at Lessee’s option, deduct any such amounts so expended by Lessee from the Rent and any
other amounts owed hereunder or under any Ancillary Agreement and any such action on the part of
Lessee shall be in addition to any other remedy that may be available to Lessee for default or
breach of contract, or otherwise, including the right of setoff.
ARTICLE X
INDEMNITY
10.1
Indemnification by Lessor
. Lessor agrees to indemnify, defend, protect, save and
keep harmless Lessee and its Affiliates and their respective officers, directors, shareholders,
unitholders, members, partners, managers, agents, employees, representatives, successors and
assigns (collectively, the “
Lessee Indemnified Parties
”) from and against any and all
liabilities, obligations, losses, damages, penalties, demands, claims (including claims involving
strict or absolute liability in tort), actions, suits, costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever (collectively, the
“
Claims
”) which may be imposed on, incurred by or asserted against any of the Lessee
Indemnified Parties, in any way relating to or arising out of (a) any failure to perform any
covenant or agreement made or
12
undertaken by Lessor in this Lease, or (b) the exercise of Lessor’s rights and obligations
under
Section 2.2(b)
; provided, however, Lessor shall not have any obligation to indemnify
the Lessee Indemnified Parties for any such Claim under clauses (a) or (b) to the extent resulting
from or arising out of the willful misconduct or negligence (standard negligence or gross
negligence) of any of the Lessee Indemnified Parties. To the extent that the Lessee Indemnified
Parties in fact receive full indemnification payments from Lessor under the indemnification
provisions of this
Section 10.1
, Lessor shall be subrogated to the Lessee Indemnified
Parties’ rights with respect to the transaction or event requiring or giving rise to such
indemnity.
NOTWITHSTANDING ANYTHING CONTAINED IN THIS LEASE TO THE CONTRARY, IN NO EVENT SHALL
LESSOR BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES,
LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES IN TORT, CONTRACT OR OTHERWISE UNDER OR ON
ACCOUNT OF THIS LEASE, EXCEPT THOSE PAYABLE TO THIRD PARTIES FOR WHICH LESSOR WOULD BE LIABLE UNDER
THIS SECTION
.
10.2
Indemnification by Lessee
. Lessee agrees to indemnify, defend, protect, save and
keep harmless Lessor and its Affiliates, and their respective officers, directors, shareholders,
unitholders, members, partners, managers, agents, employees, representatives, successors and
assigns (collectively, the “
Lessor Indemnified Parties
”) from and against any and all
Claims which may be imposed on, incurred by or asserted against the Lessor Indemnified Parties, in
any way and to the extent relating to or arising out of (a) any failure to perform any covenant or
agreement made or undertaken by Lessee in this Lease, but expressly excluding any Claims arising
pursuant to Lessee’s non-compliance with any Environmental Law or the release of any Hazardous
Substance (such Claims to be addressed pursuant to the indemnification obligations of the Pipelines
Agreement), or (b) the exercise of Lessee’s rights under
Section 2.2(a);
provided, however,
Lessee shall not have any obligation to indemnify the Lessor Indemnified Parties for any such Claim
under clauses (a) or (b) to the extent resulting from or arising out of the willful misconduct or
negligence (standard negligence or gross negligence) of any of the Lessor Indemnified Parties. To
the extent that the Lessor Indemnified Parties in fact receive full indemnification payments from
Lessee under the indemnification provisions of this
Section 10.2
, Lessee shall be
subrogated to the Lessor Indemnified Parties’ rights with respect to the transaction or event
requiring or giving rise to such indemnity.
NOTWITHSTANDING ANYTHING CONTAINED IN THIS LEASE TO
THE CONTRARY, IN NO EVENT SHALL LESSEE BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES IN TORT,
CONTRACT OR OTHERWISE UNDER OR ON ACCOUNT OF THIS LEASE, EXCEPT THOSE PAYABLE TO THIRD PARTIES FOR
WHICH LESSEE WOULD BE LIABLE UNDER THIS SECTION
.
10.3
Matters Involving a Third Party
. If any Third Party shall notify either Lessor
or Lessee with respect to any action or claim by a Third Party (a “
Third-Party Claim
”) that
may give rise to a right to claim for indemnification against the other Party under
Section
10.1
or
Section 10.2
, then the Indemnified Party shall promptly notify the Indemnifying
Party thereof in writing; provided, however, that failure to give timely notice shall not affect
the right to indemnification to the extent such failure to give timely notice is not prejudicial to
the Indemnifying Party.
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10.4
Survival
. Notwithstanding anything contained in this Lease to the contrary, the
provisions of this
Article X
shall survive the expiration or earlier termination of this
Lease.
10.5
Ancillary Agreements
. The Ancillary Agreements contain additional indemnity
provisions. The indemnities contained in this
Article X
are in addition to and not in lieu
of the indemnity provisions contained in the Ancillary Agreements.
ARTICLE XI
GENERAL PROVISIONS
11.1
Estoppel Certificates
. Lessee and Lessor shall, at any time and from time to
time upon not less than 20 days prior written request from the other party, execute, acknowledge
and deliver to the other a statement in writing (a) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such modification and certifying that
this Lease, as so modified, is in full force and effect) and the date to which Rent and other
charges are paid, and (b) acknowledging that there are not, to the executing party’s knowledge, any
uncured defaults on the part of the other party hereunder (or specifying such defaults, if any are
claimed). Any such statement may be conclusively relied upon by any prospective purchaser of the
Premises or the leasehold evidenced by this Lease or any lender with respect to the Premises or the
leasehold evidenced by this Lease. Nothing in this
Section 11.1
shall be construed to
waive the conditions elsewhere contained in this Lease applicable to assignment or subletting of
the Premises by Lessee.
11.2
Severability
. The invalidity or unenforceability of any provision of this Lease,
as determined by a court of competent jurisdiction, shall in no way affect the validity or
enforceability of any other provision hereof.
11.3
Time of Essence
. Time is of the essence in the performance of all obligations
falling due hereunder.
11.4
Captions
. The headings to Articles, Sections and other subdivisions of this
Lease are inserted for convenience of reference only and will not affect the meaning or
interpretation of this Lease.
11.5
Entire Agreement; Amendment
. This Lease, including the exhibits and schedules
attached hereto, constitutes the entire agreement and understanding between the parties hereto with
respect to the lease of the Premises, and supersedes all prior and contemporaneous agreements and
undertakings of the parties, in connection herewith. This Lease may be modified in writing only,
signed by the parties in interest at the time of modification.
11.6
Schedules and Exhibits
. All schedules and exhibits hereto which are referred to
herein are hereby made a part hereof and incorporated herein by such reference.
11.7
Notices
. Any notice or other communication given under this Agreement shall be
in writing and shall be (i) delivered personally, (ii) sent by documented overnight delivery
service, (iii) sent by email transmission, or (iv) sent by first class mail, postage prepaid
(certified or registered mail, return receipt requested). Such notice shall be deemed to have been
duly given (x) if received, on the date of the delivery, with a receipt for delivery, (y) if
refused, on the
14
date of the refused delivery, with a receipt for refusal, or (z) with respect to email
transmissions, on the date the recipient confirms receipt. Notices or other communications shall
be directed to the following addresses:
Notices to Lessor:
c/o Holly Corporation
100 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: President
Email address:
president@hollycorp.com
with
a copy, which shall not constitute notice, but is required in order to give proper notice, to:
c/o Holly Corporation
100 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: General Counsel
Email address:
generalcounsel@hollycorp.com
Notices to Lessee:
c/o Holly Energy Partners, L.P.
100 Crescent Court, Suite 1600
Dallas, TX 75201
Attn: David Blair
Email address:
SVP-HEP@hollyenergy.com
with
a copy, which shall not constitute notice, but is required in order to give proper notice, to:
c/o Holly Energy Partners, L.P.
100 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: General Counsel
Email address:
generalcounsel@hollycorp.com
Any Party may at any time change its address for service from time to time by giving notice to
the other Parties in accordance with this
Section 11.7
.
11.8
Waivers
. No waiver or waivers of any breach or default or any breaches or
defaults by either Party of any term, condition or liability of or performance by the other party
of any duty or obligation hereunder shall be deemed or construed to be a waiver or waivers of
subsequent breaches or defaults of any kind, character or description under any circumstance. The
acceptance of Rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of
any provision hereof, other than the failure of Lessee to pay the particular Rent so
15
accepted, regardless of Lessor’s knowledge of such preceding breach at the time of acceptance
of such Rent.
11.9
No Partnership
. The relationship between Lessor and Lessee at all times shall
remain solely that of landlord and tenant and shall not be deemed a partnership or joint venture.
11.10
No Third Party Beneficiaries
. Subject to the provisions of
Article X
and
Section 11.14
hereof, this Lease inures to the sole and exclusive benefit of Lessor and
Lessee, their respective Affiliates, successors, legal representatives, sublessees and assigns, and
confers no benefit on any third party.
11.11
Waiver of Landlord’s Lien
. To the extent permitted by Law, Lessor hereby
expressly waives any and all liens (constitutional, statutory, contractual or otherwise) upon
Lessee’s personal property now or hereafter installed or placed in or on the Premises, which
otherwise might exist to secure payment of the sums herein provided to be paid by Lessee to Lessor.
11.12
Mutual Cooperation; Further Assurances
. Upon request by either Party from time
to time during the Term, each Party hereto agrees to execute and deliver all such other and
additional instruments, notices and other documents and do all such other acts and things as may be
reasonably necessary to carry out the purposes of this Lease and to more fully assure the Parties’
rights and interests provided for hereunder. Lessor and Lessee each agree to reasonably cooperate
with the other on all matters relating to required Permits and regulatory compliance by either
Lessee or Lessor in respect of the Premises so as to ensure continued full operation of the
Premises by Lessee pursuant to the terms of this Lease.
11.13
Recording
. Upon the request of Lessor or Lessee, Lessor and Lessee shall
execute, acknowledge, deliver and record a “short form” memorandum of this Lease in the form of
Exhibit B
attached hereto and made a part hereof for all purposes. Promptly upon request
by Lessor at any time following the expiration or earlier termination of this Lease, however such
termination may be brought about, Lessee shall execute and deliver to Lessor an instrument, in
recordable form, evidencing the termination of this Lease and the release by Lessee of all of
Lessee’s right, title and interest in and to the Premises existing under and by virtue of this
Lease (the “
Lessee Release
”) and Lessee grants Lessor an irrevocable power of attorney
coupled with an interest for the purpose of executing the Lessee Release in the name of the Lessee.
This
Section 11.13
shall survive the termination of this Lease.
11.14
Binding Effect
. Except as herein otherwise expressly provided, this Lease shall
be binding upon and inure to the benefit of the Parties and their respective successors, sublessees
and assigns. Nothing in this Section shall be construed to waive the conditions elsewhere
contained in this Lease applicable to assignment or subletting of the Premises by the Parties.
11.15
Choice of Law
. The provisions of this Lease shall be governed by and construed
in accordance with the laws of the State of Oklahoma, excluding any conflicts-of-law rule or
principle that might require the application of laws of another jurisdiction.
11.16
Warranty of Peaceful Possession
. Lessor covenants and warrants that Lessee,
upon paying the Rent reserved hereunder and observing and performing all of the covenants,
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conditions and provisions on Lessee’s part to be observed and performed hereunder, may
peaceably and quietly have, hold, occupy, use and enjoy, and, subject to the terms of this Lease,
shall have the full, exclusive, and unrestricted use and enjoyment of, all the Premises during the
Term for the purposes permitted herein, and Lessor agrees to warrant and forever defend title to
the Premises against the claims of any and all persons whomsoever lawfully claiming or to claim the
same or any part thereof.
11.17
Force Majeure
. In the event of Lessor or Lessee being rendered unable, wholly
or in part, by Force Majeure to carry out its obligations under this Lease, other than to make
payments due hereunder and the obligations under
Section 11.16
, it is agreed that on such
Party’s giving notice and full particulars of such Force Majeure to the other Party as soon as
practicable after the occurrence of the cause relied on, then the obligations of the Parties, so
far as they are affected by such Force Majeure, shall be suspended during the continuance of any
inability so caused but for no longer period, and such cause shall, as far as possible, be remedied
with all reasonable dispatch. It is understood and agreed that the settlement of strikes or
lockouts shall be entirely within the discretion of the Party having the difficulty, and that the
above requirements that any Force Majeure shall be remedied with all reasonable dispatch shall not
require the settlement of strikes or lockouts by acceding to the demands of the opposing party when
such course is inadvisable in the discretion of the Party having the difficulty. Notwithstanding
anything in this Agreement to the contrary, inability of a Party to make payments when due, be
profitable or to secure funds, arrange bank loans or other financing, obtain credit or have
adequate capacity or production (other than for reasons of Force Majeure) shall not be regarded as
events of Force Majeure.
11.18
Survival
. All obligations of Lessor and Lessee that shall have accrued under
this Lease prior to the expiration or earlier termination hereof shall survive such expiration or
termination to the extent the same remain unsatisfied as of the expiration or earlier termination
of this Lease. Lessor and Lessee further expressly agree that all provisions of this Lease which
contemplate performance after the expiration or earlier termination hereof shall survive such
expiration or earlier termination of this Lease.
11.19
AS IS, WHERE IS
. SUBJECT TO ALL OF THE OBLIGATIONS OF LESSOR UNDER THIS LEASE
INCLUDING THOSE SET FORTH IN
ARTICLE V
,
ARTICLE X
AND
SECTION 11.16
, LESSEE
HEREBY ACCEPTS THE PREMISES “AS IS”, “WHERE IS”, AND “WITH ALL FAULTS”, AND LESSOR MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, UNDER THIS LEASE AS TO THE PHYSICAL
CONDITION OF THE PREMISES, INCLUDING THE PREMISES’ MERCHANTABILITY, HABITABILITY, CONDITION,
FITNESS, OR SUITABILITY FOR ANY PARTICULAR USE OR PURPOSE.
11.20
Relocation of Pipelines; Amendment
. If Lessor elects to move certain pipelines
within the Refinery Site, and such relocation of the pipelines requires relocation of any of the
Relevant Assets, then this Agreement shall continue in full force and effect; provided, however,
the Parties shall execute an amendment hereto reflecting the new location(s) of the Relevant
Assets.
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11.21
Option
. Following the termination or expiration of the Pipelines Agreement,
including any renewal, extension, or replacement agreement thereof subject to Section 7 of the
Pipelines Agreement, Lessor shall have an option, and Lessee hereby grants such option, to purchase
the Relevant Assets at a cost equal to the fair market value thereof, as reasonably determined by
Lessor and Lessee. In the event that Lessor and Lessee cannot agree as to the fair market value of
the Relevant Assets, each party shall select a qualified appraiser. The two appraisers shall give
their opinion of the fair market value of the Relevant Assets within 20 days after their retention.
In the event the opinions of the two appraisers differ and, after good faith efforts over the
succeeding 20-day period, they cannot mutually agree, the appraisers shall immediately and jointly
appoint a third qualified appraiser. The third appraiser shall immediately (within five days)
choose either the determination of Lessor’s appraiser or Lessee’s appraiser and such choice of this
third appraiser shall be final and binding on Lessor and Lessee. Each party shall pay its own costs
for its appraiser. Following the determination of the fair market value of the Relevant Assets by
the appraisers, the parties shall equally share the costs of any third appraiser. Upon Lessor’s
exercise of the option granted pursuant to this Section, Lessor and Lessee shall cooperate to
convey the Relevant Assets from Lessee to Lessor. The terms and conditions of this Section 11.21
shall survive the termination or expiration of this Agreement or the
Pipelines Agreement.
If Lessor chooses to exercise its option granted pursuant to this Section, the sale
of the Relevant Assets shall be subject to the receipt of any consents or waivers required pursuant to
the Amended and Restated Credit Agreement, dated as of August 27, 2007, among Holly Energy
Partners-Operating, L.P., the bank party thereto, and Union Bank, N.A., as Administrative Agent, as such agreement
may be amended, restated, otherwise modified or refinanced from time to time.
[Remainder of Page Intentionally Left Blank]
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The parties hereto have executed this Lease to be effective as of the Commencement Date.
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LESSOR:
HOLLY REFINING & MARKETING-TULSA LLC,
a Delaware limited liability company
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By:
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Holly Refining & Marketing Company, Member
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By:
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/s/
George J. Damiris
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Name:
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George J. Damiris
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Title:
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Vice President, Supply and Marketing
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LESSEE:
HEP TULSA LLC,
a Delaware limited liability company
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By:
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/s/ David G. Blair
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Name:
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David G. Blair
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Title:
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Senior Vice President
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EXHIBIT A
DESCRIPTION OF PREMISES
A-1
EXHIBIT B
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE
is made and entered into to be effective as of December 1, 2009 to
reflect the existence of a Lease and Access Agreement dated of even date herewith, by and between
HOLLY REFINING & MARKETING-TULSA LLC,
a limited liability company organized and existing under the
laws of Delaware, having an office address at 100 Crescent Court, Suite 1600, Dallas, Texas 75201
(“
Lessor
”), and
HEP TULSA LLC
, a limited liability company organized and existing under the
laws of Delaware, , having an office address at 100 Crescent Court, Suite 1600, Dallas, Texas 75201
(“
Lessee
”). Such Lease and Access Agreement is herein referred to as the “
Ground
Lease
”. Lessor and Lessee are collectively referred to as the “
Parties
” and
individually as a “
Party
”.
RECITALS
A. Lessor is the owner of those certain tracts or parcels of land and appurtenant rights on
which the Relevant Assets (as defined below) are situated (“
Lessor’s Property
”).
B. Pursuant to the terms of that certain Asset Sale and Purchase Agreement (the “
Purchase
Agreement
”), dated October 19, 2009, among Lessor and Lessee, as Buyers, and Sinclair Tulsa
Refining Company, as Seller (“
Sinclair
”), Lessor acquired certain refining and other
related assets and the real property more particularly described on
Exhibit A
annexed
hereto and made a part hereof (the “
Premises
”), and Lessee acquired the Relevant Assets (as
such term defined in the Ground Lease) all of which are located on the Premises.
C. Lessor has leased the Premises to Lessee pursuant to the terms of the Ground Lease.
D. Lessor has granted to Lessee certain rights of access and use to those portions of Lessor’s
Property that are not part of the Premises (the “
Refinery and Terminal Site
”).
E. Lessor and Lessee have entered into the Ground Lease and desire to give public notice of
the existence of certain of their rights and agreements thereunder. Capitalized terms which are
used but not defined herein shall have the meanings given to them in the full text of the Ground
Lease.
NOW, THEREFORE, the Parties do hereby give public notice as follows:
1.
Term of Ground Lease
. The initial Term of the Ground Lease commences on December
1, 2009, and terminates on December 1, 2059, and after such date the Term of the Ground Lease shall
be automatically renewed for a maximum of four (4) successive ten-year periods thereafter unless
the Term of the Ground Lease is sooner terminated pursuant to the provisions thereof.
B-1
2.
Relevant Assets
. Pursuant to those certain Bills of Sale of even date herewith,
Sinclair has granted, sold, conveyed, assigned, transferred, set over, and vested in Lessee the
Relevant Assets.
3.
Early Termination Rights
. Lessee has the right, in Lessee’s sole and absolute
discretion, to terminate the Ground Lease, without penalty or premium, if Lessee ceases to operate
the Relevant and Additional Improvements, each as defined in the Ground Lease, or ceases its
business.
4.
Access Rights of Lessee to the Refinery and Terminal Site
. Pursuant to the terms
and provisions of the Ground Lease, Lessee has been granted certain non-exclusive access rights to
use various portions of the Refinery and Terminal Site.
5.
Reservation of Rights of Lessor of Access to the Premises
. Pursuant to the terms
of the Ground Lease, Lessor has retained certain rights of access to the Premises for the purposes
set forth in the Ground Lease.
6.
Option Rights
. Pursuant to the terms of the Ground Lease, Lessor has an option to
purchase the Relevant Assets under certain terms and conditions.
7.
Ground Lease Governs
. This Memorandum of Lease has been executed and recorded as
notice of the Ground Lease in lieu of recording the Ground Lease itself. Lessor and Lessee intend
that this instrument be only a memorandum of the Ground Lease, and reference is hereby made to the
Ground Lease itself for all of the terms, covenants and conditions thereof. Lessor and Lessee
hereby covenant and agree that this Memorandum of Lease is and shall be subject to the terms and
conditions more particularly set forth in the Ground Lease. This Memorandum of Lease is not
intended to modify, limit or otherwise alter the terms, conditions and provisions of the Ground
Lease. In the event of any conflict, ambiguity or inconsistency between the terms and provisions
of this Memorandum of Lease and the terms and provisions of the Ground Lease, the terms and
provisions of the Ground Lease shall govern, control and prevail.
B-2
IN WITNESS WHEREOF, the undersigned have caused this Memorandum of Lease to be executed as of
the date first set forth above.
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ATTEST:
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LESSOR:
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HOLLY REFINING & MARKETING-
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TULSA LLC, a Delaware limited liability
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company
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Name:
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Title:
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By: Holly Refining & Marketing Company,
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Member
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By:
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Name:
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Title:
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ATTEST:
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LESSEE:
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HEP TULSA LLC,
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a Delaware limited liability company
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Name:
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Title:
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By:
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Name:
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Title:
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[Signature Page to Memorandum of Lease]
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STATE OF TEXAS
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COUNTY OF DALLAS
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This instrument was acknowledged before me on
, 2009, by
,
of
HOLLY REFINING & MARKETING-TULSA LLC
, a Delaware limited liability
company, on behalf of said limited liability company.
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Notary Public, State of Texas
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STATE OF TEXAS
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§
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§
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COUNTY OF DALLAS
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§
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This instrument was acknowledged before me
on
, 2009, by
,
of
HEP TULSA LLC
, a Delaware limited liability company, on behalf of said
limited liability company.
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Notary Public, State of Texas
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Exhibit A
Description of Premises
A-1
MEMORANDUM OF LEASE
Dated:
, 2009
MEMORANDUM OF LEASE
Between
BETWEEN
HOLLY REFINING & MARKETING-TULSA LLC,
AS LESSOR
AND
HEP TULSA LLC,
AS LESSEE
Record and return to:
Holly Corporation
100 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Denise C. McWatters
Telecopy: 214.871.3523
SCHEDULE 1.1(b)
MATTERS WHICH ARE NOT PART OF THE PREMISES
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1.
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Relevant Assets.
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2.
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Additional Improvements.
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Schedule 1.1(b)
SCHEDULE 7.4
INSURANCE REQUIREMENTS
Lessee agrees that during the terms of this Lease it shall maintain property and casualty
insurance (including pollution insurance coverage) on the Premises, the Relevant Assets and the
Additional Improvements in accordance with customary industry practices and with a licensed,
reputable carrier.
Schedule 7.4