UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 4, 2016 (October 3, 2016)

 

 

HOLLY ENERGY PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-32225   20-0833098
(State of Incorporation)  

(Commission

File Number)

 

(I.R.S. Employer

Identification Number)

2828 N. Harwood, Suite 1300, Dallas, Texas 75201

(Address of Principal Executive Offices)

(214) 871-3555

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement

On October 3, 2016, Holly Energy Partners – Operating, L.P. (“ HEP Operating ”), a wholly-owned subsidiary of Holly Energy Partners, L.P. (“ HEP ”), closed its previously announced acquisition from an affiliate of HollyFrontier Corporation (“ HollyFrontier ”) of an atmospheric distillation tower (the “ CDU 2 ”), a fluid catalytic cracking unit (the “ FCC 2 ”) and a polymerization unit (the “ Poly ” and, together with the FCC 2 and the CDU 2, the “ Assets ”) located at the West Bountiful, Utah refinery (the “ Woods Cross Refinery ”) of HollyFrontier Woods Cross Refining LLC (“ HFWCR ”), a wholly-owned subsidiary of HollyFrontier (the “ Acquisition ”). The Acquisition is effective as of October 1, 2016. HollyFrontier controls the general partner of HEP.

LLC Interest Purchase Agreement

On October 3, 2016, HollyFrontier, HFWCR, HEP Operating, and HEP entered into a LLC Interest Purchase Agreement (the “ Purchase Agreement ”), with an effective date of October 1, 2016, pursuant to which HEP Operating acquired from HFWCR all of the issued and outstanding membership interests (the “ Interests ”) of Woods Cross Operating LLC (“ Woods Cross Operating ”), which owns the Assets. The cash consideration paid by HEP Operating for the Interests was approximately $278 million. The consideration was funded with approximately $100 million in proceeds from a previously disclosed private placement of HEP common units to certain clients of Tortoise Capital Advisors, L.L.C. and the balance with borrowings under HEP’s credit facility. The Acquisition was closed simultaneously with the signing of the Purchase Agreement. HollyFrontier controls the general partner of HEP.

As disclosed in HollyFrontier’s periodic reports, the appeal proceeding challenging the Utah Department of Environmental Quality’s decision to uphold the air quality permit issued to HFWCR authorizing the expansion units at the Woods Cross Refinery is still pending. The Purchase Agreement provides HEP Operating with the option to compel HFWCR to repurchase the Interests for the full purchase price paid by HEP Operating if the Assets are required to be idled for 90 or more days as a result of a final decision in the appeal proceedings. If HEP Operating does not exercise the foregoing right and, by reason of the appeal proceedings, the Assets must be modified, then HFWCR will be responsible for the costs of such modifications.

Pursuant to the Purchase Agreement, HollyFrontier guaranteed the payment of certain obligations of HFWCR under the Purchase Agreement, and HEP guaranteed the payment of certain obligations of HEP Operating under the Purchase Agreement.

The description of the Purchase Agreement herein is qualified by reference to the copy of the Purchase Agreement filed as Exhibit 10.1 to this report, which is incorporated by reference into this report in its entirety.

Amended and Restated Master Tolling Agreement (Operating Assets)

On October 3, 2016, in connection with the closing of the Acquisition, HFWCR and HEP Operating entered into an Amended and Restated Master Tolling Agreement (Operating Assets) (the “ Tolling Agreement ”) with an effective date of October 1, 2016. The Tolling Agreement amends and restates the Tolling Agreement (Operating Assets), dated effective as of November 1, 2015, to, among other things, include the Assets within the scope thereof. The initial term of the Tolling Agreement in respect of the Assets is 15 years, and HFWCR has the option to extend the term for one additional five-year period.

Pursuant to the Tolling Agreement, HEP Operating will provide processing services to HFWCR with respect to the Assets. HFWCR will pay HEP Operating the following:

 

    a tolling fee on the CDU 2 of $2.56/barrel of certain products based on a minimum commitment of 14,625 barrels per day;

 

    a tolling fee on the FCC 2 of $12.39/barrel of certain products based on a minimum commitment of 7,600 barrels per day; and

 

    a tolling fee on the Poly of $9.72/barrel of certain products based on a minimum commitment of 2,438 barrels per day.

 

1


The tolling fees are subject to various adjustments, including limited upward adjustments (a) for changes in the Producer Price Index-Commodities-Finished Goods (“ PPI ”) produced by the U.S. Department of Labor, Bureaus of Statistics, (b) for changes to the base pay under the union contract applicable to the Wood Cross Refinery, (c) if actual operating expenses for the Assets exceed assumed operating expenses, and (d) if the costs and expenses, including catalysts, reasonably incurred by HEP Operating in the first turnaround of the Assets exceed the accrued turnaround cost. In addition, (i) if the aggregate cost of gas incurred by HEP Operating in connection with the operation of the CDU 2 exceeds $11,871, HFWCR will reimburse HEP Operating the amount by which such aggregate cost exceeds $11,871 and (ii) if the aggregate cost of gas incurred by HEP Operating in connection with the operation of the FCC 2 exceeds $11,566, HFWCR will reimburse HEP Operating the amount by which such aggregate cost exceeds $11,566.

Pursuant to the Tolling Agreement, HollyFrontier guaranteed the obligations of HFWCR under the Tolling Agreement, and HEP guaranteed the obligations of HEP Operating.

The description of the Tolling Agreement herein is qualified by reference to the copy of the Tolling Agreement, filed as Exhibit 10.2 to this report, which is incorporated by reference into this report in its entirety.

Amended and Restated Omnibus Agreement

On October 3, 2016, in connection with the closing of the Acquisition, HollyFrontier, HEP and certain of their respective subsidiaries entered into a Sixteenth Amended and Restated Omnibus Agreement (the “ Amended and Restated Omnibus Agreement ”), with an effective date of October 1, 2016. The Amended and Restated Omnibus Agreement amends and restates the Fifteenth Amended and Restated Omnibus Agreement, dated effective as of March 31, 2016, to, among other things, subject the Assets to HollyFrontier’s right of first refusal to purchase HEP’s assets that serve HollyFrontier’s refineries.

The description of the Amended and Restated Omnibus Agreement herein is qualified by reference to the copy of the Amended and Restated Omnibus Agreement, filed as Exhibit 10.3 to this report, which is incorporated by reference into this report in its entirety.

Amended and Restated Secondment Agreement

On October 3, 2016, in connection with the closing of the Acquisition, Holly Logistic Services, L.L.C. (“ Holly GP ”), the general partner of the general partner of HEP, HEP Operating, and certain subsidiaries of HEP (collectively, the “ Partnership Group ”) and HFWCR and certain subsidiaries of HollyFrontier (collectively, the “ HollyFrontier Group ”) entered into a Third Amended and Restated Services and Secondment Agreement (the “ Amended and Restated Services and Secondment Agreement ”), with an effective date of October 1, 2016. The Amended and Restated Services and Secondment Agreement amends and restates the Second Amended and Restated Services and Secondment Agreement, dated effective as of March 31, 2016, to, among other things, provide for the secondment of employees by the HollyFrontier Group to the Partnership Group for the purposes of performing operational, maintenance and management activities related to the Assets. During their period of secondment, the seconded employees will be under the management and supervision of the Partnership Group.

The Partnership Group will reimburse the applicable HollyFrontier Group member for all necessary and reasonable costs and expenses incurred by such HollyFrontier Group member with respect to the seconded employees, including their wages and benefits, based on either the percentage of time such seconded employee provides services to the Partnership Group or time such seconded employee actually spends providing services to the Partnership Group.

The description of the Amended and Restated Services and Secondment Agreement herein is qualified by reference to the copy of the Amended and Restated Services and Secondment Agreement, filed as Exhibit 10.4 to this report, which is incorporated by reference into this report in its entirety.

 

2


Amended and Restated Master Lease and Access Agreement

On October 3, 2016, in connection with the closing of the Acquisition, HFWCR, Woods Cross Operating and certain other subsidiaries of HollyFrontier and HEP, entered into a Third Amended and Restated Master Lease and Access Agreement (the “ Amended and Restated Master Lease and Access Agreement ”), with an effective date of October 1, 2016. The Amended and Restated Master Lease and Access Agreement amends and restates the Second Amended and Restated Master Lease and Access Agreement, dated effective as of March 31, 2016, to provide for a 50-year initial term lease by HFWCR to Woods Cross Operating, for a nominal amount, of the real property on which the Assets are situated. Pursuant to the terms of the Amended and Restated Master Lease and Access Agreement, HFWCR has agreed to permit Woods Cross Operating and its affiliates to have access to the Assets. The Amended and Restated Master Lease and Access Agreement also provides that, following termination or expiration of the Tolling Agreement with respect to the Assets, HFWCR will have the option to purchase the Assets for fair market value.

The description of the Amended and Restated Master Lease and Access Agreement herein is qualified by reference to the copy of the Amended and Restated Master Lease and Access Agreement, filed as Exhibit 10.5 to this report, which is incorporated by reference into this report in its entirety.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
No.

  

Description

10.1    LLC Interest Purchase Agreement dated as of October 3, 2016 by and between HollyFrontier Corporation, HollyFrontier Woods Cross Refining LLC, Holly Energy Partners – Operating, L.P. and Holly Energy Partners, L.P.
10.2    Master Tolling Agreement (Operating Assets) dated as of October 3, 2016 by and between HollyFrontier El Dorado Refining LLC, HollyFrontier Woods Cross Refining LLC, Holly Energy Partners-Operating L.P., HollyFrontier Corporation and Holly Energy Partners, L.P.
10.3    Sixteenth Amended and Restated Omnibus Agreement dated as of October 3, 2016 by and among HollyFrontier Corporation, Holly Energy Partners, L.P. and certain of their respective subsidiaries
10.4    Third Amended and Restated Services and Secondment Agreement dated as of October 3, 2016 by and among Holly Logistic Services, L.L.C., certain subsidiaries of Holly Energy Partners, L.P. and certain subsidiaries of HollyFrontier Corporation
10.5    Third Amended and Restated Master Lease and Access Agreement dated as of October 3, 2016 by and among certain subsidiaries of Holly Energy Partners, L.P. and certain subsidiaries of HollyFrontier Corporation

 

3


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

HOLLY ENERGY PARTNERS, L.P.
By:   HEP Logistics Holdings, L.P., its General Partner
  By:   Holly Logistic Services, L.L.C., its General Partner
    By:  

/s/ Richard L. Voliva III

      Name:   Richard L. Voliva III
      Title:   Senior Vice President and Chief Financial Officer

Date: October 4, 2016

 

4


EXHIBIT INDEX

 

Exhibit
No.

  

Description

10.1    LLC Interest Purchase Agreement dated as of October 3, 2016 by and between HollyFrontier Corporation, HollyFrontier Woods Cross Refining LLC, Holly Energy Partners – Operating, L.P. and Holly Energy Partners, L.P.
10.2    Master Tolling Agreement (Operating Assets) dated as of October 3, 2016 by and between HollyFrontier El Dorado Refining LLC, HollyFrontier Woods Cross Refining LLC, Holly Energy Partners-Operating L.P., HollyFrontier Corporation and Holly Energy Partners, L.P.
10.3    Sixteenth Amended and Restated Omnibus Agreement dated as of October 3, 2016 by and among HollyFrontier Corporation, Holly Energy Partners, L.P. and certain of their respective subsidiaries
10.4    Third Amended and Restated Services and Secondment Agreement dated as of October 3, 2016 by and among Holly Logistic Services, L.L.C., certain subsidiaries of Holly Energy Partners, L.P. and certain subsidiaries of HollyFrontier Corporation
10.5    Third Amended and Restated Master Lease and Access Agreement dated as of October 3, 2016 by and among certain subsidiaries of Holly Energy Partners, L.P. and certain subsidiaries of HollyFrontier Corporation

 

5

Exhibit 10.1

Execution Version

 

 

LLC INTEREST PURCHASE AGREEMENT

by and among

HOLLYFRONTIER WOODS CROSS REFINING LLC,

as Seller, with

HOLLYFRONTIER CORPORATION,

as Guarantor,

and

HOLLY ENERGY PARTNERS – OPERATING, L.P.,

as Buyer, with

HOLLY ENERGY PARTNERS, L.P.,

as Guarantor

Effective as of October 1, 2016

 

 


TABLE OF CONTENTS

 

         Page  

ARTICLE I - DEFINED TERMS

     1   

1.1

 

Definitions

     1   

1.2

 

Interpretation

     1   

ARTICLE II - PURCHASE OF LLC INTEREST

     1   

2.1

 

Transfer of LLC Interest

     1   

2.2

 

Consideration

     1   

ARTICLE III - CLOSING

     2   

3.1

 

Closing

     2   

3.2

 

Deliveries by Seller

     2   

3.3

 

Deliveries by Buyer

     3   

3.4

 

Closing Costs; Transfer Taxes and Fees

     3   

ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER

     4   

4.1

 

Organization

     4   

4.2

 

Authorization

     4   

4.3

 

Company Status

     4   

4.4

 

No Conflicts or Violations; No Consents or Approvals Required

     5   

4.5

 

Absence of Litigation; Compliance with Law

     5   

4.6

 

Title to LLC Interest; Capitalization

     5   

4.7

 

No Undisclosed Liabilities

     6   

4.8

 

No Employees

     6   

4.9

 

Taxes

     6   

4.10

 

Brokers and Finders

     6   

4.11

 

Condition of Assets

     6   

4.12

 

Title to Assets

     6   

4.13

 

Permits

     6   

4.14

 

Banking Relationships

     7   

4.15

 

Material Contracts

     7   

4.16

 

Seller Security

     7   

4.17

 

Insurance

     7   

4.18

 

Information Provided by Seller

     7   

4.19

 

Waivers and Disclaimers

     7   

ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER

     8   

5.1

 

Organization

     8   

 

i


5.2

 

Authorization

     8   

5.3

 

No Conflicts or Violations; No Consents or Approvals Required

     9   

5.4

 

Absence of Litigation

     9   

5.5

 

Brokers and Finders

     9   

ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF HOLLYFRONTIER

     9   

6.1

 

Organization

     9   

6.2

 

Authorization

     9   

6.3

 

No Conflicts or Violations; No Consents or Approvals Required

     9   

6.4

 

Absence of Litigation

     10   

6.5

 

Brokers and Finders

     10   

ARTICLE VII – REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP

     10   

7.1

 

Organization

     10   

7.2

 

Authorization

     10   

7.3

 

No Conflicts or Violations; No Consents or Approvals Required

     10   

7.4

 

Absence of Litigation

     10   

7.5

 

Brokers and Finders

     10   

ARTICLE VIII - COVENANTS

     11   

8.1

 

Cooperation

     11   

8.2

 

Additional Agreements

     11   

8.3

 

Employees

     11   

8.4

 

Put Right

     11   

8.5

 

Utah Permit Information

     13   

8.6

 

Temporary Transition Services

     13   

ARTICLE IX - INDEMNIFICATION

     13   

9.1

 

Indemnification of Buyer and Seller

     13   

9.2

 

Defense of Third-Party Claims

     13   

9.3

 

Direct Claims

     14   

9.4

 

Limitations

     14   

9.5

 

Tax Related Adjustments

     15   

ARTICLE X - MISCELLANEOUS

     15   

10.1

 

Expenses

     15   

10.2

 

Notices

     15   

10.3

 

Severability

     17   

10.4

 

Governing Law; Jurisdiction; Waiver of Jury Trial

     17   

10.5

 

Arbitration Provision

     17   

10.6

 

Parties in Interest

     18   

 

ii


10.7

 

Assignment of Agreement

     18   

10.8

 

Captions

     18   

10.9

 

Counterparts

     18   

10.10

 

Director and Officer Liability

     18   

10.11

 

Integration

     18   

10.12

 

Effect of Agreement

     18   

10.13

 

Amendment; Waiver

     18   

10.14

 

Survival of Representations and Warranties

     19   

ARTICLE XI – GUARANTEE BY HFC

     19   

11.1

 

Payment and Performance Guaranty

     19   

11.2

 

Guaranty Absolute

     19   

11.3

 

Waiver

     20   

11.4

 

Subrogation Waiver

     20   

11.5

 

Reinstatement

     20   

11.6

 

Continuing Guaranty

     20   

11.7

 

No Duty to Pursue Others

     20   

ARTICLE XII - GUARANTEE BY THE PARTNERSHIP

     20   

12.1

 

Payment and Performance Guaranty

     20   

12.2

 

Guaranty Absolute

     20   

12.3

 

Waiver

     21   

12.4

 

Subrogation Waiver

     21   

12.5

 

Reinstatement

     21   

12.6

 

Continuing Guaranty

     21   

12.7

 

No Duty to Pursue Others

     22   

 

iii


Exhibits and Schedules

 

Exhibit A -

   Definitions

Exhibit B -

   Interpretation

 

Schedule 1.1(a)

  Crude Unit 2 Assets

Schedule 1.1(b)

  FCC Unit 2 Assets

Schedule 1.1(c)

  Polymerization Unit Assets

Schedule 4.3(a)

  Jurisdictions

Schedule 4.4(a)

  Required Consents – Seller

Schedule 4.4(b)

  Required Consents – Company

Schedule 4.7

  Company Indebtedness and Liabilities

Schedule 4.13

  Permitted Exceptions

Schedule 4.14

  Banking Accounts

Schedule 4.15

  Material Contracts

Schedule 4.16

  Seller Security Instruments

Schedule 5.3

  Required Consents – Buyer

Schedule 6.3

  Required Consents – HFC

Schedule 7.3

  Required Consents – Partnership

 

iv


LLC INTEREST PURCHASE AGREEMENT

THIS LLC INTEREST PURCHASE AGREEMENT (this “ Agreement ”) dated as of October 3, 2016 to be effective as of the Effective Time (as defined below), is made and entered into by and among HollyFrontier Woods Cross Refining LLC , a Delaware limited liability company (“ Seller ”), HollyFrontier Corporation, a Delaware corporation (“ HFC ”), Holly Energy Partners – Operating, L.P. , a Delaware limited partnership (“ Buyer ”) and Holly Energy Partners, L.P. , a Delaware limited partnership (the “ Partnership ”). Seller and Buyer are sometimes referred to in this Agreement each as a “ Party ” and collectively as the “ Parties .” HFC joins this Agreement solely for the purpose of Articles VI and XI of this Agreement. The Partnership joins this Agreement solely for the purposes of Articles VII and XII of this Agreement.

WHEREAS , Seller is the sole member of Woods Cross Operating LLC, a Delaware limited liability company (the “ Company ”);

WHEREAS , the Company is the owner of the Assets (as defined below);

WHEREAS , Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all of the issued and outstanding limited liability company interests of the Company (the “ LLC Interest ”) in exchange for the consideration set forth herein;

WHEREAS , in connection with the acquisition of the LLC Interest, the Parties desire to amend the (A) Omnibus Agreement (as defined below), (B) Master Lease and Access Agreement (as defined below); (C) Master Site Services Agreement (as defined below); (D) Master Services and Secondment Agreement (as defined below); and (E) Master Tolling Agreement (as defined below);

NOW, THEREFORE , in consideration of the foregoing and the covenants set forth herein and in the Amended and Restated Omnibus Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINED TERMS

1.1. Definitions . Capitalized terms used throughout this Agreement and not otherwise defined herein shall have the meanings set forth on Exhibit A .

1.2. Interpretation . Matters relating to the interpretation of this Agreement are set forth on Exhibit B .

ARTICLE II

PURCHASE OF LLC INTEREST

2.1. Transfer of LLC Interest . Subject to all of the terms and conditions of this Agreement, Seller hereby sells, transfers and conveys to Buyer, and Buyer hereby purchases and acquires from Seller, the LLC Interest, free and clear of all Encumbrances.

2.2. Consideration .

(a) The aggregate consideration to be paid by Buyer for the LLC Interest shall be Two Hundred Seventy-Eight Million Dollars ($278,000,000) in immediately available funds (the “ Purchase Price ”).


(b) The Purchase Price shall be delivered by the Buyer to Seller (or such designee) at the Closing.

ARTICLE III

CLOSING

3.1. Closing . The closing of the transactions contemplated hereby (the “ Closing ”) shall take place simultaneously with the execution of this Agreement. The date of the Closing is referred to herein as the “ Closing Date ” and the Closing is deemed to be effective as of 12:01 a.m., Dallas, Texas time, on October 1, 2016 (the “ Effective Time ”).

3.2. Deliveries by Seller . At the Closing, Seller shall deliver, or cause to be delivered, to Buyer the following:

(a) A counterpart to the assignment of limited liability company interests transferring the LLC Interest to Buyer, in form and substance mutually acceptable to the Parties (the “ Assignment ”), duly executed by Seller.

(b) The original minute books, company books and membership registers for the Company.

(c) A counterpart of the Third Amended and Restated Master Site Services Agreement, in form and substance mutually acceptable to the Parties (the “ Amended and Restated Master Site Services Agreement ”), duly executed by the Related Refinery Owners named therein.

(d) A counterpart of the Third Amended and Restated Services and Secondment Agreement, in form and substance mutually acceptable to the Parties (the “ Amended and Restated Services and Secondment Agreement ”), duly executed by HollyFrontier Group named therein.

(e) A counterpart of the Third Amended and Restated Master Lease and Access Agreement, in form and substance mutually acceptable to the Parties (the “ Amended and Restated Master Lease and Access Agreement ”), duly executed by the Related Refinery Owners Named therein.

(f) A counterpart of the Amended and Restated Master Tolling Agreement (Operating Assets), in form and substance mutually acceptable to the Parties (the “ Amended and Restated Master Tolling Agreement ”), duly executed by Seller, HollyFrontier El Dorado Refining LLC and HFC.

(g) A counterpart of the Sixteenth Amended and Restated Omnibus Agreement, in form and substance mutually acceptable to the Parties (the “ Amended and Restated Omnibus Agreement ”), duly executed by HFC and the HFC Entities named therein.

(h) Evidence in form and substance reasonably satisfactory to Buyer of the release and termination of all Encumbrances (other than Permitted Encumbrances) on the LLC Interest and on the Assets.

(i) To the extent applicable, assignment documents, duly executed by Seller, assigning each of the Permits held by Seller which are assignable by such Seller to Buyer in accordance with Applicable Law.

(j) A certificate, executed by an officer of HFC, in the form prescribed by Treasury regulations under Section 1445 of the Code, stating that HFC (the person from whom Seller is disregarded as an entity for U.S. federal income tax purposes) is not a “foreign person” within the meaning of Section 1445 of the Code.

 

2


3.3. Deliveries by Buyer . At the Closing (or such later date as may be set forth below), Buyer shall deliver, or cause to be delivered, to Seller the Purchase Price by wire transfer of immediately available funds, and the following:

(a) A counterpart of the Assignment duly executed by Buyer.

(b) A counterpart of the Amended and Restated Master Site Services Agreement, duly executed by the Relevant Asset Owners named therein.

(c) A counterpart of the Amended and Restated Services and Secondment Agreement, duly executed by Buyer and the Partnership Group named therein.

(d) A counterpart of the Amended and Restated Master Lease and Access Agreement, duly executed by the Relevant Asset Owners named therein.

(e) A counterpart of the Amended and Restated Master Tolling Agreement, duly executed by Buyer and the Partnership.

(f) A counterpart of the Amended and Restated Omnibus Agreement, duly executed by the Partnership and the HEP Entities named therein.

(g) Simultaneous with the delivery of senior mortgages by Buyer as required under its credit facility (but in no event later than thirty (30) days following the Closing Date), Buyer shall execute and deliver to Seller the subordinate mortgages, subordinated security agreement and deeds of trust in a form reasonably acceptable to Buyer, Seller and HFC providing security in favor of HFC and/or its Affiliates in the event of a breach of the obligations of Buyer under the agreements identified in Sections 3.3(c) , (d) , (e)  and (f) , such alternative form to be reasonably acceptable to the applicable parties to such agreements.

3.4. Closing Costs; Transfer Taxes and Fees .

(a) Allocation of Costs . Buyer shall pay the cost of all sales, transfer and use taxes arising out of the transfer of the LLC Interest.

(b) Prorations . On the Closing Date, or as promptly as practicable following the Closing Date, but in no event later than sixty (60) calendar days thereafter, the real, if any, and personal property taxes, water, gas, electricity and other utilities with respect to the Assets and the real estate interests and rights associated with the Assets and local business or other license fees to the extent assigned and other similar periodic charges payable with respect to the Assets or the Company shall be prorated between Buyer, on the one hand, and Seller, on the other hand, effective as of the Effective Time, with Seller being responsible for amounts related to the period prior to but excluding the Effective Time and Buyer being responsible for amounts related to the period at and after the Effective Time. If the final property tax rate or final assessed value for the current tax year is not established by the Closing Date, the prorations shall be made on the basis of the rate or assessed value in effect for the preceding tax year and shall be adjusted when the exact amounts are determined. All such prorations shall be based upon the most recent available assessed value available prior to the Closing Date.

(c) Reimbursement . If a Party pays any tax agreed to be borne by the other Party under this Agreement, such other Party shall promptly reimburse the paying Party for the amounts so paid. If any Party receives any tax refund or credit applicable to a tax paid by another Party hereunder, the receiving Party shall promptly pay such amounts to the Party entitled thereto.

 

3


ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer that as of the Effective Time:

4.1. Organization . Seller is an entity duly organized, validly existing and in good standing under the Applicable Laws of the State of Delaware.

4.2. Authorization . Seller has full limited liability company power and authority to execute, deliver, and perform this Agreement and any Seller Ancillary Documents. The execution, delivery, and performance by Seller of this Agreement and the Seller Ancillary Documents and the consummation by such Seller of the transactions contemplated hereby and thereby, have been duly authorized by all necessary limited liability company action of Seller. This Agreement has been duly executed and delivered by Seller and constitutes, and each Seller Ancillary Document executed or to be executed by Seller has been, or when executed will be, duly executed and delivered by Seller and constitutes, or when executed and delivered will constitute, a valid and legally binding obligation of Seller, enforceable against it in accordance with their terms, except to the extent that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Applicable Laws affecting creditors’ rights and remedies generally and (ii) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.

4.3. Company Status .

(a) The Company is duly organized, validly existing and in good standing under the laws of the State of Delaware and (i) has all requisite limited liability company power and authority to own, operate, use or lease its properties and assets and to carry on its business as it is now being conducted, and (ii) is duly qualified to do business and is in good standing in each of the jurisdictions in which the ownership, operation or leasing of its properties and assets and the conduct of its business requires it to be so qualified, licensed or authorized, except, in the case of clause (ii), where the failure to have such power and authority or to be so qualified, licensed or authorized would not, individually or in the aggregate, be reasonably likely to cause a Material Adverse Effect on the Company. Schedule 4.3(a) lists all jurisdictions in which the Company is qualified to do business.

(b) The Company does not directly or indirectly, own any interest in any corporation, partnership, limited liability company, limited partnership, joint venture or other business association or entity, foreign or domestic.

(c) The Company was formed for the purpose of acquiring the Assets (which acquisition occurred effective September 28, 2016) has no assets except for the Assets, and has not conducted any business other than the operation of the Assets beginning effective September 28, 2016.

(d) Seller has made available to Buyer a copy of the certificate of formation and limited liability company agreement of the Company, such copy being complete and correct and in full force and effect on the date hereof, and no amendment or modification of any such document has been filed, recorded or is pending or contemplated. The Company is not in violation of any provision of its certificate of formation or limited liability company agreement.

 

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4.4. No Conflicts or Violations; No Consents or Approvals Required .

(a) The execution, delivery and performance by Seller of this Agreement and the other Seller Ancillary Documents does not, and the consummation of the transactions contemplated hereby and thereby will not, (i) violate, conflict with, or result in any breach of any provision of Seller’s organizational documents or (ii) subject to obtaining the Consents or making the registrations, declarations or filings set forth in the next sentence, violate in any material respect any Applicable Law or material Contract binding upon such Seller. Except as set forth on Schedule 4.4(a) , no Consent of any Governmental Authority or any other person is required for Seller in connection with Seller’s execution, delivery or performance of this Agreement or the Seller Ancillary Documents or consummation of the transactions contemplated hereby or thereby.

(b) The consummation of the transactions contemplated by this Agreement and the other Seller Ancillary Documents will not, (i) violate, conflict with, or result in any breach of any provision of the Company’s organizational documents or (ii) subject to obtaining the Consents or making the registrations, declarations or filings set forth in the next sentence, violate in any material respect any Applicable Law or material contract binding upon the Company. Except as set forth on Schedule 4.4(b) , no Consent of any Governmental Authority or any other person is required for the Company in connection with the performance of this Agreement and the Seller Ancillary Documents or the consummation of the transactions contemplated hereby or thereby.

4.5. Absence of Litigation; Compliance with Law . Except as set forth on Schedule 4.13 , there is no Action pending or, to the Knowledge of Seller, threatened against (a) the Company or the Assets or (b) Seller or any of its Affiliates relating to the transactions contemplated by this Agreement or the Ancillary Documents or which, if adversely determined, would reasonably be expected to materially impair the ability of Seller to perform its obligations and agreements under this Agreement or the Seller Ancillary Documents and to consummate the transactions contemplated hereby and thereby. Except as set forth on Schedule 4.13 , the construction, operations and business of each of the Assets have been conducted by the Seller and the Company in compliance with all applicable Laws except as would not, individually or in the aggregate, be reasonably likely to cause a Material Adverse Effect on the Company.

4.6. Title to LLC Interest; Capitalization .

(a) Immediately prior to the Effective Time, Seller is the sole member of the Company and its record owner of and has good and valid title to the LLC Interest, free and clear of all Encumbrances, and sole and unrestricted voting power and power of disposition with respect to all of the LLC Interest. Except for any Claims arising under this Agreement and any other agreement entered into by Seller in connection with this Agreement, Seller and its Affiliates have no Claims of any kind against the Company, or any of its officers, managers, directors or employees. The LLC Interest has been duly authorized and validly issued in accordance with Applicable Laws and the organizational documents of the Company, including its limited liability company agreement, and is fully paid (to the extent required by the limited liability company agreement of the Company) and nonassessable (except to the extent such nonassessability may be affected by Sections 18-607 and 18-804 of DLLCA).

(b) There are no options or rights to purchase or acquire, or agreements, arrangements, commitments or understandings relating to, the LLC Interest or the Assets except pursuant to this Agreement and the Amended and Restated Omnibus Agreement. There are no (i) authorized or outstanding securities of or equity interests in the Company of any kind other than the LLC Interest, (ii) there are no outstanding options, warrants, subscriptions, puts, calls or other rights, agreements, arrangements or commitments (preemptive, contingent or otherwise) obligating Seller or Company to offer, issue, sell, redeem, repurchase, otherwise acquire or transfer, pledge or encumber any securities of or equity interest in the Company; and (iii) there are no outstanding securities or obligations of any kind of any of the Company that are convertible into or exercisable or exchangeable for any equity interest in the Company.

 

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(c) At the Effective Time, Buyer will have the entire record and beneficial ownership of the LLC Interest, free and clear of all Encumbrances, Seller will cease to be a member of the company, and Buyer will be admitted as the sole member of the Company.

4.7. No Undisclosed Liabilities . Except as set forth on Schedules 4.7 and 4.13 , the Company does not now have any indebtedness or liability (whether absolute, accrued, contingent or otherwise) of any nature, other than its obligations under the Material Contracts and Permits, and (a) neither Seller (or any other HFC Entity, as the case may be) nor to Seller’s Knowledge, any counterparty thereto, was in material breach of its obligations under the Material Contracts at the time of the Asset Contribution and (b) neither the Company, nor to Seller’s Knowledge, any counterparty thereto, is currently in material breach of its obligations under the Material Contracts.

4.8. No Employees . The Company does not now have nor has it ever had any employees.

4.9. Taxes . The Company has filed, on or before the applicable due date (including any extensions thereof), all material tax returns that it was required to file, and all such tax returns were accurate, correct, and complete in all material respects. All taxes due and owing by the Company have been paid in full or are being properly contested. The Company is, and at all time since its formation has been, disregarded as an entity separate from Seller for U.S. federal income tax purposes, and no election has been filed on or before the Closing Date that would change such classification on or after the Closing Date.

4.10. Brokers and Finders . No investment banker, broker, finder, financial advisor or other intermediary has been retained by or is authorized to act on behalf of Seller who is entitled to receive from Buyer any fee or commission in connection with the transactions contemplated by this Agreement.

4.11. Condition of Assets . To Seller’s Knowledge, the Assets are in good operating condition and repair (normal wear and tear excepted), are free from material defects (patent and latent), are suitable for the purposes for which they are currently used and are not in need of material maintenance or repairs except for ordinary routine maintenance and repairs.

4.12. Title to Assets . The Company owns, leases or has the legal right to use all the properties and assets used by the Company in the operation of its business, in each case subject to no Encumbrances, except Permitted Encumbrances. All of the Company’s assets consist of the Assets. Except as disclosed in Schedule 4.7 , the Company owns the Assets free and clear of all Encumbrances other than Permitted Encumbrances.

4.13. Permits . Except as set forth in Schedule 4.13 , (a) the Company owns or holds all franchises, licenses, permits, consents, approvals and authorizations of any Governmental Authority necessary for the ownership and operation of the Assets (collectively, the “ Permits ”), (b) each Permit is in full force and effect, and the Company is in compliance with all of its obligations with respect thereto, (c) to the Knowledge of Seller, no event has occurred that causes, or upon the giving of notice or the lapse of time or otherwise would cause, revocation or termination of any Permit, and (d) all Permits shall be, subject to Permitted Encumbrances, owned or held by the Company at Closing.

 

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4.14. Banking Relationships . Schedule 4.14 sets forth a complete and accurate list of all accounts, including checking accounts, cash contribution accounts, safe deposit boxes, borrowing arrangements and certificates of deposit that the Company has with any banks, savings and loan associations or other financial institutions, indicating in each case account numbers, if applicable, and the person or persons authorized to act or sign on behalf of the Company in respect of the foregoing. No person holds any power of attorney or similar authority from the Company with respect to such accounts.

4.15. Material Contracts . Except as set forth on Schedule 4.15 , and other than the Construction Contracts, there are no material Contracts relating to the activities currently conducted by the Company with respect to the Assets, or by which the Company or the Assets are bound.

4.16. Seller Security . Schedule 4.16 contains a true and complete listing of the cash collateral, letters of credit, and guaranties in effect as of the date of this Agreement securing the performance of the Company under the Material Contracts and other obligations of the Company with respect to the activities currently conducted by the Company with respect to the Assets.

4.17. Insurance . All insurance policies covering the Company or its operations and Assets provided by Seller (which, for the avoidance of doubt, excludes insurance policies covering the Company or its operations and Assets provided by the Partnership and its Affiliates) are in full force and effect, all premiums with respect thereto covering all periods up to and including the Closing Date have been paid, and no written notice of cancellation or termination has been received with respect to any such policy. Such policies, including without limitation products liability insurance, (a) are sufficient for compliance in all material respects with all requirements of Applicable Law and of all Material Contracts for matters covered by such policies, and (b) are, to the Knowledge of Seller, valid policies, enforceable against the Company and the other parties thereto, in accordance with their respective terms, except to the extent that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Applicable Laws affecting creditors’ rights and remedies generally and (ii) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.

4.18. Information Provided by Seller .

(a) Seller and its Affiliates have not knowingly withheld disclosure from the Buyer of any fact that would, individually or in the aggregate, have a Material Adverse Effect on the Partnership, the Buyer, the Company or the Assets.

(b) The information for the Assets provided to the Buyer has a reasonable basis and is consistent with Seller’s current expectations with respect to the Assets and with the Seller’s and its Affiliates’ books and records.

4.19. WAIVERS AND DISCLAIMERS . NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES AND OTHER COVENANTS AND AGREEMENTS MADE BY THE PARTIES IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS AND THE AMENDED AND RESTATED OMNIBUS AGREEMENT, THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT NONE OF THE PARTIES HAS MADE, DOES NOT MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES AND DISCLAIMS, ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT, REGARDING (I) THE VALUE, NATURE, QUALITY OR CONDITION OF THE ASSETS INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, GEOLOGY OR ENVIRONMENTAL CONDITION OF THE

 

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ASSETS GENERALLY, INCLUDING THE PRESENCE OR LACK OF HAZARDOUS SUBSTANCES OR OTHER MATTERS IN THE ASSETS AND THE LAND ON WHICH THE ASSETS ARE SITUATED, (II) THE INCOME TO BE DERIVED FROM THE ASSETS, (III) THE SUITABILITY OF THE ASSETS FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON, (IV) THE COMPLIANCE OF OR BY THE ASSETS OR THEIR OPERATION WITH ANY APPLICABLE LAWS (INCLUDING WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS), OR (V) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE ASSETS. EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE AMENDED AND RESTATED OMNIBUS AGREEMENT, NONE OF THE PARTIES IS LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE LLC INTEREST, THE COMPANY OR THE ASSETS FURNISHED BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD PARTY. EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE AMENDED AND RESTATED OMNIBUS AGREEMENT, EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE TRANSFER AND CONVEYANCE OF THE COMPANY AND ITS ASSETS SHALL BE MADE IN AN “AS IS,” “WHERE IS” CONDITION WITH ALL FAULTS, AND THE COMPANY AND ITS ASSETS ARE TRANSFERRED AND CONVEYED SUBJECT TO ALL OF THE MATTERS CONTAINED IN THIS SECTION. THIS SECTION SHALL SURVIVE THE TRANSFER AND CONVEYANCE OF THE LLC INTEREST OR THE TERMINATION OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE LLC INTEREST, THE COMPANY OR THE ASSETS THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE AMENDED AND RESTATED OMNIBUS AGREEMENT.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller that as of the Effective Time:

5.1. Organization . Buyer is an entity duly organized, validly existing and in good standing under the Applicable Laws of the State of Delaware.

5.2. Authorization . Buyer has full partnership power and authority to execute, deliver, and perform this Agreement and any Buyer Ancillary Documents. The execution, delivery, and performance by Buyer of this Agreement and the Buyer Ancillary Documents and the consummation by Buyer of the transactions contemplated hereby and thereby, have been duly authorized by all necessary partnership action of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes, and each such Buyer Ancillary Document executed or to be executed Buyer has been, or when executed will be, duly executed and delivered by Buyer and constitutes, or when executed and delivered will constitute, a valid and legally binding obligation of Buyer, enforceable against it in accordance with their terms, except to the extent that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Applicable Laws affecting creditors’ rights and remedies generally and (ii) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.

 

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5.3. No Conflicts or Violations; No Consents or Approvals Required . The execution, delivery and performance by Buyer of this Agreement and the Buyer Ancillary Documents does not, and consummation of the transactions contemplated hereby and thereby will not, (i) violate, conflict with, or result in any breach of any provisions of Buyer’s organizational documents or (ii) subject to obtaining the Consents or making the registrations, declarations or filings set forth in the next sentence, violate any Applicable Law or material contract binding upon Buyer. Except as set forth on Schedule 5.3 , no Consent of any Governmental Authority or any other person is required for Buyer in connection with the Buyer’s execution, delivery or performance of this Agreement or the Buyer Ancillary Documents or the consummation of the transactions contemplated hereby and thereby.

5.4. Absence of Litigation . There is no Action pending or, to the Knowledge of Buyer, threatened against Buyer or any of its Affiliates relating to the transactions contemplated by this Agreement or the Buyer Ancillary Documents or which, if adversely determined, would reasonably be expected to materially impair the ability of Buyer to perform its obligations and agreements under this Agreement or the Buyer Ancillary Documents and to consummate the transactions contemplated hereby and thereby.

5.5. Brokers and Finders . No investment banker, broker, finder, financial advisor or other intermediary has been retained by or is authorized to act on behalf of Buyer who is entitled to receive from Seller any fee or commission in connection with the transactions contemplated by this Agreement.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF HFC

HFC hereby represents and warrants to Buyer and Seller that as of the date of this Agreement:

6.1. Organization . HFC is an entity duly organized, validly existing and in good standing under the Applicable Laws of the State of Delaware.

6.2. Authorization . HFC has full corporate power and authority to execute, deliver, and perform its obligations under Articles VI and XI . The execution, delivery, and performance by HFC of its obligations under this Agreement and the consummation by HFC of the transactions contemplated hereby, have been duly authorized by all necessary corporate action of HFC. This Agreement has been duly executed and delivered by HFC and constitutes a valid and legally binding obligation of HFC with respect to Articles VI and XI , enforceable against it in accordance with their terms, except to the extent that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Applicable Laws affecting creditors’ rights and remedies generally and (ii) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.

6.3. No Conflicts or Violations; No Consents or Approvals Required . The execution, delivery and performance by HFC of its obligations under this Agreement does not, and consummation of the transactions contemplated hereby will not, (i) violate, conflict with, or result in any breach of any provisions of HFC’s organizational documents or (ii) subject to obtaining the Consents or making the registrations, declarations or filings set forth in the next sentence, violate any Applicable Law or material contract binding upon HFC. Except as set forth on Schedule 6.3 , no Consent of any Governmental Authority or any other person is required for HFC in connection with the execution, delivery and performance of its obligations this Agreement or the consummation by HFC of the transactions contemplated hereby.

 

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6.4. Absence of Litigation . There is no Action pending or, to the Knowledge of HFC, threatened against HFC or any of its Affiliates relating to the transactions contemplated by this Agreement or which, if adversely determined, would reasonably be expected to materially impair the ability of HFC to perform its obligations and agreements under this Agreement and to consummate the transactions contemplated hereby.

6.5. Brokers and Finders . No investment banker, broker, finder, financial advisor or other intermediary has been retained by or is authorized to act on behalf of HFC who is entitled to receive from Buyer any fee or commission in connection with the transactions contemplated by this Agreement.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP

The Partnership hereby represents and warrants to Buyer and Seller that as of the date of this Agreement:

7.1 Organization . The Partnership is an entity duly organized, validly existing and in good standing under the Applicable Laws of the State of Delaware.

7.2 Authorization . The Partnership has full partnership power and authority to execute, deliver, and perform its obligations under Articles VII and XII . The execution, delivery, and performance by the Partnership of its obligations under this Agreement and the consummation by the Partnership of the transactions contemplated hereby, have been duly authorized by all necessary partnership action of the Partnership. This Agreement has been duly executed and delivered by the Partnership and constitutes a valid and legally binding obligation of the Partnership with respect to Articles VII and XII , enforceable against it in accordance with their terms, except to the extent that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Applicable Laws affecting creditors’ rights and remedies generally and (ii) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.

7.3 No Conflicts or Violations; No Consents or Approvals Required . The execution, delivery and performance by the Partnership of its obligations under this Agreement does not, and consummation of the transactions contemplated hereby will not, (i) violate, conflict with, or result in any breach of any provisions of the Partnership’s organizational documents or (ii) subject to obtaining the Consents or making the registrations, declarations or filings set forth in the next sentence, violate any Applicable Law or material contract binding upon the Partnership. Except as set forth on Schedule 7.3 , no Consent of any Governmental Authority or any other person is required for the Partnership in connection with the execution, delivery and performance of its obligations this Agreement or the consummation by the Partnership of the transactions contemplated hereby.

7.4 Absence of Litigation . There is no Action pending or, to the Knowledge of the Partnership, threatened against the Partnership or any of its Affiliates relating to the transactions contemplated by this Agreement or which, if adversely determined, would reasonably be expected to materially impair the ability of the Partnership to perform its obligations and agreements under this Agreement and to consummate the transactions contemplated hereby.

7.5 Brokers and Finders . No investment banker, broker, finder, financial advisor or other intermediary has been retained by or is authorized to act on behalf of the Partnership who is entitled to receive from Buyer any fee or commission in connection with the transactions contemplated by this Agreement.

 

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ARTICLE VIII

COVENANTS

8.1. Cooperation . Seller shall cooperate with Buyer and assist Buyer in identifying all licenses, authorizations, permissions or Permits necessary for the Company’ operations from and after the Closing Date and, where permissible, transfer existing Permits to Buyer, or, where not permissible and if needed, assist Buyer in obtaining new Permits at no cost, fee or liability to Seller.

8.2. Additional Agreements . Subject to the terms and conditions of this Agreement, the Ancillary Documents and the Amended and Restated Omnibus Agreement, each of the Parties shall use its commercially reasonable efforts to do, or cause to be taken all action and to do, or cause to be done, all things necessary, proper, or advisable under Applicable Laws to consummate and make effective the transactions contemplated by this Agreement. If at any time after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement, subject to the terms and conditions of this Agreement and the Ancillary Documents, the Parties and their duly authorized representatives shall use commercially reasonable efforts to take all such action.

8.3. Employees . At the Closing, certain employees of HFC at the Refinery whose responsibilities relate to the Assets will be seconded to the applicable HEP Entity solely pursuant to the Amended and Restated Services and Secondment Agreement.

8.4. Put Right.

(a) If, following Closing, the Utah Permit is amended, supplemented or otherwise modified by a final decision of the Utah Supreme Court in Utah Physicians for a Healthy Environment and Friends of Great Salt Lake v. Executive Director of the Utah Dept. of Envtl. Quality, et al., No. 20150344-SC, or implementing administrative order of the Utah Division of Air Quality (“ DAQ ”) (collectively, the “ Permit Appeal Proceedings ”) to include a Shutdown Condition by reason of the Permit Appeal Proceedings, and thereafter as a direct result of the Permit Appeal Proceedings the Assets are Idled for ninety (90) or more days (whether or not consecutive) (such ninetieth day being referred to hereinafter as the “ Reference Date ”), then Buyer shall have the right, but not the obligation, to require Seller to, and Seller shall, purchase all, and not less than all, of the LLC Interest (the “ Put Right ”). Such Put Right shall be exercised, if at all, by Buyer delivering an unconditional written notice of exercise to Seller (the “ Put Notice ”) at any time prior to the date on which the Assets are no longer Idled after the Reference Date. The closing of the LLC Interest purchase pursuant to this Section 8.4(a) (the “ Put Sale ”) shall be accomplished as provided in Section 8.4(c) .

(b) The Applicable Term (as defined in the Amended and Restated Master Tolling Agreement) for the Assets, as set forth in the Amended and Restated Master Tolling Agreement, shall be extended by the number of days that the Assets are Idled, such extension to be evidenced by an amendment to the Amended and Restated Master Tolling Agreement in form and substance reasonably satisfactory to the Parties.

(c) If the Put Right is exercised, the price to be paid by Seller to Buyer for the LLC Interest shall be the Purchase Price, payable in cash. Any revenue generated or operating expense incurred by the Company during the period commencing on the Closing and ending on the consummation of the Put Sale (the “ Interim Period ”) shall be for the account of Buyer, except as otherwise provided in this Section 8.4(c) . Seller shall, or shall cause the Company to, promptly remit to Buyer any payment of accounts receivable received by the Company on and after the consummation of the Put Sale that relates to the Interim Period. Buyer shall promptly pay to the Company any amount of Company operating expenses payable on and after the consummation of

 

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the Put Sale that relates to the Interim Period and which are for the account of Buyer as provided in this Section 8.4(c) . Seller shall be responsible for and shall timely pay any and all expenses associated with the Permit Appeal Proceedings or addressing a Shutdown Condition. Regardless of whether the Assets are Idled, Seller will provide and Buyer will pay for any required Services (as defined in the Amended and Restated Services and Secondment Agreement) and Service Items (as defined in the Amended and Restated Master Site Services Agreement) for the Assets pursuant to and in accordance with the terms of the Amended and Restated Services and Secondment Agreement and the Amended and Restated Master Site Services Agreement (the “ Services Fee Damages ”); provided, however, that Buyer shall be entitled to reimbursement of Services Fee Damages as contemplated by Section 8.4(d) .

(d) The closing of the Put Sale shall take place on the date designated in writing by Seller, which date shall be not more than 90 days nor less than five days after the delivery of the Put Notice. At the closing of the Put Sale, (i) Seller shall acquire all of the LLC Interest, (ii) Buyer shall be entitled to receive, in cash, from Seller the Purchase Price and Services Fee Damages, to the extent such Services Fee Damages have been paid by or on behalf of Buyer to Seller or Seller’s Affiliates, and Buyer shall be relieved of any obligation to pay Services Fee Damages that have not already been paid by or on behalf of Buyer to Seller or Seller’s Affiliates, (iii) Buyer and Seller shall execute such documents and instruments, and take such further actions, as are reasonably necessary or appropriate to effectuate the Put Sale; provided, however, that, in connection therewith, Buyer shall make to Seller only those representations and warranties that were made by Seller to Buyer in this Agreement and are contained in Article IV except that the developments in the Permit Appeal Proceedings and any Interim Period Buyer Event (which does not result in a Shutdown Condition independent of the Permit Appeal Proceedings) shall be permitted exceptions; and provided further, that except as provided in subparagraph (ii) of the definition of Seller Indemnified Costs, Buyer shall provide indemnification to Seller in respect of the foregoing representations and warranties that are no more onerous to Buyer than the indemnification in Article IX is to Seller; and provided further, that Buyer shall have no obligation to indemnify Seller in respect of the foregoing representations and warranties if such representations or warranties were incorrect when made by Seller to Buyer at the Closing, and (iv) Buyer and Seller shall, and shall cause their respective applicable Affiliates to, amend the Ancillary Documents as appropriate and in good faith to reflect that the LLC Interest has been repurchased by Seller.

(e) Notwithstanding anything in this Agreement to the contrary, the covenants in this Section 8.4 shall survive in accordance with their terms.

(f) This Section 8.4 shall terminate and cease to apply if, following completion of the Permit Appeal Proceedings, (i) the Utah Permit is upheld or (ii) the Utah Permit is not upheld by the Utah Supreme Court, but is amended, supplemented or modified without any Shutdown Condition.

(g) If the Put Right is not exercised by Buyer and, by reason of the Permit Appeal Proceedings, the Assets must be modified to allow the Assets to operate in compliance with the Utah Permit, as modified in the Permit Appeal Proceedings, Seller shall be responsible for such costs reasonably incurred to allow the Assets to be operated in compliance with the requirements set forth in the Utah Permit as so modified.

 

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8.5. Utah Permit Information; Notification . Seller shall keep Buyer reasonably informed regarding any pending Action involving the Permit Appeal Proceedings, including with regard to the timeline, rulings, motions and other material events occurring in connection with the Permit Appeal Proceedings. Additionally, Seller, at Seller’s expense, shall make reasonably available to Buyer the advisors that have been engaged by Seller or its Affiliates in connection with the Permit Appeal Proceedings. If, as a result of the Permit Appeal Proceedings, the Assets are Idled, Seller shall provide Buyer with a plan to remedy such condition. Notwithstanding anything in this Section 8.5 , neither Seller nor any of its Affiliates shall be required to disclose any information to Buyer if such disclosure would be reasonably likely to (a) jeopardize any attorney-client or other legal privilege or (b) contravene any Laws, ethical rules, fiduciary duty or binding agreement entered into prior to the date hereof.

8.6. Temporary Transition Services. In consideration of the Purchase Price, and to the extent requested by Buyer, Seller will perform all responsibilities under the license for the stationary level gauge located in the FCC Unit 2 Assets as required by applicable law and permits until Buyer has obtained and provided evidence to Seller that Buyer has obtained all necessary regulatory approvals, certificates and permits required under applicable law for such gauge. Buyer shall promptly apply for and diligently pursue the issuance to Buyer of such approvals, certificates and permits under applicable law.

ARTICLE IX

INDEMNIFICATION

9.1. Indemnification of Buyer and Seller . From and after the Closing and subject to the provisions of this Article IX , (i) Seller agrees to indemnify and hold harmless the Buyer Indemnified Parties from and against any and all Buyer Indemnified Costs and (ii) Buyer and the Partnership agree to indemnify and hold harmless the Seller Indemnified Parties from and against any and all Seller Indemnified Costs.

9.2. Defense of Third-Party Claims . An Indemnified Party shall give prompt written notice to Seller or Buyer, as applicable (the “ Indemnifying Party ”), of the commencement or assertion of any action, proceeding, demand, or claim by a third party (collectively, a “ third- party action ”) in respect of which such Indemnified Party seeks indemnification hereunder. Any failure so to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it, he, or she may have to such Indemnified Party under this Article IX unless the failure to give such notice materially and adversely prejudices the Indemnifying Party. The Indemnifying Party shall have the right to assume control of the defense of, settle, or otherwise dispose of such third-party action on such terms as it deems appropriate; provided , however , that:

(a) The Indemnified Party shall be entitled, at its own expense, to participate in the defense of such third-party action ( provided , however , that the Indemnifying Party shall pay the attorneys’ fees of the Indemnified Party if (i) the employment of separate counsel shall have been authorized in writing by the Indemnifying Party in connection with the defense of such third-party action, (ii) the Indemnifying Party shall not have employed counsel reasonably satisfactory to the Indemnified Party to have charge of such third-party action, (iii) the Indemnified Party shall have reasonably concluded that there may be defenses available to such Indemnified Party that are different from or additional to those available to the Indemnifying Party, or (iv) the Indemnified Party’s counsel shall have advised the Indemnified Party in writing, with a copy delivered to the Indemnifying Party, that there is a material conflict of interest that could violate applicable standards of professional conduct to have common counsel);

(b) The Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into or making any settlement, compromise, admission, or acknowledgment of the validity of such third-party action or any liability in respect thereof if, pursuant to or as a result of such

 

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settlement, compromise, admission, or acknowledgment, injunctive or other equitable relief would be imposed against the Indemnified Party or if, in the opinion of the Indemnified Party, such settlement, compromise, admission, or acknowledgment could have a Material Adverse Effect on its business, or, in the case of Buyer, is the result of an Interim Period Buyer Event;

(c) The Indemnifying Party shall not consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by each claimant or plaintiff to each Indemnified Party of a release from all liability in respect of such third-party action; and

(d) The Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in the defense of), and the Indemnified Party shall be entitled to have sole control over, the defense or settlement, compromise, admission, or acknowledgment of any third-party action (i) as to which the Indemnifying Party fails to assume the defense within a reasonable length of time or (ii) to the extent the third-party action seeks an order, injunction, or other equitable relief against the Indemnified Party which, if successful, would materially adversely affect the business, operations, assets, or financial condition of the Indemnified Party; provided, however, that the Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of any Indemnifying Party without the prior written consent of such Indemnifying Party.

The Parties shall extend reasonable cooperation in connection with the defense of any third-party action pursuant to this Article IX and, in connection therewith, shall furnish such records, information, and testimony and attend such conferences, discovery proceedings, hearings, trials, and appeals as may be reasonably requested.

9.3. Direct Claims . In any case in which an Indemnified Party seeks indemnification hereunder which is not subject to Section 9.2 because no third-party action is involved, the Indemnified Party shall notify the Indemnifying Party in writing of any Indemnified Costs which such Indemnified Party claims are subject to indemnification under the terms hereof. Subject to the limitations set forth in Section 9.4(a) , the failure of the Indemnified Party to exercise promptness in such notification shall not amount to a waiver of such claim unless the resulting delay materially prejudices the position of the Indemnifying Party with respect to such claim.

9.4. Limitations . The following provisions of this Section 9.4 shall limit the indemnification obligations hereunder:

(a) Limitation as to Time . The Indemnifying Party shall not be liable for any Indemnified Costs pursuant to this Article IX unless a written claim for indemnification in accordance with Section 9.2 or Section 9.3 is given by the Indemnified Party to the Indemnifying Party with respect thereto on or before 5:00 p.m., Dallas, Texas time, on the first anniversary of the Closing Date; provided that the Indemnifying Party shall be liable for Indemnified Costs with respect to claims for indemnification for breach of the representations and warranties contained in Sections 4.1 (Organization), 4.2 (Authorization), 4.3(a) (Company Status), 4.4(a) (No Conflicts), 4.6 (Title to LLC Interest; Capitalization), 4.9 (Taxes), 4.10 (Brokers and Finders), 4.12 (Title To Assets), 4.19 (Waivers and Disclaimers), 5.1 (Organization), 5.2 (Authorization), 5.3 (No Conflicts), 5.5 (Brokers and Finders), 6.1 (Organization) and 6.2 (Authorization), 6.3 (No Conflicts), 6.5 (Brokers and Finders), 7 .1 (Organization), 7 .2 (Authorization), 7.3 (No Conflicts), and 7.5 (Brokers and Finders), if a written claim for indemnification in accordance with Section 9.2 or Section 9.3 is given by the Indemnified Party to the Indemnifying Party at any time prior to the expiration of the applicable statute of limitations.

(b) Sole and Exclusive Remedy . Each Party acknowledges and agrees that, after the Closing Date, notwithstanding any other provision of this Agreement to the contrary, Buyer’s and the other Buyer Indemnified Parties’ and Seller and the other Seller Indemnified Parties’ sole and exclusive

 

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remedy with respect to the Indemnified Costs shall be in accordance with, and limited by, the provisions set forth in this Article IX . The Parties further acknowledge and agree that the foregoing is not the remedy for and does not limit the Parties’ remedies for matters covered by the indemnification provisions contained in the Amended and Restated Omnibus Agreement.

9.5. Tax Related Adjustments . Seller and Buyer agree that any payment of Indemnified Costs made hereunder will be treated by the Parties on their tax returns as an adjustment to the Purchase Price.

ARTICLE X

MISCELLANEOUS

10.1. Expenses . Except as provided in Section 3.4 of this Agreement, or as provided in the Ancillary Documents or the Amended and Restated Omnibus Agreement, all costs and expenses incurred by the Parties in connection with the consummation of the transactions contemplated hereby shall be borne solely and entirely by the Party which has incurred such expense.

10.2. 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:

Notices to HFC :

HollyFrontier Corporation

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: President

Email address: president@hollyfrontier.com

with a copy, which shall not constitute notice, but is required in order to give proper notice, to:

HollyFrontier Corporation

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: General Counsel

Email address: generalcounsel@hollyfrontier.com

Notices to Seller :

HollyFrontier Woods Cross Refining LLC

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: President

Email address: president@hollyfrontier.com

 

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with a copy, which shall not constitute notice, but is required in order to give proper notice, to:

HollyFrontier Woods Cross Refining LLC

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: General Counsel

Email address: generalcounsel@hollyfrontier.com

Notices to Buyer :

Holly Energy Partners – Operating, L.P.

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: President

Email address: president-hep@hollyenergy.com

with a copy, which shall not constitute notice, but is required in order to give proper notice, to:

Holly Energy Partners-Operating, L.P.

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: General Counsel

Email address: generalcounsel@hollyenergy.com

Notices to the Partnership :

Holly Energy Partners, L.P.

c/o Holly Logistic Services, L.L.C.

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: President

Email address: president-HEP@hollyenergy.com

with a copy, which shall not constitute notice, but is required in order to give proper notice, to:

Holly Energy Partners, L.P.

c/o Holly Logistic Services, L.L.C.

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: General Counsel

Email address: general.counsel@hollyenergy.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 10.2 .

 

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10.3. Severability . If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced under Applicable Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner adverse to any Party. Upon such determination that any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated herein are consummated as originally contemplated to the fullest extent possible.

10.4. Governing Law; Jurisdiction; Waiver of Jury Trial . 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. Each Party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to venue in Dallas, Texas. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

10.5. 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 10.5 and the Commercial Arbitration Rules or the Federal Arbitration Act, the terms of this Section 10.5 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 Seller, Buyer 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. Seller, Buyer 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 Seller, Buyer 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.

 

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10.6. Parties in Interest . This Agreement shall be binding upon and inure solely to the benefit of each Party and their successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement.

10.7. Assignment of Agreement . At any time, the Parties may make a collateral assignment of their rights under this Agreement to any of their bona fide lenders or debt holders, or a trustee or a representative for any of them, and the non-assigning Parties shall execute an acknowledgment of such collateral assignment in such form as may from time to time be reasonably requested; provided, however , that unless written notice is given to the non-assigning Parties that any such collateral assignment has been foreclosed upon, such non-assigning Parties shall be entitled to deal exclusively with Seller or HFC, as the case may be, as to any matters arising under this Agreement, the Ancillary Documents or the Amended and Restated Omnibus Agreement (other than for delivery of notices required by any such collateral assignment). Except as otherwise provided in this Section 10.7 , neither this Agreement nor any of the rights, interests, or obligations hereunder may be assigned by any Party without the prior written consent of the other Parties.

10.8. Captions . The captions in this Agreement are for purposes of reference only and shall not limit or otherwise affect the interpretation hereof.

10.9. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

10.10. Director and Officer Liability . The directors, managers, officers, partners and stockholders of HFC, Buyer, Seller and their respective Affiliates shall not have any personal liability or obligation arising under this Agreement (including any claims that another party may assert) other than, if applicable, as a direct party to or as an assignee of this Agreement or pursuant to a written guarantee.

10.11. Integration . This Agreement, the Ancillary Documents and the Amended and Restated Omnibus Agreement supersede any previous understandings or agreements among the Parties, whether oral or written, with respect to their subject matter. This Agreement, the Ancillary Documents and the Amended and Restated Omnibus Agreement contain the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement, the Ancillary Documents or the Amended and Restated Omnibus Agreement unless it is contained in a written amendment hereto or thereto and executed by the Parties hereto or thereto after the date of this Agreement, the Ancillary Documents or the Amended and Restated Omnibus Agreement. To the extent that there is any conflict between the Ancillary Documents (other than the Amended and Restated Omnibus Agreement) and this Agreement, this Agreement shall prevail.

10.12. Effect of Agreement . The Parties ratify and confirm that except as otherwise expressly provided herein, in the event this Agreement conflicts in any way with the Amended and Restated Omnibus Agreement, the terms and provisions of the Amended and Restated Omnibus Agreement shall control.

10.13. Amendment; Waiver . This Agreement may be amended only in a writing signed by all parties hereto. Any waiver of rights hereunder must be set forth in writing. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive any party’s rights at any time to enforce strict compliance thereafter with every term or condition of this Agreement.

 

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10.14. Survival of Representations and Warranties . The representations and warranties set forth in this Agreement shall survive the Closing until 5:00 p.m., Dallas, Texas time on, on the anniversary of the Closing Date, except that the representations and warranties contained in Sections 4.1 (Organization), 4.2 (Authorization), 4.3(a) (Company Status), 4.4(a) (No Conflicts), 4.6 (Title to LLC Interest; Capitalization), 4.9 (Taxes), 4.10 (Brokers and Finders), 4.12 (Title To Assets), 4.19 (Waivers and Disclaimers), 5.1 (Organization), 5.2 (Authorization), 5.3 (No Conflicts), 5.5 (Brokers and Finders), 6.1 (Organization) and 6.2 (Authorization), 6.3 (No Conflicts), 6.5 (Brokers and Finders), 7 .1 (Organization), 7 .2 (Authorization), 7.3 (No Conflicts), and 7.5 (Brokers and Finders), shall survive until the expiration of the applicable statute of limitations; provided, however, that any representation and warranty that is the subject of a claim for indemnification hereunder which claim was timely made pursuant to Section 9.4(a) shall survive with respect to such claim until such claim is finally paid or adjudicated.

ARTICLE XI

GUARANTEE BY HFC

11.1. Payment and Performance Guaranty . HFC unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to Buyer the punctual and complete performance and payment in full when due of all Buyer Indemnified Costs by the Indemnifying Party under the Agreement (collectively, the “ HFC Guaranty Obligations ”). HFC agrees that Buyer shall be entitled to enforce directly against HFC any of the HFC Guaranty Obligations.

11.2. Guaranty Absolute . HFC hereby guarantees that the HFC Guaranty Obligations will be performed and paid strictly in accordance with the terms of the Agreement. The obligations of HFC under this Agreement constitute a present and continuing guaranty of performance and payment, and not of collection or collectability. The liability of HFC under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of:

(a) any assignment or other transfer of the Agreement or any of the rights thereunder of Buyer;

(b) any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to the Agreement;

(c) any acceptance by Buyer of partial payment or performance from the Indemnifying Party;

(d) any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to the Indemnifying Party, or any action taken with respect to the Agreements by any trustee or receiver, or by any court, in any such proceeding;

(e) any absence of any notice to, or Knowledge of, HFC, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (a) through (d); or

(f) any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor.

The obligations of HFC 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 HFC Guaranty Obligations or otherwise.

 

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11.3. Waiver . HFC hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HFC Guaranty Obligations and any requirement for Buyer 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 the Indemnifying Party, any other entity or any collateral.

11.4. Subrogation Waiver . HFC agrees that it shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from the Indemnifying Party for any payments made by HFC under this Article XI until all HFC Guaranty Obligations have been indefeasibly paid, and HFC 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 the Indemnifying Party until all HFC Guaranty Obligations have been indefeasibly paid.

11.5. Reinstatement . The obligations of HFC under this Article XI shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the HFC Guaranty Obligations is rescinded or must otherwise be returned to the Indemnifying Party or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of the Indemnifying Party or such other entity, or for any other reason, all as though such payment had not been made.

11.6. Continuing Guaranty . This Article XI is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible performance and payment in full of all of the HFC Guaranty Obligations, (ii) be binding upon HFC, its successors and assigns and (iii) inure to the benefit of and be enforceable by Buyer and its successors, transferees and assigns.

11.7. No Duty to Pursue Others . It shall not be necessary for Buyer (and HFC hereby waives any rights which HFC may have to require Buyer), in order to enforce such payment by HFC, first to (i) institute suit or exhaust its remedies against the Indemnifying Party or others liable on the HFC Guaranty Obligations or any other person, (ii) enforce Buyer’s rights against any other guarantors of the HFC Guaranty Obligations, (iii) join the Indemnifying Party or any others liable on the HFC Guaranty Obligations in any action seeking to enforce this Article XI , (iv) exhaust any remedies available to Buyer against any security which shall ever have been given to secure the HFC Guaranty Obligations, or (v) resort to any other means of obtaining payment of the HFC Guaranty Obligations.

ARTICLE XII

GUARANTEE BY THE PARTNERSHIP

12.1. Payment and Performance Guaranty . The Partnership unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to Seller the punctual and complete performance and payment in full when due of all Seller Indemnified Costs by the Indemnifying Party under the Agreement (collectively, the “ HEP Guaranty Obligations ”). The Partnership agrees that Seller shall be entitled to enforce directly against the Partnership any of the HEP Guaranty Obligations.

12.2. Guaranty Absolute . The Partnership hereby guarantees that the HEP Guaranty Obligations will be performed and paid strictly in accordance with the terms of the Agreement. The obligations of the Partnership under this Agreement constitute a present and continuing guaranty of performance and payment, and not of collection or collectability. The liability of the Partnership under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of:

(a) any assignment or other transfer of the Agreement or any of the rights thereunder of Seller;

 

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(b) any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to the Agreement;

(c) any acceptance by Seller of partial payment or performance from the Indemnifying Party;

(d) any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to the Indemnifying Party, or any action taken with respect to the Agreements by any trustee or receiver, or by any court, in any such proceeding;

(e) any absence of any notice to, or Knowledge of, the Partnership, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (a) through (d); or

(f) any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor.

The obligations of the 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 Guaranty Obligations or otherwise.

12.3. Waiver . The Partnership hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HEP Guaranty Obligations and any requirement for Seller 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 the Indemnifying Party, any other entity or any collateral.

12.4. Subrogation Waiver . The Partnership agrees that it shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from the Indemnifying Party for any payments made by the Partnership under this Article XII until all HEP Guaranty Obligations have been indefeasibly paid, and the 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 the Indemnifying Party until all HEP Guaranty Obligations have been indefeasibly paid.

12.5. Reinstatement . The obligations of the Partnership under this Article XII 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 Guaranty Obligations is rescinded or must otherwise be returned to the Indemnifying Party or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of the Indemnifying Party or such other entity, or for any other reason, all as though such payment had not been made.

12.6. Continuing Guaranty . This Article XII is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible performance and payment in full of all of the HEP Guaranty Obligations, (ii) be binding upon the Partnership, its successors and assigns and (iii) inure to the benefit of and be enforceable by Seller and its successors, transferees and assigns.

 

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12.7. No Duty to Pursue Others . It shall not be necessary for Seller (and the Partnership hereby waives any rights which the Partnership may have to require Seller), in order to enforce such payment by the Partnership, first to (i) institute suit or exhaust its remedies against the Indemnifying Party or others liable on the HEP Guaranty Obligations or any other person, (ii) enforce Seller’s rights against any other guarantors of the HEP Guaranty Obligations, (iii) join the Indemnifying Party or any others liable on the HEP Guaranty Obligations in any action seeking to enforce this Article XII , (iv) exhaust any remedies available to Seller against any security which shall ever have been given to secure the HEP Guaranty Obligations, or (v) resort to any other means of obtaining payment of the HEP Guaranty Obligations.

[ The Remainder of this Page is Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the Effective Time.

 

SELLER:
  HOLLYFRONTIER WOODS CROSS REFINING LLC
  By:  

/s/ George J. Damiris

    George J. Damiris
    Chief Executive Officer and President
BUYER:    
  HOLLY ENERGY PARTNERS – OPERATING, L.P.
  By:  

/s/ Michael C. Jennings

    Michael C. Jennings
    Chief Executive Officer

 

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ACKNOWLEDGED AND AGREED FOR
THE PURPOSES ONLY OF ARTICLES VI and XI :
HOLLYFRONTIER CORPORATION
By:  

/s/ George J. Damiris

  George J. Damiris
  Chief Executive Officer
ACKNOWLEDGED AND AGREED FOR
THE PURPOSES ONLY OF ARTICLES VII and XII :
HOLLY ENERGY PARTNERS, L.P.
By:   HEP Logistics Holdings, L.P., its General Partner
By:   Holly Logistic Services, L.L.C., its General Partner
By:  

/s/ Michael C. Jennings

  Michael C. Jennings
  Chief Executive Officer


EXHIBIT A

to

LLC INTEREST PURCHASE AGREEMENT

 

Definitions

Action ” means any claim, action, suit, investigation, inquiry, proceeding, condemnation or audit by or before any court or other Governmental Authority or any arbitration proceeding.

Affiliate ” means, with 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, no HollyFrontier Entity will be considered an Affiliate of an HEP Entity, and no HEP Entity will be considered an Affiliate of a HFC Entity.

Agreement ” has the meaning set forth in the Preamble.

Amended and Restated Master Lease and Access Agreement ” has the meaning set forth in Section 3.2(e) .

Amended and Restated Master Site Services Agreement ” has the meaning set forth in Section 3.2(c) .

Amended and Restated Master Tolling Agreement ” has the meaning set forth in Section 3.2(f) .

Amended and Restated Omnibus Agreement ” has the meaning set forth in Section 3.2(g) .

Amended and Restated Services and Secondment Agreement ” has the meaning set forth in Section 3.2(d) .

Ancillary Documents ” means, collectively, the Buyer Ancillary Documents and the Seller Ancillary Documents.

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 by 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 Seller, on the one hand, and Buyer, on the other hand, 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

 

Exhibit A-1


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.

Assets ” means the Crude Unit 2 Assets, FCC Unit 2 Assets and the Polymerization Unit Assets.

Assignment ” has the meaning set forth in Section 3.2(a) .

Business Day ” means any day other than Saturday, Sunday or other day upon which commercial banks in Dallas, Texas are authorized by law to close.

Buyer ” has the meaning set forth in the Preamble.

Buyer Ancillary Documents ” means each agreement, document, instrument or certificate to be delivered by Buyer, or their Affiliates, at the Closing pursuant to Section 3.3 and each other document or Contract entered into by Buyer, or the Partnership, or their Affiliates, in connection with this Agreement or the Closing.

Buyer Indemnified Costs ” means, subject to Article IX , any and all damages, losses, Claims, assessments, judgments, liabilities, demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable attorneys’ fees and expenses incurred in investigating and preparing for any litigation or proceeding) that any of the Buyer Indemnified Parties incurs and that arise out of or relate to:

(i) any breach of a representation, warranty or covenant of Seller under this Agreement;

(ii) any obligations or duties of the Company under any Construction Contract (including, without limitation, Company’s payment obligations under such Construction Contracts and the cost to complete construction of the Assets as set forth in such Construction Contracts); or

(iii) any Construction Defect; provided that in each case Buyer has first exhausted all commercially reasonable efforts to recover such damages, losses, Claims, assessments, liabilities, demands, charges, penalties, costs, and expenses under applicable Construction Contracts or third parties liable for the same.

Notwithstanding anything in the foregoing to the contrary, Buyer Indemnified Costs shall exclude any and all indirect, consequential, punitive, or exemplary damages (other than (A) lost revenue under a Amended and Restated Master Tolling Agreement resulting from a Construction Defect, or (B) those that are a result of (x) the third-party action for such indirect, consequential, punitive or exemplary damages, or (y) the gross negligence or willful misconduct of Seller or, to the extent occurring before the Closing Date, the Company).

Buyer Indemnified Parties ” means Buyer and the Partnership and each officer, director, partner, manager, employee, consultant, stockholder, and Affiliate of Buyer and the Partnership, including, without limitation, the Company.

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.

 

Exhibit A-2


Claimant ” has the meaning set forth in Section 10.5 .

Closing ” has the meaning set forth in Section 3.1 .

Closing Date ” has the meaning set forth in Section 3.1 .

Code ” means the Internal Revenue Code of 1986, as amended.

Company ” has the meaning set forth in the Recitals.

Consents ” means all notices to, authorizations, consents, Orders or approvals of, or registrations, declarations or filings with, or expiration of waiting periods imposed by, any Governmental Authority, and any notices to, consents or approvals of any other third party, in each case that are required by Applicable Law or by Contract in order to consummate the transactions contemplated by this Agreement and the Ancillary Documents.

Construction Contract ” means any Contract relating to the original planned construction of the Assets, as such Contract is in effect as of the date hereof (including any change orders agreed to by the parties to such Contract prior to the date hereof, whether or not such change order has properly been documented as of the date hereof).

Construction Defect ” means any equipment or materials that are a part of the original construction of an Asset that as of the Closing Date are not in conformance with the approved drawings and specifications for such Asset or that do not meet the requirements of any inspection, reference standard, test, approval, or acceptance required by Applicable Law.

Contract ” means any written or oral contract, agreement, indenture, instrument, note, bond, loan, lease, mortgage, franchise, license agreement, purchase order, binding bid or offer, binding term sheet or letter of intent or memorandum, commitment, letter of credit or any other legally binding arrangement, including any amendments or modifications thereof and waivers relating thereto.

Crude Unit 2 Assets ” means those assets identified as “Crude Unit 2 Assets” on Schedule 1.1(a) .

DAQ ” has the meaning set forth in Section 8.4(a) .

DLLCA ” means the Delaware Limited Liability Company Act, 6 Del.C. §18-101 et seq ., as amended from time to time.

Effective Time ” has the meaning set forth in Section 3.1 .

Encumbrance ” means any mortgage, pledge, charge, hypothecation, claim, easement right of purchase, security interest, deed of trust, conditional sales agreement, encumbrance, interest, option, lien, right of first refusal, right of way, defect in title, encroachments or other restriction, whether or not imposed by operation of Law, any voting trust or voting agreement, stockholder agreement or proxy.

FCC Unit 2 Assets ” means those assets identified as the “FCC Unit 2 Assets” on Schedule 1.1(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.

 

Exhibit A-3


HEP Entities ” means Holly Logistic Services, L.L.C., HEP Logistics Holdings, L.P. and the Partnership and its direct and indirect subsidiaries.

HEP Guaranty Obligations ” has the meanings set forth in Section 12.1 .

HFC ” has the meaning set forth in the Preamble.

HFC Entities ” means HFC and its direct and indirect subsidiaries other than the HEP Entities.

HFC Guaranty Obligations ” has the meanings set forth in Section 11.1 .

Idled ” means the inability, solely attributable to the Permit Appeal Proceedings, to process feedstock through the Assets in the manner contemplated by the Amended and Restated Master Tolling Agreement.

Indemnified Costs ” means Buyer Indemnified Costs and Seller Indemnified Costs, as applicable.

Indemnified Party ” means Buyer Indemnified Parties and Seller Indemnified Parties.

Indemnifying Party ” has the meaning set forth in Section 9.2 .

Interim Period ” has the meaning set forth in Section 8.4(c) .

Interim Period Buyer Event ” means any fact, development, circumstance or event first occurring during the Interim Period relating to the Assets or the ownership or operation thereof.

Knowledge ” and any variations thereof, or words to the same effect, means (i) with respect to Seller and HFC, actual knowledge after reasonable inquiry of James M. Stump; and (ii) with respect to Buyer, actual knowledge after reasonable inquiry of Mark A. Plake.

Laws ” means all statutes, laws, rules, regulations, Orders, ordinances, writs, injunctions, judgments and decrees of all Governmental Authorities.

LLC Interest ” has the meaning set forth in the Preamble.

Master Lease and Access Agreement ” means that certain Second Amended and Restated Master Lease and Access Agreement, effective as of March 31, 2016 by and among Seller and certain of its Affiliates, and certain Affiliates of Buyer.

Master Site Services Agreement ” means that certain Second Amended and Restated Master Site Services Agreement, effective as of March 31, 2016 by and among Seller and certain of its Affiliates, and certain Affiliates of Buyer.

Master Tolling Agreement ” means that certain Master Tolling Agreement (Operating Assets), effective as of November 1, 2015, by and among Seller and Buyer.

 

Exhibit A-4


Material Adverse Effect ” means any adverse change, circumstance, effect or condition in or relating to the assets, financial condition, results of operations, or business of any person that materially affects the business of such person or that materially impedes the ability of any person to consummate the transactions contemplated hereby, other than any change, circumstance, effect or condition in the refining or pipelines industries generally (including any change in the prices of crude oil, natural gas, natural gas liquids, feedstocks or refined products or other hydrocarbon products, industry margins or any regulatory changes or changes in Law) or in United States or global economic conditions or financial markets in general. Any determination as to whether any change, circumstance, effect or condition has a Material Adverse Effect shall be made only after taking into account all effective insurance coverages and effective third-party indemnifications with respect to such change, circumstance, effect or condition.

Material Contracts ” means the Construction Contracts and the Contracts set forth on Schedule 4.15 .

Omnibus Agreement ” means that certain Fifteenth Amended and Restated Omnibus Agreement entered into and effective as of March 31, 2016 by and among HFC, Holly Logistic Services, L.L.C., a Delaware limited liability company, the Partnership, Buyer, HEP Logistics GP, L.L.C., a Delaware limited liability company and HEP Logistics Holdings, L.P., a Delaware limited partnership, and the other HFC Affiliates and Partnership Affiliates signatory thereto, and as amended and restated as of the Closing Date.

Order ” means any order, writ, injunction, decree, compliance or consent order or decree, settlement agreement, schedule and similar binding legal agreement issued by or entered into with a Governmental Authority.

Partnership ” means Holly Energy Partners, L.P., a Delaware limited partnership.

Party ” and “ Parties ” have the meanings set forth in the Preamble.

Permit Appeal Proceedings ” has the meaning set forth in Section 8.4(a) .

Permits ” means all material permits, licenses, variances, exemptions, Orders, franchises and approvals of all Governmental Authorities necessary for the lawful ownership and operation of the Company’s business, including the Assets.

Permitted Encumbrances ” means (i) statutory liens for current taxes or assessments not yet due or delinquent or the validity of which are being contested in good faith by appropriate proceedings; (ii) mechanics’, carriers’, workers’, repairmen’s, landlord’s and other similar liens imposed by law arising or incurred in the ordinary course of business with respect to charges not yet due and payable; and (iii) such other encumbrances, if any, which were not incurred in connection with the borrowing of money or the advance of credit and which do not materially detract from the value of or interfere with the present use, or any use presently anticipated by the Company, of the property subject thereto or affected thereby, and including without limitation capital leases.

Person ” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, Governmental Authority or other entity.

Polymerization Unit Assets ” means those assets identified as “Polymerization Unit Assets” on Schedule 1.1(c) .

Purchase Price ” has the meaning set forth in Section 2.2(a) .

 

Exhibit A-5


Put Notice ” has the meaning set forth in Section 8.4(a) .

Put Right ” has the meaning set forth in Section 8.4(a) .

Put Sale ” has the meaning set forth in Section 8.4(a) .

Reference Date ” has the meaning set forth in Section 8.4(a) .

Refinery ” means the “Woods Cross Refinery Complex” as defined in the Amended and Restated Master Tolling Agreement.

Respondent ” has the meaning set forth in Section 10.5 .

Seller ” has the meaning set forth in the Preamble.

Seller Ancillary Documents ” means each agreement, document, instrument or certificate to be delivered by Seller, or its Affiliates, at the Closing pursuant to Section 3.2 and each other document or Contract entered into by Seller, or its Affiliates, in connection with this Agreement or the Closing.

Seller Indemnified Costs ” means any and all damages, losses, Claims, liabilities, demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable attorneys’ fees and expenses incurred in investigating and preparing for any litigation or proceeding) that any of the Seller Indemnified Parties incurs and that arise out of or relate to:

(i) any breach of a representation, warranty or covenant of Buyer or the Partnership under this Agreement, or

(ii) any Interim Period Buyer Event; provided that this subparagraph (ii) shall apply only in the event the Put Right is exercised by Buyer.

Notwithstanding anything in the foregoing to the contrary, Seller Indemnified Costs shall exclude any and all indirect, consequential, punitive or exemplary damages (other than those that are a result of (x) a third-party claim for such indirect, consequential, punitive or exemplary damages or (y) the gross negligence or willful misconduct of Buyer).

Seller Indemnified Parties ” means Seller and each officer, director, partner, manager, employee, consultant, stockholder, and Affiliate of Seller, including, without limitation, HFC.

Services and Secondment Agreement ” means that certain Second Amended and Restated Services and Secondment Agreement, effective as of March 31, 2016, by and between Seller and certain of its Affiliates and Buyer and certain of its Affiliates.

Services Fee Damages ” has the meaning set forth in Section 8.4(c) .

Shutdown Condition ” means any restriction on the ownership or operation of the Assets that is in addition to those restrictions already contained in the Utah Permit as of the date hereof that requires the Assets to be Idled pending further modification of the Utah Permit.

third-party action ” has the meaning set forth in Section 9.2 .

 

Exhibit A-6


Utah Permit ” means the air quality permit issued to HollyFrontier Woods Cross Refining LLC on November 18, 2013 by the Utah Division of Air Quality, as upheld by the Executive Director of the Utah Department of Environmental Quality on March 31, 2015.

 

Exhibit A-7


EXHIBIT B

to

LLC INTEREST PURCHASE AGREEMENT

 

Interpretation

As used in this Agreement, unless a clear contrary intention appears:

(a) any reference to the singular includes the plural and vice versa, any reference to natural persons includes legal persons and vice versa, and any reference to a gender includes the other gender;

(b) the words “hereof”, “herein”, and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;

(c) any reference to Articles, Sections and Exhibits are, unless otherwise stated, references to Articles, Sections and Exhibits of or to this Agreement and references in any Section or definition to any clause means such clause of such Section or definition. The headings in this Agreement have been inserted for convenience only and shall not be taken into account in its interpretation;

(d) reference to any agreement (including this Agreement), document or instrument means such agreement, document, or instrument as amended, modified or supplemented and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of this Agreement;

(e) the Exhibits and Schedules hereto form an integral part of this Agreement and are equally binding therewith. Any reference to “this Agreement” shall include such Exhibits and Schedules;

(f) references to a Person shall include any permitted assignee or successor to such Party in accordance with this Agreement and reference to a Person in a particular capacity excludes such Person in any other capacity;

(g) if any period is referred to in this Agreement by way of reference to a number of days, the days shall be calculated exclusively of the first and inclusively of the last day unless the last day falls on a day that is not a Business Day in which case the last day shall be the next succeeding Business Day;

(h) the use of “or” is not intended to be exclusive unless explicitly indicated otherwise;

(i) references to “$” or to “dollars” shall mean the lawful currency of the United States of America; and

(j) the words “includes,” “including,” or any derivation thereof shall mean “including without limitation” or “including, but not limited to.”


SCHEDULE 1.1(a)

to

LLC INTEREST PURCHASE AGREEMENT

 

Crude Unit 2 Assets

The “Crude Unit 2 Assets” referred to in the foregoing Agreement means that certain atmospheric distillation tower (15,000 bbls/day nameplate capacity) at the Refinery.


SCHEDULE 1.1(b)

to

LLC INTEREST PURCHASE AGREEMENT

 

FCC Unit 2 Assets

The “FCC Unit 2 Assets” referred to in the foregoing Agreement means that certain fluid catalytic cracking unit (8,000 bbls/day nameplate capacity) at the Refinery.


SCHEDULE 1.1(c)

to

LLC INTEREST PURCHASE AGREEMENT

 

Polymerization Unit Assets

The “Polymerization Unit Assets” referred to in the foregoing Agreement means that certain polymerization unit (2,500 bbls/day nameplate capacity) at the Refinery.


SCHEDULE 4.3(a)

to

LLC INTEREST PURCHASE AGREEMENT

 

Jurisdictions

Utah


SCHEDULE 4.4(a)

to

LLC INTEREST PURCHASE AGREEMENT

 

Required Consents - Seller

 

1. UOP Fluid Catalytic Cracking Process License Agreement dated effective as of 11/18/14 between HollyFrontier Woods Cross Refining LLC f/k/a Holly Refining & Marketing Company – Woods Cross LLC and UOP LLC.

 

2. Managed Reliability Program Agreement dated July 1, 2011 by and among HollyFrontier Navajo Refining LLC, a Delaware limited liability company, formerly known as Navajo Refining Company, L.L.C., HollyFrontier Woods Cross Refining LLC, formerly known as Holly Refining & Marketing Company – Woods Cross LLC, and John Crane, Incorporated, as amended by that certain First Amendment to Managed Reliability Program dated June 30, 2012, as further amended by the revised Exhibit D - Covered Equipment Included/Excluded Equipment entered into by Assignor and Seller and last executed June 20, 2016. (partial assignment)

 

3. Consignment and Inventory Agreement dated June 1, 2011 by and among HollyFrontier Navajo Refining LLC, a Delaware limited liability company, formerly known as Navajo Refining Company, L.L.C., HollyFrontier Woods Cross Refining LLC, formerly known as Holly Refining & Marketing Company – Woods Cross LLC, and John Crane, Incorporated, as amended by that certain First Amendment to Consignment and Inventory Agreement dated June 30, 2012, as further amended by that certain Second Amendment to Consignment and Inventory Agreement dated September 10, 2013. (partial assignment)


SCHEDULE 4.4(b)

to

LLC INTEREST PURCHASE AGREEMENT

 

Required Consents - Company

None.


SCHEDULE 4.7

to

LLC INTEREST PURCHASE AGREEMENT

 

Company Indebtedness and Liabilities

None.


SCHEDULE 4.13

to

LLC INTEREST PURCHASE AGREEMENT

 

Permitted Exceptions

 

1. Permit Appeal Proceedings.

Subject to the Permit Appeal Proceedings, Buyer will not hold necessary environmental Permits, though the Buyer (or its Affiliates) will be entitled or allowed to own and operate the Assets pursuant to environmental Permits held in the name of a Seller or an Affiliate of Seller.


SCHEDULE 4.14

to

LLC INTEREST PURCHASE AGREEMENT

 

Banking Accounts

None.


SCHEDULE 4.15

to

LLC INTEREST PURCHASE AGREEMENT

 

Material Contracts

See items 1-3 listed on Schedule 4.4(a) .

Engineering, Procurement and Construction Agreement, dated effective as of January 7, 2011, and amended as of May 21, 2014, by and between HollyFrontier Woods Cross Refining LLC, a Delaware limited liability company (formerly known as Holly Refining & Marketing Company – Woods Cross LLC) and Lauren Engineers & Constructors, Inc., a Delaware corporation.

Project Closure Agreement, dated September 22, 2016 by and between HollyFrontier Woods Cross Refining LLC, a Delaware limited liability company (formerly known as Holly Refining & Marketing Company – Woods Cross LLC) and Lauren Engineers & Constructors, Inc., a Delaware corporation.


SCHEDULE 4.16

to

LLC INTEREST PURCHASE AGREEMENT

 

Seller Security Instruments

None.


SCHEDULE 5.3

to

LLC INTEREST PURCHASE AGREEMENT

 

Required Consents – Buyer

None.


SCHEDULE 6.3

to

LLC INTEREST PURCHASE AGREEMENT

 

Required Consents - HFC

None.


SCHEDULE 7.3

to

LLC INTEREST PURCHASE AGREEMENT

 

Required Consents – Partnership

None.

Exhibit 10.2

Execution Version

AMENDED AND RESTATED MASTER TOLLING AGREEMENT

(Operating Assets)

Effective as of October 1, 2016


TABLE OF CONTENTS

 

ARTICLE 1 DEFINITIONS AND INTERPRETATIONS

     1   

1.1

 

D EFINITIONS

     1   

1.2

 

I NTERPRETATION

     1   

ARTICLE 2 AGREEMENT TO PURCHASE SERVICES

     1   

2.1

 

I NTENT

     1   

2.2

 

M INIMUM T HROUGHPUT C OMMITMENT

     1   

2.3

 

M EASUREMENT AND O WNERSHIP OF D ELIVERED V OLUMES

     3   

2.4

 

O BLIGATIONS OF HEP O PERATING

     3   

2.5

 

N OTIFICATION OF U TILIZATION

     3   

2.6

 

S CHEDULING AND A CCEPTING M OVEMENT

     3   

2.7

 

T AXES

     3   

2.8

 

T IMING OF P AYMENTS

     3   

2.9

 

I NCREASES IN T OLLING F EES

     4   

2.10

 

N O G UARANTEED M INIMUM

     4   

ARTICLE 3 FORCE MAJEURE

     4   

ARTICLE 4 EFFECTIVENESS AND APPLICABLE TERM

     4   

ARTICLE 5 NOTICES

     5   

ARTICLE 6 DEFICIENCY PAYMENTS

     5   

6.1

 

D EFICIENCY N OTICE ; D EFICIENCY P AYMENTS

     5   

6.2

 

D ISPUTED D EFICIENCY N OTICES

     5   

6.3

 

P AYMENT OF A MOUNTS N O L ONGER D ISPUTED

     6   

6.4

 

C ONTRACT Q UARTERS I NDEPENDENT

     6   

ARTICLE 7 RIGHT OF FIRST REFUSAL

     6   

ARTICLE 8 INDEMNITY; LIMITATION OF DAMAGES

     6   

8.1

 

I NDEMNITY ; L IMITATION OF L IABILITY

     6   

8.2

 

S URVIVAL

     6   

 

i


ARTICLE 9 MISCELLANEOUS

     6   

9.1

 

A MENDMENTS AND W AIVERS

     6   

9.2

 

S UCCESSORS AND A SSIGNS

     7   

9.3

 

S EVERABILITY

     7   

9.4

 

C HOICE OF L AW

     7   

9.5

 

R IGHTS OF L IMITED P ARTNERS

     7   

9.6

 

F URTHER A SSURANCES

     7   

9.7

 

H EADINGS

     8   

ARTICLE 10 GUARANTEE BY HOLLYFRONTIER

     8   

10.1

 

P AYMENT G UARANTY

     8   

10.2

 

G UARANTY A BSOLUTE

     8   

10.3

 

W AIVER

     9   

10.4

 

S UBROGATION W AIVER

     9   

10.5

 

R EINSTATEMENT

     9   

10.6

 

C ONTINUING G UARANTY

     9   

10.7

 

N O D UTY TO P URSUE O THERS

     9   

ARTICLE 11 GUARANTEE BY THE PARTNERSHIP

     9   

11.1

 

P AYMENT AND P ERFORMANCE G UARANTY

     9   

11.2

 

G UARANTY A BSOLUTE

     10   

11.3

 

W AIVER

     10   

11.4

 

S UBROGATION W AIVER

     10   

11.5

 

R EINSTATEMENT

     11   

11.6

 

C ONTINUING G UARANTY

     11   

11.7

 

N O D UTY TO P URSUE O THERS

     11   

 

ii


EXHIBITS

 

Exhibit A

    Parties

Exhibit B

    Drop Down Transactions

Exhibit C

    Applicable Assets; Minimum Throughput Commitment; Tolling Fees and Adjustments; Applicable Term

Exhibit D

    Definitions

Exhibit E

  -   Interpretations

Exhibit F

  -   Measurement of Delivered Volumes

Exhibit G

  -   Increase in Tolling Fees as a Result of Changes in Applicable Law

 

iii


AMENDED AND RESTATED MASTER TOLLING AGREEMENT

(Operating Assets)

This Amended and Restated Master Tolling Agreement (this “ Agreement ”) is dated as of October 3, 2016, to be effective as of the Effective Time (as defined below) by and between the Persons set forth on Exhibit A (each hereinafter sometimes referred to as a “ Party ” and sometimes collectively referred to as the “ Parties ”).

RECITALS:

A. Pursuant to certain transactions identified on Exhibit B (the “ Drop-Down Transactions ”) HEP Operating acquired from each Applicable Refinery Owner the assets identified on Exhibit C (the “ Applicable Assets ”) which are located at each Refinery Complex.

B. In connection with each transaction between HEP Operating and the Applicable Refinery Owner, HEP Operating leased from the Applicable Refinery Owner land at the Applicable Refinery Owner’s Refinery Complex on which all or a part of the Applicable Assets are located.

C. The Parties desire to enter into a master agreement pursuant to which HEP Operating will provide certain services to the Applicable Refinery Owner with respect to the Applicable Assets from and after the Effective Time.

NOW, THEREFORE, in consideration of the covenants and obligations contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATIONS

1.1 Definitions . Capitalized terms used throughout this Agreement and not otherwise defined herein shall have the meanings set forth on Exhibit D .

1.2 Interpretation . Matters relating to the interpretation of this Agreement are set forth on Exhibit E .

ARTICLE 2

AGREEMENT TO PURCHASE SERVICES

2.1 Intent . The Parties intend to be strictly bound by the terms set forth in this Agreement, which sets forth the Tolling Fees to be paid by the Applicable Refinery Owner to HEP Operating for providing certain processing services to the Applicable Refinery Owner.

2.2 Minimum Throughput Commitment . During the Applicable Term and subject to the terms and conditions of this Agreement, each Applicable Refinery Owner agrees as follows:

(a) Throughput Commitment . Subject to Article 2 , the Applicable Refinery Owner commits to deliver to HEP Operating at the location of each Applicable Asset the Minimum Throughput Commitment of Feedstock for each Contract Quarter, and pay the Tolling Fees in exchange for HEP Operating providing the services necessary to process the Feedstock into the Products.

 

1


(b) Tolling Fees . The Applicable Refinery Owner shall pay the Tolling Fees for all quantities of Feedstock processed through the Applicable Asset in each Contract Quarter during the Applicable Term.

(c) Adjustment of Tolling Fees . The Tolling Fees shall be adjusted in the manner set forth on Exhibit C . To evidence the Parties’ agreement to each adjusted Tolling Fee, the Parties shall execute an amended, modified, revised or updated Exhibit C and attach it to this Agreement. Such amended, modified, revised or updated Exhibit C shall be sequentially numbered ( e.g . Exhibit C-1 , Exhibit C-2 , etc .), dated and appended as an additional exhibit to this Agreement and shall replace the prior version of Exhibit C in its entirety, after its date of effectiveness.

(d) Reduction for Non-Force Majeure Events .

(1) If, as a result of HEP Operating’s operational difficulties or inability to provide sufficient capacity for the Minimum Throughput Commitment, HEP Operating fails to process and deliver to the Applicable Refinery Owner at least 95% of the volumes of Products expected to be derived from the volume of Feedstock processed with such Applicable Asset for a particular Contract Quarter based on the applicable Conversion Ratio, then the Tolling Fee applicable to that Contract Quarter will be reduced by a percentage equal to (A) 100% minus (B) the percentage represented by the ratio of (i) the volume of Products actually produced for the Contract Quarter to (ii) the volume of Products that would be produced from the volume of Feedstock delivered for the Contract Quarter based on the Conversion Ratio plus (C) 5%.

(2) If the Aggregate Capacity of any Applicable Asset for any Contract Quarter is less than the Minimum Throughput Commitment for such Applicable Asset for such Contract Quarter, including any time period during which HEP Operating is performing a turnaround on the Applicable Asset, then the Minimum Throughput Commitment for such Applicable Asset for such Contract Quarter will be reduced by a percentage equal to (A) 100% minus (B) the percentage represented by the ratio of (i) the Aggregate Capacity for such Applicable Asset for such Contract Quarter to (ii) the Minimum Throughput Commitment for such Applicable Asset for such the Contract Quarter.

If, as a result of a reduction to the Tolling Fee or Minimum Throughput Commitment for a Contract Quarter under this Section 2.2(d) the Applicable Refinery Owner shall have overpaid its Tolling Fees for the Contract Quarter, the Applicable Refinery Owner shall receive a credit against its Tolling Fees or other obligations to HEP Operating as provided in Exhibit C . This Section 2.2(d) shall not apply in the event HEP Operating gives a Force Majeure Notice in accordance with the terms of Article IX of the Omnibus Agreement, in which case the Minimum Throughput Commitment shall be suspended to the extent contemplated in Article IX of the Omnibus Agreement and Article 3 of this Agreement.

(e) Pro-Rationing for Partial Periods . Notwithstanding the other provisions of this Section 2.2 , in the event that the Effective Time is any date other than the first day of a Contract Quarter, then the Minimum Throughput Commitment for the initial partial Contract Quarter shall be prorated based upon the number of actual days between the date on which the Effective Time occurs and the end of such partial Contract Quarter. Similarly, notwithstanding the other provisions of this Section 2.2 , if the end of the Applicable Term is on a day other than the last day of a Contract Quarter, then the Minimum Throughput Commitment shall be prorated based upon the number of actual days between the beginning of such partial Contract Quarter and the last day of the Applicable Term.

 

2


2.3 Measurement and Ownership of Delivered Volumes . Matters with respect to the measurement of delivered volumes of Feedstock and Products are set forth on Exhibit F . Applicable Refinery Owner shall at all times retain title to the Feedstock and the Products.

2.4 Obligations of HEP Operating . During the Applicable Term and subject to the terms and conditions of this Agreement, HEP Operating agrees to:

(a) own or lease, operate and maintain (directly or through a Subsidiary) the Applicable Assets and all related assets necessary to process the applicable Feedstock and produce and deliver the applicable Products to the Applicable Refinery Owner at the throughput levels required by this Agreement;

(b) provide the services required under this Agreement and perform all operations relating to the Applicable Assets; and

(c) maintain adequate property and liability insurance covering the Applicable Assets and any related assets owned by HEP Operating or its Affiliates and necessary for the operation of the Applicable Assets.

Notwithstanding the first sentence of this Section 2.4 , subject to right of first refusal under Article V the Omnibus Agreement, HEP Operating or its Affiliate is free to sell any of its assets, including any Applicable Assets, and the Applicable Refinery Owner is free to merge with another entity and to sell all of its assets or equity to another entity at any time.

2.5 Notification of Utilization of Services . During the Applicable Term, the Applicable Refinery Owner will provide to HEP Operating written notification of the Applicable Refinery Owner’s reasonable good faith estimate of its anticipated future volumes of Feedstock to be delivered and the Applicable Refinery Owners’ requirements for Products as soon as reasonably practicable.

2.6 Scheduling and Accepting Movement . HEP Operating will use its reasonable commercial efforts to process, and schedule movement and accept movements of, Feedstocks in a manner that is consistent with the historical dealings between the Parties and their Affiliates, as such dealings may change from time to time.

2.7 Taxes . The Applicable Refinery Owner will pay all taxes, import duties, license fees and other charges by any Governmental Authority levied on or with respect to the Feedstocks processed and Products delivered to the Applicable Refinery Owner by HEP Operating. HEP Operating will pay all property and ad valorem taxes levied on, or with respect to, the Applicable Assets. Should either 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 2.6 , the Party subject to such tax shall promptly reimburse the Party collecting or paying the tax on its behalf for the amount of such tax.

2.8 Timing of Payments . The Applicable Refinery Owner will make payments to HEP Operating by electronic payment with immediately available funds on a monthly basis during the

 

3


Applicable Term with respect to services rendered or reimbursable costs or expenses incurred by HEP Operating under this Agreement in the prior month. Payments not received by HEP Operating on or prior to the tenth day following the invoice date will accrue interest at the Prime Rate from the applicable payment due date until the date payment is made.

2.9 Increases in Tolling Fees . If new Applicable Laws are enacted that require HEP Operating to make capital expenditures with respect to the Applicable Assets, HEP Operating may amend the Tolling Fees in the manner set forth in Exhibit G in order to recover HEP Operating’s cost of complying with such new Applicable Laws (as determined by HEP Operating in good faith and assuming that such capital expenditures are financed at a reasonable rate and amortized on a mortgage style basis over a period equal to the then remaining Initial Term (or if such capital expenditures are incurred during any Expansion Term, the then remaining Expansion Term)). The Applicable Refinery Owner and HEP Operating shall use their reasonable commercial efforts to comply with such new Applicable Laws, and shall negotiate in good faith to mitigate the impact of such new Applicable Laws and to determine the amount of the new Tolling Fee rates. If the Applicable Refinery Owner and HEP Operating are unable to agree on the amount of the new Tolling Fee rates that HEP Operating will charge, such Tolling Fee rates will be resolved in the manner provided for in Article VIII of the Omnibus Agreement. Any other applicable exhibit to this Agreement will be updated, amended or revised, as applicable, in accordance with this Agreement to reflect any changes in Tolling Fee rates established in accordance with this Section 2.9 .

2.10 No Guaranteed Minimum . Notwithstanding anything to the contrary set forth in this Agreement, there is no requirement that the Applicable Refinery Owner actually deliver any minimum quantity of Feedstock to the Applicable Assets, it being understood that the Applicable Refinery Owner’s obligation for failing to deliver sufficient quantities of Feedstock to satisfy the Minimum Throughput Commitment for any Contract Quarter is to make Deficiency Payments as provided in Article 6 .

ARTICLE 3

FORCE MAJEURE

The rights and obligations of the Parties upon the occurrence of an event of Force Majeure will be determined in the manner set forth in Article IX of the Omnibus Agreement; provided that (a) any suspension of the obligations of the Parties under this Agreement as a result of an event of Force Majeure shall extend the Applicable Term (to the extent so affected) for a period equivalent to the duration of the inability set forth in the Force Majeure Notice, (b) the Applicable Refinery Owner will be required to pay any amounts accrued and due under this Agreement at the time of the Force Majeure event, and (c) if a Force Majeure event prevents either Party from performing substantially all of their respective obligations under this Agreement relating to a group of Applicable Assets for a period of more than twelve (12) consecutive months, this Agreement may be terminated as to such Applicable Assets (but not as to unaffected Applicable Assets) by either Party providing written notice thereof to the other Party.

ARTICLE 4

EFFECTIVENESS AND APPLICABLE TERM

This Agreement shall be effective as to each group of Applicable Assets as of the Effective Time and, unless terminated earlier in accordance with its terms, shall terminate with respect to each group of Applicable Assets upon the expiration of the initial term set forth on Exhibit C (the “ Initial Term ”);

 

4


provided that, at the end of the Initial Term for each group of Applicable Assets, the Applicable Refinery Owner shall have the option to extend the Applicable Term for such group of Applicable Assets for an extension term beyond the Initial Term if, and to the extent, provided in Exhibit C (an “ Extension Term ”). In the event an Extension Term is available for a group of Applicable Assets, the Applicable Refinery Owner shall give HEP Operating written notice of its exercise of its option to extend the Applicable Term with respect to such group of Applicable Assets at least twelve (12) months prior to the end of the Initial Term for such group of Applicable Assets.

ARTICLE 5

NOTICES

Any notice or other communication given under this Agreement shall be in writing and shall be provided in the manner set forth in Article X of the Omnibus Agreement.

ARTICLE 6

DEFICIENCY PAYMENTS

6.1 Deficiency Notice; Deficiency Payments . As soon as practicable following the end of each Contract Quarter, HEP Operating shall deliver to the Applicable Refinery Owner a written notice (the “ Deficiency Notice ”) detailing any failure of the Applicable Refinery Owner to meet the Minimum Throughput Commitment for such Contract Quarter. The Deficiency Notice shall specify in reasonable detail the excess of (i) the dollar amount of the Tolling Fee that HEP Operating would have been paid by the Applicable Refinery Owner if the Applicable Refinery Owner had complied with its Minimum Throughput Commitment obligations for such Contract Quarter pursuant to this Agreement over (ii) the dollar amount of the Tolling Fee payable based on the Feedstock actually processed during such Contract Quarter (the “ Deficiency Payment ”). The Applicable Refinery Owner shall pay the Deficiency Payment to HEP Operating upon the later of: (A) ten (10) days after the Applicable Refinery Owner’s receipt of the Deficiency Notice and (B) thirty (30) days following the end of the related Contract Quarter, unless such day is not a Business Day, in which case the due date for payment shall be the next Business Day.

6.2 Disputed Deficiency Notices . If the Applicable Refinery Owner disagrees with all or any portion of the Deficiency Notice, then, prior to the due date of the Deficiency Payment, the Applicable Refinery Owner shall (i) send HEP Operating a written notice with an explanation of the basis for the dispute (a “ Dispute Notice ”) and (ii) pay HEP Operating the portion of the Deficiency Payment not disputed in such Dispute Notice. Thereafter, a senior officer of HollyFrontier (on behalf of the Applicable Refinery Owner) and a senior officer of the Partnership (on behalf of HEP Operating) shall meet in person 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 matters set forth in such Dispute Notice. During the thirty (30)-day period following the Applicable Refinery Owner’s timely delivery of such Dispute Notice, the Applicable Refinery Owner shall have reasonable access to the working papers of HEP Operating relating to the Deficiency Notice. If the matters set forth in such Dispute Notice are not resolved within thirty (30) days following the Applicable Refinery Owner’s timely delivery of such Dispute Notice, the Applicable Refinery Owner and HEP Operating shall, within forty-five (45) days following the Applicable Refinery Owner’s timely delivery of such Dispute Notice, submit any and all matters which remain in dispute to dispute resolution in accordance with the Omnibus Agreement.

 

5


6.3 Payment of Amounts No Longer Disputed . If it is finally determined pursuant to this Article 6 that the Applicable Refinery Owner is required to pay any or all of the disputed portion of the Deficiency Payment, the Applicable Refinery Owner shall pay such amount to HEP Operating, together with interest thereon at the Prime Rate, in immediately available funds within ten (10) days of such final determination.

6.4 Contract Quarters Independent . The fact that the Applicable Refinery Owner has exceeded or fallen short of the Minimum Throughput Commitment with respect to any Contract Quarter shall not be considered in determining whether the Applicable Refinery Owner meets, exceeds or falls short of the Minimum Throughput Commitment with respect to any other Contract Quarter, and the amount of any such excess or shortfall shall not be counted towards or against the Minimum Throughput Commitment with respect to any other Contract Quarter.

ARTICLE 7

RIGHT OF FIRST REFUSAL

The Parties acknowledge the right of first refusal of HollyFrontier with respect to the Applicable Assets as provided in the Omnibus Agreement.

ARTICLE 8

INDEMNITY; LIMITATION OF DAMAGES

8.1 Indemnity; Limitation of Liability . The Parties acknowledge and agree that the provisions relating to indemnity and limitation of liability set forth in Article III of the Omnibus Agreement shall apply to this Agreement. Notwithstanding anything in this Agreement or the Omnibus Agreement to the contrary, and solely for the purpose of determining which of the Applicable Refinery Owner or HEP Operating shall be liable in a particular circumstance, neither the Applicable Refinery Owner nor HEP Operating shall be liable to the other Party for any loss, damage, injury, judgment, claim, cost, expense or other liability suffered or incurred (collectively, “ Damages ”) by such Party except to the extent that the Applicable Refinery Owner or HEP Operating causes such Damages or owns or operates the assets or other property in question responsible for causing such Damages.

8.2 Survival . The provisions of this Article 8 shall survive the termination of this Agreement.

ARTICLE 9

MISCELLANEOUS

9.1 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 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, and attaches it to this Agreement. Such amended, modified, revised or updated exhibits shall be sequentially numbered ( e.g. Exhibit A-1 , Exhibit A-2 , etc .), dated and appended as an additional exhibit to this Agreement and shall replace the prior exhibit, in its entirety, after its date of effectiveness, except as specified therein. No

 

6


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.

9.2 Successors and Assigns . This Agreement shall inure to the benefit of, and shall be binding upon, the Parties 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 the Applicable Refinery Owner (in the case of any assignment by HEP Operating) or HEP Operating (in the case of any assignment by an Applicable Refinery Owner), in each case, such consent is not to be unreasonably withheld or delayed; provided , however , that (i) HEP Operating may make such an assignment (including a partial pro rata assignment) to an Affiliate of HEP Operating without the Applicable Refinery Owner’s consent (but subject to the provision of written notice to the Applicable Refinery Owner), (ii) an Applicable Refinery Owner may make such an assignment (including a pro rata partial assignment) to an Affiliate of such Applicable Refinery Owner without HEP Operating’s consent (but subject to the provision of written notice to HEP Operating), (iii) an Applicable Refinery Owner may make a collateral assignment of its rights and obligations hereunder and/or grant a security interest in its rights and obligations hereunder, and HEP Operating shall execute an acknowledgement of such collateral assignment in such form as may from time-to-time be reasonably requested, and (iv) HEP Operating may make a collateral assignment of its rights hereunder and/or grant a security interest in its rights and obligations hereunder to a bona fide third party lender or debt holder, or trustee or representative for any of them, without an Applicable Refinery Owner’s consent, if such third party lender, debt holder or trustee shall have executed and delivered to such Applicable Refinery Owner a non-disturbance agreement in such form as is reasonably satisfactory to such Applicable Refinery Owner and such third party lender, debt holder or trustee, and such Applicable Refinery Owner 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.

9.3 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.

9.4 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.

9.5 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.

9.6 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.

 

7


9.7 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.

ARTICLE 10

GUARANTEE BY HOLLYFRONTIER

10.1 Payment Guaranty . HollyFrontier unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to HEP Operating the punctual and complete payment in full when due of all amounts due from each Applicable Refinery Owner under this Agreement (collectively, the “ Applicable Refinery Owner Payment Obligations ”). HollyFrontier agrees that HEP Operating shall be entitled to enforce directly against HollyFrontier any of the Applicable Refinery Owner Payment Obligations.

10.2 Guaranty Absolute . HollyFrontier hereby guarantees that the Applicable Refinery Owner Payment Obligations will be paid strictly in accordance with the terms of the Agreement. The obligations of HollyFrontier under this Agreement constitute a present and continuing guaranty of payment, and not of collection or collectability. The liability of HollyFrontier under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of:

(a) any assignment or other transfer of this Agreement or any of the rights thereunder of HEP Operating;

(b) any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to this Agreement;

(c) any acceptance by HEP Operating of partial payment or performance from the Applicable Refinery Owner;

(d) any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to the Applicable Refinery Owner or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding;

(e) any absence of any notice to, or knowledge of, HollyFrontier, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (i) through (iv); or

(f) any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor.

The obligations of HollyFrontier 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 Applicable Refinery Owner Payment Obligations or otherwise.

 

8


10.3 Waiver . HollyFrontier hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the Applicable Refinery Owner Payment Obligations and any requirement for HEP Operating 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 the Applicable Refinery Owner, any other entity or any collateral.

10.4 Subrogation Waiver . HollyFrontier agrees that for so long as there is a current or ongoing default or breach of this Agreement by the Applicable Refinery Owner, HollyFrontier shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from the Applicable Refinery Owner for any payments made by HollyFrontier under this Article 10 , and HollyFrontier 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 the Applicable Refinery Owner during any period of default or breach of this Agreement by the Applicable Refinery Owner until such time as there is no current or ongoing default or breach of this Agreement by the Applicable Refinery Owner.

10.5 Reinstatement . The obligations of HollyFrontier under this Article 10 shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the Applicable Refinery Owner Payment Obligations is rescinded or must otherwise be returned to the Applicable Refinery Owner or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of the Applicable Refinery Owner or such other entity, or for any other reason, all as though such payment had not been made.

10.6 Continuing Guaranty . This Article 10 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 Applicable Refinery Owner Payment Obligations, (ii) be binding upon HollyFrontier, its successors and assigns and (iii) inure to the benefit of and be enforceable by HEP Operating and its respective successors, transferees and assigns.

10.7 No Duty to Pursue Others . It shall not be necessary for HEP Operating (and HollyFrontier hereby waives any rights which HollyFrontier may have to require HEP Operating), in order to enforce such payment by HollyFrontier, first to (i) institute suit or exhaust its remedies against the Applicable Refinery Owner or others liable on the Applicable Refinery Owner Payment Obligations or any other Person, (ii) enforce HEP Operating’s rights against any other guarantors of the Applicable Refinery Owner Payment Obligations, (iii) join the Applicable Refinery Owner or any others liable on the Applicable Refinery Owner Payment Obligations in any action seeking to enforce this Article 10 , (iv) exhaust any remedies available to HEP Operating against any security which shall ever have been given to secure the Applicable Refinery Owner Payment Obligations, or (v) resort to any other means of obtaining payment of the Applicable Refinery Owner Payment Obligations.

ARTICLE 11

GUARANTEE BY THE PARTNERSHIP

11.1 Payment and Performance Guaranty . The Partnership unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to the Applicable Refinery Owner the punctual and complete payment in full when due of all amounts due from HEP Operating under this Agreement (collectively, the “ HEP Operating Payment Obligations ”) and the punctual and complete

 

9


performance of all other obligations of HEP Operating under this Agreement (collectively, the “ HEP Operating Performance Obligations ”, together with the HEP Operating Payment Obligations, the “ HEP Operating Obligations ”). The Partnership agrees that the Applicable Refinery Owner shall be entitled to enforce directly against the Partnership any of the HEP Operating Obligations.

11.2 Guaranty Absolute . The Partnership hereby guarantees that the HEP Operating Payment Obligations will be paid, and the HEP Performance Obligations will be performed, strictly in accordance with the terms of this Agreement. The obligations of the Partnership under this Agreement constitute a present and continuing guaranty of payment and performance, and not of collection or collectability. The liability of the Partnership under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of:

(a) any assignment or other transfer of this Agreement or any of the rights thereunder of the Applicable Refinery Owner;

(b) any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to this Agreement;

(c) any acceptance by the Applicable Refinery Owner of partial payment or performance from HEP Operating;

(d) any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to HEP Operating or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding;

(e) any absence of any notice to, or knowledge of, the Partnership, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (i) through (iv); or

(f) any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor.

The obligations of the 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 Operating Obligations or otherwise.

11.3 Waiver . The Partnership hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HEP Operating Payment Obligations and any requirement for the Applicable Refinery Owner 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 Operating, any other entity or any collateral.

11.4 Subrogation Waiver . The Partnership agrees that for so long as there is a current or ongoing default or breach of this Agreement by HEP Operating, the Partnership shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of

 

10


payment or recovery from HEP Operating for any payments made by the Partnership under this Article 11 , and each of the 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 Operating during any period of default or breach of this Agreement by HEP Operating until such time as there is no current or ongoing default or breach of this Agreement by HEP Operating.

11.5 Reinstatement . The obligations of the Partnership under this Article 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 HEP Operating Payment Obligations is rescinded or must otherwise be returned to HEP Operating or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of HEP Operating or such other entity, or for any other reason, all as though such payment had not been made.

11.6 Continuing Guaranty . This Article 11 is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible payment and/or performance in full of all of the HEP Operating Payment Obligations, (ii) be binding upon the Partnership and each of its respective successors and assigns and (iii) inure to the benefit of and be enforceable by the Applicable Refinery Owner and their respective successors, transferees and assigns.

11.7 No Duty to Pursue Others . It shall not be necessary for the Applicable Refinery Owner (and the Partnership hereby waives any rights which the Partnership may have to require the Applicable Refinery Owner), in order to enforce such payment by the Partnership, first to (i) institute suit or exhaust its remedies against HEP Operating or others liable on the HEP Operating Obligations or any other Person, (ii) enforce the Applicable Refinery Owner’s rights against any other guarantors of the HEP Operating Obligations, (iii) join HEP Operating or any others liable on the HEP Operating Obligations in any action seeking to enforce this Article 11 , (iv) exhaust any remedies available to the Applicable Refinery Owner against any security which shall ever have been given to secure the HEP Operating Obligations, or (v) resort to any other means of obtaining payment of the HEP Operating Obligations.

[Remainder of page intentionally left blank. Signature pages follow.]

 

11


IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of the date first written above to be effective as of the Effective Time.

 

HEP OPERATING:
Holly Energy Partners-Operating, L.P.
By:  

/s/ Michael C. Jennings

  Michael C. Jennings
  Chief Executive Officer
APPLICABLE REFINERY OWNER:
HollyFrontier El Dorado Refining LLC
HollyFrontier Woods Cross Refining LLC
By:  

/s/ George J. Damiris

  George J. Damiris
  Chief Executive Officer and President

 

[Signature Page 1 of 2 to the Master Tolling Agreement]


ACKNOWLEDGED AND AGREED
FOR PURPOSES OF Article 10 :
HOLLYFRONTIER CORPORATION
By:  

/s/ George J. Damiris

  George J. Damiris
  Chief Executive Officer and President
ACKNOWLEDGED AND AGREED
FOR PURPOSES OF Article 11 :
HOLLY ENERGY PARTNERS, L.P.
By:   HEP Logistics Holdings, L.P.,
  its General Partner
By:   Holly Logistic Services, L.L.C.,
  its General Partner
By:  

/s/ Michael C. Jennings

  Michael C. Jennings
  Chief Executive Officer

 

[Signature Page 2 of 2 to the Master Tolling Agreement]


Exhibit A

to

Amended and Restated Master Tolling Agreement

 

 

Parties

HollyFrontier El Dorado and HEP Operating, as to the El Dorado Assets.

HollyFrontier Woods Cross and HEP Operating, as to the Woods Cross Assets.

 

Exhibit A-1


Exhibit B

to

Amended and Restated Master Tolling Agreement

 

 

Drop Down Transactions

 

1. Sale of all the outstanding membership interests in El Dorado Operating LLC from HollyFrontier El Dorado to HEP Operating, effective November 1, 2015. El Dorado Operating LLC owns a Naphtha Fractionation Unit at the El Dorado Refinery Complex.

 

2. Sale of all the outstanding membership interests in Woods Cross Operating LLC from HollyFrontier Woods Cross to HEP Operating, effective October 1, 2016. Woods Cross Operating LLC owns the Crude Unit 2, the FCC Unit 2 and the Polymerization Unit at the Woods Cross Refinery Complex.

 

Exhibit B-1


Exhibit C

to

Amended and Restated Master Tolling Agreement

 

 

Applicable Assets; Minimum Throughput Commitment; Tolling Fees and Adjustments; Applicable Term

 

Applicable
Assets
 

Type of

Applicable

Asset

  Products  

Minimum

Throughput

Commitment

(on a BPD

basis)

 

Tolling

Fee

 

Tolling

Fee

Adjustment

 

PPI

Adjustment

Minimum/
Cap

 

Fee

Adjustment

Commencement

Date

 

Assumed

OPEX

 

Purchase

Price

 

Accrued

Turn-
around

Cost

 

Assumed

Fuel Gas

Cost

 

Initial

Term (all

times are

Dallas,

TX time)

 

Extension

Term (all

times are

Dallas, TX

time)

El Dorado Assets   Naphtha Fractionation Unit  

Isopentane 1

 

ISOM Feed

 

Int. Naphtha

 

Reformer

  48,750 BPD   $.36/BBL 2  

PPI/HFC Merit Comp Adjustment 3

 

OPEX Adjustment 4

 

CAPEX Adjustment 5

 

Turnaround Surcharge 6

 

Fuel Gas Surcharge 7

  Subject to 1% Minimum/ 3% Cap 3   July 1, 2017   $3.3M 4   $25,851,371   $1.6M 6   $73,610 7   12:01 a.m. on Novem-ber 1, 2015 (the “Effec-tive Time”) to 12:00 midnight on October 31, 2030   The Applicable Refinery Owner shall have the option to extend the Applicable Term beyond the Initial Term for one additional five (5) year period beginning at 12:01 am on November 1, 2030 and ending at 12:00 midnight on October 31, 2035 on the same terms and conditions as in existence for the Initial Term.

 

Exhibit C-1


Applicable
Assets
 

Type of

Applicable

Asset

  Products  

Minimum

Throughput

Commitment

(on a BPD

basis)

 

Tolling

Fee

 

Tolling

Fee

Adjustment

 

PPI

Adjustment

Minimum/
Cap

 

Fee

Adjustment

Commencement

Date

 

Assumed

OPEX

 

Purchase

Price

 

Accrued

Turn-
around

Cost

 

Assumed

Fuel Gas

Cost

 

Initial

Term (all

times are

Dallas,

TX time)

 

Extension

Term (all

times are

Dallas, TX

time)

Woods Cross Assets   Crude Unit 2   Naphtha Diesel tower bottoms   14,625 BPD 8   $2.56/BBL 10   PPI/WX Union Annual Increase 9   None   July 1, 2017   $4.0M 4   $64.75M   $8.7M 6   $11,871  

12:01 a.m. on October 1, 2016 (the

“Effective Time”) to 12:00

midnight on September 30, 2031

 

The Applicable Refinery Owner shall have

the option to extend the Applicable

Term beyond the Initial Term for one additional five (5) year period beginning at 12:01 am on October 1, 2031 and ending at 12:00 midnight on September 30, 2036 on the same terms and conditions as in existence for the Initial Term.

    FCC Unit 2   Gasoline Light Cycle Oil Olefins Slurry   7,600 BPD 8   $12.39 /BBL 10   OPEX Adjustment 4           $11.8M 4   $176.25M   $7.8M 6   $11,566    
    Polymeriza-tion Unit   Gasoline Butane Propane   2,438 BPD 8   $9.72/BBL 10  

CAPEX Adjustment 5

 

Turn- around Surcharge  6

 

Fuel Gas Surcharge (excluding Polymeri-zation Unit) 7

          $3.6M 4   $37.0M   $3.2M 6   -    

 

1. The “Feedstock” for the El Dorado Assets is light naphtha and heavy naphtha. The “Feedstock” for the Woods Cross Assets is as follows: Crude Unit 2 – crude oil; FCC Unit 2 – crude tower bottoms and outside gas oil; Poly Unit – olefins.

 

Exhibit C-2


2. El Dorado Only: The Tolling Fee shall never be less than $.36 per BBL of Feedstock, subject to a one-time potential reduction in the Tolling Fee for the adjustment in paragraph 4 below. If as a result of a reduction to the Tolling Fee or Minimum Throughput Commitment for a Contract Quarter pursuant to Section 2.2(d) of the Agreement, the Applicable Refinery Owner has overpaid its Tolling Fees for a Contract Quarter, the Applicable Refinery Owner shall receive a credit against its Tolling Fees due for the following Contract Quarter in the amount of such overpayment.
3. El Dorado Only: The Tolling Fee, as previously adjusted on a cumulative basis, shall be adjusted on July 1 of each calendar year, commencing July 1, 2017, by an amount equal to a percentage calculated as follows: (A) 0.75 x the change in the PPI as described below, plus (B) 0.25 x the annual HollyFrontier Merit Compensation Adjustment (positive or negative) for
 

 

Exhibit C-3


  such calendar year. The change in the PPI is 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. The series ID is WPUFD49207– located at http://www.bls.gov/data/. The change in PPI for each year 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); provided that the change in PPI in any year shall not be less than one percent (1%) or more than three percent (3%). For the avoidance of doubt, if the change in PPI in any year is less than one percent (1%) (including if the change in the PPI is negative) it will be rounded up to one percent (1%) and if the change in PPI in any year is greater than three percent (3%) it will be rounded down to three percent (3%). If either index is no longer published, the Parties shall negotiate in good faith to agree on a new index (as applicable) that gives comparable protection against inflation or deflation, and the same method of adjustment for increases or decreases in the new index shall be used to calculate increases or decreases in the Tolling Fee. If the Parties are unable to agree on a new index, a new index will be determined in accordance with the dispute resolution provisions set forth in the Article VIII of Omnibus Agreement, and the same method of adjustment for increases or decreases in the new index shall be used to calculate increases or decreases in the Tolling Fee. The annual HollyFrontier Merit Compensation Adjustment is the company-wide increase (or decrease) in salary for the year in which the adjustment occurs as determined by the HollyFrontier Chief Executive Officer and Vice President, Human Resources (excluding merit compensation adjustments for executive officers that are determined by the HollyFrontier Board of Directors (or a committee thereof) and excluding any annual increases for union employees). Examples of the annual Tolling Fee adjustment under various scenarios are as follows:

 

  (1) if the change in PPI is 0% and the HFC Merit Compensation Adjustment is 3.5%, the Tolling Fee adjustment would be (0.75 x 1%) + (0.25 x 3.5%) = 1.625%
  (2) if the change in PPI is 2% and the HFC Merit Compensation Adjustment is 2%, the Tolling Fee adjustment would be (0.75 x 2%) + (0.25 x 2%) = 2%
  (3) if the change in PPI is 5% and the HFC Merit Compensation Adjustment is 2%, the Tolling Fee adjustment would be (0.75 x 3%) + (0.25 x 2%) = 2.75%
  (4) if the change in PPI is 0% and the HFC Merit Compensation Adjustment is -2%, the Tolling Fee adjustment would be (0.75 x 1%) + (0.25 x (-2%)) = 0.25%

 

4. At the end of the first four (4) Contract Quarters during the Applicable Term, HEP Operating shall calculate the aggregate operating expenses incurred in the operation of the Applicable Asset (but such calculation shall not include turnaround accruals, capitalized catalyst costs, fuel gas costs and extraordinary and non-recurring items of expense that are not reasonably expected to recur in future periods during the Applicable Term) (“OPEX”). In the event that such aggregate OPEX exceed the Assumed OPEX set forth above, (A) the Applicable Refinery Owner shall, within ten (10) days of receiving an invoice from HEP Operating, reimburse HEP Operating for such OPEX incurred during such initial four (4) Contract Quarters in excess of the Assumed OPEX, and (B) from and after the first four (4) Contract Quarters during the Applicable Term, HEP Operating shall increase the Tolling Fee for processing with the Applicable Asset by the amount necessary to recover such aggregate OPEX in excess of the Assumed OPEX for the remainder of the Applicable Term, and the Parties shall execute an amended, modified, revised or updated Exhibit C reflecting such aggregate OPEX as the new Assumed OPEX. In the event that such aggregate OPEX is less than the Assumed OPEX, HEP Operating shall decrease the Tolling Fee by the amount necessary to account for the difference between the Assumed OPEX and such actual OPEX for the remainder of the Applicable Term, and the Parties shall execute an amended, modified, revised or updated Exhibit C reflecting such aggregate OPEX as the new Assumed OPEX.
5. At the end of the first four (4) Contract Quarters during the Applicable Term, HEP Operating shall determine its aggregate capital expenditures relating to the construction and start-up of the Applicable Asset (“CAPEX”). HEP Operating shall amend and increase the Tolling Fee for the remainder of the Initial Term by the following formulae: For the El Dorado Assets: (aggregate CAPEX/9.0) ÷ (Minimum Throughput Commitment (on a BPD basis) x 365.25); and for the Woods Cross Assets: (aggregate CAPEX/8.5) ÷ (Minimum Throughput (on a BPD basis) x 365.25).
6. After the first turnaround on the Applicable Asset during the Applicable Term, HEP Operating will calculate its aggregate Turnaround Costs incurred in connection therewith. In the event such aggregate Turnaround Costs for the Applicable Asset exceeds the Accrued Turnaround Cost set forth above then (A) a turnaround surcharge (the “Turnaround Surcharge”) will be added to the Tolling Fee based on each BBL of Feedstock (using the Minimum Throughput Commitment) in order to allow HEP Operating to recover (i) such Turnaround Costs in excess of the Accrued Turnaround Cost plus (ii) a ten percent (10%) return on such excess (the aggregate amount specified in clauses (i) and (ii), the “Turnaround Payment”). Such Turnaround Surcharge shall be paid by the Applicable Refinery Owner to HEP Operating on each BBL of Feedstock processed through the Applicable Asset until the earlier to occur of (i) the expiration of the Applicable Term or (ii) the recovery by HEP Operating of the Turnaround Payment. In addition, the Tolling Fee will be adjusted by the amount necessary to recover the new estimated turnaround expense for the remainder of the Applicable Term (based on the Minimum Throughput Commitment).
7. If at the end of any calendar month during the Applicable Term the aggregate cost of gas incurred by HEP Operating in connection with the operation of the Applicable Assets exceeds the Assumed Fuel Gas Cost, the Applicable Refinery Owner shall promptly pay to HEP Operating an amount equal to the positive difference, if any, of (i) the aggregate cost of fuel gas incurred by HEP Operating in connection with the operation of the Applicable Assets during such calendar month less (ii) the Assumed Fuel Gas Cost.
 

 

Exhibit C-4


8. Determined on a Contract Quarter basis.
9. Woods Cross Only: The Tolling Fee, as previously adjusted on a cumulative basis, shall be adjusted on July 1 of each calendar year, commencing July 1, 2017, by an amount equal to a percentage calculated as follows: (A) 0. 5 x the change in the PPI as described below, plus (B) 0.5 x the annual increase under the then current Woods Cross union contract. The change in the PPI is 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. The series ID is WPUFD49207– located at http://www.bls.gov/data/. The change in PPI for each year 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). If either index is no longer published, the Parties shall negotiate in good faith to agree on a new index (as applicable) that gives comparable protection against inflation or deflation, and the same method of adjustment for increases or decreases in the new index shall be used to calculate increases or decreases in the Tolling Fee. If the Parties are unable to agree on a new index, a new index will be determined in accordance with the dispute resolution provisions set forth in the Article VIII of Omnibus Agreement, and the same method of adjustment for increases or decreases in the new index shall be used to calculate increases or decreases in the Tolling Fee. The annual increase under the then current Woods Cross union contract is the annual base pay increase given to union employees at Woods Cross, currently on or about February 1 of each year. Examples of the annual Tolling Fee adjustment under various scenarios are as follows:

(1) if the change in PPI is 0% and the annual increase under the then current Woods Cross union contract is 3.5%, the Tolling Fee adjustment would be (0.5 x 0%) + (0.5 x 3.5%) = 1.75%

(2) if the change in PPI is 2% and the annual increase under the then current Woods Cross union contract is 2%, the Tolling Fee adjustment would be (0.5 x 2%) + (0.5 x 2%) = 2%

(3) if the change in PPI is 5% and the annual increase under the then current Woods Cross union contract is 2%, the Tolling Fee adjustment would be (0.5 x 5%) + (0.5 x 2%) = 3.5%10.

(4) if the change in PPI is -1% and the annual increase under the then current Woods Cross union contract is 2%, the Tolling Fee adjustment would be (0.5 x -1%) + (0.5 x 2%) = 0.5%.

 

10. Woods Cross Only: If the Applicable Refinery Owner has overpaid its monthly Tolling Fees after adjustments to Tolling Fees or Minimum Throughput Commitments for a Contract Quarter pursuant to Section 2.2(d) of the Agreement, the Applicable Refinery Owner shall be entitled to apply any such overpayment as a credit against Tolling Fees within the succeeding twelve months for volumes of Feedstock delivered to HEP Operating in excess of the Minimum Throughput Commitment for any of the Applicable Assets. If any such overpayment has not been credited within twelve months of the overpayment, such overpayment shall be credited against Tolling Fees due with respect to any Minimum Throughput Commitment for any of the Applicable Assets, or if there are no such Tolling Fees due, such overpayment shall be credited against any other obligations owed by the Applicable Refinery Owner, or its Affiliates, to HEP Operating.
 

 

Exhibit C-5


Exhibit D

to

Amended and Restated Master Tolling Agreement

 

Definitions

Accrued Turnaround Cost ” has the meaning set forth in Exhibit C .

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, the Applicable Refinery Owner, on the one hand, and HEP Operating, on the other hand, shall not be considered affiliates of each other.

Aggregate Capacity ” means, with respect to each Contract Quarter and each Applicable Asset, the product of (i) the volume of Feedstock (expressed in BPD) that HEP Operating was available to receive on average on a daily basis from the Applicable Refinery Owner at the location of such Applicable Asset for the Contract Quarter and (ii) the number of days in such Contract Quarter.

Agreement ” has the meaning set forth in the preamble to this Agreement.

Applicable Asset ” means each of the Applicable Assets, individually.

Applicable Assets ” has the meaning set forth in the Recitals.

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.

Applicable Refinery Owner ” means, with respect to the El Dorado Refinery, HollyFrontier El Dorado, and with respect to the Woods Cross Refinery, HollyFrontier Woods Cross.

Applicable Refinery Owner Payment Obligations ” has the meaning set forth in Section 10.1 .

Applicable Term ” means the Initial Term, together with any Extension Term, if applicable.

Assumed Fuel Gas Cost ” has the meaning set forth in Exhibit C .

 

Exhibit D-1


Assumed OPEX ” means the amount set forth in Exhibit C for the Applicable Assets.

BBL ” means barrel.

BPD ” means barrels per day.

Business Day means any day other than Saturday, Sunday or other day upon which commercial banks in Dallas, Texas are authorized by law to close.

CAPEX ” has the meaning set forth in Exhibit C .

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.

Conversion Ratio ” has the meaning set forth in Exhibit F .

Crude Unit 2 ” has the meaning set forth in the Master Lease and Access Agreement.

Damages ” has the meaning set forth in Section 8.1 .

Deficiency Notice ” has the meaning set forth in Section 6.1 .

Deficiency Payment ” has the meaning set forth in Section 6.1 .

Dispute Notice ” has the meaning set forth in Section 6.2 .

Drop Down Transactions ” has the meaning set forth in the Recitals.

Effective Time ” has the meaning set forth in Exhibit C .

El Dorado Assets ” means those assets identified as the “El Dorado Assets” in Exhibit C .

El Dorado Refinery Complex ” means the refinery complex owned by HollyFrontier El Dorado, commonly known as the El Dorado Refinery, and located in the City of El Dorado, Butler County, Kansas.

Extension Term ” has the meaning set forth in Section 4 .

FCC Unit 2 ” has the meaning set forth in the Master Lease and Access Agreement.

Feedstock ” has the meaning set forth in Exhibit C .

Force Majeure ” has the meaning set forth in the Omnibus Agreement.

Force Majeure Notice ” has the meaning set forth in the Omnibus Agreement.

 

Exhibit D-2


Fuel Gas Cost ” has the meaning set forth in Exhibit C .

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.

HEP Operating ” means Holly Energy Partners – Operating, L.P., a Delaware limited partnership.

HEP Operating Obligations ” has the meaning set forth in Section 11.1 .

HEP Operating Payment Obligations ” has the meaning set forth in Section 11.1 .

HEP Operating Performance Obligations ” has the meaning set forth in Section 11.1 .

HollyFrontier El Dorado ” means HollyFrontier El Dorado Refining LLC, a Delaware limited liability company.

HollyFrontier Woods Cross ” means HollyFrontier Woods Cross Refining LLC, a Delaware limited liability company.

HollyFrontier ” means HollyFrontier Corporation, a Delaware corporation.

Initial Term ” has the meaning set forth in Article 4 .

Master Lease and Access Agreement ” means that certain Third Amended and Restated Master Lease and Access Agreement dated effective as of the Effective Date hereof among the Parties and certain of their Affiliates.

Minimum Throughput Commitment ” means, with respect to each Contract Quarter and each Applicable Asset, the product of (i) the quantity of Feedstock to be delivered by the Applicable Refinery Owner to HEP Operating at the location of the Applicable Asset on a daily basis, as set forth on Exhibit C and (ii) the number of days in such Contract Quarter, as such amount may be adjusted pursuant to the terms of this Agreement.

Naphtha Fractionation Unit ” has the meaning set forth in the Master Lease and Access Agreement.

NFC Products ” has the meaning set forth in Exhibit F .

Omnibus Agreement ” means the Sixteenth Amended and Restated Omnibus Agreement, effective as of October 1, 2016.

OPEX ” has the meaning set forth in Exhibit C .

Parties ” has the meaning set forth in the Preamble.

Partnership ” means Holly Energy Partners, L.P., a Delaware limited partnership.

 

Exhibit D-3


Party ” has the meaning set forth in the Preamble.

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.

Polymerization Unit ” has the meaning set forth in the Master Lease and Access Agreement.

PPI ” has the meaning set forth in Exhibit C .

Prime Rate ” means the lesser of (i) 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 and (ii) the maximum lawful rate permitted by Applicable Law.

Products ” has the meaning set forth in Exhibit C .

Purchase Price ” means the amount set forth in Exhibit C for the Applicable Assets.

Subsidiary ” means with respect to any Person (the “ Owner ”), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interest having such power only upon the happening of a contingency that has not occurred), are held by the Owner or one or more of its Subsidiaries.

Tolling Fee ” has the meaning set forth in Exhibit C .

Turnaround Costs ” means costs and expenses, including catalysts, reasonably incurred by HEP Operating in the first turnaround of the Applicable Asset occurring during the Applicable Term.

Turnaround Payment ” has the meaning set forth in paragraph 6 of Exhibit C .

Turnaround Surcharge ” has the meaning set forth in paragraph 6 of Exhibit C .

Woods Cross Assets ” means those assets identified as the “Woods Cross Assets” in Exhibit C .

Woods Cross Refinery Complex ” means the refinery complex owned by HollyFrontier Woods Cross, commonly known as the Woods Cross Refinery, and located in the City of West Bountiful, Davis County, Utah.

 

Exhibit D-4


Exhibit E

to

Amended and Restated Master Tolling Agreement

 

 

Interpretations

As used in this Agreement, unless a clear contrary intention appears:

(a) any reference to the singular includes the plural and vice versa, any reference to natural persons includes legal persons and vice versa, and any reference to a gender includes the other gender;

(b) the words “hereof”, “herein”, and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;

(c) any reference to Articles, Sections and Exhibits are, unless otherwise stated, references to Articles, Sections and Exhibits of or to this Agreement and references in any Section or definition to any clause means such clause of such Section or definition. The headings in this Agreement have been inserted for convenience only and shall not be taken into account in its interpretation;

(d) reference to any agreement (including this Agreement), document or instrument means such agreement, document, or instrument as amended, modified or supplemented and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of this Agreement;

(e) the Exhibits hereto form an integral part of this Agreement and are equally binding therewith. Any reference to “this Agreement” shall include such Exhibits;

(f) references to a Person shall include any permitted assignee or successor to such Party in accordance with this Agreement and reference to a Person in a particular capacity excludes such Person in any other capacity;

(g) if any period is referred to in this Agreement by way of reference to a number of days, the days shall be calculated exclusively of the first and inclusively of the last day unless the last day falls on a day that is not a Business Day in which case the last day shall be the next succeeding Business Day;

(h) the use of “or” is not intended to be exclusive unless explicitly indicated otherwise;

(i) references to “$” or to “dollars” shall mean the lawful currency of the United States of America; and

(j) the words “includes,” “including,” or any derivation thereof shall mean “including without limitation” or “including, but not limited to.”

 

Exhibit E-1


Exhibit F

to

Amended and Restated Master Tolling Agreement

 

 

Measurement of Delivered Volumes

 

Applicable Asset    Type of Applicable Asset    Measurement of Volumes

El Dorado

Assets

   Naphtha Fractionation Unit   

Delivery volumes of light naphtha and heavy naphtha feedstock shall be determined by the BBL unit of measure with the metered data stored at PI Tag FI14381.daca.pv for light naphtha and FI14382.daca.pv for heavy naphtha.

 

Delivery volumes of isopentane, ISOM feed, intermediate naphtha and reformer feed shall be determined by the BBL unit of measure with the metered data stored at tags FC14578.pida.pv, FC14592.pida.pv, FC14612.pida.pv and reformer feed at tag FY14467.daca.pv. 1

     
Woods Cross Assets   

Crude Unit 2

FCC Unit 2

Poly Unit

  

Delivery volumes of feedstock shall be determined for each BBL unit of measure with the metered data stored at

 

(a) tags 24FC4010, 24FC4025, 24FC4021a, 24FC4022A, 24FC4031, 24FC4028a or 24FC4029a for the Crude Unit 2

 

(b) tags 25FC4106, 25Fl4144 (MSCFD), 25FC4153, 25FC4156, 25FC4131 and 25FC4126 for the FCC Unit 2, and

 

(c) tags 26Fl4040, 26FC4105, 26Fl4106 and 26Fl4009 for the Polymerization Unit. 2

 

1. For the Naphtha Fractionation Unit, the expected conversion ratio of light naphtha and heavy naphtha to isopentane, ISOM feed, intermediate naphtha and reformer feed is 1 BBL to 1 BBL.

Examples of the reduction in Tolling Fees and the Minimum Throughput Commitment for non-Force Majeure Events that may occur under Section 2.2(d)(1) and (2)  of the Agreement are as follows:

Section 2.2(d)(1) – The Minimum Throughput Commitment of 48,750 BPD of light naphtha and heavy naphtha converts to 48,750 BPD of isopentane, ISOM feed, intermediate naphtha and reformer feed (the “ NFC Products ”) based on a Conversion Ratio of 1 to 1. If the NFC Products produced are 46,312.5 BPD (95%) or more, then there would be no adjustment to the Tolling Fee.

Example A: If the Minimum Throughput Commitment of Feedstock is delivered by the Applicable Refinery Owner to HEP Operating at the Applicable Asset for a particular Contract Quarter and the NFC Products produced by HEP Operating for such Contract Quarter is on average 43,875 BPD (90% of the Conversion Ratio for the Minimum Throughput Commitment), the Tolling Fee for such Contract Quarter would be reduced by 5% from $.36 per BBL (100%) to $.342 per BBL (95%).

Example B: If the Minimum Throughput Commitment of Feedstock is delivered by the Applicable Refinery Owner to HEP Operating at the Applicable Asset for a particular Contract Quarter and the NFC Products produced by HEP Operating for such Contract Quarter is on average 41,437.5 BPD (85% of the Conversion Ratio for the Minimum Throughput Commitment), the Tolling Fee for such Contract Quarter would be reduced by 10% from $.36 BBL (100%) to $.324 per BBL (90%).

 

Exhibit F-1


Section 2.2(d)(2) – If the Aggregate Capacity of any Applicable Asset for any Contract Quarter is less than the Minimum Throughput Commitment for such Applicable Asset for such Contract Quarter, then the Minimum Throughput Commitment for such Applicable Asset for such Contract Quarter will be reduced by a percentage equal to (A) 100% minus (B) the percentage represented by the ratio of (i) the Aggregate Capacity for such Applicable Asset for such Contract Quarter to (ii) the Minimum Throughput Commitment for such Applicable Asset for such Contract Quarter.

Example A: If the Aggregate Capacity of any Applicable Asset for a Contract Quarter is on average 46,312.5 BPD (95% of the Minimum Throughput Commitment for such Contract Quarter), then the Minimum Throughput Commitment for such Contract Quarter would be reduced to 46,312.5 BPD of light naphtha and heavy naphtha (95% of the Minimum Throughput Commitment for such Contract Quarter).

Example B: If the Aggregate Capacity of any Applicable Asset for a Contract Quarter is on average 43,875 BPD (90% of the Minimum Throughput Commitment for such Contract Quarter), then the Minimum Throughput Commitment for such Contract Quarter would be reduced to 43,875 BPD of light naphtha and heavy naphtha (90% of the Minimum Throughput Commitment for such Contract Quarter).

 

2. For the Crude Unit 2, the expected conversion ratio of Feedstock to Products is 1 BBL to 1 BBL. For the FCC Unit 2, the expected conversion ratio is 1 BBL to 1.03 BBL. For the Polymerization Unit, the expected conversion ratio is 1 BBL to 0.90 BBL. The examples in footnote 1 above demonstrate the reduction in Tolling Fees and Minimum Throughput Commitments for non-Force Majeure Events that may occur under Section 2.2(d)(1) and (2) of the Agreement for the Woods Cross Assets.

 

Exhibit F-2


Exhibit G

to

Amended and Restated Master Tolling Agreement

 

 

Increase in Tolling Fees as a Result of Changes in Applicable Law

 

Applicable

Assets

   Types of Tolling Fees that may be increased (as  applicable)    Threshold
El Dorado Assets    Naphtha Fractionation Unit Tolling Fee   

No Tolling Fees may be amended until HEP Operating has made capital expenditures of $2,000,000 in the aggregate with respect to the El Dorado Assets in order to comply with new Applicable Laws.

 

Thereafter, HEP Operating may amend the applicable Tolling Fee to recover its full cost of complying with the new Applicable Laws and such recovery shall not be limited to amounts in excess of $2,000,000.

     
Woods Cross Assets   

Crude Unit 2 Tolling Fee

FCC Unit 2 Tolling Fee

Poly Unit Tolling Fee

  

No Tolling Fees may be amended until HEP Operating has made capital expenditures of $5,000,000 in the aggregate with respect to the Woods Cross Assets in order to comply with new Applicable Laws.

 

Thereafter, HEP Operating may amend the applicable Tolling Fee to recover its full cost of complying with the new Applicable Laws and such recovery shall not be limited to amounts in excess of $5,000,000.

 

Exhibit G-1

Exhibit 10.3

Execution Version

 

 

 

SIXTEENTH AMENDED AND RESTATED OMNIBUS AGREEMENT

among

HOLLYFRONTIER CORPORATION,

HOLLY ENERGY PARTNERS, L.P.

and

CERTAIN OF THEIR RESPECTIVE SUBSIDIARIES

October 1, 2016

 

 

 


TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS AND INTERPRETATIONS

     2   

1.1

  D EFINITIONS      2   

1.2

  I NTERPRETATION      2   

ARTICLE II BUSINESS OPPORTUNITIES

     3   

2.1

  R ESTRICTED B USINESSES      3   

2.2

  P ERMITTED E XCEPTIONS      3   

2.3

  R IGHT OF O FFER      3   

2.4

  P ROCEDURE FOR O FFERING A CQUIRED OR C ONSTRUCTED A SSETS TO HEP      4   

2.5

  S COPE OF P ROHIBITION      6   

2.6

  E NFORCEMENT      6   

2.7

  L IMITATION ON A CQUISITIONS OF P ERMITTED A SSETS BY HEP G ROUP M EMBERS      6   

2.8

  T ERMINATION OF A RTICLE II      6   

ARTICLE III INDEMNIFICATION

     6   

3.1

  C ONDITIONS OF I NDEMNIFICATION BY THE HFC E NTITIES      6   

3.2

  I NDEMNIFICATION BY THE HFC E NTITIES      6   

3.3

  C ONDITIONS OF I NDEMNIFICATION BY HEP E NTITIES      8   

3.4

  I NDEMNIFICATION BY HEP E NTITIES      9   

3.5

  M UTUAL G ENERAL I NDEMNITY      9   

3.6

  E XCLUSIONS FROM I NDEMNITY FOR P OST -C LOSING D ATE C LAIMS      9   

3.7

  I NDEMNIFICATION P ROCEDURES      10   

3.8

  L IMITATION ON I NDEMNIFICATION O BLIGATIONS      11   

3.9

  W AIVER OF S UBROGATION      12   

ARTICLE IV GENERAL AND ADMINISTRATIVE EXPENSES

     12   

4.1

  G ENERAL      12   

ARTICLE V RIGHT OF FIRST REFUSAL

     13   

5.1

  HFC R IGHT OF F IRST R EFUSAL : P ROHIBITION ON F URTHER T RANSFER OF T RANSFERRED A SSETS      13   

5.2

  P ROCEDURES      14   

ARTICLE VI HFC PURCHASE OPTION

     17   

6.1

  O PTION TO P URCHASE T ULSA T RANSFERRED A SSETS      17   

ARTICLE VII API INSPECTIONS

     17   

7.1

  API I NSPECTIONS      17   

ARTICLE VIII DISPUTE RESOLUTION

     17   

8.1

  D ISPUTE R ESOLUTION      17   

8.2

  A RBITRATION      18   

8.3

  C ONFLICT      19   

ARTICLE IX FORCE MAJEURE

     19   

9.1

  F ORCE M AJEURE      19   

ARTICLE X MISCELLANEOUS

     19   

10.1

  C HOICE OF L AW      19   

10.2

  N OTICES      19   

10.3

  E NTIRE A GREEMENT      20   

 

i


10.4

  A MENDMENT OR M ODIFICATION      20   

10.5

  A SSIGNMENT      21   

10.6

  C OUNTERPARTS      21   

10.7

  S EVERABILITY      21   

10.8

  F URTHER A SSURANCES      21   

10.9

  R IGHTS OF L IMITED P ARTNERS      21   

10.10

  H EADINGS      21   

10.11

  L IMITATION OF D AMAGES      21   

10.12

  N ATURE OF THE R ELATIONSHIP      22   

EXHIBITS

 

Exhibit A - Omnibus Agreement Amendments

Exhibit B - Definitions

Exhibit C - Interpretation

Exhibit D - Asset Indemnification Summary

Exhibit E - Administrative Fee

 

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SIXTEENTH AMENDED AND RESTATED

OMNIBUS AGREEMENT

THIS SIXTEENTH AMENDED AND RESTATED OMNIBUS AGREEMENT (this “ Agreement ”) is being entered into on October 3, 2016 and effective as of October 1, 2016 (the “ Effective Date ”), by and among the following entities (all Delaware limited liability companies unless otherwise noted):

 

HollyFrontier Corporation, a Delaware corporation (“ HFC ”), and its Affiliates listed below (singularly, “ HFC Entity ”; and with HFC collectively, the “ HFC Entities ”):

El Paso Logistics LLC (“ El Paso Logistics ”)

HollyFrontier El Dorado Refining LLC (“ HollyFrontier El Dorado ”)

HollyFrontier Cheyenne Refining LLC (“ HollyFrontier Cheyenne ”)

HollyFrontier Tulsa Refining LLC (“ HollyFrontier Tulsa ”)

HollyFrontier Woods Cross Refining LLC (“ HollyFrontier Woods Cross ”)

Navajo Pipeline Co., L.P., a Delaware limited partnership (“ Navajo Pipeline ”)

HollyFrontier Navajo Refining LLC (“ HollyFrontier Navajo ”)

HollyFrontier Refining & Marketing LLC (“ HFRM ”)

Frontier Pipeline LLC (“ Frontier Pipeline ”)

AND

Holly Energy Partners, L.P., a Delaware limited partnership (“ HEP ”), and its Affiliates listed below (singularly, “ HEP Entity ”; and with HEP collectively, the “ HEP Entities ”):

Cheyenne Logistics LLC (“ Cheyenne Logistics ”)

El Dorado Logistics LLC (“ El Dorado Logistics ”)

El Dorado Operating LLC (“ El Dorado Operating ”)

El Dorado Osage LLC (“ El Dorado Osage ”)

HEP El Dorado LLC (“ HEP El Dorado ”)

HEP Logistics GP, L.L.C. (the “ OLP GP ”)

HEP Logistics Holdings, L.P., a Delaware limited partnership (the “ General Partner ”)

HEP Mountain Home, L.L.C.

HEP Navajo Southern, L.P., a Delaware limited partnership

HEP Pipeline Assets, Limited Partnership, a Delaware limited partnership

HEP Pipeline GP, L.L.C.

HEP Pipeline, L.L.C. (“ HEP Pipeline ”)

HEP Refining Assets, L.P., a Delaware limited partnership (“ HEP Refining Assets ”)

HEP Refining GP, L.L.C.

 

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HEP Refining, L.L.C. (“ HEP Refining ”)

HEP Tulsa LLC (“ HEP Tulsa ”)

HEP UNEV Holdings LLC (“ HEP UNEV ”)

HEP UNEV Pipeline LLC (“ HEP UNEV Pipeline ”)

HEP Woods Cross, L.L.C.

Holly Energy Partners – Operating, L.P., a Delaware limited partnership (the “ Operating Partnership ”)

Holly Energy Storage – Lovington LLC

Holly Logistic Services, L.L.C. (“ Holly GP ”),

Lovington-Artesia, L.L.C.

Roadrunner Pipeline, L.L.C. (“ Roadrunner ”)

Woods Cross Operating LLC (“ Woods Cross Operating ”)

This Agreement amends and restates in its entirety the Fifteenth Amended and Restated Omnibus Agreement, effective as of March 31, 2016, among certain of the HFC Entities and certain of the HEP Entities which were signatories thereto (the “ Fifteenth Amended and Restated Omnibus Agreement ”).

RECITALS:

WHEREAS, the Parties entered into an Omnibus Agreement on July 13, 2004 (as amended, the “ Original Omnibus Agreement ”) to evidence their agreement with respect to various administrative, indemnity and other obligations, which agreement has been further amended and restated as set forth on Exhibit A , resulting in the Fifteenth Amended and Restated Omnibus Agreement.

WHEREAS, the Parties desire to amend and restate the Fifteenth Amended and Restated Omnibus Agreement as provided herein in order to, among other things, consolidate terms from various other agreements between the parties and to clarify terms as more particularly set forth herein.

AGREEMENT:

NOW, THEREFORE, in consideration of the premises and the covenants, conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATIONS

1.1 Definitions . Capitalized terms used throughout this Agreement and not otherwise defined herein shall have the meanings set forth on Exhibit B .

1.2 Interpretation . Matters relating to the interpretation of this Agreement are set forth on Exhibit C .

 

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ARTICLE II

BUSINESS OPPORTUNITIES

2.1 Restricted Businesses . For so long as a HFC Group Member owns a controlling interest in the general partner of HEP, and except as permitted by Section 2.2 , Holly GP and each HFC Group Member shall be prohibited from engaging in or acquiring a controlling interest in or operating any business having assets or operations engaged in the Restricted Businesses.

2.2 Permitted Exceptions . Notwithstanding any provision of Section 2.1 to the contrary, Holly GP and the HFC Group Members may engage in the following activities under the following circumstances:

 

  (a) the ownership and/or operation of any of the Retained Assets (including replacements of the Retained Assets);

 

  (b) any Restricted Businesses conducted by a HFC Group Member and Holly GP with the approval of the General Partner;

 

  (c) the ownership and/or operation of Restricted Businesses by an HFC Entity or Holly GP in its capacity as general partner of HEP or its general partner;

 

  (d) the ownership and/or operation of any asset or group of related assets used in the Restricted Business that are acquired or constructed by a HFC Group Member or Holly GP after the Closing Date (the “ Permitted Assets ”), the fair market value of which (as determined in good faith by the Board of Directors of HFC) is as follows:

 

  (i) less than $5 million at the time of such acquisition or good faith estimate of construction costs, as the case may be; or

 

  (ii) equal to or greater than $5 million at the time of the acquisition or good faith estimate of construction costs; provided, HEP has been offered the opportunity to purchase the Permitted Assets in accordance with Section 2.3 and HEP has elected not to purchase the Permitted Assets;

 

  (e) the ownership of the UNEV Profits Interest;

 

  (f) the ownership of limited or any general partnership interests in HEP; and

 

  (g) the ownership and/or operation of the El Paso Hawkins Terminal.

2.3 Right of Offer .

 

  (a) If Holly GP or a HFC Group Member becomes aware of an opportunity to acquire Permitted Assets with a fair market value (as determined in good faith by the Board of Directors of HFC) equal to or greater than $5 million, then, subject to Section 2.3(c) , as soon as practicable, Holly GP or such HFC Group Member shall notify HEP of such opportunity and deliver to HEP, or provide HEP access to all information prepared by or on behalf of, or material information submitted or delivered to, Holly GP or such HFC Group Member relating to such potential transaction. As soon as practicable, but in any event within 30 days after receipt of such notification and information, HEP shall notify Holly GP or the HFC Group Member that it has either elected:

 

  (i) not to cause a HEP Group Member to pursue the opportunity to purchase the Permitted Assets, or

 

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  (ii) to cause a HEP Group Member to pursue the opportunity to purchase the Permitted Assets, in which case the applicable Parties shall follow the procedures in Section 2.4 .

 

  (b) If, at any time, HEP abandons such opportunity (as evidenced in writing by HEP to the HFC Group Member), Holly GP or the HFC Group Member may pursue such opportunity. Any Permitted Assets which are permitted to be acquired by Holly GP or a HFC Group Member must be so acquired:

 

  (i) within 12 months of the later to occur of (A) the date that Holly GP or the HFC Group Member becomes able to pursue such acquisition in accordance with the provisions of this Section 2.3 , and (B) the date upon which all required governmental approvals to consummate such acquisition have been obtained, and

 

  (ii) on terms not materially more favorable to Holly GP or the HFC Group Member than were offered to HEP.

If either of these conditions are not satisfied, the opportunity must be reoffered to HEP in accordance with Section 2.3(a) .

 

  (c) Section 2.3(a) shall not apply if Holly GP or a HFC Group Member:

 

  (i) becomes aware of an opportunity to make an acquisition that includes Permitted Assets and assets that are not Permitted Assets, and the Permitted Assets have a fair market value (as determined in good faith by the Board of Directors of HFC) equal to or greater than $5 million but comprise less than half of the fair market value (as determined in good faith by the Board of Directors of HFC) of the total assets being considered for acquisition, or

 

  (ii) desires to construct Permitted Assets with an estimated construction cost (as determined in good faith by the Board of Directors of HFC) equal to or greater than $5 million;

provided, however, that in each case Holly GP or a HFC Group Member, as the case may be, shall comply with Section 2.4 .

2.4 Procedure for Offering Acquired or Constructed Assets to HEP .

 

  (a)

Within 180 days after the consummation of the acquisition or the completion of construction by Holly GP or a HFC Group Member of the Permitted Assets, as the case may be, Holly GP or the HFC Group Member shall notify HEP in writing of such acquisition or construction and offer HEP the opportunity to purchase such Permitted Assets (the “ Offer ”). The Offer shall set forth the terms

 

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  relating to the purchase of the Permitted Assets, and, if Holly GP or any HFC Group Member desires to utilize the Permitted Assets, the Offer will also include (i) the commercially reasonable terms on which the HEP Group will provide services to Holly GP or the HFC Group Member to enable Holly GP or the HFC Group Member to utilize the Permitted Assets and (ii) the terms of any service agreements, leases or access agreements to be provided to HEP by Holly GP or the HFC Group relating to such assets. As soon as practicable, but in any event within 30 days after receipt of such written notification, HEP shall notify Holly GP or the HFC Group Member in writing that HEP has elected (i) not to cause a HEP Group Member to purchase the Permitted Assets, in which event Holly GP or the HFC Group Member shall be forever free to continue to own or operate such Permitted Assets, or (ii) to cause a HEP Group Member to purchase the Permitted Assets, in which event Section 2.4(b) and Section 2.4(c) shall apply.

 

  (b) If within 60 days after receipt by HEP of the Offer, Holly GP or the HFC Group Member and HEP are able to agree on the fair market value of the subject Permitted Assets and the other terms of the Offer including, the terms, if any, on which the HEP Group will provide services to Holly GP or the HFC Group Member to enable it to utilize the Permitted Assets, a HEP Group Member shall purchase the Permitted Assets for the agreed upon fair market value as soon as commercially practicable after such agreement has been reached and, if required by the Offer or otherwise agreed, enter into an agreement with Holly GP or the HFC Group Member to provide services in a manner consistent with the Offer.

 

  (c) If Holly GP or the HFC Group Member and HEP are unable to agree within 60 days after receipt by HEP of the Offer on the fair market value of the subject Permitted Assets and/or the other terms of the Offer, Holly GP or the HFC Entity, on the one hand, and HEP, on the other hand, will engage a mutually agreed upon investment banking firm to determine the disputed terms. Such investment banking firm will determine the disputed terms within 30 days of its engagement and furnish Holly GP or the HFC Group Member, on the one hand, and HEP, on the other hand, its determination. The fees of the investment banking firm will be split equally between Holly GP or the HFC Group Member, on the one hand, and HEP, on the other hand. Once the investment banking firm has submitted its determination of the disputed terms, HEP will have the right, but not the obligation, to cause a HEP Group Member to purchase the Permitted Assets pursuant to the Offer as modified by the determination of the investment banking firm. HEP will provide written notice of its decision to Holly GP or the HFC Group Member within 30 days after the investment banking firm has submitted its determination. Failure to provide such notice within such 30-day period shall be deemed to constitute a decision not to purchase the Permitted Assets. If HEP elects to cause a HEP Group Member to purchase the Permitted Assets, then the HEP Group Member shall purchase the Permitted Assets pursuant to the Offer as modified by the determination of the investment banking firm as soon as commercially practicable after such determination and, if applicable, enter into an agreement with Holly GP or the HFC Group Member to provide services in a manner consistent with the Offer, as modified by the determination of the investment banking firm, if applicable.

 

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2.5 Scope of Prohibition . Except as provided in this Article II and the Partnership Agreement, Holly GP and each HFC Group Member shall be free to engage in any business activity, including those that may be in direct competition with any HEP Group Member.

2.6 Enforcement . Holly GP and the HFC Group Members agree and acknowledge that the HEP Group does not have an adequate remedy at law for the breach by Holly GP and the HFC Group of the covenants and agreements set forth in this Article II , and that any breach by Holly GP and the HFC Group of the covenants and agreements set forth in this Article II would result in irreparable injury to the HEP Group. Holly GP and the HFC Group Members further agree and acknowledge that any HEP Group Member may, in addition to the other remedies that may be available to the HEP Group, file a suit in equity to enjoin Holly GP and the HFC Group from such breach and hereby consent to the issuance of injunctive relief under this Agreement.

2.7 Limitation on Acquisitions of Permitted Assets by HEP Group Members . Notwithstanding anything in this Agreement to the contrary, a HEP Group Member who is not a party to this Agreement is prohibited from acquiring Permitted Assets. In the event HEP desires a HEP Group Member who is not a party to this Agreement to acquire any Permitted Assets, then the General Partner shall first cause such HEP Group Member to become a party to this Agreement.

2.8 Termination of Article II . The provisions of this Article II may be terminated by HFC upon a Change of Control of HFC.

ARTICLE III

INDEMNIFICATION

3.1 Conditions of Indemnification by the HFC Entities . All indemnities set forth in Section 3.2 are subject to the following conditions:

 

  (a) Except for the indemnity in Sections 3.2(a)(ii) , (vii)  and (viii) , indemnities apply only to the Transferred Assets and only until the applicable expiration date, if any, related to each such Transferred Asset shown on Exhibit D .

 

  (b) The aggregate liability of the HFC Entities for all Covered Environmental Losses under Section 3.2(a) shall not exceed the amounts shown in column (b) on Exhibit D . The liability limits listed in column (b) represent separate individual limits for each location.

 

  (c) Indemnities in Section 3.2(a)(i) apply only to the extent that such events or conditions occurred before the applicable Closing Date.

3.2 Indemnification by the HFC Entities .

 

  (a) Subject to Section 3.1 , the HFC Entities shall indemnify, defend and hold harmless the HEP Entities from and against any Liability or Claim incurred by the HEP Entities or any Third Party to the extent arising out of:

 

  (i) the Covered Environmental Losses relating to the Transferred Assets to the extent caused by the acts or omissions of an HFC Entity;

 

  (ii) the ownership or operation by HFC and its Affiliates of any asset not constituting part of the Transferred Assets, except to the extent arising out of the negligent acts or omissions or willful misconduct of HEP or any of its Affiliates;

 

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  (iii) the failure of the applicable HEP Entity to be the owner of valid and indefeasible easement rights or fee ownership for interests in and to the lands on which any pipeline or related pump station, tank farm or equipment conveyed or contributed or otherwise Transferred (including by way of a Transfer of the ownership interest of a Person or by operation of law) to the applicable HEP Entity on the applicable Closing Date;

 

  (iv) the failure of the applicable HEP Entity to have the consents, licenses and permits necessary to allow any such Transferred Assets referred to in Section 3.2(a)(iii) to cross the roads, waterways, railroads and other areas upon which any such Transferred Assets are located as of the Closing Date;

 

  (v) the cost of curing any condition set forth in clauses (iii) or (iv) above to the extent such conditions do not allow any Transferred Asset to be operated in accordance with Prudent Industry Practice;

 

  (vi) the following:

 

  (A) events and conditions associated with the operation of the Transferred Assets before the Closing Date (other than Covered Environmental Losses which are provided for under Section 3.2(a)(i) and events and conditions covered by Section 3.4 );

 

  (B) all legal actions pending against the HFC Entities on July 13, 2004;

 

  (C) the completion of remediation projects at the respective HEP Entity’s El Paso Hawkins Terminal, Albuquerque terminal and Mountain Home terminal that were ongoing or scheduled as of July 13, 2004;

 

  (D) events and conditions associated with the Retained Assets and whether occurring before or after the Closing Date;

 

  (E) all federal, state and local tax liabilities attributable to the operation or ownership of the Transferred Assets prior to the applicable Closing Date, including any such tax liabilities of the HFC Entities that may result from the consummation of the formation transactions for the HEP Entities and the General Partner; and

 

  (F) any breach by HollyFrontier Tulsa of the representations and warranties set forth in Section 3.9 of the Master Lease and Access Agreement.

 

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  (vii) the operation by HEP and its Affiliates of any assets owned by HFC or any of its Affiliates, except to the extent arising out of the gross negligence or willful misconduct of HEP or any of its Affiliates;

 

  (viii) any failure to perform any covenant or agreement made or undertaken by HFC or its Affiliates in the (A) Master Lease and Access Agreement, or the exercise by HFC or its Affiliates of any rights and obligations under Section 2.2 thereof; or (B) Services and Secondment Agreement; except in either case to the extent arising out of the willful misconduct or negligence (standard negligence or gross negligence) of HEP or any of its Affiliates; and

 

  (ix) any failure of HEP or any of its Affiliates to perform its obligations pursuant to the Storage and Handling Agreement to the extent arising after February 22, 2016, except to the extent arising out of gross negligence and willful misconduct of HEP or any of its Affiliates.

 

  (b) The indemnities provided for in Section 3.2(a)(i) through (v)  shall only apply if the HFC Entities are notified in writing of any of the foregoing prior to the applicable expiration date listed in column (b) on Exhibit D .

 

  (c) The indemnities provided for in Section 3.2(a)(vi) shall only apply if to the extent that the HFC Entities are notified in writing of any of the following events and conditions within five years after the applicable Closing Date.

 

  (d) Notwithstanding anything in this Agreement to the contrary, because HEP has been involved since the inception with the following Transferred Assets, as used in this Section 3.2 , the definition of “Transferred Assets” shall not include the 16” Lovington/Artesia Intermediate Pipeline, the Beeson Pipeline, the Roadrunner Pipeline, the Tulsa Interconnecting Pipelines, and the UNEV Pipeline.

 

  (e) To the extent that a good faith Claim by the HEP Entities for indemnification under Section 3.2(a) arises from events or conditions at the Transferred Tanks or the soil immediately underneath the Transferred Tanks or the Transferred Tanks’ secondary containment, and the HFC Entities refuse to provide such indemnification, then the burden of proof shall be on the HFC Entities to demonstrate that the events or conditions giving rise to the Claim arose after the Closing Date.

 

  (f) As used in this Section 3.2 , “Affiliates” of the Indemnifying Party shall not include the HEP Group Members when a HFC Entity is the Indemnifying Party and shall not include the HFC Group Members when the Indemnifying Party is a HEP Entity.

3.3 Conditions of Indemnification by the HEP Entities . The indemnities set forth in Section 3.4 apply only to the extent that such events or conditions occurred on or after the applicable Closing Date, if any.

 

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3.4 Indemnification by the HEP Entities .

 

  (a) Subject to Section 3.3 , the HEP Entities shall indemnify, defend and hold harmless the HFC Entities from and against any Liability or Claim suffered or incurred by the HFC Entities or any Third Party to the extent arising from:

 

  (i) the Covered Environmental Losses associated with operation of (A) the Other Assets, and (B) the Transferred Assets by a Person (other than a HFC Entity or ownership and operation of the Transferred Assets by a Person other than a HFC Entity);

 

  (ii) operation by HEP and HEP’s Affiliates of any asset owned by HFC or any of HFC’s Affiliates but only to the extent caused by the gross negligence or willful misconduct of any of the HEP Entities; and

 

  (iii) any failure to perform any covenant or agreement made or undertaken by any HEP or its Affiliates in the (A) Master Lease and Access Agreement, or the exercise by HEP or its Affiliates of any rights and obligations under Section 2.2 thereof; or (B) Services and Secondment Agreement; except in either case to the extent arising out of the willful misconduct or negligence (standard negligence or gross negligence) of HFC or any of its Affiliates.

 

  (b) Nothing set forth in Section 3.4(a) shall make the HEP Entities responsible for any post-Closing Date negligent actions or omissions or willful misconduct by the HFC Entities.

3.5 Mutual General Indemnity . Following the applicable Closing Dates, the HFC Entities and the HEP Entities, respectively, agree to indemnify, protect, defend and hold harmless each other from and against any and all Liabilities and Claims based upon, in connection with, relating to or arising out of their respective actions or inactions in connection with the operation of the Indemnifying Party’s respective assets or any failure to comply with any Applicable Laws; in any case of or by any Indemnifying Party or its subcontractors, suppliers, materialmen, employees, agents, successors and assigns, or other persons directly or indirectly employed by them, including the following:

 

  (a) any injury to or death of any Person or the damage to or theft, destruction, loss or loss of use of, any property; or

 

  (b) the failure to perform any covenant or agreement made or undertaken by the applicable Party in agreements with any of the other Parties.

3.6 Exclusions from Indemnity for Post-Closing Date Claims . NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, FOR ANY LIABILITIES OR CLAIMS ARISING OUT OF EVENTS OCCURRING AFTER AN APPLICABLE CLOSING DATE:

 

  (a) EXCEPT AS EXPRESSLY PROVIDED IN SECTION 3.2(a)(vii) , THE INDEMNIFICATION OBLIGATIONS HEREIN SHALL NOT EXTEND TO THE PROPORTIONATE AMOUNT OF ANY SUCH LIABILITY OR CLAIM CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF AN INDEMNITEE OR ITS AGENTS OR EMPLOYEES.

 

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  (b) No statute, rule or regulation that precludes an injured party from bringing an action against a fellow employee or employer shall preclude a Party from seeking and obtaining a judicial determination of the fault or negligence of such Persons.

 

  (c) Each Party shall be responsible for any insurance deductibles or self-insured retention arising out of any Liability or Claim to the extent such Liability or Claim arises out of the negligence or willful misconduct of such Party, except to the extent the subrogation waiver provided for in Section 3.9 applies to such Liability or Claim.

3.7 Indemnification Procedures .

 

  (a) The Indemnified Party agrees that promptly after it becomes aware of facts giving rise to a Claim for indemnification under this Article III , it will provide notice thereof in writing to the Indemnifying Party, specifying the nature of and specific basis for such Claim.

 

  (b) 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 Indemnified Party that are covered by the indemnification under this Article III , including, 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.

 

  (c) 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 Article III , including, 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 making available to the Indemnifying Party any employees of the Indemnified Party.

 

  (d) In no event shall the obligation of the Indemnified Party to cooperate with the Indemnifying Party as set forth in Section 3.7(c) 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 Article III ; 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.

 

  (e) In connection with the indemnities in this Article III , Indemnifying Party:

 

  (i) agrees to use reasonable efforts to minimize the impact thereof on the operations of the Indemnified Party;

 

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  (ii) agrees to enter into a joint defense agreement with Indemnifying Party in order to allow communication by counsel if Indemnified Party elects to involve separate counsel; and

 

  (iii) agrees to maintain the confidentiality of all files, records, and other information furnished by the Indemnified Party pursuant to this Section 3.7 .

 

  (f) The amounts for which an Indemnified Party is entitled to indemnification under this Article III shall be reduced by the net amounts recovered by the Indemnified Party pursuant to contractual indemnities from any Third Party (other than pursuant to insurance policies that are not required to include a waiver of subrogation pursuant to Section 3.9 ) after deducting the reasonable unreimbursed out-of-pocket fees and expenses incurred by the Indemnified Party in recovering such amounts (the “ Net Recovery ”). If the Indemnified Party receives a Net Recovery subsequent to an indemnification payment by the Indemnifying Party under this Article III , then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by such Indemnifying Party in connection with providing such indemnification payment up to Net Recovery. An Indemnified Party shall be obligated to pursue all contractual indemnities (including insurance claims) that such Indemnified Party has with any Third Party, 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, making its relevant books, records, officers, information and testimony reasonably available to the Indemnifying Party) in the Indemnifying Party’s pursuit of such claim.

 

  (g) For avoidance of doubt, no Claim may be asserted pursuant to Section 3.2 or Section 3.4 following the applicable expiration of the indemnity related to such Claim; provided that any Claim asserted in writing prior to the expiration date of such indemnity that is the basis for such Claim shall survive until such Claim is finally resolved and satisfied. The date on which notification of a Claim for indemnification is received by the Indemnifying Party shall determine whether such Claim is timely made.

3.8 Limitation on Indemnification Obligations .

 

  (a) Notwithstanding anything in this Agreement to the contrary, when referring to the indemnification obligations of the HFC Entities in Article III , the definition of HFC Entities shall be deemed to mean solely (i) the HFC Entity or HFC Entities that own or operate, or owned or operated immediately prior to the transfer to the HEP Entities, the Retained Asset, Transferred Asset or other property in question with respect to which indemnification is sought by reason of such HFC Entity’s or HFC Entities’ ownership or operation of the Retained Asset, Transferred Asset or other property in question or that is responsible for causing such loss, damage, injury, judgment, claim, cost, expense or other liability suffered or incurred by the HEP Entities for which it is entitled to indemnification under Article III and (ii) HFC.

 

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  (b) Notwithstanding anything in this Agreement to the contrary, when referring to the indemnification obligations of the HEP Entities in Article III , the definition of HEP Entities shall be deemed to mean solely (i) the HEP Entity or HEP Entities that own or operate, or previously owned or operated, the Transferred Asset or other property in question or that is responsible for causing such loss, damage, injury, judgment, claim, cost, expense or other liability suffered or incurred by the HFC Entities for which they are entitled to indemnification under Article III , (ii) HEP and (iii) Operating Partnership.

 

  (c) For the avoidance of doubt, any indemnification obligations of the HFC Entities in Article III with respect to any indemnifiable losses incurred by or attributable to the UNEV Pipeline shall be (i) limited to an amount that is the product of (x) the amount of such losses, multiplied by (y) HEP UNEV’s direct or indirect percentage ownership interest in the UNEV Pipeline at the time such losses were incurred and (ii) payable to, for the benefit of and recoverable solely by HEP UNEV or any HEP Entity designated by HEP UNEV (and not by UNEV Pipeline, LLC).

3.9 Subrogation; Waiver of Subrogation . To the extent that any of the HFC Entities or HEP Entities in fact receive full indemnification payments pursuant to Section 3.2(a)(viii) or Section 3.4(a)(iii) hereof, as the case may be, the HFC Entity or HEP Entity paying such Claim shall be subrogated to the receiving party’s rights with respect to the transaction or event requiring or giving rise to such indemnity. Notwithstanding the foregoing, each of the HFC Entities and the HEP Entities, hereby waives and releases, and shall cause their respective insurers, to waive and release, all rights against each other and any of their respective contractors, subsidiaries, consultants, agents and employees for loss or damages to any of the Transferred Assets to the extent of fire and other hazards covered by property insurance applicable to the property to which such loss or damage occurs, except such rights as they have to proceeds of such insurance. For the purposes of this Section 3.9 , all deductibles shall be considered insured losses. Without limiting the foregoing, all of the Parties’ policies of property insurance for the Transferred Assets shall be endorsed to provide a complete waiver for the benefit of the other Parties and their Affiliates of (i) any right of recovery which the insurer may have or acquire against the other Parties or any of its Affiliates, or its or their employees, officers or directors for payments made or to be made under such policies and (ii) any lien or right of subrogation which the insurer may have or acquire for payments made or to be made to any person or entity who asserts a Claim against such other Parties or any of its Affiliates, or its or their employees, officers or directors. The releases and waivers of subrogation set forth above in this paragraph shall apply notwithstanding any obligation of a Party to indemnify the other Party for the Claim(s) at issue.

ARTICLE IV

GENERAL AND ADMINISTRATIVE EXPENSES

4.1 General .

 

  (a) The Operating Partnership will pay HFC an administrative fee (the “ Administrative Fee ”) in the amount set forth on Exhibit E , payable in equal quarterly installments, for the provision by HFC and its Affiliates for the HEP Group’s benefit of all the general and administrative services that HFC and its Affiliates provide, including, the general and administrative services listed on Exhibit E .

 

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  (b) HEP and HFC shall also periodically assess and increase the Administrative Fee in connection with expansions of the operations of the HEP Group through the acquisition or construction of new assets or businesses.

 

  (c) At the end of each year, HEP will have the right to submit to HFC a proposal to reduce the amount of the Administrative Fee for that year if HEP believes in good faith that the general and administrative services performed by HFC and its Affiliates for the benefit of the HEP Group for the year in question do not justify payment of the full Administrative Fee for that year. If HEP submits such a proposal to HFC, HFC agrees that it will negotiate in good faith with HEP to determine if the Administrative Fee for that year should be reduced and, if so, the amount of such reduction.

 

  (d) The Administrative Fee shall not include and the HEP Group shall reimburse HFC and its Affiliates for:

 

  (i) salaries of employees of HFC or its Affiliates, to the extent, but only to the extent, such employees perform services for the HEP Group;

 

  (ii) the cost of employee benefits relating to employees of HFC or its Affiliates, such as 401(k), pension, and health insurance benefits, to the extent, but only to the extent, such employees perform services for the HEP Group and have not been paid by HEP pursuant to the Master Site Services Agreement and the Services and Secondment Agreement;

 

  (iii) any amounts payable under the Master Site Services Agreement and the Services and Secondment Agreement;

 

  (iv) all sales, use, excise, value added or similar taxes, if any, that may be applicable from time to time in respect of the services provided by the HFC and its Affiliates to HEP pursuant to Section 4.1(a) ; and

 

  (v) all premiums for insurance policies carried for and on behalf of HEP.

 

  (e) Either HFC, on the one hand, or HEP, on the other hand, may terminate this Article IV , by providing the other with written notice of its election to do so at least six months prior to the proposed date of termination.

ARTICLE V

RIGHT OF FIRST REFUSAL

5.1 HFC Right of First Refusal: Prohibition on Transfer .

 

  (a) The HEP Entities hereby grant to HFC a right of first refusal on any proposed Transfer (other than a grant of a security interest to a bona fide third-party lender or a Transfer to another HEP Group Member) of any of the Assets.

 

  (b) The HEP Entities are prohibited from Transferring any of the Assets to a HEP Group Member that is not a party to this Agreement. In the event the HEP Entities desire to Transfer any of the Assets to a HEP Group Member that is not a Party to this Agreement, they shall first cause the proposed transferee HEP Group Member to become a Party to this Agreement.

 

13


  (c) The Parties acknowledge that all potential Transfers of Sale Assets pursuant to this Article V are subject to obtaining any and all required written consents of governmental authorities and other third parties and to the terms of all existing agreements in respect of the Sale Assets.

 

  (d) Notwithstanding anything in this Agreement to the contrary, as used in Article V the definition of “Assets” shall not include the Tulsa Transferred Assets or the UNEV Pipeline, but shall expressly include the equity interests of UNEV Pipeline, LLC, HEP UNEV Pipeline, HEP UNEV, El Dorado Osage and Osage then owned directly or indirectly by the HEP Entities.

5.2 Procedures .

 

  (a) If a HEP Entity proposes to Transfer any of the Assets to any Person pursuant to a bona fide third-party offer (an “ Acquisition Proposal ”), then HEP shall promptly give written notice (a “ Disposition Notice ”) thereof to HFC. The Disposition Notice shall set forth the following information in respect of the proposed Transfer:

 

  (i) the name and address of the prospective acquiror (the “ Proposed Transferee ”);

 

  (ii) the Assets subject to the Acquisition Proposal (the “ Sale Assets ”);

 

  (iii) the purchase price offered by such Proposed Transferee (the “ Offer Price ”);

 

  (iv) reasonable detail concerning any non-cash portion of the proposed consideration, if any, to allow HFC to reasonably determine the fair market value of such non-cash consideration;

 

  (v) the HEP Entities’ estimate of the fair market value of any non-cash consideration; and

 

  (vi) all other material terms and conditions of the Acquisition Proposal that are then known to the HEP Entities.

 

  (b) To the extent the Acquisition Proposal consists of consideration other than cash (or in addition to cash) the Offer Price shall be deemed equal to the amount of any such cash plus the fair market value of such non-cash consideration. In the event HFC and the HEP Entities agree as to the fair market value of any non-cash consideration, HFC will provide written notice of its decision regarding the exercise of its right of first refusal to purchase the Sale Assets within 30 days of its receipt of the Disposition Notice (the “ First ROFR Acceptance Deadline ”). Failure to provide such notice within such 30-day period shall be deemed to constitute a decision not to purchase the Sale Assets.

 

14


  (c) In the event (i) HFC’s determination of the fair market value of any non-cash consideration described in the Disposition Notice (to be determined by HFC within 30 days of receipt of such Disposition Notice) is less than the fair market value of such consideration as determined by the HEP Entities in the Disposition Notice and (ii) HFC and the HEP Entities are unable to mutually agree upon the fair market value of such non-cash consideration within 30 days after HFC notifies the HEP Entities of its determination thereof, the HEP Entities and HFC shall engage a mutually-agreed-upon investment banking firm to determine the fair market value of the non-cash consideration. Such investment banking firm shall be instructed to return its decision within 30 days after all material information is submitted thereto, which decision shall be final. The fees of the investment banking firm will be split equally between HFC and the HEP Entities. HFC will provide written notice of its decision regarding the exercise of its right of first refusal to purchase the Sale Assets to the HEP Entities within 30 days after the investment banking firm has submitted its determination (the “ Second ROFR Acceptance Deadline ”). Failure to provide such notice within such 30-day period shall be deemed to constitute a decision by HFC not to purchase the Sale Assets.

 

  (d) If HFC fails to exercise a right during any applicable period set forth in this Section 5.2 , HFC shall be deemed to have waived its rights with respect to such proposed disposition of the Sale Assets, but not with respect to any future offer of such Sale Assets.

 

  (e) If HFC chooses to exercise its right of first refusal to purchase the Sale Assets under Sections 5.1(a) and 5.2(c) , HFC and the HEP Entities shall enter into a purchase and sale agreement for the Sale Assets which shall include the following terms:

 

  (i) HFC will agree to deliver cash for the Offer Price (or any other consideration agreed to by HFC and the HEP Entities (each in their sole discretion));

 

  (ii) the HEP Entities will represent that they have good, indefeasible and unencumbered title to the Sale Assets, subject to all recorded and unrecorded matters and all physical conditions and other matters in existence on the closing date for the Sale Assets, plus any other reasonable and customary matters and such matters as HFC may approve, which approval will not be unreasonably withheld. If HFC desires to obtain any title insurance with respect to the Sale Assets, the full cost and expense of obtaining the same (including the cost of title examination, document duplication and policy premium) shall be borne by HFC;

 

  (iii) the HEP Entities will grant to HFC the right, exercisable at HFC’s risk and expense, to conduct such surveys, tests and inspections of the Sale Assets as HFC may deem desirable, so long as such surveys, tests or inspections do not damage the Sale Assets or interfere with the activities of the HEP Entities thereon and so long as HFC has furnished the HEP Entities with evidence that adequate liability insurance is in full force and effect;

 

15


  (iv) HFC will have the right to terminate its obligation to purchase the Sale Assets under this Article V if the results of any searches, surveys, tests or inspections conducted pursuant to Section 5.2(e)(ii) or Section 5.2(e)(iii) above are, in the reasonable opinion of HFC, unsatisfactory;

 

  (v) the closing date for the purchase of the Sale Assets shall, unless otherwise agreed to by HFC and the HEP Entities, occur no later than 90 days following receipt by the HEP Entities of written notice by HFC of its intention to exercise its option to purchase the Sale Assets pursuant to Section 5.2(b) or (c) ;

 

  (vi) the HEP Entities shall execute, have acknowledged and deliver to HFC a special warranty deed, assignment of easement, or comparable document, as appropriate, in the applicable jurisdiction, on the closing date for the purchase of the Sale Assets constituting real property interests conveying the Sale Assets unto HFC free and clear of all encumbrances created by the HEP Entities other than those set forth in Section 5.2(e)(ii) above;

 

  (vii) the sale of any Sale Assets shall be made on an “as is,” “where is” and “with all faults” basis, and the instruments conveying such Sale Assets shall contain appropriate disclaimers; and

 

  (viii) neither the HEP Entities nor HFC shall have any obligation to sell or buy the Sale Assets if any of the material consents referred to in Section 5.1(c) have not been obtained or such sale or purchase is prohibited by Applicable Law.

 

  (f) HFC and the HEP Entities shall cooperate in good faith in obtaining all necessary governmental and other Third Party approvals, waivers and consents required for the closing. Any such closing shall be delayed, to the extent required, until the third Business Day following the expiration of any required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; provided, however, that such delay shall not exceed 120 days and, if governmental approvals and waiting periods shall not have been obtained or expired, as the case may be, by such 120th day, then HFC shall be deemed to have waived its right of first refusal with respect to the Sale Assets described in the Disposition Notice and thereafter neither HFC nor HEP shall have any further obligation under this Article V with respect to such Sale Assets unless such Sale Assets again become subject to this Article V pursuant to Section 5.2(g) .

 

  (g) If the Transfer to the Proposed Transferee is not consummated in accordance with the terms of the Acquisition Proposal within the later of (i) 180 days after the later of the applicable ROFR Acceptance Deadline, and (ii) 10 days after the satisfaction of all governmental approval or filing requirements, if any, the Acquisition Proposal shall be deemed to lapse, and the HEP Entities may not Transfer any of the Sale Assets described in the Disposition Notice without complying again with the provisions of this Article V if and to the extent then applicable.

 

16


ARTICLE VI

HFC PURCHASE OPTION

6.1 Option to Purchase Tulsa Transferred Assets . The Parties acknowledge the purchase options and right of first refusal granted to an Affiliate of HFC with respect to the Tulsa Transferred Assets in the Purchase Option Agreement.

ARTICLE VII

API INSPECTIONS

7.1 API Inspections . With respect only to the 2008 Tanks, the applicable HFC Entity that sold the particular tank(s) to the applicable HEP Entity shall, during the period that commences on the applicable Closing Date and ends five (5) years thereafter (the “ Initial Tank Inspection Period ”) reimburse the applicable HEP Entity for the actual costs associated with the first regularly scheduled API 653 inspection (the “ Initial Tank Inspections ”) and the costs associated with the replacement of the tank mixers on each of the Transferred Tanks after the Closing Date and any repairs required to be made to the 2008 Tanks as a result of any discovery made during the Initial Tank Inspections; provided, however, that

 

  (a) such HFC Entity shall not reimburse such HEP Entity with respect to the relocated crude oil Tank 437 in the Artesia refinery complex or the new crude oil tank to replace crude oil Tank 439 in the Artesia refinery complex more particularly described in the Purchase and Sale Agreement referenced in the definition of 2008 Crude Pipelines, Tanks and Related Assets, and

 

  (b) upon expiration of the Initial Tank Inspection Period, all of the obligations of the applicable HFC Entity pursuant to this Article VII shall terminate, except that the Initial Tank Inspection Period shall be extended if, and only to the extent that

 

  (i) inaccessibility of the 2008 Tanks during the Initial Tank Inspection Period caused the delay of an Initial Tank Inspection originally scheduled to be performed during the Initial Tank Inspection Period, and

 

  (ii) the applicable HFC Entity received notice from the applicable HEP Entity regarding such delay at the time it occurred.

ARTICLE VIII

DISPUTE RESOLUTION

8.1 Dispute Resolution .

 

  (a) Any Arbitrable Dispute arising out of or in connection with this Agreement, including any question regarding the existence, validity or termination of this Agreement, shall be exclusively resolved in accordance with this Article VIII .

 

  (b) In the event of a Arbitrable Dispute between an HFC Entity and an HEP Entity, the HFC Entity and the HEP Entity shall, within ten (10) days of a written request by either of them to the other, meet in good faith to resolve such Arbitrable Dispute in a meeting that includes individuals with authority to resolve the Arbitrable Dispute at such meeting.

 

17


  (c) If the HFC Entity and the HEP Entity are unable to resolve the Arbitrable Dispute within ten (10) days after submission of such Arbitrable Dispute as provided in Section 8.1(b), either the HFC Entity or the HEP Entity may submit the matter to arbitration in accordance with the terms of Section 8.2 below.

 

  (d) Pending resolution of any Arbitrable Dispute between the HFC Entity and the HEP Entity, the HFC Entity and the HEP Entity shall continue to perform in good faith their respective obligations under this Agreement based upon the last agreed performance demonstrated prior to the Arbitrable Dispute.

 

  (e) Resolution of any Arbitrable Dispute between the HFC Entity and the HEP Entity involving payment of money by either the HFC Entity and the HEP Entity to the other shall include payment of interest at the Prime Rate from the original due date of such amount.

 

  (f) Each of the HFC Entity and the HEP Entity shall, in addition to all rights provided herein or provided by Law, be entitled to the remedies of specific performance and injunction to enforce its rights hereunder.

8.2 Arbitration . 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, as amended from time to time).

 

  (a) Arbitration must be initiated within the time limits set forth in this Agreement, or if no such limits apply, then within the time period allowed by the applicable statute of limitations. Arbitration may be initiated by either party (“ Claimant ”) by delivering written notice to the other (“ 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.

 

  (b) The hearing will be conducted in Dallas, Texas and commence within thirty (30) days after the selection of the third arbitrator. The parties 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 Claimant and Respondent.

 

  (c) 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 Claimant and Respondent will each pay one-half of the compensation and expenses of the third arbitrator.

 

18


  (d) All arbitrators must (i) be neutral parties who have never been officers, directors or employees of any of the Parties or any of their Affiliates and who have not provided consulting services (directly or indirectly) for at least three (3) years prior to their appointment and (ii) have at least seven (7) years’ experience in the petroleum transportation industry.

 

  (e) The arbitrators shall have no right to grant or award indirect, consequential, punitive or exemplary damages of any kind.

 

  (f) The Arbitrable Disputes may be arbitrated in a common proceeding along with disputes under other agreements between the Claimant and Respondent to the extent that the issues raised in such disputes are related. Without the written consent of the Claimant and Respondent, no unrelated disputes (including those with Affiliates of either Claimant or Respondent) or Third Party disputes may be joined to an arbitration pursuant to this Agreement.

8.3 Conflict . If there is any inconsistency between this Article VIII and the Commercial Arbitration Rules or the Federal Arbitration Act, the terms of this Article VIII will control the rights and obligations of the parties seeking arbitration.

ARTICLE IX

FORCE MAJEURE

9.1 Force Majeure . In the event of any Party being rendered unable, wholly or in part, by a Force Majeure event from performing its obligations under any of the Master Agreements, Services and Secondment Agreement or 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 relied on (“ Force Majeure Notice ”) to the other affected Party(ies), the obligations of the Parties, so far are they are affected by the Force Majeure event, shall be suspended during the continuance of any inability so caused. The cause of the Force Majeure event shall, as 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.

ARTICLE X

MISCELLANEOUS

10.1 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.

 

19


10.2 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:

Notices to the HFC Entities:

HollyFrontier Corporation

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: President

Email address: president@hollyfrontier.com

with a copy, which shall not constitute notice, but is required in order to give proper notice, to:

HollyFrontier Corporation

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: General Counsel

Email address: general.counsel@hollyfrontier.com

Notices to the HEP Entities:

Holly Energy Partners, L.P.

c/o Holly Logistic Services, L.L.C.

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: President

Email address: president-HEP@hollyenergy.com

with a copy, which shall not constitute notice, but is required in order to give proper notice, to:

Holly Energy Partners, L.P.

c/o Holly Logistic Services, L.L.C.

2828 N. Harwood, Suite 1300

Dallas, Texas 75201

Attention: General Counsel

Email address: general.counsel@hollyenergy.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 10.2 .

10.3 Entire Agreement . This Agreement, together with the other agreements and instruments referred to herein, constitutes the entire agreement of the Parties relating to the matters contained herein, superseding as of the Effective Date all prior contracts or agreements (including the Original Omnibus Agreement), whether oral or written, relating to the matters contained herein. For avoidance of doubt the Eleventh Amended and Restated Omnibus Agreement, effective as of January 1, 2015, shall remain in full force and effect with respect to any event, act or omission occurring before January 1, 2015.

10.4 Amendment or Modification . No amendment or modification of this Agreement shall be valid unless it is in writing and signed by the parties hereto . 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 to this Agreement may be amended, modified, revised or updated by the Parties hereto if each of HFC (on behalf of the HFC Entities) and HEP (on behalf of the HEP Entities)

 

20


execute an amended, modified, revised or updated exhibit or schedule, as applicable, and attach it to this Agreement. Such amended, modified, revised or updated exhibits shall be sequentially numbered (e.g. Exhibit A-1 , Exhibit A-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.

10.5 Assignment . No Party shall have the right to assign any of its rights or obligations under this Agreement without the consent of the other Parties hereto.

10.6 Counterparts . This Agreement may be executed in any number of paper or electronic counterparts with the same effect as if all signatory parties had signed the same document. All such counterparts shall be construed together and shall constitute one and the same agreement.

10.7 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.

10.8 Further Assurances . In connection with this Agreement and all transactions contemplated by this Agreement, each 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.

10.9 Rights of Limited Partners . The provisions of this Agreement are enforceable solely by the Parties to this Agreement, and no Limited Partner (as defined in the Partnership Agreement) of HEP shall have the right, separate and apart from HEP, to enforce any provision of this Agreement or to compel any Party to this Agreement to comply with the terms of this Agreement. There are no Third Party beneficiaries to this Agreement.

10.10 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.

10.11 Limitation of Damages . N OTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER PROVISION OF THIS A GREEMENT AND EXCEPT FOR CLAIMS MADE BY THIRD PARTIES WHICH SHALL NOT BE LIMITED BY THIS S ECTION , THE P ARTIES AGREE THAT THE RECOVERY BY ANY P ARTY , INCLUDING , PURSUANT TO A RTICLE  III , OF ANY LIABILITIES , DAMAGES , COSTS OR OTHER EXPENSES (i)   AS A RESULT OF ANY BREACH OR NONFULFILLMENT BY A PARTY OF ANY OF ITS COVENANTS , AGREEMENTS OR OTHER OBLIGATIONS UNDER THIS AGREEMENT OR (ii)   BY REASON OF OR ARISING OUT OF ANY OF THE EVENTS , CONDITIONS OR OTHER MATTERS LISTED IN SECTIONS 3.2 OR 3.4 WHICH THE PARTIES HAVE AGREED TO INDEMNIFY THE OTHER PARTY AGAINST , 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 , ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE ) SUFFERED OR INCURRED BY ANY P ARTY ; PROVIDED , HOWEVER , THAT SUCH RESTRICTION AND LIMITATION SHALL NOT APPLY TO A P ARTY S OBLIGATION TO INDEMNIFY THE OTHER P ARTY :

( X ) AS A RESULT OF A THIRD PARTY CLAIM FOR SUCH INDIRECT , CONSEQUENTIAL , EXEMPLARY OR PUNITIVE DAMAGES ,

 

21


( Y ) FOR CLAIMS THAT ARE COVERED BY INSURANCE AND ANY RELATED DEDUCTIBLES , OR

( Z ) FOR INDIRECT , CONSEQUENTIAL , EXEMPLARY OR PUNITIVE DAMAGES ( INCLUDING LIABILITIES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE ) THAT ARE A RESULT OF SUCH INDEMNIFYING P ARTY S OR ITS AFFILIATES GROSS NEGLIGENCE OR WILLFUL MISCONDUCT .

As used in this Section 10.11 , “Affiliates” of the Indemnifying Party shall not include the HEP Group Members when a HFC Entity is the Indemnifying Party and shall not include the HFC Group Members when the Indemnifying Party is a HEP Entity.

10.12 Nature of the Relationship . Notwithstanding the foregoing, nothing in this Agreement and no actions taken by the Parties shall constitute a partnership, joint venture, association or other co-operative entity among the Parties or authorize either Party to represent or contract on behalf of the other Party.

[Remainder of Page Intentionally Left Blank]

 

22


IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the Effective Date.

 

HFC ENTITIES:
H OLLY F RONTIER C ORPORATION
E L D ORADO L OGISTICS LLC
H OLLY F RONTIER E L D ORADO R EFINING LLC
H OLLY F RONTIER C HEYENNE R EFINING LLC
H OLLY F RONTIER W OODS C ROSS R EFINING LLC
H OLLY F RONTIER T ULSA R EFINING LLC
N AVAJO P IPELINE C O ., L.P.
H OLLY F RONTIER N AVAJO R EFINING LLC
F RONTIER P IPELINE LLC
By:  

/s/ George J. Damiris

Name:   George J. Damiris
Title:   Chief Executive Officer and President
HEP ENTITIES:
H OLLY E NERGY P ARTNERS , L.P.
By:   HEP Logistics Holdings, L.P.
  Its General Partner
  By:   Holly Logistic Services, L.L.C.
    Its General Partner
  By:  

/s/ Michael C. Jennings

  Name:   Michael C. Jennings
  Title:   Chief Executive Officer

[Signature Page 1 of 3 to Sixteenth Amended and Restated Omnibus Agreement]


C HEYENNE L OGISTICS LLC
HEP L OGISTICS GP, L.L.C.
HEP T ULSA LLC
E L D ORADO L OGISTICS LLC
EL D ORADO O PERATING LLC
HEP UNEV H OLDINGS LLC
HEP UNEV P IPELINE LLC
H OLLY E NERGY S TORAGE – L OVINGTON LLC
H OLLY E NERGY P ARTNERS – O PERATING , L.P.
H OLLY L OGISTIC S ERVICES , L.L.C.
R OADRUNNER P IPELINE , L.L.C.
HEP E L D ORADO LLC
E L D ORADO O SAGE LLC
W OODS C ROSS O PERATING LLC
By:  

/s/ Michael C. Jennings

Name:   Michael C. Jennings
Title:   Chief Executive Officer
HEP L OGISTICS H OLDINGS , L.P.
By:   Holly Logistic Services, L.L.C,
  Its General Partner
By:  

/s/ Michael C. Jennings

  Name:   Michael C. Jennings
  Title:   Chief Executive Officer
HEP M OUNTAIN H OME , L.L.C.
HEP P IPELINE GP, L.L.C.
HEP P IPELINE , L.L.C.
HEP R EFINING GP, L.L.C.
HEP R EFINING , L.L.C.
HEP W OODS C ROSS , L.L.C.
L OVINGTON -A RTESIA , L.L.C.
By:   HOLLY ENERGY PARTNERS – OPERATING, L.P.
  Sole Member
  By:  

/s/ Michael C. Jennings

  Name:   Michael C. Jennings
  Title:   Chief Executive Officer

[Signature Page 2 of 3 to Sixteenth Amended and Restated Omnibus Agreement]


HEP N AVAJO S OUTHERN , L.P.
HEP P IPELINE A SSETS , L IMITED P ARTNERSHIP
By:   HEP Pipeline GP, L.L.C.
  Its General Partner
  By:  

/s/ Michael C. Jennings

  Name:   Michael C. Jennings
  Title:   Chief Executive Officer
HEP R EFINING A SSETS , L.P.
By:   HEP Refining GP, L.L.C.
  Its General Partner
  By:  

/s/ Michael C. Jennings

  Name:   Michael C. Jennings
  Title:   Chief Executive Officer

[Signature Page 3 of 3 to Sixteenth Amended and Restated Omnibus Agreement]

 

25


Exhibit A

to

Sixteenth Amended and Restated Omnibus Agreement

 

 

Omnibus Agreement Amendments

 

Agreement    Effective Date    Reason for Amendment
Original Omnibus Agreement    July 13, 2004    n/a
First Amended and Restated Omnibus Agreement    June 1, 2009    16” Lovington/Artesia Intermediate Pipeline Purchase Agreement
Second Amended and Restated Omnibus Agreement    August 1, 2009    Tulsa West (Sunoco) Asset Purchase Agreement
Third Amended and Restated Omnibus Agreement    October 19, 2009   

(i) Tulsa East (Sinclair) Purchase Agreement

(ii) Beeson Pipeline Purchase Agreement, and

(iii) Roadrunner Pipeline Purchase Agreement

Fourth Amended and Restated Omnibus Agreement    March 31, 2010    LLC Interest Purchase Agreement for certain Tulsa East Assets
Fifth Amended and Restated Omnibus Agreement    August 31, 2011    Tulsa Throughput Agreement
Sixth Amended and Restated Omnibus Agreement    November 1, 2011    LLC Interest Purchase Agreement for Cheyenne Assets and El Dorado Assets
Seventh Amended and Restated Omnibus Agreement    July 12, 2012    UNEV LLC Interest Purchase Agreement
Eighth Amended and Restated Omnibus Agreement    June 1, 2013    Malaga Throughput Agreement
Ninth Amended and Restated Omnibus Agreement    January 7, 2014    Amended and Restated El Dorado Throughput Agreement for the El Dorado New Tank No. 647
Tenth Amended and Restated Omnibus Agreement    September 26, 2014    Amended and Restated Malaga Throughput Agreement
Eleventh Amended and Restated Omnibus Agreement    January 1, 2015    Unloading and Blending Services Agreement (Artesia) and Third Amended and Restated Crude Pipelines and Tankage Agreement (Beeson to Lovington System Expansion)
Twelfth Amended and Restated Omnibus Agreement    January 1, 2015    Artesia Railyard Facility, El Dorado Terminal and Cheyenne New Tank No. 117
Thirteenth Amended and Restated Omnibus Agreement    November 2, 2015    LLC Interest Purchase Agreement for certain El Dorado Refinery Assets
Fourteenth Amended and Restated Omnibus Agreement    February 22, 2016    LLC Interest Purchase Agreement for Osage Membership Interest
Fifteenth Amended and Restated Omnibus Agreement    March 31, 2016    Tulsa West Crude Tank Assets and Tulsa New Tanks

 

A-1


Exhibit B

to

Sixteenth Amended and Restated Omnibus Agreement

 

 

Definitions

8” and 10” Lovington/Artesia Intermediate Pipelines ” means the 8-inch pipeline and the 10-inch pipeline, each running from Lovington, New Mexico to Artesia, New Mexico and owned by HEP Pipeline .

16” Lovington/Artesia Intermediate Pipeline ” means the 16-inch pipeline running from Lovington, New Mexico to Artesia, New Mexico, owned by Lovington-Artesia, L.L.C.

16” Lovington/Artesia Intermediate Pipeline Purchase Agreement ” means that certain LLC Interest Purchase Agreement dated as of June 1, 2009, by and among HFC, Navajo Pipeline and the Operating Partnership, pursuant to which Navajo Pipeline transferred and conveyed to the Operating Partnership, and the Operating Partnership acquired, all of the limited liability company interests of Lovington-Artesia, L.L.C., the entity that owns the 16” Lovington/Artesia Intermediate Pipeline.

2004 Product Pipelines, Terminal and Related Assets ” means the assets transferred under the July 13, 2004 Contribution, Conveyance and Assumption Agreement at the time of HEP’s initial public offering.

2008 Crude Pipelines, Tanks and Related Assets ” means the Drop-Down Assets as defined in the Purchase and Sale Agreement, dated February 25, 2008, by and among HFC, Navajo Pipeline, Woods Cross Refining Company, L.L.C., a Delaware limited liability company, and HollyFrontier Navajo, as the seller parties, and HEP, the Operating Partnership, HEP Woods Cross, L.L.C., a Delaware limited liability company, and HEP Pipeline, as the buyer parties.

2008 Tanks ” means the Transferred Tanks included in the 2008 Crude Pipelines, Tanks and Related Assets.

Acquisition Proposal ” is defined in Section 5.2(a) .

Additional Lovington Assets ” means the Transferred Lovington Assets as defined in the March 2010 Drop Down LLC Interest Purchase Agreement.

Additional Tulsa East Assets ” means the Transferred Tulsa East Assets as defined in the March 2010 Drop Down LLC Interest Purchase Agreement.

Administrative Fee ” is defined in Section 4.1(a) .

Affiliate ” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

Agreement ” is defined in the introduction to this Agreement.

 

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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 by 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, 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 any of the HEP Entities, on the one hand, and any of the HFC Entities, on the other hand, arising out of or relating to this Agreement, the Master Agreements, or the Services and Secondment Agreement, or the alleged breach hereof and thereof, or in any way relating to the subject matter of this Agreement, the Master Agreements, or the Services and Secondment 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.

Artesia Blending Facility ” means the two tanks and related equipment for the unloading and blending of ethanol and biodiesel at the refined product truck rack located at the refinery owned by HollyFrontier Navajo in Artesia, New Mexico.

Artesia Rail Yard Facility ” means (a) the railroad track siding consisting of approximately 8,300 track feet of siding (rail storage) and two mainline switches and three industry switches located on certain land leased by HFRM from the Operating Partnership pursuant to that certain Track Lease Agreement effective as of November 1, 2014 by and between HEP Refining and HFRM, pursuant to which HEP Refining agreed to lease to HFRM, and HFRM agreed to lease from HEP Refining, the Artesia Rail Yard Facility, and (b) HEP Refining’s leasehold interest, as tenant, under the BNSF Lease, and (c) HEP Refining’s leasehold interest, as landlord, under that certain Sublease Agreement effective as of November 1, 2014 by and between HEP Refining and HFRM, pursuant to which HEP Refining agreed to sublease to HFRM, and HFRM agreed to sublease from HEP Refining, the BNSF Land.

Assets ” means the Transferred Assets and the Other Assets, collectively.

Beeson Pipeline ” means the 8” crude oil pipeline extending from Beeson station to Lovington, New Mexico, owned by HEP Pipeline.

Beeson Pipeline Purchase Agreement ” means that certain Asset Purchase Agreement dated as of December 1, 2009, by and among HFC, Navajo Pipeline and HEP Pipeline, pursuant to which Navajo Pipeline agreed to transfer and convey to HEP Pipeline, and HEP Pipeline agreed to acquire, the Beeson Pipeline.

Beeson to Lovington System Expansion ” means the following project undertaken by HEP Pipeline: the installation of a larger pump at the Beeson station and the replacement of five miles of existing 8-inch pipeline with 10-inch pipeline beginning at the Beeson station end of the Beeson Pipeline.

BNSF Land ” means the land located in Eddy County, New Mexico leased to HEP Refining pursuant to the BNSF Lease.

 

B-2


BNSF Lease ” means that certain Lease of Land Including New Track Construction dated to be effective as of February 14, 2014, pursuant to which HEP Reining agreed to lease from BNSF Railway Company the BNSF Land.

Business Day means any day other than Saturday, Sunday or other day upon which commercial banks in Dallas, Texas are authorized by law to close.

Change of Control ” means, with respect to any Person (the “ Applicable Person ”), any of the following events:

(a) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the Applicable Person’s assets to any other Person unless immediately following such sale, lease, exchange, or other transfer such assets are owned, directly or indirectly, by the Applicable Person;

(b) the consolidation or merger of the Applicable Person with or into another Person pursuant to a transaction in which the outstanding Voting Securities of the Applicable Person are changed into or exchanged for cash, securities, or other property, other than any such transaction where

(i) the outstanding Voting Securities of the Applicable Person are changed into or exchanged for Voting Securities of a surviving Person or its parent and

(ii) the holders of the Voting Securities of the Applicable Person immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Securities of the surviving Person or its parent immediately after such transaction; and

(c) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) (in the case of HFC, other than a group consisting of some of all of the current control persons of HFC), being or becoming the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended) of more than 50% of all of the then outstanding Voting Securities of the Applicable Person, except in a merger or consolidation that would not constitute a Change of Control under clause (b) above.

Cheyenne Assets ” is defined in the November 2011 Frontier Drop Down LLC Interest Purchase Agreement.

Cheyenne Logistics ” is defined in the introduction to this Agreement.

Cheyenne New Tank ” means petroleum storage tank no. 117 located at the Cheyenne Refinery Complex.

Claim ” means any existing or threatened future claim, demand, suit, judgment, settlement, action, investigation, proceeding, governmental action, cause of action, claims, demands, causes of action, suits, judgments, settlements, fines, penalties, costs, and expenses (including court costs and reasonable attorneys’ and experts’ fees) 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 of any and every kind or character, known or unknown, fixed, contingent or suffered.

 

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Claimant ” is defined in Section 8.2(a).

Closing Date ” means

(a) for all sections other than Articles III and VII , July 13, 2004, the date of the closing of HEP’s initial public offering, and

(b) for purposes of Articles III and VII , Closing Date means, with respect to a group of assets, the effective date of the purchase of such assets or the stock, partnership interests or membership interests of the entity that directly or indirectly owns such assets, by a HEP Entity (such Closing Date being shown in Exhibit D , column (a)).

Contribution Agreement ” means that certain Contribution, Conveyance and Assumption Agreement, dated as of July 13, 2004, among HFC, Navajo Pipeline, the General Partner, HEP, the OLP GP, the Operating Partnership and certain other parties, together with the additional conveyance documents and instruments contemplated or referenced thereunder.

control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.

Covered Environmental Losses ” means Environmental Claims to the extent arising from:

 

  (a) any violation or correction of violation of Environmental Laws associated with the ownership or operation of the Assets, or

 

  (b) any event or condition associated with ownership or operation of the Assets (including, the presence of Hazardous Substances on, under, about or migrating from the Assets or the disposal or release of Hazardous Substances generated by operation of the Assets at any non-Asset locations), including:

 

  (i) 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;

 

  (ii) 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

 

  (iii) the cost and expense for any environmental or Toxic Tort pre-trial, trial, or appellate legal or litigation support work.

Disposition Notice ” is defined in Section 5.2(a) .

Effective Date ” is defined in the introduction to this Agreement.

El Dorado Assets ” is defined in the November 2011 Frontier Drop Down LLC Interest Purchase Agreement.

 

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El Dorado Logistics ” is defined in the introduction to this Agreement.

El Dorado New Tank ” means petroleum products storage tanks no. 647 and no. 651 located at the El Dorado Refinery Complex.

El Dorado Operating ” is defined in the introduction to this Agreement.

El Dorado Osage ” is defined in the introduction to this Agreement.

El Dorado Refinery Assets ” means “Assets” as defined in that certain LLC Interest Purchase Agreement dated as of October 30, 2015 and effective as of November 1, 2015 by and among HollyFrontier El Dorado, HFC and the Operating Partnership, pursuant to which HollyFrontier El Dorado agreed sell to the Operating Partnership all of the issued and outstanding limited liability company interests in El Dorado Operating.

El Dorado Terminal ” means that certain petroleum products tank farm located in El Dorado Kansas, and more particularly described in that certain Membership Interest Purchase Agreement dated as of March 6, 2015 by and between El Dorado Logistics and Rimrock Midstream, LLC, as such terminal may be modified, expanded or upgraded from time to time.

El Paso Logistics ” is defined in the introduction to this Agreement.

El Paso Hawkins Terminal ” means the El Paso Hawkins Terminal as defined in that certain Refined Products Terminal Transfer Agreement effective as of February 22, 2016 between HEP Refining Assets and El Paso Logistics, pursuant to which El Paso Logistics acquired the El Paso Hawkins Terminal.

Environmental Claims ” means environmental and Toxic Tort Liabilities and Claims of any and every kind or character, known or unknown, fixed or contingent.

Environmental Costs ” means (i) 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, (ii) 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 (iii) the cost and expense for any Environmental Claim, including pre-trial, trial, or appellate legal or litigation support work.

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 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.

Fifteenth Amended and Restated Omnibus Agreement ” is defined in the introduction to this Agreement.

First ROFR Acceptance Deadline ” is defined in Section 5.2(b) .

 

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Force Majeure ” means acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy, wars (whether or not an official declaration is made thereof), terrorist attacks, blockades, insurrections, riots, epidemics, landslides, lightening, earthquakes, fires, hurricanes, storms, floods, washouts, freezeoffs, arrests, the order of any Governmental Authority having jurisdiction while the same is in force and effect, civil disturbances, explosions, breakage, accident to machinery, equipment, storage tanks or lines of pipe, repairs, maintenance, inability to obtain or unavoidable delay in obtaining permits, 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.

Frontier Pipeline ” is defined in the introduction to this Agreement.

General Partner ” is defined in the introduction to this Agreement.

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, 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.

HEP ” is defined in the introduction to this Agreement.

HEP El Dorado ” is defined in the introduction to this Agreement.

HEP Entities ” is defined in the introduction to this Agreement.

HEP Entity ” means any of the HEP Entities.

HEP Group ” means the HEP Entities and any Subsidiary of any such Person, all of which are treated as a single consolidated entity for purposes of this Agreement.

HEP Group Member ” means any member of the HEP Group.

HEP Pipeline ” is defined in the introduction to this Agreement.

HEP Refining ” is defined in the introduction to this Agreement.

HEP Refinery Assets ” is defined in the introduction to this Agreement.

HEP Tulsa ” is defined in the introduction to this Agreement.

 

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HEP UNEV ” is defined in the introduction to this Agreement.

HEP UNEV Pipeline ” is defined in the introduction to this Agreement.

HFC ” is defined in the introduction to this Agreement.

HFC Group ” means the HFC Entities and any Person controlled, directly or indirectly, by HFC other than the HEP Entities.

HFC Group Member ” means any member of the HFC Group.

HFRM ” is defined in the introduction to this Agreement.

HollyFrontier Cheyenne ” is defined in the introduction to this Agreement.

HollyFrontier El Dorado ” is defined in the introduction to this Agreement.

HollyFrontier Navajo ” is defined in the introduction to this Agreement.

HollyFrontier Tulsa ” is defined in the introduction to this Agreement.

HollyFrontier Woods Cross ” is defined in the introduction to this Agreement.

Holly GP ” is defined in the introduction to this Agreement.

Indemnified Claims ” means losses, damages, liabilities, Claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, court costs and reasonable attorney’s and expert’s fees) of any and every kind or character.

Indemnified Party ” means all or part of either the HEP Entities or the HFC Entities, as the case may be, in their capacity as the parties entitled to indemnification in accordance with Article III .

Indemnifying Party means all or part of either the HEP Entities or the HFC Entities, as the case may be, in their capacity as the parties from whom indemnification may be required in accordance with Article III .

Initial Tank Inspections ” is defined in Section 7.1.

Initial Tank Inspection Period ” is defined in Section 7.1

Liability means with respect to any Person, any economic losses (including, diminution in value and lost profits suffered by third parties to the extent an Indemnified Party is required to pay for such damages), damages, injuries (including, personal injury and death), liabilities, of any and every kind or character, known or unknown, fixed, contingent or suffered.

Limited Partner ” is defined in the Partnership Agreement.

Malaga Pipeline System ” means the Pipeline System, as such term is defined in the Malaga TSA.

Malaga TSA ” means that certain Amended and Restated Transportation Services Agreement (Malaga) dated as of September 26, 2014 by and between HFRM and Operating Partnership, pursuant to which Operating Partnership provides certain transportation services for HFRM on the Malaga Pipeline System, as such agreement may be amended, modified or replaced from time to time.

 

B-7


March 2010 Drop Down LLC Interest Purchase Agreement ” means that certain LLC Interest Purchase Agreement dated as of March 31, 2010, by and among HFC, Lea Refining Company, HollyFrontier Tulsa, HEP Refining and HEP Tulsa, pursuant to which HFC, Lea Refining Company and HollyFrontier Tulsa agreed to transfer and convey to HEP Refining and HEP Tulsa the Additional Tulsa East Assets and the Additional Lovington Assets.

Master Agreements means the Master Lease and Access Agreement, Master Site Services Agreement, Master Systems Operating Agreement, Master Throughput Agreement and Master Tolling Agreements.

Master Lease and Access Agreement ” means that certain Third Amended and Restated Master Lease and Access Agreement dated effective as of the Effective Date among certain of the HEP Entities and the Refinery Owners.

Master Site Services Agreement ” means that certain Third Amended and Restated Master Site Services Agreement dated effective as of the Effective Date among certain of the HEP Entities and the Refinery Owners.

Master Systems Operating Agreement ” means that certain Second Amended and Restated Master Systems Operating Agreement dated as of the Effective Date among certain of the HEP Entities and the Refinery Owners.

Master Throughput Agreement ” means that certain Third Amended and Restated Master Throughput Agreement effective as of the Effective Date between the Operating Partnership and HFRM.

Master Tolling Agreements ” means that certain Master Tolling Agreement (Refinery Assets) dated effective as of November 1, 2015 between HollyFrontier El Dorado and the Operating Partnership, and that certain Amended and Restated Master Tolling Agreement (Operating Assets) dated effective as of the Effective Date between HollyFrontier El Dorado, HollyFrontier Woods Cross and the Operating Partnership.

Navajo Pipeline ” is defined in the introduction to this Agreement.

Net Recovery ” is defined in Section 3.7(f) .

November 2011 Frontier Drop Down LLC Interest Purchase Agreement means that certain LLC Interest Purchase Agreement effective as of November 1, 2011, by and among HFC, HollyFrontier Cheyenne, HollyFrontier El Dorado, the Operating Partnership and HEP, pursuant to which HollyFrontier Cheyenne and HollyFrontier El Dorado agreed sell to the Operating Partnership the entities that own the Cheyenne Assets and the El Dorado Assets.

Offer ” is defined in Section 2.4(a)

Offer Price ” is defined in Section 5.2(a)(iii) .

OLP GP ” is defined in the introduction to this Agreement.

Operating Partnership ” is defined in the introduction to this Agreement.

 

B-8


Original Omnibus Agreement ” is defined in the recitals to this Agreement.

Osage ” means Osage Pipe Line Company, LLC, a Delaware limited liability company.

Osage Membership Interest ” means a fifty percent (50%) limited liability company membership interest in Osage.

Other Assets ” means those assets owned by a HEP Entity that serve the Refineries and were not conveyed, contributed, or otherwise transferred, directly or indirectly by the HFC Entities to the HEP Entities, as indicated in column (a) of Exhibit D , Part 2 ; provided, that for the purposes of Section 3.2 , Other Assets shall not include that certain 8” pipeline extending 50 miles from the White City Station that was formerly used as a refined products pipeline and that was conveyed to the HEP Entities as part of the 2004 Product Pipelines, Terminal and Related Assets.

Partnership Agreement ” means the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P. dated as of July 13, 2004 as amended or supplemented by the following:

 

Agreement    Effective Date
Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P.    February 28, 2005
Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P.    July 6, 2005
Amendment No. 3 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P.    April 11, 2008
Limited Partial Waiver of Incentive Distribution Rights    July 12, 2012
Amendment No. 4 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P.    January 16, 2013
Amendment No. 5 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P.    June 13, 2016

No amendment or modification to the Partnership Agreement subsequent to the date of this Agreement shall be given effect for the purposes of this Agreement unless consented to by each of the Parties.

Party ” means any one of the entities listed on the signature page to this Agreement, collectively the “ Parties ”.

Permitted Assets ” is defined in Section 2.2(d).

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.

 

B-9


Post-Closing Covered Environmental Losses ” means, to the extent such violation, event or condition occurred after the Closing Date:

 

  (a) any violation or correction of violation of Environmental Laws associated with the operation of the Transferred Assets by a Person other than a HFC Entity or ownership and operation of the Transferred Assets by a Person other than a HFC Entity, or

 

  (b) any event or condition associated with the ownership and/or operation of the Transferred Assets by a Person other than a HFC Entity (including the presence of Hazardous Substances on, under, about or migrating to or from the Transferred Assets or the disposal or release of Hazardous Substances generated by operation of the Transferred Assets) including, the Environmental Costs;

provided, however, that nothing stated above shall make the HEP Entities responsible for any post-Closing Date negligent actions or omissions or willful misconduct by any of the HFC Entities.

Pre-Closing Covered Environmental Losses ” means, to the extent such violation, event or condition occurred before the Closing Date:

 

  (a) any violation or correction of violation of Environmental Laws associated with the ownership or operation of the Transferred Assets by a Person other than a HEP Entity or ownership and operation of the Transferred Assets by a Person other than a HEP Entity, or

 

  (b) any event or condition associated with ownership and/or operation of the Transferred Assets by a Person other than a HEP Entity (including, the presence of Hazardous Substances on, under, about or migrating to or from the Transferred Assets or the disposal or release of Hazardous Substances generated by operation of the Transferred Assets), including, the Environmental Costs.

provided, however, that nothing stated above shall make the HFC Entities responsible for any pre-Closing Date negligent actions omissions or willful misconduct by any of the HEP Entities.

Proposed Transferee ” is defined in Section 5.2(a)(i) .

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 the HFC Entities in the performance of similar tasks or projects, or by the HEP Entities in the performance of similar tasks or projects.

Purchase Option Agreement ” has the meaning set forth in the Asset Purchase Agreement, dated August 1, 2009, between HollyFrontier Tulsa, as the seller, and HEP Tulsa, as the buyer.

Refinery ” or “ Refineries ” means each of the Refinery Complexes identified in the Master Lease and Access Agreement.

Refinery Owners ” means each of the HFC Entities that own one or more of the Refineries.

Respondent ” is defined in Section 8.2(a).

 

B-10


Restricted Business ” or “ Restricted Businesses ” means the ownership or operation of crude oil pipelines or terminals, intermediate petroleum product pipelines or terminals, refined petroleum products pipelines, terminals, truck racks or crude oil gathering systems in the continental United States.

Retained Assets ” means the pipelines, terminals and other assets and investments owned by any HFC Group Member on the date of the Contribution Agreement that were not conveyed, contributed or otherwise transferred to the HEP Entities pursuant to the Contribution Agreement or otherwise.

Roadrunner ” is defined in the introduction to this Agreement.

Roadrunner Pipeline ” means 16” crude oil pipeline extending from Slaughter station in Texas to Lovington, New Mexico owned by Roadrunner.

Roadrunner Pipeline Purchase Agreement ” means that certain LLC Interest Purchase Agreement dated as of December 1, 2009 by and among Navajo Pipeline and the Operating Partnership, pursuant to which the Operating Partnership acquired, all of the outstanding limited liability company interests of Roadrunner, the entity that owns the Roadrunner Pipeline.

ROFR Acceptance Deadline ” means the First ROFR Acceptance Deadline or the Second ROFR Acceptance Deadline, as applicable, both as defined in Section 5.2(b) and (c) .

Sale Assets ” is defined in Section 5.2(a)(ii) .

Second ROFR Acceptance Deadline ” is defined in Section 5.2(c).

Services and Secondment Agreement means that certain Third Amended and Restated Services and Secondment Agreement dated effective as of the Effective Date, by and among Holly GP, the Operating Partnership, Cheyenne Logistics, El Dorado Logistics, El Dorado Operating, HEP Tulsa, Woods Cross Operating, HollyFrontier Payroll Services, Inc., a Delaware corporation, HollyFrontier Cheyenne, HollyFrontier El Dorado HollyFrontier Tulsa and HollyFrontier Woods Cross.

Sinclair ” means Sinclair Tulsa Refining Company.

Sinclair Purchase Agreement ” means that certain Asset Sale and Purchase Agreement dated as of October 19, 2009, by and among HollyFrontier Tulsa, HEP Tulsa and Sinclair, pursuant to which HEP Tulsa acquired the Sinclair Transferred Assets.

Sinclair Transferred Assets ” means the HEP Tulsa Assets as defined in the Sinclair Purchase Agreement.

Storage and Handling Agreement ” means that certain Storage and Handling Agreement dated February 21, 1997, between the Operating Partnership and Alon U.S.A., L.P., as amended effective January 1, 2004, September 1, 2008 and March 1, 2011.

Third Party ” means a Person which is not (a) HEP or an Affiliate of HEP, (b) HFC or an affiliate of HFC, (c) a Person that, after the signing of this Agreement becomes a successor entity of HEP, HFC or any of their respective Affiliates. An employee of HFC or HEP shall not be deemed an Affiliate.

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.

 

B-11


Transfer ” including the correlative terms “ Transferring ” or “ Transferred ” means any direct or indirect transfer, assignment, sale, gift, pledge, hypothecation or other encumbrance, or any other disposition (whether voluntary, involuntary or by operation of law) of the Assets.

Transferred Assets ” means all of the assets conveyed, contributed, or otherwise transferred, directly or indirectly (including by transfer or sale of the entity that owns such assets or the entity that owns the interests in the entity that owns such assets) that serve the Refineries, by the HFC Entities to the HEP Entities, as indicated in column (a) of Exhibit D , Part 1 ; provided that for the purposes of Section 3.2 , the term “Transferred Assets” shall include (a) that certain 8” pipeline extending 50 miles from the White City Station that was formerly used as a refined products pipeline and that was conveyed to the HEP Entities as part of the 2004 Product Pipelines, Terminal and Related Assets, and (b) the Tulsa West Crude Tank Assets.

Transferred Tanks ” means the tanks included in the Assets, as indicated in column (h) of Exhibit D .

Tulsa Interconnecting Pipelines” means the Interconnecting Pipelines as defined in the Tulsa Throughput Agreement.

Tulsa New Tanks ” means petroleum products storage tank nos. 45 and 444A located at the Tulsa Refinery Complex.

Tulsa Purchase Agreement ” means that certain Asset Purchase Agreement dated as of August 1, 2009, by and between HollyFrontier Tulsa and HEP Tulsa, pursuant to which HollyFrontier Tulsa transferred and conveyed to HEP Tulsa, and HEP Tulsa acquired, the Tulsa Transferred Assets.

Tulsa Throughput Agreement ” means that certain Second Amended and Restated Pipelines, Tankage and Loading Rack Throughput Agreement (Tulsa East), dated as of August 31, 2011, pursuant to which HEP Tulsa agreed to provide transportation services to HollyFrontier Tulsa with respect to the Tulsa Interconnecting Pipelines.

Tulsa Transferred Assets ” means the Transferred Assets as defined in the Tulsa Purchase Agreement.

Tulsa West Crude Tank Assets ” means the Leased Property as defined in the Bill of Sale, Assignment and Assumption Agreement dated as of March 31, 2016 between Plains Marketing, L.P. and HEP Tulsa.

UNEV LLC Interest Purchase Agreement ” means that certain LLC Interest Purchase Agreement dated as of July 12, 2012, by and among HFC, HEP UNEV and HEP, pursuant to which HFC agreed to sell to HEP UNEV the entity that owns 75% of all of the issued and outstanding membership interests of UNEV Pipeline, LLC, the entity that owns the UNEV Pipeline.

UNEV Pipeline ” means, collectively, an approximately 400 mile, 12-inch refined products pipeline currently running from Woods Cross, Utah to Las Vegas, Nevada, related products terminals in or near Cedar City, Utah and Las Vegas, Nevada and other related assets owned by UNEV Pipeline, LLC.

 

B-12


UNEV Profits Interest ” means the membership interest in HEP UNEV held directly or indirectly by HFC.

Voting Securities ” means securities of any class of a Person entitling the holders thereof to vote on a regular basis in the election of members of the board of directors or other governing body of such Person.

Wood Cross Operating ” is defined in the introduction to this Agreement.

Woods Cross Refinery Assets ” has the meaning ascribed to the term “Assets” in that certain LLC Interest Purchase Agreement dated as of October 3, 2016 and effective as of October 1, 2016 by and among HollyFrontier Woods Cross, HFC and the Operating Partnership, pursuant to which HollyFrontier Woods Cross agreed to sell to the Operating Partnership all of the issued and outstanding limited liability company interests in Woods Cross Operating.

 

B-13


Exhibit C

to

Sixteenth Amended and Restated Omnibus Agreement

 

 

Interpretation

As used in this Agreement, unless a clear contrary intention appears:

(a) any reference to the singular includes the plural and vice versa, any reference to natural persons includes legal persons and vice versa, and any reference to a gender includes the other gender;

(b) the words “hereof”, “hereby”, “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;

(c) any reference to Articles, Sections and Exhibits are, unless otherwise stated, references to Articles, Sections and Exhibits of or to this Agreement and references in any Section or definition to any clause means such clause of such Section or definition. The headings in this Agreement have been inserted for convenience only and shall not be taken into account in its interpretation;

(d) reference to any agreement (including this Agreement), document or instrument means such agreement, document, or instrument as amended, modified or supplemented and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of this Agreement;

(e) the Exhibits hereto form an integral part of this Agreement and are equally binding therewith. Any reference to “this Agreement” shall include such Exhibits;

(f) references to a Person shall include any permitted assignee or successor to such Party in accordance with this Agreement and reference to a Person in a particular capacity excludes such Person in any other capacity;

(g) if any period is referred to in this Agreement by way of reference to a number of days, the days shall be calculated exclusively of the first and inclusively of the last day unless the last day falls on a day that is not a Business Day in which case the last day shall be the next succeeding Business Day;

(h) the use of “or” is not intended to be exclusive unless explicitly indicated otherwise;

(i) references to “$” or to “dollars” shall mean the lawful currency of the United States of America; and

(j) the words “includes,” “including,” or any derivation thereof shall mean “including without limitation” or “including, but not limited to.”

 

C-1


Exhibit D

to

Sixteenth Amended and Restated Omnibus Agreement

 

 

Asset Indemnification Summary

Part 1: Transferred Assets:

 

(a)    (b)    (c)    (d)    (e)    (f)    (g)    (h)

TRANSFERRED

ASSET AND

CLOSING DATE

  

HFC

ENVIRONMENTAL

(Expiration Date)

  

HEP

ENVIRONMENTAL 1

   RIGHT-OF-WAY   

ADDITIONAL

INDEMNITIES

  

OPERATIONAL

INDEMNITY

  

RIGHT OF

FIRST

REFUSAL

  

INCLUDES

TRANSFERRED

TANKS

    

Indemnity from HFC to HEP for Pre-Closing Covered Environmental Losses under Section 3.2(a) / Aggregate cap on HFC environmental indemnity in Section 3.1(b)

(expiration date of indemnity)

   Indemnity from HEP to HFC for Post-Closing Covered Environmental Losses under Section 3.4(a)   

Right-of-Way Indemnity under Sections 3.2(a)(iii) and 3.2(a)(iv)

(expiration date of indemnity)

  

Additional Indemnities under Section 3.2(a)(vi)

(expiration date of indemnity) 2

   Additional Indemnities under Section 3.5    Right of First Refusal under Article V     

2004 Product Pipelines, Terminal and Related Assets

(July 13, 2004)

  

$15,000,000

(July 13, 2014)

     

(July 13, 2014)

  

(July 13, 2009)

         No

8” and 10” Lovington/Artesia Intermediate Pipelines

(June 1, 2009)

  

$2,500,000

(June 1, 2019)

     

(June 1, 2019)

  

(June 1, 2014)

         No

 

1   Where subsurface rights are not transferred to the HEP Entities, the HEP Entities have no liabilities for subsurface contamination unless caused by an HEP Entity.
2   Notification of Claim must be provided prior to date noted.

 

D-1


(a)    (b)    (c)    (d)    (e)    (f)    (g)    (h)

TRANSFERRED

ASSET AND

CLOSING DATE

  

HFC

ENVIRONMENTAL

(Expiration Date)

  

HEP

ENVIRONMENTAL

   RIGHT-OF-WAY   

ADDITIONAL

INDEMNITIES

  

OPERATIONAL

INDEMNITY

  

RIGHT OF

FIRST

REFUSAL

  

INCLUDES

TRANSFERRED

TANKS

2008 Crude Pipelines, Tanks and Related Assets

(March 1, 2008)

  

$7,500,000

(March 1, 2023)

     

(March 1, 2023)

  

(March 1, 2013)

         Yes

16” Lovington/Artesia Intermediate Pipeline

(June 1, 2009)

   None      

(June 1, 2019)

  

(June 1, 2014)

         No

Tulsa Transferred Assets

(August 1, 2009)

   None    None    None    None    None    None 3    No

Beeson Pipeline

(December 1, 2009)

   None      

(December 1, 2019)

  

(December 1, 2014)

         No

Roadrunner Pipeline

(December 1, 2009)

   None      

(December 1, 2019)

  

(December 1, 2014)

         No

Additional Lovington Assets

(March 31, 2010)

  

$15,000,000

(March 31, 2020)

     

(March 31, 2020)

  

(March 31, 2015)

         No

Additional Tulsa East Assets

(March 31, 2010)

  

unlimited

(no expiration)

   None    None    None    None       No

Sinclair Transferred Assets

(October 19, 2009)

   None    None    None    None    None       Yes

Tulsa Interconnecting Pipelines

(August 31, 2011)

   None       (August 31, 2021)    (August 31, 2016)          No

 

3   Right of first refusal granted to an Affiliate of HFC with respect to the Tulsa Transferred Assets is contained in the Purchase Option Agreement.

 

D-2


(a)    (b)    (c)    (d)    (e)    (f)    (g)    (h)

TRANSFERRED

ASSET AND

CLOSING DATE

  

HFC

ENVIRONMENTAL

(Expiration Date)

  

HEP

ENVIRONMENTAL

   RIGHT-OF-WAY   

ADDITIONAL

INDEMNITIES

  

OPERATIONAL

INDEMNITY

  

RIGHT OF

FIRST

REFUSAL

  

INCLUDES

TRANSFERRED

TANKS

Cheyenne Assets

(November 1, 2011)

  

$15,000,000

(November 1, 2021)

     

(November 1, 2021)

  

(November 1, 2016)

         Yes

El Dorado Assets

(November 1, 2011)

  

$15,000,000

(November 1, 2021)

     

(November 1, 2021)

  

(November 1, 2016)

         Yes

UNEV Pipeline

(July 12, 2012)

   None      

(July 12, 2022)

  

(July 12, 2017)

      None 4    No

El Dorado Refinery Assets

(November 1, 2015)

  

$15,000,000

(November 1, 2025)

     

(November 1, 2025)

  

(November 1, 2020)

         No

Osage

(February 22, 2016)

   None    None    None    None    None    None 5    No

Tulsa West Crude Tank Assets

(11:59 p.m., March 31, 2016)

  

$5,000,000

(11:59 p.m., March 31, 2026)

      None   

(11:59 p.m., March 31, 2021) 6

         No

Woods Cross Refinery Assets

October 1, 2016

  

$15,000,000

October 1, 2026

     

October 1, 2026

  

October 1, 2026

         No

 

4   However, the right of first refusal includes the equity interests of HEP UNEV Holdings LLC, HEP UNEV Pipeline LLC and UNEV Pipeline, LLC then owned directly or indirectly by the HEP Entities; provided, however, the right of first refusal on the equity interests of UNEV Pipeline, LLC is subject to any rights of the other member(s) of UNEV Pipeline, LLC.
5   However, the right of first refusal includes the equity interests of El Dorado Osage and Osage then owned directly or indirectly by the HEP Entities; provided, however, the right of first refusal on the equity interests of Osage is subject to any rights of the other member(s) of Osage.
6   Notwithstanding such expiration date, the indemnity provided for in Section 3.2(a)(vi)(F) applies only to the Tulsa West Crude Tank Assets and expires at 11:59 p.m. on March 31, 2017.

 

D-3


Part 2: Other Assets:

 

(a)    (b)    (c)    (d)    (e)    (f)    (g)    (h)

OTHER ASSET AND

CLOSING DATE

  

HFC ENVIRONMENTAL

(Expiration Date)

  

HEP

ENVIRONMENTAL

   RIGHT-OF-WAY   

ADDITIONAL

INDEMNITIES

  

OPERATIONAL

INDEMNITY

  

RIGHT OF

FIRST

REFUSAL

  

INCLUDES

TRANSFERRED

TANKS

    

Indemnity from HFC to HEP for Pre-Closing Covered Environmental Losses under Section 3.2(a) / Aggregate cap on HFC environmental indemnity in Section 3.1(b)

(expiration date of indemnity)

   Indemnity from HEP to HFC for Post-Closing Covered Environmental Losses under Section 3.4(a)   

Right-of-Way Indemnity under Sections 3.2(a)(iii) and 3.2(a)(iv)

(expiration date of indemnity)

  

Additional Indemnities under Section 3.2(a)(vi)(A)

(expiration date of indemnity) 1

   Additional Indemnities under Section 3.5    Right of First Refusal under Article V     

Malaga Pipeline System

(July 16, 2013, as amended by that certain Amended and Restated Transportation Services Agreement dated September 26, 2014)

   None 7       None    None          No

El Dorado New Tank (Tank 647)

(January 7, 2014)

   None      

(January 7, 2024)

   None          No

Artesia Railyard Facility

(November 1, 2014)

   None       None    None          No

El Dorado Terminal

(March 6, 2015)

   None       None    None          No

 

7   However, Section 3.1(a) covers the 8” pipeline extending 50 miles from White City Station that was formerly used as a refined products pipeline that was conveyed to HEP as part of the 2004 Product Pipelines, Terminal and Related Assets.

 

D-4


Beeson to Lovington System Expansion (March 12, 2015)    None       None    None          No

Artesia Blending Facility

(March 12, 2015)

   None      

(March 12, 2025)

   None          No

Cheyenne New Tank (Tank 117)

(December 4, 2014)

   None      

(December 4, 2029)

   None          No

Tulsa New Tanks

(Tanks 45 and 444A)

(May 1, 2016)

   None      

(May 1, 2026)

   None          No

El Dorado New Tank (Tank 651)

(September 12, 2016)

   None      

(September 12, 2026)

   None          No

 

D-5


Exhibit E

to

Sixteenth Amended and Restated Omnibus Agreement

 

 

Administrative Fee

 

     

Amount of Annual Administrative Fee

 

Years beginning July 13, 2004 through June 30, 2007

       $2,000,000  

Years beginning July 1, 2007 through February 29, 2008

       $2,100,000  

Years beginning from and after March 1, 2008 through December 31, 2014

       $2,300,000  

Years beginning January 1, 2015 through December 31, 2015

       $2,380,500  

Years beginning January 1, 2016

       $2,464,000  

General and Administrative Services

 

  (1) executive services

 

  (2) finance, including treasury, and administration services

 

  (3) information technology services

 

  (4) legal services

 

  (5) corporate health, safety and environmental services

 

  (6) human resources services

 

  (7) procurement

 

  (8) corporate operations team services

 

E-1

Exhibit 10.4

Execution Version

THIRD AMENDED AND RESTATED

SERVICES AND SECONDMENT AGREEMENT

Effective October 1, 2016


TABLE OF CONTENTS

 

ARTICLE I DEFINED TERMS

     2   

S ECTION  1.01

 

D EFINED T ERMS

     2   

S ECTION  1.02

 

T ERMS G ENERALLY

     2   

ARTICLE II SERVICES

     2   

S ECTION  2.01

 

HEP S ECONDED E MPLOYEES

     2   

S ECTION  2.02

 

P ERSONNEL AND S ECONDMENT

     2   

S ECTION  2.03

 

T ERMINATION OF S ECONDMENT

     3   

S ECTION  2.04

 

S UPERVISION

     3   

S ECTION  2.05

 

B ENEFIT P LANS

     3   

ARTICLE III FINANCIAL ACCOUNTING AND BILLING PRACTICES

     4   

S ECTION  3.01

 

A CCOUNTING

     4   

S ECTION  3.02

 

C OMPENSATION

     4   

S ECTION  3.03

 

B ILLING P RACTICES

     4   

S ECTION  3.04

 

R ECORDS AND A UDIT R IGHTS

     4   

S ECTION  3.05

 

N OTIFICATION OF S ECONDMENT

     5   

ARTICLE IV SAFETY AND COMPLIANCE WITH LAWS

     5   

ARTICLE V RELATIONSHIP OF THE PARTIES

     5   

ARTICLE VI LIABILITY STANDARD AND INDEMNIFICATION

     5   

S ECTION  6.01

 

L IMITATION OF L IABILITY ; I NDEMNIFICATION

     5   

S ECTION  6.02

 

S URVIVAL

     6   

ARTICLE VII INSURANCE

     6   

S ECTION  7.01

 

I NSURANCE

     6   

S ECTION  7.02

 

C OST R EIMBURSEMENT

     6   

S ECTION  7.03

 

R EQUIRED C ONTRACTOR C OVERAGE

     6   

ARTICLE VIII TERM AND TERMINATION

     7   

S ECTION  8.01

 

T ERM

     7   

S ECTION  8.02

 

T ERMINATION BY THE P ARTNERSHIP G ROUP

     7   

S ECTION  8.03

 

T ERMINATION BY THE H OLLY F RONTIER P ARTIES

     7   

S ECTION  8.04

 

R IGHT OF T ERMINATION BY E ITHER P ARTY

     7   

S ECTION  8.05

 

E FFECT OF T ERMINATION

     7   

ARTICLE IX NOTICES

     7   

ARTICLE X APPLICABLE LAW

     8   

ARTICLE XI DISPUTES BETWEEN THE PARTIES

     8   

S ECTION  11.01

 

D ISPUTE R ESOLUTION

     8   

S ECTION  11.02

 

P ERFORMANCE D URING D ISPUTES

     8   

ARTICLE XII GENERAL PROVISIONS

     8   

S ECTION  12.01

 

A SSIGNABILITY

     8   

S ECTION  12.02

 

F URTHER A SSURANCES

     8   


S ECTION 12.03

 

C OMPLIANCE WITH L AWS

     8   

S ECTION  12.04

 

S EVERABILITY

     8   

S ECTION 12.05

 

W AIVER

     9   

S ECTION 12.06

 

E NTIRE A GREEMENT

     9   

S ECTION 12.07

 

A MENDMENT

     9   

S ECTION 12.08

 

C OUNTERPARTS

     9   

S ECTION 12.09

 

C ONSTRUCTION

     9   

S ECTION 12.10

 

H EADINGS

     9   

S ECTION 12.11

 

E XHIBITS

     9   

S ECTION 12.12

 

B INDING E FFECT

     9   

S ECTION 12.13

 

C OOPERATION

     9   

S ECTION 12.14

 

N O T HIRD P ARTY B ENEFICIARIES

     9   

EXHIBITS

 

Exhibit A – Defined Terms
Exhibit B – Interpretation
Exhibit C – Services
Exhibit D – Accounting Procedures
Exhibit E-1 – Seconded Employee Positions – El Dorado
Exhibit E-2 – Seconded Employee Positions – Cheyenne
Exhibit E-3 – Seconded Employee Positions – Tulsa
Exhibit E-4 – Seconded Employee Positions – Woods Cross

 

2


THIRD AMENDED AND RESTATED

SERVICES AND SECONDMENT AGREEMENT

This THIRD AMENDED AND RESTATED SERVICES AND SECONDMENT AGREEMENT (this “ Agreement ”) is made and entered into on October 3, 2016 and effective as of October 1, 2016, by and among HOLLY LOGISTIC SERVICES , L.L.C ., a Delaware limited liability company (“ Holly GP ”), HOLLY ENERGY PARTNERS – OPERATING, L.P. , a Delaware limited partnership (“ Partnership ”), CHEYENNE LOGISTICS LLC , a Delaware limited liability company (“ Cheyenne Logistics ”), EL DORADO LOGISTICS LLC , a Delaware limited liability company (“ El Dorado Logistics ”), EL DORADO OPERATING LLC , a Delaware limited liability company (“ El Dorado Operating ”), HEP TULSA LLC , a Delaware limited liability company (“ HEP Tulsa ”), WOODS CROSS OPERATING LLC, a Delaware limited liability company (“Woods Cross Operating” and, together with Holly GP, Partnership, Cheyenne Logistics, El Dorado Logistics, El Dorado Operating and HEP Tulsa, the “ Partnership Group ”), HOLLYFRONTIER PAYROLL SERVICES, INC. , a Delaware corporation (“ HPS ”), HOLLYFRONTIER CHEYENNE REFINING LLC , a Delaware limited liability company (“ HollyFrontier Cheyenne ”), HOLLYFRONTIER EL DORADO REFINING LLC , a Delaware limited liability company (“ HollyFrontier El Dorado ”), HOLLYFRONTIER TULSA REFINING LLC , a Delaware limited liability company (“ HollyFrontier Tulsa ”), and HOLLYFRONTIER WOODS CROSS REFINING LLC, a Delaware limited liability company (“HollyFrontier Woods Cross” and, together with HPS, HollyFrontier Cheyenne, HollyFrontier El Dorado and HollyFrontier Tulsa, the “ HollyFrontier Group ”).

W I T N E S S E T H:

WHEREAS , Holly GP, as the general partner of the general partner of Holly Energy Partners, L.P., a Delaware limited partnership (“ HEP ”), manages HEP, and HEP and its subsidiaries (together with Holly GP, the “ HEP Entities ”) own or operate petroleum product and crude pipelines and terminal, tankage, loading rack and refinery processing facilities;

WHEREAS , the Partnership Group Members have agreed to provide terminalling, transportation and storage services to HollyFrontier Cheyenne, HollyFrontier El Dorado and HollyFrontier Tulsa pursuant to the Throughput Agreement, and refinery processing services to HollyFrontier El Dorado and HollyFrontier Woods Cross pursuant to the Tolling Agreement;

WHEREAS, the HollyFrontier Group Members have experience and expertise in the maintenance and operation of certain processing, refining, terminalling, transportation and storage assets and the environmental reporting related thereto and can provide or make available to the Partnership Group, personnel, and other resources necessary to perform maintenance, operations and management functions with respect to assets that are owned or leased (in whole or in part) by any Partnership Group Member, or with respect to which any Partnership Group Member has the right or obligation to operate and/or maintain;

WHEREAS, the Partnership Group and the HollyFrontier Group desire that the HollyFrontier Group provide maintenance, operations and management resources to the Partnership Group in accordance with the terms and conditions of this Agreement, and in connection therewith, that the HollyFrontier Group second certain of their personnel to the Partnership Group; and

WHEREAS, the Partnership Group and the HollyFrontier Group are parties to a certain Second Amended and Restated Services and Secondment Agreement dated March 31, 2016 and now desire to amend and restate such agreement in its entirety, in accordance with the terms and conditions set forth herein.


NOW , THEREFORE , for and in consideration of the foregoing, the covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Partnership Group and the HollyFrontier Group, the Partnership Group and the HollyFrontier Group hereby amend and restate the Second Amended and Restated Services and Secondment Agreement in its entirety as follows:

ARTICLE I

Defined Terms

Section 1.01 Defined Terms . Capitalized terms used in this Agreement but not otherwise defined herein shall have the meanings set forth on Exhibit A .

Section 1.02 Terms Generally . Matters relating to the interpretation of this Agreement are set forth on Exhibit B .

ARTICLE II

Services

Section 2.01 HEP Seconded Employees . Subject to the terms and conditions of this Agreement, the HollyFrontier Group agrees to second certain of its employees to the Partnership Group, and the Partnership Group agrees to accept the secondment of such employees (the “ Secondment ”) for the purposes of performing operational, maintenance and management activities related to the Assets that are described on Exhibit C and such other services related to the Assets as the Parties may agree upon in writing from time to time (collectively, the “ Services ”). Each such employee who the HollyFrontier Group seconds to the Partnership Group shall, during the period (and only during the period) that such employee is providing Services to the Partnership Group under this Agreement (the “ Period of Secondment ”), be referred to individually herein as an “ HEP Seconded Employee ” and, collectively, as the “ HEP Seconded Employees .” For the avoidance of doubt, the Parties acknowledge that the HEP Seconded Employees will, during the Period of Secondment, be called upon to perform Services for both the applicable Partnership Group Members and the applicable HollyFrontier Group Members, and the Parties intend that such HEP Seconded Employees shall only be seconded to the Partnership Group during those times the HEP Seconded Employees are performing services for the Partnership Group hereunder.

Section 2.02 Personnel and Secondment .

(a) The HollyFrontier Group will provide, or cause to be provided, to the Partnership Group such suitably qualified and experienced HEP Seconded Employees and such other Persons (including consultants and professionals, and service or other organizations) as the HollyFrontier Group is reasonably able to make available to the Partnership Group. The Partnership Group will have the right to approve such HEP Seconded Employees and such other Persons. The HollyFrontier Group does not warrant that the HEP Seconded Employees will permit the Partnership Group to achieve any specific results. Subject to the HollyFrontier Group’s right to be reimbursed for such expenses in accordance with the Accounting Procedures, each HollyFrontier Group Member shall pay all expenses incurred by it in connection with the retention of the HEP Seconded Employees and such other Persons, including, but not limited to, the HEP Seconded Employee Expenses, as defined in Exhibit D . Any such HEP Seconded Employees and other Persons retained by any HollyFrontier Group Member may include employees covered by a collective bargaining agreement, in which case the Secondment will be subject to the terms and conditions of any such agreement. The HollyFrontier Group shall have the sole and exclusive right to negotiate the terms and conditions of any labor or other agreements with the unions to which such employees belong.

 

2


(b) The HEP Seconded Employees will remain at all times employees of the applicable HollyFrontier Group Member, but, will, at all times during the Period of Secondment, work under the direct management, supervision, direction and control of the applicable Partnership Group Member. HEP Seconded Employees shall have no authority or apparent authority to act on behalf of the HollyFrontier Group during the Period of Secondment.

Section 2.03 Termination of Secondment. The applicable HollyFrontier Group Members retain the right to terminate the Secondment of any HEP Seconded Employee for any reason at any time or to hire, discipline or discharge the HEP Seconded Employees with respect to their employment with the HollyFrontier Group. The applicable Partnership Group Member will have the right to terminate the secondment to it of any HEP Seconded Employee for any reason at any time, upon prior written notice to the HollyFrontier Group, but at no time will the Partnership Group have the right to terminate any HEP Seconded Employee’s employment by the HollyFrontier Group. Upon the termination of the Secondment of any HEP Seconded Employee, such HEP Seconded Employee will cease performing Services for the Partnership Group and will no longer be subject to the direction by the Partnership Group of the HEP Seconded Employee’s day-to-day activities.

Section 2.04 Supervision .

(a) During the Period of Secondment, the Partnership Group shall be ultimately and fully responsible for the daily work assignments of the HEP Seconded Employees during those times that the HEP Seconded Employees are performing services for the Partnership Group hereunder, including supervision of their day-to-day work activities and performance consistent with the job functions associated with the Services. In the course and scope of performing any HEP Seconded Employee’s job functions for the Partnership Group, the HEP Seconded Employee will report into the Partnership Group’s management structure, and will be under the direct management, supervision, direction and control of the applicable Partnership Group Member with respect to such HEP Seconded Employee’s day-to-day activities.

(b) Those active employees whose titles reflect that they serve as supervisors or managers and who are called upon to oversee the work of HEP Seconded Employees related to the Assets or to provide management support on behalf of the Partnership Group are designated by the Partnership Group as supervisors to act on the behalf of the Partnership Group in supervising the HEP Seconded Employees pursuant to Section 2.04(a) above. Any HEP Seconded Employee so designated will be acting on the behalf of the Partnership Group when supervising the work of the HEP Seconded Employees or when they are otherwise providing management or executive support on behalf of the Partnership Group.

(c) Holly GP shall at all times be ultimately and fully responsible for the daily work assignments of persons employed by HollyFrontier El Dorado, HollyFrontier Cheyenne, HollyFrontier Tulsa and HollyFrontier Woods Cross (and HPS as agent for HollyFrontier El Dorado, HollyFrontier Cheyenne, HollyFrontier Tulsa and HollyFrontier Woods Cross under Section 3504 of the Internal Revenue Code) dedicated to performing services on behalf of the HEP Entities, including supervision of their day-to-day work activities and performance. In the course and scope of performing any HEP Seconded Employee’s job functions for the HEP Entities, the HEP Seconded Employee will be integrated into the organization of the HEP Entities, will report into the HEP Entities’ management structure, and will be under the direct management, supervision, direction and control of the applicable HEP Entity with respect to such HEP Employee’s day-to-day activities. The positions in the HEP Entities to be filled by HEP Seconded Employees are set forth on Exhibits E-1 through Exhibit E-4 .

Section 2.05 Benefit Plans. The Partnership Group shall not be a participating employer in any benefit plan of any HollyFrontier Group Member. The HollyFrontier Group shall remain solely

 

3


responsible for all obligations and liabilities arising with respect to any benefit plans relating to any HEP Seconded Employees and the Partnership Group shall not assume any benefit plan or have any obligations or liabilities arising thereunder, in each case except for costs properly chargeable to the Partnership Group.

ARTICLE III

Financial Accounting and Billing Practices

Section 3.01 Accounting . Each HollyFrontier Group Member shall keep a full and complete account of all costs and expenses incurred by it with respect to the HEP Seconded Employees in connection with the performance and provision of the Services hereunder in the manner set forth on Exhibit D hereto (the “ Accounting Procedures ”).

Section 3.02 Compensation . Each HollyFrontier Group Member shall be fully reimbursed by the applicable Partnership Group Member for all necessary and reasonable costs and expenses incurred by such HollyFrontier Group Member with respect to the HEP Seconded Employees in connection with the provision of the Services to the Partnership Group at the rates and in the manner set forth in the Accounting Procedures. It is understood that the Partnership Group shall be liable for HEP Seconded Employee Expenses to the extent, and only to the extent, they are attributable to the Period of Secondment.

Section 3.03 Billing Practices . The Partnership Group shall pay, and the HollyFrontier Group shall receive, as full and complete compensation with respect to the HEP Seconded Employees in connection with the performance of the Services hereunder, the sum of the amounts becoming due as described in the Accounting Procedures. For each calendar month during the Period of Secondment, payment by the applicable Partnership Group Member shall be made no later than the tenth Business Day of the immediately following calendar month. As long as the HollyFrontier Group Members are Affiliates of the Partnership Group Members, the HollyFrontier Group and the Partnership Group may settle the Partnership Group’s financial obligations to the HollyFrontier Group through the HollyFrontier Group’s normal intercompany settlement processes.

Section 3.04 Records and Audit Rights . The HollyFrontier Group shall maintain a true and correct set of records pertaining to the HEP Seconded Employees and all activities relating to the performance of the HollyFrontier Group hereunder and all transactions related thereto. The HollyFrontier Group further agrees to retain all such records for a period of time not less than two (2) years following the end of the calendar year in which the applicable Services were performed. The Partnership Group, or its authorized representative or representatives, shall have the right during any HollyFrontier Group Member’s normal business hours to audit, copy and inspect, at the Partnership Group Member’s sole cost and expense, any and all records of such HollyFrontier Group Member relating to its performance of its obligations hereunder (but not any other books and records of such HollyFrontier Group Member). Audits shall not be commenced more than once by the Partnership Group during each calendar year and shall be completed within a reasonable time frame not to exceed ten (10) days. The Partnership Group may request information from the HollyFrontier Group’s books and records relating to the HollyFrontier Group’s obligations hereunder from time to time and such requests shall not constitute an audit for that calendar year. The Partnership Group shall have two (2) years after the end of a calendar year during which to conduct an audit of any HollyFrontier Group Member’s books and records for such calendar year, and any Claim arising out of or based in whole or in part on the information produced or obtained by the performance of any such audit must be made, if at all, within such two (2) year period or shall be deemed waived.

 

4


Section 3.05 Notification of Secondment . At least annually, Holly GP shall notify the HEP Seconded Employees of their respective duties and obligations as HEP Seconded Employees, including but not limited to, (i) when working on assets of the HEP Entities, HEP Seconded Employees should only take direction from HEP employees or HEP Seconded Employees; (ii) questions regarding operations, tasks and similar matters while working on assets of the HEP Entities should only be directed to HEP employees or HEP Seconded Employees; (iii) decisions regarding flows into a tank should only be made while performing services for the HEP Entities; (iv) documentation required at the time working on assets of the HEP Entities should be prepared in the name of the applicable HEP Entity; (v) performance evaluation for the HEP Seconded Employees will be completed in part by the HEP Entities and in part by the HollyFrontier Group.

ARTICLE IV

Safety and Compliance with Laws

The Parties will abide by, at a minimum, the safety requirements promulgated by the Parties from time to time with respect to the HEP Seconded Employees, the Services and the Assets and in compliance with Applicable Laws and any applicable collective bargaining agreement. Without limiting the foregoing, the parties agree that the Partnership Group and the HollyFrontier Group jointly shall develop, adopt, and enforce a written workplace and accident plan and injury reduction program that satisfies the requirements of Applicable Law and Prudent Industry Practice and post the workplace accident and injury reduction plan at each work site at which the HEP Seconded Employees perform work. The Partnership Group shall be responsible, during any Period of Secondment, for ensuring that all applicable federal, state and local laws prohibiting harassment, discrimination or retaliation in the workplace are adhered to and followed with respect to any HEP Seconded Employee. The Parties agree to disclose, and cooperate in the investigation of, any complaint of harassment, discrimination or retaliation made to either Party by an HEP Seconded Employee in connection with any Secondment.

ARTICLE V

Relationship of the Parties

This Agreement shall not in any manner limit the Parties in carrying on their respective separate businesses or operations or impose upon any Party a fiduciary duty vis-à-vis the other Party. Nothing in this Agreement and no actions taken by the HollyFrontier Group or the Partnership Group shall constitute a partnership, joint venture, association or other co-operative entity among the HollyFrontier Group and the Partnership Group. No Party shall have the right or authority to negotiate, conclude or execute any contract or legal document with any third person in the name of other Party; to assume, create, or incur any liability of any kind, express or implied, against or in the name of any of the other Party; or to otherwise act as the representative of the other Party, unless expressly authorized in writing by the other Party.

ARTICLE VI

Liability Standard and Indemnification

Section 6.01 Limitation of Liability; Indemnification . The Parties acknowledge and agree that the provisions relating to Force Majeure, indemnity and limitation of liability set forth in the Omnibus Agreement shall apply and be in full force and effect with respect to this Agreement. Notwithstanding anything in this Agreement or the Omnibus Agreement to the contrary and solely for the purpose of determining which of the HollyFrontier Group Members or Partnership Group Members shall be liable in a particular circumstance, neither a HollyFrontier Group Member nor a Partnership Group Member shall be liable to another Party for any loss, damage, injury, judgment, claim, cost, expense or other liability suffered or incurred (collectively, “ Damages ”) by such Party except to the extent provided for in the

 

5


Omnibus Agreement and to the extent that the HollyFrontier Group Member or Partnership Group Member causes such Damages or owns or operates the assets or other property in question responsible for causing such Damages. In no event shall any HollyFrontier Group Member have any liability to another HollyFrontier Group Member, or shall any Partnership Group Member have any liability to another Partnership Group Member, for Damages, regardless of how caused or under any theory of recovery.

Section 6.02 Survival . The provisions of this Article VI shall survive the termination of this Agreement.

ARTICLE VII

Insurance

Section 7.01 Insurance .

(a) The HollyFrontier Group shall at all times during the term of this Agreement procure and maintain workers’ compensation insurance or similar insurance, including all such insurance as may be required by all Applicable Laws. The HollyFrontier Group shall at all times during the term of this Agreement cause each Partnership Group Member and their respective subsidiaries to be an additional named insured on such workers’ compensation or similar insurance policies; provided that the Partnership Group shall be considered an employer solely for the purposes of its status as a dual, joint- or co-employer under the relevant workers’ compensation regime. Each HollyFrontier Group Member shall cause its workers’ compensation and employers liability insurers to waive their rights of subrogation against the Partnership Group. The compensation paid by any Partnership Group Member to the HollyFrontier Group includes amounts intended for the purchase of the workers compensation coverage required by this paragraph. The HollyFrontier Group shall provide to each Partnership Group Member a certification or other evidence of its compliance with this paragraph.

(b) The HollyFrontier Group may elect to self-insure all or any part of the insurance requirements set forth in Section 7.01(a) above to the extent allowed by Applicable Law. If the HollyFrontier Group elects to self-insure, then the HollyFrontier Group shall respond to any insurance claim, with regard to waiving rights of subrogation against the Partnership Group, in the same manner as a commercial market insurance policy that waived subrogation rights against the Partnership Group would have responded to such insurance claim.

Section 7.02 Cost Reimbursement . Insurance as required in Section 7.01 hereof shall be a reimbursable cost pursuant to the Accounting Procedures.

Section 7.03 Required Contractor Coverage . The HollyFrontier Group shall require all contractors and subcontractors employed by them in performing and/or providing Services hereunder to procure and maintain: (i) workers’ compensation insurance or similar insurance, including all such insurance as may be required by Applicable Laws; (ii) employers’ liability insurance; (iii) commercial general liability insurance; and (iv) any other insurance that may be necessary or advisable, in each case, in amounts and with such terms as are reasonable and consistent with industry practice and as may be specified in writing by the Partnership Group. Further, the HollyFrontier Group shall require such contractors and subcontractors to cause their workers’ compensation and employers’ liability insurance insurers to waive their rights of subrogation against the Partnership Group, and to name the Partnership Group as an additional insured under any commercial general liability and or other appropriate insurance policies carried by such contractors and subcontractors.

 

6


ARTICLE VIII

Term and Termination

Section 8.01 Term . Unless terminated in accordance with Section 8.02 , Section 8.03 or Section 8.04 below, this Agreement shall commence on the date hereof and continue until the earlier of (a) the mutual agreement of the Parties to terminate this Agreement or (b) the termination of the Omnibus Agreement. In addition, the applicable Parties may terminate specific Services provided under this Agreement in the event the Throughput Agreement or Tolling Agreement related to the Assets for which such Services are performed or provided is terminated in accordance with its terms.

Section 8.02 Termination by the Partnership Group . The applicable Partnership Group Member shall have the right to terminate this Agreement immediately upon the Bankruptcy of the applicable HollyFrontier Group Member; provided that such Partnership Group Member shall deliver to such HollyFrontier Group Member notice of any such termination, which shall include a reasonably detailed description of the basis therefor. Any specific Service may be terminated by a Partnership Group Member in accordance with Section 3.05 or upon thirty (30) days’ prior written notice to the applicable HollyFrontier Group Member.

Section 8.03 Termination by the HollyFrontier Parties . The applicable HollyFrontier Group Member shall have the right to terminate this Agreement or any Services provided hereunder: (i) immediately upon the Bankruptcy of the applicable Partnership Group Member or (ii) on thirty (30) days’ prior written notice upon the occurrence of a Change of Control of the applicable Partnership Group Member. Notwithstanding the foregoing, if the Partnership ceases to Control, directly or indirectly, any Partnership Group Member, then the HollyFrontier Group shall have the right to terminate this Agreement with respect to any Services provided to such Partnership Group Member.

Section 8.04 Right of Termination by Either Party . Any Party may terminate this Agreement upon prior written notice to the other Party if the other Party is in Material Default of any of its obligations under this Agreement; and

(a) the non-defaulting Party gives prior written notice of such Material Default to the defaulting Party, which notice shall set forth in reasonable detail the facts and circumstances of such Material Default; and

(b) the defaulting Party fails to cure the Material Default within twenty (20) Business Days from receipt by the defaulting Party of the written notice.

Section 8.05 Effect of Termination . The termination of this Agreement shall not relieve any Party of its obligations to pay amounts of money due hereunder which accrued prior to such termination. Upon termination, the applicable HollyFrontier Group Member shall promptly make available for review and copying by the applicable Partnership Group Member its then existing books and records relating to the Assets.

ARTICLE IX

Notices

Any notice or other communication given under this Agreement shall be in writing and shall be delivered in accordance with the requirements for notices set forth in the Omnibus Agreement.

 

7


ARTICLE X

Applicable Law

REGARDLESS OF THE PLACE OF CONTRACTING, PLACE(S) OF PERFORMANCE, OR OTHERWISE, THE PROVISIONS OF THIS AGREEMENT AND ALL AMENDMENTS, MODIFICATIONS, ALTERATIONS OR SUPPLEMENTS HERETO SHALL BE GOVERNED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WHERE THE SERVICES ARE PERFORMED, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW OR ANY OTHER PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR INTERPRETATION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION.

ARTICLE XI

Disputes Between the Parties

Section 11.01 Dispute Resolution . Subject to Article VIII, any Dispute arising out of or in connection with this Agreement, including any question regarding the existence, validity or termination of this Agreement, shall be exclusively resolved in accordance with Article VIII of the Omnibus Agreement.

Section 11.02 Performance During Disputes . Pending resolution of any Dispute between the Parties, the Parties shall continue to perform in good faith their respective obligations under this Agreement based upon the last agreed performance demonstrated prior to the Dispute.

ARTICLE XII

General Provisions

Section 12.01 Assignability . This Agreement shall inure to the benefit of and shall be binding upon the Parties and their respective successors and assigns; provided , however , that neither this Agreement nor any of the rights, benefits or obligations hereunder shall be assigned, by operation of applicable law or otherwise, by any Party without the prior written consent of the other Parties, which consent shall not be unreasonably withheld; provided, however that each Party may assign its rights and obligations hereunder to an Affiliate without the consent of any other Party. Except as provided for herein, nothing in this Agreement is intended to confer any rights, benefits or obligations upon any Person other than the Parties and their permitted respective successors and assigns.

Section 12.02 Further Assurances . The Parties shall execute such additional documents and shall cause such additional actions to be taken as may be required or, in the judgment of any Party, be necessary or desirable, to effect or evidence the provisions of this Agreement and the transactions contemplated hereby.

Section 12.03 Compliance with Laws . This Agreement is in all respects subject to all Applicable Laws. The Parties shall at all times comply with all Applicable Laws in the performance of this Agreement.

Section 12.04 Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Applicable Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party hereto. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

 

8


Section 12.05 Waiver . To be effective, any waiver of any right under this Agreement must be in writing and signed by a duly authorized officer or representative of the Party bound thereby.

Section 12.06 Entire Agreement . This Agreement, together with all the Exhibits attached hereto, constitutes the entire agreement of the Parties with respect to the subject matter hereof as applicable to such Party and supersedes all prior agreements and undertakings, both written and oral, between any of the Parties with respect to the subject matter hereof.

Section 12.07 Amendment . This Agreement may not be amended or modified except by an instrument in writing signed by, or on behalf of, each of the Parties hereto.

Section 12.08 Counterparts . This Agreement may be executed in one or more counterparts, and by the Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

Section 12.09 Construction . The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring a Party by virtue of the authorship of any of the provisions of this Agreement.

Section 12.10 Headings . The Article and Section headings used in this Agreement have been inserted only for convenience to facilitate reference and they shall not be determinative in construing the meaning, interpretation or application of any Article or Section.

Section 12.11 Exhibits . The Exhibits referred to herein are attached hereto and by this reference are incorporated herein and made a part hereof. In the event there is any conflict between this Agreement and an Exhibit, the provisions of this Agreement shall be deemed controlling.

Section 12.12 Binding Effect . This Agreement will be binding upon, and will inure to the benefit of, the Parties and their respective successors, permitted assigns and legal representatives.

Section 12.13 Cooperation . The Parties acknowledge that they are entering into a long-term arrangement in which the cooperation of the parties will be required. If, during the term of this Agreement, changes in the operations, facilities or methods of any HollyFrontier Group Member or any Partnership Group Member will materially benefit one of them without detriment to the other, the Parties commit to each other to make reasonable efforts to cooperate and assist each other.

Section 12.14 No Third Party Beneficiaries . No Person not a Party to this Agreement will have any rights under this Agreement as a third party beneficiary or otherwise, including, without limitation, any HEP Seconded Employee. In furtherance but not in limitation of the foregoing: (i) nothing in this Agreement shall be deemed to provide any HEP Seconded Employee with a right to continued Secondment or employment; and (ii) nothing in this Agreement shall be deemed to constitute an amendment to any benefit plan or limit in any way the right of the Parties to amend, modify or terminate, in whole or in part, any benefit plan which may be in effect from time to time.

[Signature page follows.]

 

9


IN WITNESS WHEREOF , the Parties have caused this Agreement to be signed by their duly authorized officers as of the date first set forth above.

 

HOLLYFRONTIER GROUP:
HOLLYFRONTIER PAYROLL SERVICES, INC.
HOLLYFRONTIER CHEYENNE REFINING LLC
HOLLYFRONTIER EL DORADO REFINING LLC
HOLLYFRONTIER TULSA REFINING LLC
HOLLYFRONTIER WOODS CROSS REFINING LLC
By:  

/s/ George J. Damiris

Name:   George J. Damiris
Title:   Chief Executive Officer and President
PARTNERSHIP GROUP:
HOLLY LOGISTIC SERVICES, L.L.C.
HOLLY ENERGY PARTNERS – OPERATING, L.P.
CHEYENNE LOGISTICS LLC
EL DORADO LOGISTICS LLC
EL DORADO OPERATING LLC
HEP TULSA LLC
WOODS CROSS OPERATING LLC
By:  

/s/ Michael C. Jennings

Name:   Michael C. Jennings
Title:   Chief Executive Officer

 

10


Exhibit A

to

Third Amended and Restated Services and Secondment Agreement

 

 

Defined Terms

Accounting Procedures ” has the meaning set forth in Section 3.01 .

Affiliate ” has the meaning set forth in the Partnership Agreement.

Agreement ” has the meaning set forth in the Preamble.

Allocation Methodology ” has the meaning set forth in Exhibit D .

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 by 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.

Assets ” means such assets as are identified on Exhibit C , as amended from time to time.

Bankruptcy ” means, with respect to any Person, that: (i) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar applicable law, or has any such petition filed or commenced against it which is not withdrawn or dismissed within thirty (30) Days, (ii) makes a general assignment or any general arrangement for the benefit of creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced) or (iv) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets which is not withdrawn or dismissed within thirty (30) Days.

Business Day ” means any day except for Saturday, Sunday or a legal holiday in the State of Texas.

Change of Control ” has the meaning set forth in the Omnibus Agreement.

Cheyenne Assets ” has the meaning set forth on Exhibit C .

Cheyenne Logistics ” has the meaning set forth in the Preamble.

Cheyenne Refinery ” means that certain petroleum refinery owned by HollyFrontier Cheyenne in Cheyenne, Wyoming.

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.


Control ” has the meaning set forth in the Omnibus Agreement.

Damages ” has the meaning set forth in Section 6.01 .

Dispute ” means any dispute or difference that arises between two or more Parties in connection with or arising out of this Agreement (including, any dispute as to the termination or invalidity of this Agreement or any provision of it).

El Dorado Assets ” has the meaning set forth on Exhibit C .

El Dorado Logistics ” has the meaning set forth in the Preamble.

El Dorado Operating ” has the meaning set forth in the Preamble.

El Dorado Refinery ” means that certain petroleum refinery owned by HollyFrontier El Dorado in El Dorado, Kansas.

Force Majeure ” has the meaning set forth in the Omnibus Agreement.

GAAP ” means United States generally accepted accounting principles.

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.

HEP ” has the meaning set forth in the Recitals.

HEP Entity ” has the meaning set forth in the Recitals.

HEP Seconded Employee Expenses ” has the meaning set forth in Exhibit D .

HEP Seconded Employees ” has the meaning set forth in Section 2.01 .

HEP Tulsa ” has the meaning set forth in the Preamble.

HollyFrontier Group ” has the meaning set forth in the Preamble.

HollyFrontier Cheyenne ” has the meaning set forth in the Preamble.

HollyFrontier El Dorado ” has the meaning set forth in the Preamble.

HollyFrontier Group Member ” means any member of the HollyFrontier Group.

HollyFrontier Tulsa ” has the meaning set forth in the Preamble.

HollyFrontier Woods Cross ” has the meaning set forth in the Preamble.

 

A-2


Holly GP ” has the meaning set forth in the Preamble.

HPS ” has the meaning set forth in the Preamble.

Master Site Services Agreement ” means that certain Third Amended and Restated Master Site Services Agreement dated as of the date hereof between the HollyFrontier Group and certain of their Affiliates, and Cheyenne Logistics, El Dorado Logistics and HEP Tulsa and certain of their Affiliates.

Material Default ” means: (i) the failure of a Party to pay the applicable Party any money payable by that Party within ten (10) Business Days after demand therefor, except a failure related to a bona fide business dispute about the amount of such payment or the liability for such payment, or (ii) the failure of a Party to perform its material obligations under this Agreement, which is not cured to the reasonable satisfaction of the applicable other Party within thirty (30) days after the date the Party receives notice that such obligation has not been performed, except when excused by Force Majeure or by some other provision of this Agreement, and except a failure related to a bona fide dispute about any obligation.

Omnibus Agreement ” shall mean the Sixteenth Amended and Restated Omnibus Agreement, dated as of the date hereof, as may be further amended from time to time, by and among HollyFrontier Corporation, a Delaware corporation, the other Holly Entities (as defined in the Omnibus Agreement and listed on the signature pages thereto), Holly Energy Partners, L.P., a Delaware limited partnership, and the other Partnership Entities (as defined in the Omnibus Agreement and listed on the signature pages thereto), as the same may be amended, modified or supplemented from time to time.

Parties ” means the Partnership Group and the HollyFrontier Group collectively.

Partnership ” has the meaning set forth in the Preamble.

Partnership Agreement ” means the First Amended and Restated Agreement of Limited Partnership of HEP, dated as of July 13, 2004, as amended and as may be further amended from time to time, by and among HEP Logistics Holdings, L.P., a Delaware limited partnership, and Holly Corporation, a Delaware corporation, together with others who become Partners (as defined in the Partnership Agreement).

Partnership Group ” has the meaning set forth in the Preamble.

Partnership Group Member ” means any member of the Partnership Group.

Party ” means any Partnership Group Member or any HollyFrontier Group Member, individually.

Period of Secondment ” has the meaning set forth in Section 2.01 .

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.

Prudent Industry Practice ” has the meaning set forth in the Omnibus Agreement.

Secondment ” has the meaning set forth in Section 2.01 .

Services ” has the meaning set forth in Section 2.01 .

 

A-3


Throughput Agreement ” means an agreement whereby HollyFrontier El Dorado, HollyFrontier Cheyenne or HollyFrontier Tulsa (or their Affiliates) agrees to terminal, transport or store crude oil or refined petroleum products on, in or at the Assets, as such agreement may be amended, modified or superseded from time to time.

Tolling Agreement ” means an agreement whereby HollyFrontier El Dorado, or HollyFrontier Woods Cross (or their Affiliates) agrees to certain processing or refining services at the Assets, as such agreement may be amended, modified or superseded from time to time.

Tulsa Assets ” has the meaning set forth on Exhibit C .

Tulsa Refinery ” means that certain petroleum refinery owned by HollyFrontier Tulsa in Tulsa, Oklahoma.

Woods Cross Assets ” has the meaning set forth on Exhibit C .

Woods Cross Operating ” has the meaning set forth in the Preamble.

Woods Cross Refinery ” means that certain petroleum refinery owned by HollyFrontier Woods Cross in West Bountiful, Utah.

 

A-4


Exhibit B

to

Third Amended and Restated Services and Secondment Agreement

 

 

Interpretation

As used in this Agreement, unless a clear contrary intention appears:

(a) any reference to the singular includes the plural and vice versa, any reference to natural persons includes legal persons and vice versa, and any reference to a gender includes the other gender;

(b) the words “hereof”, “herein”, and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;

(c) any reference to Articles, Sections and Exhibits are, unless otherwise stated, references to Articles, Sections and Exhibits of or to this Agreement and references in any Section or definition to any clause means such clause of such Section or definition. The headings in this Agreement have been inserted for convenience only and shall not be taken into account in its interpretation;

(d) reference to any agreement (including this Agreement), document or instrument means such agreement, document, or instrument as amended, modified or supplemented and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of this Agreement;

(e) the Exhibits hereto form an integral part of this Agreement and are equally binding therewith. Any reference to “this Agreement” shall include such Exhibits;

(f) references to a Person shall include any permitted assignee or successor to such Party in accordance with this Agreement and reference to a Person in a particular capacity excludes such Person in any other capacity;

(g) if any period is referred to in this Agreement by way of reference to a number of days, the days shall be calculated exclusively of the first and inclusively of the last day unless the last day falls on a day that is not a Business Day in which case the last day shall be the next succeeding Business Day;

(h) the use of “or” is not intended to be exclusive unless explicitly indicated otherwise;

(i) references to “$” or to “dollars” shall mean the lawful currency of the United States of America; and

(j) the words “includes,” “including,” or any derivation thereof shall mean “including without limitation” or “including, but not limited to.”

 

B-1


Exhibit C

to

Third Amended and Restated Services and Secondment Agreement

 

 

Services

The HollyFrontier Group shall provide HEP Seconded Employees to the Partnership Group to perform operational and maintenance activities related to the following assets that are owned (in whole or in part) or leased by any Partnership Group Member, or with respect to which any Partnership Group Member has the right or obligation to operate and/or maintain, at each of the following refinery locations:

 

1. Cheyenne Refinery (the “Cheyenne Assets”)

 

  A. Group 1 Cheyenne Assets:

Storage tanks, propane loading spots and crude oil LACTS located at or comprising any part of the Cheyenne Refinery and the piping and valves associated with the tank farm that are directly connected to the Partnership Group’s storage tanks at the Cheyenne Refinery.

 

  B. Group 2 Cheyenne Assets:

All assets other than the Group 1 Cheyenne Assets at the Cheyenne Refinery owned by Cheyenne Logistics.

 

2. El Dorado Refinery (the “El Dorado Assets”)

 

  A. Group 1 El Dorado Assets:

Storage tanks located at or comprising any part of the El Dorado Refinery, the valves and piping located in the tank farm area that are directly connected to the Partnership Group’s storage tanks at the El Dorado Refinery and piping at the El Dorado Refinery connected to the Nustar and Magellan pipeline.

Naptha fractionation column and hydrogen generation un