__________________
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):
March 16, 2015 (March 12, 2015)
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
Unloading and Blending Services Agreement
On March 12, 2015, Holly Energy Partners-Operating, L.P. (“ HEP Operating ”) and HEP Refining, L.L.C. (“ HEP Refining ”), both of which are wholly owned subsidiaries of Holly Energy Partners, L.P. (the “ Partnership ”), and HollyFrontier Refining & Marketing LLC (“ HFRM ”), a wholly owned subsidiary of HollyFrontier Corporation (“ HollyFrontier ”), entered into an Unloading and Blending Services Agreement (the “ Services Agreement ”). HollyFrontier controls the general partner of the Partnership.
Pursuant to the Services Agreement, HEP Refining has agreed to undertake certain construction projects to facilitate the unloading and blending of ethanol and biodiesel fuel at the refinery owned by Navajo Refining Company, L.L.C. (“ Navajo Refining ”), a wholly owned subsidiary of HollyFrontier, in Artesia, New Mexico (the “ Facility ”). The Services Agreement also provides that once the Facility is determined to be operational (the “ Facility Commencement Date ”), HEP Operating will provide certain unloading and blending services to HFRM and HFRM will pay HEP Operating a base tariff and incentive tariff for each gallon unloaded at the Facility, with a guaranteed minimum throughput revenue commitment of approximately $700,000 per year. The tariffs are subject to various adjustments under the Services Agreement. The Service Agreement’s term ends 20 years following the Facility Commencement Date.
The description of the Services Agreement herein is qualified by reference to the copy of the Services Agreement, filed as Exhibit 10.1 to this report, which is incorporated by reference into this report in its entirety.
Amended and Restated Crude Gathering Agreement
On March 12, 2015, Navajo Refining, Holly Refining & Marketing Company – Woods Cross LLC (“ HRM – WX ”), a wholly owned subsidiary of HollyFrontier, HFRM (together with Navajo Refining and HRM - WX, the “ HollyFrontier Entities ”), HEP Operating, HEP Pipeline, L.L.C. (“ HEP Pipeline ”), a wholly owned subsidiary of the Partnership, and HEP Woods Cross, L.L.C. (“ HEP WX ” and, together with HEP Operating and HEP Pipeline, the “ Partnership Entities ”), a wholly owned subsidiary of the Partnership, entered into the Third Amended and Restated Crude Pipelines and Tankage Agreement (the “ Amended Crude Agreement ”). HollyFrontier controls the general partner of the Partnership.
Pursuant to the Amended Crude Agreement, HEP Pipeline has agreed to undertake certain expansion projects at the Beeson station and related to the Beeson Pipeline (the “ Beeson to Lovington System Expansion ”). The Amended Crude Agreement also provides that once the Beeson to Lovington System Expansion is determined to be operational (the “ Expansion Commencement Date ”), the HollyFrontier Entities will pay to the Partnership Entities an extra surcharge per barrel (the “ Surcharge ”) for making shipments of crude oil and service on the trunk lines, and the minimum trunk pipelines revenue commitment under the Amended Crude Agreement will be increased by an amount equal to approximately $900,000 per year. The Surcharge is subject to various adjustments under the Amended Crude Agreement. As previously disclosed, the term of the Amended Crude Agreement ends on February 28, 2023.
The description of the Amended Crude Agreement herein is qualified by reference to the copy of the Amended Crude Agreement, filed as Exhibit 10.2 to this report, which is incorporated by reference into this report in its entirety.
Eleventh Amended and Restated Omnibus Agreement
On March 12, 2015, in connection with the execution of the Services Agreement and the Amended Crude Agreement, HollyFrontier and the Partnership and certain of their respective subsidiaries entered into an Eleventh Amended and Restated Omnibus Agreement (the “ Eleventh Amended Omnibus Agreement ”), with an effective date of January 1, 2015. The Eleventh Amended Omnibus Agreement amends and restates the Tenth Amended and Restated Omnibus Agreement, dated as of September 26, 2014, which was previously filed as an exhibit to the Partnership’s Current Report on Form 8-K dated September 29, 2014, to, among other things, subject assets included in the Facility and the Beeson to Lovington System Expansion to HollyFrontier’s right of first refusal to purchase the Partnership’s assets that serve HollyFrontier’s refineries. In addition, the Eleventh Amended Omnibus Agreement increases the annual administrative fee to be paid by the Partnership to HollyFrontier from $2,300,000 to $2,380,500.


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The description of the Eleventh Amended Omnibus Agreement herein is qualified by reference to the copy of the Eleventh Amended Omnibus Agreement, filed as Exhibit 10.3 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
Unloading and Blending Services Agreement dated March 12, 2015 by and between HollyFrontier Refining & Marketing LLC, Holly Energy Partners-Operating, L.P. and HEP Refining, L.L.C.

10.2
Third Amended and Restated Crude Pipelines and Tankage Agreement, dated as of March 12, 2015, by and among Navajo Refining Company, L.L.C., Holly Refining & Marketing Company - Woods Cross LLC, HollyFrontier Refining & Marketing LLC, Holly Energy Partners-Operating, L.P., HEP Pipeline, L.L.C. and HEP Woods Cross, L.L.C.

10.3
Eleventh Amended and Restated Omnibus Agreement dated March 12, 2015 by and among HollyFrontier Corporation, Holly Energy Partners, L.P. and certain of their respective subsidiaries


2



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/ Douglas S. Aron
 
 
 
 
 
Executive Vice President and
 Chief Financial Officer
                
Date:    March 16, 2015


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EXHIBIT INDEX
Exhibit No.
Description
10.1
Unloading and Blending Services Agreement dated March 12, 2015 by and between HollyFrontier Refining & Marketing LLC, Holly Energy Partners-Operating, L.P. and HEP Refining, L.L.C.

10.2
Third Amended and Restated Crude Pipelines and Tankage Agreement, dated as of March 12, 2015, by and among Navajo Refining Company, L.L.C., Holly Refining & Marketing Company - Woods Cross LLC, HollyFrontier Refining & Marketing LLC, Holly Energy Partners-Operating, L.P., HEP Pipeline, L.L.C. and HEP Woods Cross, L.L.C.

10.3
Eleventh Amended and Restated Omnibus Agreement dated March 12, 2015 by and among HollyFrontier Corporation, Holly Energy Partners, L.P. and certain of their respective subsidiaries



4

Execution Version

UNLOADING AND BLENDING SERVICES AGREEMENT
(Artesia)
This Unloading and Blending Services Agreement (this “ Agreement ”) is dated as of March 12, 2015, to be effective as of the Effective Time, by and among HollyFrontier Refining & Marketing LLC (“ HFRM ”), Holly Energy Partners-Operating, L.P. (“ HEP Operating ”) and HEP Refining, L.L.C. (“ HEP Refining ”). Each of HFRM, HEP Operating and HEP Refining is individually referred to herein as a “ Party ” and collectively as the “ Parties .”

RECITALS:
WHEREAS, HEP Refining desires to undertake certain construction projects, as more specifically set forth in Section 2 below, related to constructing 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 Navajo Refining Company, L.L.C. in Artesia, New Mexico (the “ Facility ”), with the volume capacities as set forth on Exhibit A hereto; and
WHEREAS, in connection with the construction of the Facility, HFRM, HEP Operating and HEP Refining desire to enter into this Agreement to, among other things, set forth the terms and conditions under which HEP Operating will provide certain unloading and blending services for HFRM at the Facility.
NOW, THEREFORE, in consideration of the covenants and obligations contained herein, the Parties hereby agree as follows:
Section 1. Definitions
Capitalized terms used throughout this Agreement and not otherwise defined herein shall have the meanings set forth on Appendix A .
Section 2.      Construction of the Facility and Related Assets .
In consideration of and in reliance upon HFRM’s execution and delivery of this Agreement, including the Minimum Revenue Commitment, HEP Refining agrees to use commercially reasonable efforts to complete the construction projects set forth on Exhibit B (the “ Construction Projects ”). HEP Refining shall bear the costs of constructing the Construction Projects listed on Exhibit B .
Section 3.      Agreement to Use Services Relating to the Facility .
The Parties intend to be strictly bound by the terms set forth in this Agreement, which sets forth revenues to HEP Operating to be paid by HFRM, and requires HEP Operating to provide certain unloading and blending services to HFRM. The principal objective of HEP Operating is for HFRM to meet or exceed its obligations with respect to the Minimum Revenue Commitment. The principal objective of HFRM is for HEP Operating to provide services to HFRM in a manner that enables HFRM to have the Products unloaded and blended at the Facility.

UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


(a)      Minimum Revenue Commitment . During the Term, following the Commencement Date, and subject to the terms and conditions of this Agreement, HFRM agrees as follows:
(i)      Capacity and Revenue Commitment . Subject to Section 5 , HFRM shall pay HEP Operating service tariffs set forth in this Agreement for use of the Facility that result in the payment of an amount that will satisfy the Minimum Revenue Commitment in exchange for HEP Operating providing HFRM a minimum aggregate capacity for unloading and blending services at the Facility equal to the Minimum Capacity Commitment. The “ Minimum Revenue Commitment ” shall be an amount of revenue to HEP Operating for each Contract Quarter determined by multiplying the Minimum Throughput for such Contract Quarter, by the Base Tariff in effect for such Contract Quarter, as such Base Tariff may be revised pursuant to Section 3(a)(iii) . The “ Minimum Capacity Commitment ” means an amount equal to 450 bpd.
(ii)      Applicable Tariffs . HFRM will pay the Base Tariff for all quantities of Products unloaded at the Facility in each Contract Quarter during the Term up to and including the Incentive Tariff Threshold, and shall pay the Incentive Tariff for all quantities in excess of the Incentive Tariff Threshold at the Facility during such Contract Quarter.
(iii)      Adjustment of Tariffs .
(A)    The Base Tariff and Incentive Tariff shall be adjusted on July 1 of each year during the Term commencing on July 1, 2015, by an amount equal to three percent (3%).
(B)    In the event that the actual, reasonable and necessary costs, or as otherwise approved in writing by HFRM (the “ Actual Construction Costs ”) incurred by HEP Refining to construct the Construction Projects are more or less than $5,300,000 (the “ Construction Cost Estimate ”), then the Base Tariff in effect shall automatically be increased or decreased, as applicable, by the same percentage by which the Actual Construction Costs exceeded or were less than the Construction Cost Estimate; provided, however , that in no event shall the amount of such overage or savings used to calculate the increase or decrease in the Base Tariff exceed 25% of the original Base Tariff. For example:
(1)     if the Actual Construction Cost is $5,830,000 (10% above the Construction Cost Estimate), the Base Tariff would be increased to be $0.1133 per gallon (a 10% increase);
(2) if the Actual Construction Cost is $4,770,000 (10% below the Construction Cost Estimate), the Base Tariff would be decreased to be $0.0927 per gallon (a 10% decrease);

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UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


(3)      if the Actual Construction Cost is $6,890,000 (30% above the Construction Cost Estimate), the Base Tariff would be increased to be $0.12875 per gallon (a 25% increase); or
(4)      if the Actual Construction Cost is $3,710,000 (30% below the Construction Cost Estimate), the Base Tariff would be decreased to be $0.07725 per gallon (a 25% decrease).
(iv)      Reduction for Non-Force Majeure Operational Difficulties . If HFRM is unable to unload at the Facility the volumes of Products required to meet the Minimum Revenue Commitment for a particular Contract Quarter as a result of HEP Operating’s operational difficulties, prorationing, or the inability to provide sufficient capacity for the Minimum Throughput, then the Minimum Revenue Commitment applicable to the Contract Quarter during which HFRM is unable to unload such volumes of Products will be reduced by an amount equal to: (A) the volume of Products that HFRM was unable to unload at the Facility (but not to exceed the Minimum Throughput), as a result of HEP Operating’s operational difficulties, prorationing or inability to provide sufficient capacity at the Facility to achieve the Minimum Throughput, multiplied by (B) the Base Tariff. This Section 3(a)(iv) shall not apply in the event HEP Operating gives notice of a Force Majeure event in accordance with Section 5 , in which case the Minimum Revenue Commitment shall be suspended in accordance with and as provided in Section 5 .
(v)      Pro-Rationing for Partial Periods . Notwithstanding the other portions of this Section 3(a) , in the event that the Commencement Date is any date other than the first day of a Contract Quarter, then the Minimum Revenue Commitment, Minimum Throughput, and Incentive Tariff Threshold for the initial partial Contract Quarter shall be prorated based upon the number of days actually in such partial Contract Quarter. Similarly, notwithstanding the other portions of this Section 3(a) , if the end of the Term is on a day other than the last day of a Contract Quarter, then the Minimum Revenue Commitment, Minimum Throughput, and Incentive Tariff Threshold for the final partial Contract Quarter shall be prorated based upon the number of days actually in such partial Contract Quarter.
(b)      Measurement of Unloaded Volumes . Quantities unloaded at the Facility and subject to the tariffs, charges and other fees provided for in this Agreement shall be determined by measuring volumes of Products as the Products are offloaded from the delivery truck using the same measurement method(s) used to determine the volume of Product to be loaded into outbound trucks.
(c)      Obligations of HEP Operating and HEP Refining . During the Term and subject to the terms and conditions of this Agreement, including Section 13(b) , HEP Operating and HEP Refining agree to:
(i)      own or lease, operate and maintain the Facility and all related assets necessary to handle the Products from HFRM;
(ii)      make available to HFRM’s use the capacity of the Facility equal to at least the Minimum Capacity Commitment;

3

UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


(iii)      provide the services required under this Agreement and perform all operations relating to the Facility;
(iv)      maintain adequate property and liability insurance covering the Facility and any related assets owned by HEP Operating and necessary for the operation of the Facility; and
(v)      to provide blending services for the Products at the Facility to the specifications of HFRM, as such specifications may be adjusted from time to time.
Notwithstanding the first sentence of this Section 3(c) , subject to Section 13(b) of this Agreement and Article V of the Omnibus Agreement, HEP Operating and HEP Refining are free to sell any of their respective assets, including assets that provide services under this Agreement, and HFRM is free to merge with another entity and to sell all of its assets or equity to another entity at any time.
(d)      Notification of Utilization . Upon request by HEP Operating, HFRM will provide to HEP Operating written notification of HFRM’s reasonable good faith estimate of its anticipated future utilization of the Facility as soon as reasonably practicable after receiving such request.
(e)      Scheduling . HEP Operating will use its reasonable commercial efforts to schedule unloading and blending the Products in a manner that is consistent with the historical dealings between the Parties and their Affiliates to support HFRM’s gasoline and diesel rack sales, as such dealings may change from time to time.
(f)      Taxes . HFRM will pay all taxes, import duties, license fees and other charges by any Governmental Authority levied on or with respect to the Products delivered by HFRM for unloading and blending by HEP Operating; provided that HFRM shall not be responsible for any income taxes payable by HEP Operating relating to such services. Should any Party be required to pay or collect any taxes, duties, charges and or assessments pursuant to any Applicable Law or authority now in effect or hereafter to become effective which are payable by the any other Party pursuant to this Section 3(f) the proper Party shall promptly reimburse the other Party therefor.
(g)      Timing of Payments . HFRM will make payments to HEP Operating by electronic payment with immediately available funds on a quarterly basis during the Term with respect to services rendered or reimbursable costs or expenses incurred by HEP Operating under this Agreement in the prior quarter. Payments not received by HEP Operating on or prior to the applicable payment date will accrue interest at the Prime Rate from the applicable payment date until paid.
(h)      Increases in Tariff Rates . If new Applicable Laws are enacted that require HEP Operating to make capital expenditures with respect to the Facility, HEP Operating may amend the Base Tariff and the Incentive Tariff in order to recover HEP Operating’s cost of complying with such new Applicable Laws (as determined in good faith and including a reasonable return). HFRM 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 tariff rates. If HFRM and HEP Operating are unable to agree on the amount of the new tariff rates that HEP Operating will charge, such tariff rates will

4

UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


be determined by binding arbitration in accordance with Section 13(e) . Schedule I or any other applicable exhibit or schedule to this Agreement will be updated, amended or revised, as applicable, in accordance with this Agreement to reflect any changes in tariff rates agreed to in accordance with this Section 3(h) .
(i)      No Guaranteed Minimum Shipments . Notwithstanding anything to the contrary set forth in this Agreement, there is no requirement that HFRM deliver any minimum quantity of Products at the Facility, it being understood that HFRM’s obligation for failing to unload sufficient quantities of Products to satisfy the Minimum Revenue Commitment is to make Deficiency Payments as provided in Section 10 .
Section 4.      Agreement to Remain Shipper
With respect to any Products that are transported to and from the Facility by HFRM, HFRM agrees that it will act in the capacity of the shipper of record for any such Products for its own account at all times that such Products are being transported to and from the Facility.
Section 5.      Force Majeure
In the event that any Party is rendered unable, wholly or in part, by a Force Majeure event from performing its obligations under this Agreement, then, upon the delivery of notice and full particulars of the Force Majeure event in writing within a reasonable time after the occurrence of the Force Majeure event relied on (“ Force Majeure Notice ”), the obligations of the Parties, so far as they are affected by the Force Majeure event, shall be suspended for the duration of any inability so caused. Any suspension of the obligations of the Parties as a result of this Section 5 for a period of more than thirty (30) consecutive days shall extend the Term (to the extent so affected) for a period equivalent to the duration of the inability set forth in the Force Majeure Notice. HFRM will be required to pay any amounts accrued and due under this Agreement at the time of the Force Majeure event. The cause of the Force Majeure event shall so far as possible be remedied with all reasonable dispatch, except that no Party shall be compelled to resolve any strikes, lockouts or other industrial disputes other than as it shall determine to be in its best interests. In the event a Force Majeure event prevents HEP Operating or HFRM from performing substantially all of their respective obligations under this Agreement for a period of more than one (1) year, this Agreement may be terminated by HEP Operating or HFRM by providing written notice thereof to the other Party.
Section 6.      [Reserved]
Section 7.      Effectiveness and Term
This Agreement shall be effective as of the Effective Time, and shall terminate at 12:01 a.m. Dallas, Texas, time on the day that is twenty (20) years from the Commencement Date, unless extended pursuant to Section 5 or by written mutual agreement of the Parties or as set forth in Section 8 (the “ Term ”). The Party desiring to extend this Agreement pursuant to this Section 7 shall provide prior written notice to the other Party of its desire to so extend this Agreement; such written notice shall be provided not more than twenty-four (24) months and not less than the later of twelve (12) months prior to the date of termination or ten (10) days after receipt of a written request from

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UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


the other Party (which request may be delivered no earlier than twelve (12) months prior to the date of termination) to provide any such notice or lose such right.
Section 8.      Right to Enter into a New Agreement
(a)      In the event that HFRM provides prior written notice to HEP Operating of the desire of HFRM to extend this Agreement by written mutual agreement of the Parties pursuant to Section 7 , the Parties shall negotiate in good faith to extend this Agreement by written mutual agreement, but, if such negotiations fail to produce a written mutual agreement for extension by a date six (6) months prior to the termination date, then HEP Operating shall have the right to negotiate to enter into one or more services agreements for HFRM’s Minimum Capacity Commitment for the Facility with one or more third parties to begin after the date of termination, provided , however , that until the end of one year following termination without renewal of this Agreement, HFRM will have the right to enter into a new services agreement with HEP Operating with respect to its Minimum Capacity Commitment on the date of termination on commercial terms that substantially match the terms upon which HEP Operating propose to enter into an agreement with a third party for similar services with respect to all or a material portion of such capacity of the Facility. In such circumstances, HEP Operating shall give HFRM forty-five (45) days prior written notice of any proposed new services agreement with a third party, and such notice shall inform HFRM of the fee schedules, tariffs, duration and any other material terms of the proposed third party agreement and HFRM shall have forty-five (45) days following receipt of such notice to agree to the terms specified in the notice or HFRM shall lose the rights specified by this Section 8(a) with respect to the capacity that is the subject of such notice.
(b)      In the event that HFRM fails to provide prior written notice to HEP Operating of the desire of HFRM to extend this Agreement by written mutual agreement of the Parties pursuant to Section 7 , HEP Operating shall have the right, during the period from the date of HFRM’s failure to provide written notice pursuant to Section 7 to the date of termination of this Agreement, to negotiate to enter into one or more services agreements for HFRM’s Minimum Capacity Commitment for the Facility with one or more third parties to begin after the date of termination; provided, however , that at any time during the twelve (12) months prior to the expiration of the Term, HFRM will have the right to enter into a new services agreement with HEP Operating with respect to its existing Minimum Capacity Commitment at such time on commercial terms that substantially match the terms upon which HEP Operating proposes to enter into an agreement with a third party for similar services with respect to all or a material portion of such capacity at the Facility. In such circumstances, HEP Operating shall give HFRM forty-five (45) days prior written notice of any proposed new services agreement with a third party, and such notice shall inform HFRM of the fee schedules, tariffs, duration and any other material terms of the proposed third party agreement and HFRM shall have forty-five (45) days following receipt of such notice to agree to the terms specified in the notice or HFRM shall lose the rights specified by this Section 8(b) with respect to the capacity that is the subject of such notice.
Section 9.      Notices
(a)      Any notice or other communication given under this Agreement shall be in writing and shall be (i) delivered personally, (ii) sent by documented overnight delivery service, (iii) sent

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UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


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 HFRM:

HollyFrontier Refining & Marketing LLC
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attn: 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 Refining & Marketing LLC
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attn: General Counsel
Email address: generalcounsel@hollyfrontier.com

Notices to HEP Operating:

c/o Holly Energy Partners, L.P.
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attn: 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:

c/o Holly Energy Partners, L.P.
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attn: 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 9 .
Section 10.      Deficiency Payments

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UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


(a)      Following the Commencement Date, as soon as practicable following the end of each Contract Quarter under this Agreement, HEP Operating shall deliver to HFRM a written notice (the “ Deficiency Notice ”) detailing any failure of HFRM to meet its Minimum Revenue Commitment obligations under Section 3(a)(i) ; provided, however , that HFRM’s obligations pursuant to the Minimum Revenue Commitment shall be assessed on a quarterly basis for the purposes of this Section 10 . The Deficiency Notice shall (i) specify in reasonable detail the nature of any deficiency and (ii) specify the approximate dollar amount that HEP Operating believes would have been paid by HFRM to HEP Operating if HFRM had complied with its Minimum Revenue Commitment obligations pursuant to Section 3(a)(i) (the “ Deficiency Payment ”). HFRM shall pay the Deficiency Payment to HEP Operating upon the later of: (A) ten (10) days after its receipt of the Deficiency Notice and (B) thirty (30) days following the end of the related Contract Quarter.
(b)      If HFRM disagrees with the Deficiency Notice, then, following the payment of the undisputed portion of the Deficiency Payment to HEP Operating, if any, HFRM shall send written notice thereof regarding the disputed portion of the Deficiency Payment to HEP Operating and a senior officer of HFRM and a senior officer of HEP Operating shall meet or communicate by telephone at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary and shall negotiate in good faith to attempt to resolve any differences that they may have with respect to matters specified in the Deficiency Notice. During the 30-day period following the payment of the Deficiency Payment, HFRM shall have access to the working papers of HEP Operating relating to the Deficiency Notice. If such differences are not resolved within thirty (30) days following HFRM’s receipt of the Deficiency Notice, HFRM and HEP Operating shall, within forty-five (45) days following HFRM’s receipt of the Deficiency Notice, submit any and all matters which remain in dispute and which were properly included in the Deficiency Notice to arbitration in accordance with Section 13(e) .
(c)      If it is finally determined pursuant to this Section 10 that HFRM is required to pay any or all of the disputed portion of the Deficiency Payment, HFRM shall promptly pay such amount to HEP Operating, together with interest thereon at the Prime Rate, in immediately available funds.
(d)      The fact that HFRM has exceeded or fallen short of the Minimum Revenue Commitment with respect to any Contract Quarter shall not be considered in determining whether HFRM meets, exceeds or falls short of the Minimum Revenue 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 Revenue Commitment with respect to any other Contract Quarter.
Section 11.      Right of First Refusal. The Parties acknowledge the right of first refusal of HollyFrontier with respect to the Facility as provided in the Omnibus Agreement.
Section 12.      Limitation of Damages.
(a)      NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT AND EXCEPT FOR CLAIMS MADE BY THIRD PARTIES WHICH SHALL NOT BE LIMITED BY THIS PARAGRAPH, THE PARTIES AGREE THAT THE RECOVERY BY ANY PARTY OF ANY LIABILITIES, DAMAGES, COSTS OR OTHER EXPENSES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH

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UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


OR NONFULFILLMENT BY A PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS OR OTHER OBLIGATIONS UNDER THIS AGREEMENT, OR IN CONNECTION WITH A CLAIM FOR INDEMNIFICATION UNDER THIS SECTION 12 SHALL BE LIMITED TO ACTUAL DAMAGES AND SHALL NOT INCLUDE OR APPLY TO, NOR SHALL ANY PARTY BE ENTITLED TO RECOVER, ANY INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) SUFFERED OR INCURRED BY ANY PARTY; PROVIDED , HOWEVER , THAT SUCH RESTRICTION AND LIMITATION SHALL NOT APPLY (x) AS A RESULT OF A THIRD PARTY CLAIM FOR SUCH INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES OR (y) TO INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) THAT ARE A RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE BREACHING OR NONFULFILLING PARTY OR ITS AFFILIATES.
(b)      HFRM shall indemnify, defend, and hold harmless HEP Operating, HEP Refining and their Affiliates from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorneys’ fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by HEP Operating, HEP Refining and their Affiliates to the extent resulting or arising from, or attributable to, acts or omissions of HFRM and its Affiliates in connection with the performance of HFRM’s obligations under this Agreement that constitute negligence.
(c)      HEP Operating shall indemnify, defend, and hold harmless HFRM and its Affiliates from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorneys’ fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by HFRM and its Affiliates, including loss of Products from the Facility, to the extent resulting or arising from, or attributable, to (i) events and conditions associated with the operation of the Facility, or (ii) acts or omissions of HEP Operating and its Affiliates in connection with the performance of HEP Operating’s obligations under this Agreement that constitute negligence; provided, however , that, with respect to loss of Products from the Facility, HEP Operating will only be liable for losses in excess of 0.25% of the total throughput of Products with respect to each individual incident of loss of Products.
(d)      HEP Refining shall indemnify, defend, and hold harmless HFRM and its Affiliates from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorneys’ fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by HFRM and its Affiliates, to the extent resulting or arising from, or attributable, to acts or omissions of HEP Refining and its Affiliates in connection with the performance of HEP Refining’s obligations under this Agreement that constitute negligence.

9

UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


Section 13.      Miscellaneous
(a)      Amendments and Waivers . No amendment or modification of this Agreement shall be valid unless it is in writing and signed by the Parties. No waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the Party against whom the waiver is sought to be enforced. Any of the exhibits or schedules to this Agreement may be amended, modified, revised or updated by the Parties if each of the Parties executes an amended, modified, revised or updated exhibit or schedule, as applicable, and attaches it to this Agreement. Such amended, modified, revised or updated exhibits or schedules shall be sequentially numbered ( e.g. Schedule I-1, Schedule I-2, etc .), dated and appended as an additional exhibit or schedule to this Agreement and shall replace the prior exhibit or schedule, as applicable, in its entirety, after its date of effectiveness, except as specified therein. No failure or delay in exercising any right hereunder, and no course of conduct, shall operate as a waiver of any provision of this Agreement. No single or partial exercise of a right hereunder shall preclude further or complete exercise of that right or any other right hereunder.
(b)      Successors and Assigns . This Agreement shall inure to the benefit of, and shall be binding upon, HFRM, HEP Operating, HEP Refining 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 HFRM (in the case of any assignment by HEP Operating or HEP Refining) or HEP Operating and HEP Refining (in the case of any assignment by HFRM), in each case, such consent is not to be unreasonably withheld or delayed; provided , however , that (i) HEP Operating and HEP Refining may make such an assignment (including a partial pro rata assignment) to an Affiliate of HEP Operating or HEP Refining without HFRM’s consent, (ii) HFRM may make such an assignment (including a pro rata partial assignment) to an Affiliate of HFRM without HEP Operating’s or HEP Refining’s consent, (iii) HFRM 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 and HEP Refining shall execute an acknowledgement of such collateral assignment in such form as may from time-to-time be reasonably requested, and (iv) HEP Operating and HEP Refining 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 HFRM’s consent, if such third party lender, debt holder or trustee shall have executed and delivered to HFRM a non-disturbance agreement in such form as is reasonably satisfactory to HFRM and such third party lender, debt holder or trustee, and HFRM executes an acknowledgement of such collateral assignment in such form as may from time to time be reasonably requested. Any attempt to make an assignment otherwise than as permitted by the foregoing shall be null and void. The Parties agree to require their respective successors, if any, to expressly assume, in a form of agreement reasonably acceptable to the other Parties, their obligations under this Agreement.
(c)      Severability . If any provision of this Agreement shall be held invalid or unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect.

10

UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


(d)      Choice of Law . This Agreement shall be subject to and governed by the laws of the State of Delaware, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.
(e)      Arbitration Provision . Any and all Arbitrable Disputes must be resolved through the use of binding arbitration using three arbitrators, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as supplemented to the extent necessary to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code). If there is any inconsistency between this Section 13(e) and the Commercial Arbitration Rules or the Federal Arbitration Act, the terms of this Section 13(e) will control the rights and obligations of the Parties. Arbitration must be initiated within the time limits set forth in this Agreement, or if no such limits apply, then within a reasonable time or the time period allowed by the applicable statute of limitations. Arbitration may be initiated by a Party (“ Claimant ”) serving written notice on the other Party (“ Respondent ”) that the Claimant elects to refer the Arbitrable Dispute to binding arbitration. Claimant’s notice initiating binding arbitration must identify the arbitrator Claimant has appointed. The Respondent shall respond to Claimant within thirty (30) days after receipt of Claimant’s notice, identifying the arbitrator Respondent has appointed. If the Respondent fails for any reason to name an arbitrator within the 30-day period, Claimant shall petition the American Arbitration Association for appointment of an arbitrator for Respondent’s account. The two arbitrators so chosen shall select a third arbitrator within thirty (30) days after the second arbitrator has been appointed. The Claimant will pay the compensation and expenses of the arbitrator named by it, and the Respondent will pay the compensation and expenses of the arbitrator named by or for it. The costs of petitioning for the appointment of an arbitrator, if any, shall be paid by Respondent. The Claimant and Respondent will each pay one-half of the compensation and expenses of the third arbitrator. All arbitrators must (i) be neutral parties who have never been officers, directors or employees of any of HFRM, HEP Operating, HEP Refining 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. HFRM, HEP Operating, HEP Refining 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 HFRM, HEP Operating, HEP Refining or their Affiliates to the extent that the issues raised in such disputes are related. Without the written consent of the Parties, no unrelated disputes or third party disputes may be joined to an arbitration pursuant to this Agreement.
(f)      Rights of Limited Partners . The provisions of this Agreement are enforceable solely by the Parties, and no limited partner of the Partnership shall have the right, separate and apart from the Partnership, to enforce any provision of this Agreement or to compel any Party to comply with the terms of this Agreement.
(g)      Further Assurances . In connection with this Agreement and all transactions contemplated by this Agreement, each signatory Party hereto agrees to execute and deliver such

11

UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.
(h)      Headings . Headings of the Sections of this Agreement are for convenience of the Parties only and shall be given no substantive or interpretative effect whatsoever. All references in this Agreement to Sections are to Sections of this Agreement unless otherwise stated.
Section 14.      Guarantee by HollyFrontier
(a)      Payment Guaranty . HollyFrontier unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to HEP Operating and HEP Refining the punctual and complete payment in full when due of all amounts due from HFRM under this Agreement (collectively, the “ HFRM Payment Obligations ”). HollyFrontier agrees that HEP Operating and HEP Refining shall be entitled to enforce directly against HollyFrontier any of the HFRM Payment Obligations.
(b)      Guaranty Absolute . HollyFrontier hereby guarantees that the HFRM 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:
(i)      any assignment or other transfer of this Agreement or any of the rights thereunder of HEP Operating or HEP Refining;
(ii)      any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to this Agreement;
(iii)      any acceptance by HEP Operating or HEP Refining of partial payment or performance from HFRM;
(iv)      any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to HFRM or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding;
(v)      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
(vi)      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

12

UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


or termination whatsoever by reason of the invalidity, illegality or unenforceability of the HFRM Payment Obligations or otherwise.
(c)      Waiver . HollyFrontier hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HFRM Payment Obligations and any requirement for HEP Operating or HEP Refining 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 HFRM, any other entity or any collateral.
(d)      Subrogation Waiver . HollyFrontier agrees that for so long as there is a current or ongoing default or breach of this Agreement by HFRM, HollyFrontier shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from HFRM for any payments made by HollyFrontier under this Section 14 , 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 HFRM during any period of default or breach of this Agreement by HFRM until such time as there is no current or ongoing default or breach of this Agreement by HFRM.
(e)      Reinstatement . The obligations of HollyFrontier under this Section 14 shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the HFRM Payment Obligations is rescinded or must otherwise be returned to HFRM or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of HFRM or such other entity, or for any other reason, all as though such payment had not been made.
(f)      Continuing Guaranty . This Section 14 is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible payment in full of all of the HFRM Payment Obligations, (ii) be binding upon HollyFrontier, its successors and assigns and (iii) inure to the benefit of and be enforceable by HEP Operating, HEP Refining and their respective successors, transferees and assigns.
(g)      No Duty to Pursue Others . It shall not be necessary for HEP Operating or HEP Refining (and HollyFrontier hereby waives any rights which HollyFrontier may have to require HEP Operating or HEP Refining), in order to enforce such payment by HollyFrontier, first to (i) institute suit or exhaust its remedies against HFRM or others liable on the HFRM Payment Obligations or any other person, (ii) enforce HEP Operating’s and HEP Refining’s rights against any other guarantors of the HFRM Payment Obligations, (iii) join HFRM or any others liable on the HFRM Payment Obligations in any action seeking to enforce this Section 14 , (iv) exhaust any remedies available to HEP Operating or HEP Refining against any security which shall ever have been given to secure the HFRM Payment Obligations, or (v) resort to any other means of obtaining payment of the HFRM Payment Obligations.
Section 15.      Guarantee by the Partnership .

13

UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


(a)      Payment and Performance Guaranty . The Partnership unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to HFRM the punctual and complete payment in full when due of all amounts due from HEP Operating or HEP Refining under this Agreement (collectively, the “ HEP Payment Obligations ”) and the punctual and complete performance of all other obligations of HEP Operating and HEP Refining under this Agreement (collectively, the “ HEP Performance Obligations ”, together with the HEP Payment Obligations, the “ HEP Obligations ”). The Partnership agrees that HFRM shall be entitled to enforce directly against the Partnership any of the HEP Obligations.
(b)      Guaranty Absolute . The Partnership hereby guarantees that the HEP 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:
(i)      any assignment or other transfer of this Agreement or any of the rights thereunder of HFRM;
(ii)      any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to this Agreement;
(iii)      any acceptance by HFRM of partial payment or performance from HEP Operating or HEP Refining;
(iv)      any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to HEP Operating or HEP Refining or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding;
(v)      any absence of any notice to, or knowledge of, the Partnership, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (i) through (iv); or
(vi)      any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor.
The obligations of 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 Obligations or otherwise.
(c)      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 Payment Obligations and any requirement for HFRM to protect, secure, perfect or insure any security

14

UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)


interest or lien or any property subject thereto or exhaust any right or take any action against HEP Operating, HEP Refining, any other entity or any collateral.
(d)      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 or HEP Refining, the Partnership shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from HEP Operating or HEP Refining for any payments made by the Partnership under this Section 15 , 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 HEP Operating or HEP Refining during any period of default or breach of this Agreement by HEP Operating or HEP Refining until such time as there is no current or ongoing default or breach of this Agreement by HEP Operating or HEP Refining.
(e)      Reinstatement . The obligations of the Partnership under this Section 15 shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the HEP Payment Obligations is rescinded or must otherwise be returned to HEP Operating, HEP Refining or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of HEP Operating, HEP Refining or such other entity, or for any other reason, all as though such payment had not been made.
(f)      Continuing Guaranty . This Section 15 is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible payment and/or performance in full of all of the HEP 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 HFRM and their respective successors, transferees and assigns.
(g)      No Duty to Pursue Others . It shall not be necessary for HFRM (and the Partnership hereby waives any rights which the Partnership may have to require HFRM), in order to enforce such payment by the Partnership, first to (i) institute suit or exhaust its remedies against HEP Operating, HEP Refining or others liable on the HEP Obligations or any other person, (ii) enforce HFRM’s rights against any other guarantors of the HEP Obligations, (iii) join HEP Operating, HEP Refining or any others liable on the HEP Obligations in any action seeking to enforce this Section 15 , (iv) exhaust any remedies available to HFRM against any security which shall ever have been given to secure the HEP Obligations, or (v) resort to any other means of obtaining payment of the HEP Obligations.
[Remainder of page intentionally left blank. Signature pages follow.]

15

UNLOADING AND BLENDING SERVICES AGREEMENT (ARTESIA)



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/ Bruce R. Shaw
 
 
 
 
 
 
Bruce R. Shaw
 
 
 
 
 
 
President
 

 
 
 
 
HEP REFINING:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HEP Refining, L.L.C.
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Bruce R. Shaw
 
 
 
 
 
 
Bruce R. Shaw
 
 
 
 
 
 
President
 

 
 
 
 
HFRM:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HollyFrontier Refining & Marketing LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Michael C. Jennings
 
 
 
 
 
 
Michael C. Jennings
 
 
 
 
 
 
Chief Executive Officer and President


.


[Signature Page 1 of 2 to the Unloading and Blending Services Agreement (Artesia)]



ACKNOWLEDGED AND AGREED
FOR PURPOSES OF Section 10(b)
AND Section 14 :

HOLLYFRONTIER CORPORATION


By: /s/ Michael C. Jennings    
Michael C. Jennings
Chief Executive Officer and President




ACKNOWLEDGED AND AGREED
FOR PURPOSES OF Section 10(b)
AND Section 15 :

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/ Bruce R. Shaw    
Bruce R. Shaw
President




[Signature Page 2 of 2 to the Unloading and Blending Services Agreement (Artesia)]



Appendix A
Definitions
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, HFRM, on the one hand, and HEP Operating, on the other hand, shall not be considered affiliates of each other.
Agreement ” has the meaning set forth in the preamble to this Agreement.
Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, agreement, requirement, or other governmental restriction or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued under any of the foregoing by, or any determination of, any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each case as amended (including, without limitation, all of the terms and provisions of the common law of such Governmental Authority), as interpreted and enforced at the time in question.
Arbitrable Dispute ” means any and all disputes, Claims, controversies and other matters in question between HFRM and HEP Operating, arising out of or relating to this Agreement or the alleged breach hereof, or in any way relating to the subject matter of this Agreement regardless of whether (a) allegedly extra-contractual in nature, (b) sounding in contract, tort or otherwise, (c) provided for by Applicable Law or otherwise or (d) seeking damages or any other relief, whether at law, in equity or otherwise.
Base Tariff ” means the amount set forth as such on Schedule I attached hereto, as the same may be adjusted by the terms of this Agreement, including Section 3(a)(iii) .
Biodiesel ” means diesel fuel that qualifies for the generation of Renewable identification Numbers (RINs) under the Renewable Fuel Standard Regulations, 40 CFR § 80.1400 et seq ., as amended from time to time.
bpd ” means barrels per day.
Claim ” means any existing or threatened future claim, demand, suit, action, investigation, proceeding, governmental action or cause of action of any kind or character (in each case, whether civil, criminal, investigative or administrative), known or unknown, under any theory, including those based on theories of contract, tort, statutory liability, strict liability, employer liability, premises liability, products liability, breach of warranty or malpractice.

Appendix A-1



Commencement Date ” means the date on which the Facility is available for service and operating as expected in unloading and blending the Products, which date has been specified in written notice from HEP Operating to HFRM at least 60 days prior to such Commencement Date; provided, however , that if the Facility is, in the discretion of HEP Operating, substantially complete, then the parties may agree in writing to a commencement date prior to the Facility being fully completed.
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.
Effective Time ” means 12:01 a.m., Dallas, Texas time, on the date hereof.
Ethanol ” means ethyl alcohol fuel or fuel additive.
Facility ” has the meaning set forth in the recitals to this Agreement.
Force Majeure ” means acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy, wars, blockades, insurrections, riots, storms, floods, washouts, arrests, the order of any Governmental Authority having jurisdiction while the same is in force and effect, civil disturbances, explosions, breakage, accident to machinery, storage tanks or lines of pipe, inability to obtain or unavoidable delay in obtaining material or equipment, and any other causes whether of the kind herein enumerated or otherwise not reasonably within the control of the Party claiming suspension and which by the exercise of due diligence such Party is unable to prevent or overcome. Notwithstanding anything in this Agreement to the contrary, inability of a Party to make payments when due, be profitable or to secure funds, arrange bank loans or other financing, obtain credit or have adequate capacity or production (other than for reasons of Force Majeure) shall not be regarded as events of Force Majeure.
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 ” has the meaning set forth in the preamble to this Agreement.
HEP Refining ” has the meaning set forth in the preamble to this Agreement.
HFRM ” has the meaning set forth in the preamble to this Agreement.
HollyFrontier ” means HollyFrontier Corporation, a Delaware corporation.
Incentive Tariff ” means the amount set forth as such on Schedule I attached hereto, as the same may be adjusted by the terms of this Agreement, including Section 3(a)(iii) .
Incentive Tariff Threshold ” means 550 bpd of Products, in the aggregate, on average, for each Contract Quarter, as the same may be adjusted by the terms of this Agreement.

Appendix A-2



Minimum Throughput ” means 450 bpd of Products, in the aggregate, on average, for each Contract Quarter, as such amount may be adjusted by the terms of this Agreement.
Omnibus Agreement ” means the Eleventh Amended and Restated Omnibus Agreement, dated as of the date hereof, by and among HollyFrontier, the Partnership and certain of their respective subsidiaries.
Parties ” or “ Party ” has the meaning set forth in the preamble to this Agreement.
Partnership ” means Holly Energy Partners, L.P., a Delaware limited partnership.
Person ” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.
Prime Rate ” means the prime rate per annum announced by Union Bank, N.A., or if Union Bank, N.A. no longer announces a prime rate for any reason, the prime rate per annum announced by the largest U.S. bank measured by deposits from time to time as its base rate on corporate loans, automatically fluctuating upward or downward with each announcement of such prime rate.
Products ” means Ethanol and Biodiesel.
In addition, the following terms have the meanings given to them in the Sections indicated in the following table:
Term
 
Section
Actual Construction Costs
Claimant
Construction Cost Estimate
 
Section 3(a)(iii)(B)
Section 13(e)
Section 3(a)(iii)(B)
Construction Projects
 
Section 1
Deficiency Notice
 
Section 10(a)
Deficiency Payment
 
Section 10(a)
Facility
 
Recitals
Force Majeure Notice
 
Section 5
HEP Obligations
 
Section 15(a)
HEP Payment Obligations
 
Section 15(a)
HEP Performance Obligations
 
Section 15(a)
HFRM Payment Obligations
 
Section 14(a)
Minimum Capacity Commitment
 
Section 3(a)(i)
Minimum Revenue Commitment
 
Section 3(a)(i)
Refund
 
Section 10(c)
Respondent
 
Section 13(e)
Term
 
Section 7


Appendix A-3



EXHIBIT A
Volume Capacities

Two (2) 5,000 barrel tanks for unloading and blending Ethanol and Biodiesel at the Facility with a maximum capacity of approximately 1,200 bpd of unloading for Ethanol and Biodiesel combined




Exhibit A-1



EXHIBIT B


Construction Projects
1. Facilities for offloading B99 biodiesel trucks into tankage
2. Tankage (nominal 5,000 bbls) for storing B99 biodiesel
3. Pump, metering and blending equipment for loading B5 to B20 biodiesel at three load arms (one arm on Lane 1 and two arms on Lane 2
4. Included in the B99 facilities are heating and heat tracing of B99 tank and piping
5. Facilities for offloading ethanol into tankage
6. Tankage (nominal 5,000 bbls) for storing ethanol
7. Pump, metering and blending equipment for loading ethanol blended gasoline (10% ethanol). The blended gasoline can be loaded on three gasoline load arms (two arms on Lane 1 and one arm on Lane 2)
8. All control, metering, and automation equipment required to operate facilities listed above




Exhibit B-1



SCHEDULE I
TARIFFS

Base Tariff
$0.103 per gallon

Incentive Tariff
$0.005 per gallon




Schedule I
Execution Version

THIRD AMENDED AND RESTATED
CRUDE PIPELINES AND TANKAGE AGREEMENT
This Third Amended and Restated Crude Pipelines and Tankage Agreement (this “ Agreement ”) is being entered into on March 12, 2015, by and among:

1.
Navajo Refining Company, L.L.C., a Delaware limited liability company (“ Navajo Refining ”),

2.
Holly Refining & Marketing Company – Woods Cross LLC (formerly Holly Refining & Marketing Company – Woods Cross), a Delaware limited liability company (“ Holly Refining – Woods Cross ”), and

3.
HollyFrontier Refining & Marketing LLC (formerly known as Holly Refining & Marketing Company), a Delaware limited liability company (“ HFRM ”, together with Navajo Refining and Holly-Refining – Woods Cross, the “ HollyFrontier Entities ”),

4.
Holly Energy Partners-Operating, L.P., a Delaware limited partnership (the “ Operating Partnership ”),

5.
HEP Pipeline, L.L.C., a Delaware limited liability company (“ HEP Pipeline ”), and

6.
HEP Woods Cross, L.L.C., a Delaware limited liability company (“ HEP Woods Cross ”, together with the Operating Partnership and HEP Pipeline, the “ Partnership Entities ”).

This Agreement amends and restates in its entirety the Second Amended Pipelines Agreement. Each of the HollyFrontier Entities and the Partnership Entities are individually referred to herein as a “ Party ” and collectively as the “ Parties .”

RECITALS:
WHEREAS, pursuant to that certain Purchase and Sale Agreement dated as of February 25, 2008 (the “ Purchase Agreement ”) by and among Holly, Navajo Refining, Navajo Pipeline and Woods Cross Refining (collectively, the “ Seller Parties ”) and the Partnership, the Operating Partnership, HEP Pipeline and HEP Woods Cross (collectively, the “ Buyer Parties ”), the Seller Parties transferred and conveyed to the Buyer Parties, and the Buyer Parties acquired, certain assets, including certain of the Drop-Down Assets;
WHEREAS, in connection with the closing of the transactions contemplated by the Purchase Agreement the Seller Parties and the Buyer Parties entered into the Original Pipelines Agreement, pursuant to which the Seller Parties continued to transport Crude Oil and Refined Product in the Drop-Down Assets and the Partnership provides transportation services to the Seller Parties;



WHEREAS, in connection with that certain Asset Purchase Agreement dated as of December 1, 2009 by and among Holly, Navajo Pipeline, and HEP Pipeline, Navajo Pipeline transferred and conveyed to HEP Pipeline the Beeson Pipeline, the HollyFrontier Entities and the Partnership Entities amended and restated the Original Pipelines Agreement and entered into the First Amended Pipelines Agreement to, among other things, address lease connection expenses and provide for a volume incentive tariff;
WHEREAS, on November 16, 2011, the HollyFrontier Entities and the Partnership Entities entered into that certain Letter Agreement regarding the First Amended Pipelines Agreement (the “ Letter Agreement ”) to, among other things, clarify the method by which certain payments due from the HollyFrontier Entities to the Partnership Entities pursuant to the First Amended Pipelines Agreement are calculated;
WHEREAS, in connection with the Malaga TSA, on July 16, 2013, the HollyFrontier Entities and the Partnership Entities amended and restated the First Amended Pipelines Agreement, as supplemented by the Letter Agreement, and entered into the Second Amended Pipelines Agreement; and
WHEREAS, in connection with the Beeson to Lovington System Expansion, the Parties desire to amend and restate the Second Amended Pipelines Agreement, as provided herein.
NOW, THEREFORE, in consideration of the covenants and obligations contained herein, the Parties hereby agree as follows:
Section 1. Definitions
Capitalized terms used throughout this Agreement and not otherwise defined herein shall have the meanings set forth in Annex A .
Section 2.      Agreement to Use Services Relating to Pipelines and Tankage .
This Agreement sets forth a commercial arrangement consistent with historical operational practices between the HollyFrontier Entities and the Partnership Entities as well as the objectives of the Parties. The Parties intend to be strictly bound by the terms set forth in this Agreement, which sets forth revenues to the Partnership Entities to be paid by the HollyFrontier Entities and requires the Partnership Entities to provide certain transportation and storage services to the HollyFrontier Entities. The principal objective of the Partnership Entities is for the HollyFrontier Entities to meet or exceed their obligations with respect to the Minimum Pipeline Revenue Commitment, and to meet their obligations with respect to the Tankage Revenue Commitment and the Roswell Terminal Payment. The principal objective of the HollyFrontier Entities is for the Partnership Entities to provide services to the HollyFrontier Entities in a manner that enables the HollyFrontier Entities to operate their assets in a manner as favorably as their historical practice when the HollyFrontier Entities were the owners of the Drop-Down Assets.
(a)      Minimum Pipeline Revenue Commitment . During the Term and subject to the terms and conditions of this Agreement, the HollyFrontier Entities agree as follows:

 
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(i)      Minimum Pipeline Revenue Commitment . Subject to Section 3 , the HollyFrontier Entities will ship the Product indicated in the following table, using the Pipeline Asset indicated for such Product, which shipments will, in the aggregate, have the quantity and consistency that will produce the revenue per Contract Year or Contract Quarter indicated in the final column as a result of the tariffs charged to the HollyFrontier Entities under this Agreement (in each case, as may be adjusted pursuant to Section 2(q)(i) and Schedule I attached hereto):
Pipeline Assets
Product
Minimum Revenue to Partnership Entities for Shipments on such Pipeline Assets
Crude Oil Trunk Pipelines
Crude Oil
$13,552,450 per Contract Year
(the “
Minimum Trunk Pipeline Revenue Commitment ”)
Crude Oil Gathering Pipelines and store at the Artesia Crude Oil Pipeline Tankage and the Lovington Crude Oil Pipeline Tankage
Crude Oil
$9,125,000 per Contract Year    
(the “
Minimum Gathering Pipeline Revenue Commitment ”)
Woods Cross Pipelines
Crude Oil and
Refined Product
$730,000 per Contract Year
(the “
Minimum Woods Cross Pipeline Revenue Commitment ”)
Roswell Products Pipeline
Refined Product
$35,000 per Contract Quarter
(the “
Minimum Roswell Pipeline Revenue Commitment ”)

Notwithstanding the foregoing, in the event that the end of the Term occurs on any date other than the final day of a Contract Year or Contract Quarter (as applicable), then the Minimum Trunk Pipeline Revenue Commitment, Minimum Gathering Pipeline Revenue Commitment, Minimum Woods Cross Pipeline Revenue Commitment, and Minimum Roswell Pipeline Revenue Commitment for the final Contract Year or Contract Quarter (as applicable) shall each be prorated based upon the number of days actually in such contract year or contract quarter and the final Contract Year or Contract Quarter (as applicable). The amount of the Minimum Trunk Pipeline Revenue Commitment, Minimum Gathering Pipeline Revenue Commitment, Minimum Woods Cross Pipeline Revenue Commitment and Minimum Roswell Pipeline Revenue Commitment applicable to each Contract Quarter shall be calculated by multiplying the annual revenue commitment for each such amount set forth on Schedule I by a fraction, the numerator of which shall be actual number of days in such Contract Quarter and the denominator of which shall be the total number of days in the Contract Year in which such Contract Quarter is included.
(ii)      Service Disruption. If the HollyFrontier Entities are unable for a period in excess of thirty (30) consecutive days to transport on any of the Pipeline Assets the respective volumes of Crude Oil and Refined Product required to meet the Minimum Pipeline Revenue Commitment as a result of the Partnership Entities’ operational difficulties, prorationing, or the inability to provide the following minimum capacities during such thirty (30) day consecutive period:

 
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Pipeline Assets
Minimum Capacity
Crude Oil Trunk Pipelines
79,000 bpd
(the “
Trunk Pipeline Minimum Capacity ”)
Crude Oil Gathering Pipelines (including storage in the Artesia Crude Oil Pipeline Tankage and Lovington Crude Oil Pipeline Tankage, but excluding storage in the Refinery Tankage)
Effective Time until the fifth anniversary of the Effective Time: 50,000 bpd capacity;
Commencing on the fifth anniversary of the Effective Time until the tenth anniversary of the Effective Time: 47,500 bpd capacity; and
Commencing on the tenth anniversary of the Effective Time until the expiration of the Term: 45,000 bpd capacity
(collectively, the “ Gathering Pipeline Minimum Capacity ”)
Woods Cross Pipelines
8,000 bpd capacity
(the “
Woods Cross Minimum Capacity ”)
Roswell Products Pipeline
a proportionate amount of 36,000 bpq capacity
(the “
Roswell Pipeline Minimum Capacity ”)

then upon written notice by the HollyFrontier Entities to the Partnership Entities (which notice shall be given reasonably promptly after the expiration of such 30 day consecutive period), the Minimum Pipeline Revenue Commitment, as affected, will be reduced for such period of time by an amount equal to: (A) the volume of Crude Oil or Refined Product that the HollyFrontier Entities were unable to transport on any of the Pipeline Assets, as applicable, as a result of the Partnership Entities’ operational difficulties, prorationing or inability to provide the Trunk Pipeline Minimum Capacity, the Gathering Pipeline Minimum Capacity, the Woods Cross Minimum Capacity or the Roswell Pipeline Minimum Capacity, as applicable, multiplied by (B) the applicable tariffs. This Section 2(a)(ii) shall not apply in the event the Partnership Entities give notice of a Force Majeure event in accordance with Section 3 , in which case the HollyFrontier Entities’ Minimum Pipeline Revenue Commitment shall be suspended in accordance with and as provided in Section 3 .
(b)      Tariffs and Tankage Fees .
(i)      Tariff Rates . The HollyFrontier Entities shall pay to the Partnership Entities the applicable tariff rates (as such tariff rate may be revised pursuant to Section 2(q)(ii) ) for making shipments of Crude Oil and/or Refined Product on the Pipeline Assets pursuant to this Agreement, as follows (in each case, as such exhibit may be amended from time-to-time in accordance with this Agreement):
(A) service on the Crude Oil Trunk Pipelines as set forth in Exhibit A attached hereto;
(B) service on the Crude Oil Gathering Pipelines as set forth in Exhibit B attached hereto;
(C) service on the Woods Cross Pipelines as set forth in Exhibit C attached hereto; and

 
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(D) service on Roswell Product Pipeline as set forth in Exhibit D attached hereto.
The rules and regulations governing service on the Pipeline Assets shall be as set forth in the applicable rules and regulations tariffs with respect to such service. The Partnership Entities shall have the right to change the tariff rates applicable to the Pipeline Assets in the event that the Partnership Entities incur increased expenses (or lower revenues) or capital costs, as a direct result of a change in the quality and/or consistency of the Crude Oil or Refined Product, as applicable, and to the extent thereof.
(ii)      Renegotiation of Tariff Rates . In the event that Crude Oil throughput at the Artesia Refinery and/or the Lovington Refinery exceeds 110,000 bpd or if Crude Oil viscosity exceeds 50 SSU on greater than 10,000 bpd of such Crude Oil throughput at the Artesia Refinery and/or the Lovington Refinery, and the Partnership Entities incur increased expenses (or lower revenues) or capital costs, as a direct result thereof, the Parties will renegotiate the tariff rates in good faith in order to compensate the Partnership Entities on account of such incremental expenses (or lower revenues) or capital costs, which capital costs shall also include a reasonable rate of return. If the HollyFrontier Entities and the Partnership Entities are unable to agree upon renegotiated tariff rates, the renegotiated tariff rates will be determined by binding arbitration in accordance with Section 12(e) of this Agreement.
(iii)      Volume Incentive Tariff . The HollyFrontier Entities shall pay to the Partnership Entities a volume incentive tariff of $0.4614 per barrel as of the date hereof to June 30, 2015, as such incentive may be revised pursuant to Section 2(q)(ii) and Schedule II attached hereto (the “ Volume Incentive Tariff ”) under the then current applicable tariff on volumes greater than the applicable minimum volumes necessary to meet the portion of the Minimum Gathering Pipeline Revenue Commitment to be shipped during a Contract Quarter, which shall be determined and applied on a quarterly basis for purposes of this Section 2(b)(iii) .
(c)      Tankage Revenue Commitment . During the Term the HollyFrontier Entities shall pay the Partnership Entities throughput fees associated with the Refinery Tankage in the amount of $184,000 per month as such amount may be revised pursuant to Section 2(q)(ii) and Schedule III attached hereto (the “ Tankage Revenue Commitment ”) in exchange for the Partnership Entities providing to the HollyFrontier Entities 613,333 barrels per month of crude oil storage capacity at the Refinery Tankage.
(d)      Roswell Terminal Operating Expenses and Payment . During the Term and subject to the terms and conditions of this Agreement, the HollyFrontier Entities shall (i) reimburse all operating expenses incurred by the Partnership Entities in their operation of the Roswell Terminal in an economic and prudent manner, in accordance with the normal and customary practices in the industry and Applicable Laws, and consistent with the historical operation of the Roswell Terminal by the HollyFrontier Entities, and (ii) make annual payment to the Partnership Entities in the amount of $100,000 as such amount may be revised pursuant to Section 2(q)(i) and Schedule IV attached hereto (such annual payment, the “ Roswell Terminal Payment ”).

 
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(e)      Volumetric Gains and Losses . The HollyFrontier Entities shall, during the Term, (i) absorb all volumetric gains in the Crude Oil Trunk Pipelines and Crude Oil Gathering Pipelines, and (ii) be responsible for all volumetric losses in the Crude Oil Trunk Pipelines and the Crude Oil Gathering Pipelines up to a maximum of 0.5%. The Partnership Entities shall be responsible for all volumetric losses in excess of 0.5% in the Crude Oil Trunk Pipelines and Crude Oil Gathering Pipelines during the Term.
(f)      Obligations of the Partnership Entities . During the Term and subject to the terms and conditions of this Agreement, including Section 12(b) , the Partnership Entities agree to own or lease, operate and maintain the assets necessary to accept the deliveries from the HollyFrontier Entities and to provide the services required under this Agreement. Notwithstanding the preceding sentence, subject to Section 12(b) of this Agreement and Article V of the Omnibus Agreement, the Partnership Entities are free to sell any of their assets, including assets that provide services under this Agreement, and the Partnership or any of the Partnership Entities are free to merge with another entity (whether or not the Partnership or any of the Partnership Entities is the surviving entity in such merger) and are free to sell all of their assets, including assets that provide services under this Agreement, or all of their equity to another entity at any time. The Partnership Entities shall, upon six (6) months’ prior written notice to the HollyFrontier Entities, except in the event of an emergency or in order to comply with Applicable Law, have the right to discontinue operation with respect to any of the Crude Oil Gathering Pipelines in the event that such operation becomes (i) mechanically unreliable or (ii) uneconomical due to a decline in volume. At the request of the HollyFrontier Entities, and subject in each case to any applicable common carrier proration duties, the Partnership Entities agree to use commercially reasonable efforts to transport by pipeline for the HollyFrontier Entities each month during the Term: (i) quantities of Crude Oil equal to the Trunk Pipeline Minimum Capacity on the Crude Oil Trunk Pipelines; (ii) quantities of Crude Oil equal to the Gathering Pipeline Minimum Capacity on the Crude Oil Gathering Pipelines; (iii) quantities of Crude Oil and Refined Product equal to the Woods Cross Minimum Capacity, collectively, on the Woods Cross Pipelines; and (iv) quantities of Refined Product equal to the Roswell Pipeline Minimum Capacity on the Roswell Products Pipeline. To the extent that the HollyFrontier Entities are entitled to an exception under Section 3 to their obligations under Section 2(a) , the corresponding obligations of the Partnership Entities under this Section 2(f) will be proportionately reduced.
(g)      Drag Reducing Agents and Additives . If the Partnership Entities determine that adding drag reducing agents (“ DRA ”) and additives to the Crude Oil and Refined Products is reasonably required to move Crude Oil and Refined Product in the quantities necessary to meet the HollyFrontier Entities’ schedule or as may be otherwise be required to safely move such quantities of Crude Oil and Refined Product, the Partnership Entities shall provide the HollyFrontier Entities with an analysis of the proposed cost and benefits thereof. In the event that the HollyFrontier Entities agree to use such additives as proposed by the Partnership Entities, the HollyFrontier Entities shall reimburse the Partnership Entities for the costs of adding any additive, including DRA and/or other additives to the Crude Oil and Refined Product. All fuel additives, anti-icers and DRA (collectively, Additives ”) added to the Crude Oil and Refined Product pursuant to this Section 2(g) will be provided by the HollyFrontier Entities at no cost to the Partnership Entities or, if the Partnership Entities provide Additives, then the HollyFrontier Entities agree to reimburse the Partnership Entities for the costs of the Additives.

 
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(h)      Reimbursement for Initial Tank Inspections . The HollyFrontier Entities will, during the period that commences on the Effective Time and ends five (5) years thereafter (the “ Initial Tank Inspection Period ”), reimburse the Partnership Entities for the actual costs incurred by the Partnership Entities in performing the first regularly scheduled API 653 inspection conducted after the Effective Time of the tanks included within the Tankage Assets (the “ Initial Tank Inspections ”), and any repairs or tests or consequential remediation that may be required to be made to such Tankage Assets as a result of any discovery made during the Initial Tank Inspections; provided , however , that (i) the HollyFrontier Entities are not obligated to reimburse the Partnership Entities for any costs associated with or arising from any inspection of Relocated Tank 437 or Replacement Tank 439, and (ii) upon expiration of the Initial Tank Inspection Period, all of the obligations of the HollyFrontier Entities pursuant to this Section 2(h) shall terminate, except that the Initial Tank Inspection Period shall be extended if, and only to the extent that (a) inaccessibility of the Tankage Assets 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 (b) the HollyFrontier Entities received notice from the Partnership Entities regarding such delay at the time it occurred.
(i)      Taxes . The HollyFrontier Entities will pay all taxes, import duties, license fees and other charges by any Governmental Authority levied on or with respect to the Crude Oil and Refined Product delivered by the HollyFrontier Entities for transportation by the Partnership Entities in the Pipeline Assets including, but not limited to, any New Mexico gross receipts and compensating (use) taxes. The HollyFrontier Entities will reimburse the Partnership Entities for the New Mexico gross receipts tax, but not income tax, levied on or with respect to the transportation services provided by the Partnership Entities to the HollyFrontier Entities under this Agreement. Should any Party be required to pay or collect any taxes, duties, charges and or assessments pursuant to any Applicable Law or authority now in effect or hereafter to become effective which are payable by the any other Party pursuant to this Section 2(i) the proper Party shall promptly reimburse the other Party therefor.
(j)      Timing of Payments . The HollyFrontier Entities will make payments to the Partnership Entities by electronic payment with immediately available funds on a monthly basis during the Term with respect to services rendered or reimbursable costs or expenses incurred by the Partnership Entities under this Agreement in the prior month. Payments not received by the Partnership Entities on or prior to the applicable payment date will accrue interest at the Prime Rate from the applicable payment date until paid.
(k)      Marketing of Transportation and Storage Services . The Partnership Entities may market transportation and storage services to third parties on the Crude Oil Trunk Pipelines or the Crude Oil Gathering Pipelines, provided that (i) the Partnership Entities provide the HollyFrontier Entities with prior written notice describing the purported transportation and/or storage services to the extent permitted by Applicable Law; and (ii) the HollyFrontier Entities remain satisfied that such transportation and storage services marketed by the Partnership Entities has not negatively affected the HollyFrontier Entities’ ability to utilize the Drop-Down Assets in any material respect and the quality and quantity of the Crude Oil has not been materially degraded or otherwise impaired.

 
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(l)      Change in Pipeline Direction; Product Service or Origination and Destination . Without the HollyFrontier Entities’ prior written consent, which shall not be unreasonably withheld, the Partnership Entities shall not (i) reverse the direction of any of the Pipeline Assets; (ii) change, alter or modify the product service of any of the Pipeline Assets; or (iii) change, alter or modify the origination or destination of any of the Pipeline Assets; provided , however , that the Partnership Entities may take any necessary emergency action to prevent or remedy a release of Crude Oil or Refined Product, as applicable, from any of the Pipeline Assets without obtaining the consent required by this Section 2(l) . The HollyFrontier Entities shall have the right to reverse the direction of any of the Pipeline Assets if the HollyFrontier Entities agree to (i) reimburse the Partnership Entities for the additional costs and expenses incurred by the Partnership Entities as a result of such change in direction (both to reverse and re-reverse); (ii) reimburse the Partnership Entities for all costs arising out of the Partnership Entities’ inability to perform under any transportation service contract due to the reversal of the direction of the Pipeline Assets; and (iii) pay the flow reversal rates as set forth on Exhibit E , as it may be amended from time-to-time in accordance with this Agreement. The tariff rates applicable to any such flow reversal shall be as set forth on Exhibit E and shall be adjusted each year as provided in Section 2(q)(i) .
(m)      Notification of Utilization . Upon request by the Partnership Entities, the HollyFrontier Entities will provide to the Partnership Entities written notification of the HollyFrontier Entities’ reasonable good faith estimate of their anticipated future utilization of any of the Drop-Down Assets as soon as reasonably practicable after receiving such request.
(n)      Scheduling and Accepting Deliveries . The Partnership Entities will use their reasonable commercial efforts to schedule movement and accept deliveries of Crude Oil and Refined Product in a manner that is consistent with the historical dealings between the Parties, as such dealings may change from time to time.
(o)      Increases in Pipeline Tariff Rates and Tankage Fees . If new Applicable Laws are enacted that require the Partnership Entities to make capital expenditures with respect to the Drop-Down Assets, the Partnership Entities may amend the tariff rates in order to recover the Partnership Entities’ cost of complying with these Applicable Laws (including a reasonable return). The HollyFrontier Entities and the Partnership Entities shall use their reasonable commercial efforts to comply with these Applicable Laws, and shall negotiate in good faith to mitigate the impact of these Applicable Laws and to determine the amount of the new tariff rates. If the HollyFrontier Entities and the Partnership Entities are unable to agree on the amount of the new tariff rates that the Partnership Entities will charge, such tariff rates will be determined by binding arbitration in accordance with Section 12(e) . Exhibit A , Exhibit B , Exhibit C , Exhibit D or any other applicable exhibit or schedule to this Agreement will be updated, amended or revised, as applicable, in accordance with this Agreement to reflect any changes in tariff rates agreed to in accordance with this Section 2(o) .
(p)      Lease Connection Expenses . The Partnership Entities shall construct and add such new lease connection pipelines to the Crude Oil Gathering Pipelines, as requested by the HollyFrontier Entities; provided , however , that the obligation of the Partnership Entities to construct and add such new lease connection pipelines shall be limited to $250,000 per calendar year from

 
8


the Effective Time through the calendar year ending December 31, 2012, and $275,000 per calendar year from the calendar year beginning January 1, 2013 until the end of the Term (the “ Lease Connection Expense Cap ”). In the event the HollyFrontier Entities request that the Partnership Entities construct new lease connection pipelines in excess of the Lease Connection Expense Cap, then the Partnership Entities will be reimbursed for costs and expenses incurred by them in excess of the Lease Connection Expense Cap as follows:
(i)      Incremental Capital and Capital Fee . At the end of each calendar year beginning in 2009 and in each subsequent year, the Partnership Entities will calculate the total lease connection expansion capital spent in the prior calendar year and subtract the Lease Connection Expense Cap (such difference, the “ Incremental Capital ”); provided , however , that no amounts spent regarding the Devon Lease Connection Pipelines shall be included in calculating Incremental Capital. The Partnership Entities shall use the Incremental Capital to calculate a monthly fee (the “ Capital Fee ”) to provide the Partnership Entities with a simple 15% return calculated over a seven year period. The Capital Fee shall be charged to the HollyFrontier Entities over a seven year period commencing January 1 st of the year following the calendar year in which such Incremental Capital was incurred by the Partnership Entities. The Capital Fee is in addition to the previous agreed gathering fee set forth on Exhibit B .
(ii)      Capital Calculation Notice . The Partnership Entities shall provide the HollyFrontier Entities with written notice of their calculation of the Incremental Capital and the Capital Fee (the “ Capital Calculation Notice ”), as well as supporting documentation, by no later than 30 days following the end of a calendar year.
(iii)      Disagreement over Incremental Capital or Capital Fee . If the HollyFrontier Entities disagree with the Partnership Entities’ calculation of the Incremental Capital or Capital Fee, then the HollyFrontier Entities shall send written notice thereof to the Partnership Entities and a senior officer of HollyFrontier (on behalf of the HollyFrontier Entities) and a senior officer of the Partnership (on behalf of the Partnership Entities) shall meet or communicate by telephone at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary and shall negotiate in good faith to attempt to resolve any differences that they may have with respect to the calculation of the Incremental Capital or the Capital Fee. During the 30-day period following the Partnership Entities’ delivery to the HollyFrontier Entities of the Capital Calculation Notice, the HollyFrontier Entities shall have access to the working papers of the Partnership Entities relating to such calculations. If such differences are not resolved within 30 days following the Partnership Entities’ delivery to the HollyFrontier Entities of the Capital Calculation Notice, the HollyFrontier Entities and the Partnership Entities shall, within forty-five (45) days following the Partnership Entities’ delivery to the HollyFrontier Entities of the Capital Calculation Notice, submit any and all matters which remain in dispute to arbitration in accordance with Section 12(e) .
(q)      PPI and FERC Oil Pipeline Index Adjustments .
(i)      PPI Adjustments .

 
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A.      The Minimum Roswell Pipeline Revenue Commitment, the Minimum Trunk Pipeline Revenue Commitment, the Minimum Gathering Pipeline Revenue Commitment, the Minimum Woods Cross Pipeline Revenue Commitment and the Roswell Terminal Payment shall be adjusted on July 1 of each Contract Year commencing on July 1, 2008, by an amount equal to the percentage increase, if any, in the PPI rounded to four decimal places.
B.      The change factor shall be calculated as follows: annual PPI index (most current year) less annual PPI index (most current year minus 1) divided by annual PPI index (most current year minus 1). An example for year 2006 change is: [PPI (2005) – PPI (2004)] / PPI (2004) or (155.7 – 148.5) / 148.5 or .0485 or 4.85%. If the PPI index change is negative in a given year then there will be no change in the Minimum Pipeline Revenue Commitment.
(ii)      FERC Oil Pipeline Index Adjustments .
A.      The tariff rates specified in Section 2(b)(i) and the Volume Incentive Tariff shall be adjusted on the first day of each Contract Year (commencing on July 1, 2008 in the case of tariff rates and commencing July 1, 2010 in the case of the Volume Incentive Tariff), by an amount equal to the percentage change, if any, between the two (2) immediately preceding calendar years, in the FERC Oil Pipeline Index.
B.      The amount of the Tankage Revenue Commitment shall be adjusted upward on the first day of each Contract Year commencing on July 1, 2008, by an amount equal to the percentage change, if any, between the two (2) immediately preceding calendar years, in the FERC Oil Pipeline Index. If the percentage change in the FERC Oil Pipeline Index is negative in a given year then there will be no change in the Tankage Revenue Commitment.
(iii)      Replacement Index . If the PPI or the FERC Oil Pipeline Index is no longer published, the HollyFrontier Entities and the Partnership Entities shall negotiate in good faith to agree on a new index that gives comparable protection against inflation or deflation and the same method of adjustment for increases in the new index shall be used to calculate increases in the Minimum Pipeline Revenue Commitment, tariff rates, the Volume Incentive Tariff, Tankage Revenue Commitment, or Roswell Terminal Payment, as applicable. If the HollyFrontier Entities and the Partnership Entities are unable to agree, a new index will be determined by binding arbitration in accordance with Section 12(e) , and the same method of adjustment for increases or decreases in the new index shall be used to calculate increases in the Minimum Pipeline Revenue Commitment, tariff rates, the Volume Incentive Tariff, Tankage Revenue Commitment, or Roswell Terminal Payment, as applicable.

 
10


(r)      Amendments to Schedules and Exhibits . To evidence the Parties’ agreement to each adjusted Minimum Pipeline Revenue Commitment, tariff rate, Volume Incentive Tariff, Tankage Revenue Commitment, or Roswell Terminal Payment, the Parties may, but shall not be required to execute an amended, modified, revised or updated Schedule or Exhibit, as applicable and attach it to this Agreement. Such amended, modified, revised or updated Schedule or Exhibit shall be sequentially numbered (e.g. Schedule I-1 , Schedule I-2 , etc.), dated and appended as an additional schedule or exhibit to this Agreement and shall replace the prior version of the Schedule or Exhibit in its entirety after its date of effectiveness, except as specified therein.
(s)      Crude Oil Trunk Pipelines Volume Measurement . The HollyFrontier Entities will not be charged the tariff rates applicable to services on the Crude Oil Trunk Pipelines for volumes of Crude Oil moved over the 4 inch, 1.2 mile Abo Station to BP Sweet System pipeline (since such volumes of Crude Oil are not ultimately shipped to a HollyFrontier refinery), though such volumes of Crude Oil so shipped may be charged the tariff rates applicable to services on the Crude Oil Gathering Pipelines, as further specified in Section 2(t) below.
(t)      Crude Oil Gathering Pipelines Volume Measurements . The HollyFrontier Entities will be charged the tariff applicable to service on the Crude Oil Gathering Pipelines for all volumes (whether shipped by pipeline or truck) of Crude Oil delivered to the following Crude Oil gathering stations:
     Abo
     Monument Sweet
     Artesia
     North Monument
     Barnsdall
     South Monument
     Baumgart
     Riley
     Beeson
     Russell
     Burton Flats
     Seminole
     Lovington Station 126 - Chevron LACTs
     Wood
     Maljamar Park
 


Additionally, the measurement points for measuring such volumes shall be as follows (with the stations included or excluded at such measurement points set forth in the parenthetical next to such measurement point):

 
11


     Abo
     Artesia (includes Burton Flats)
     Barnsdall
     Beeson (includes Maljamar Park)
     Monument Sour (includes North Monument and South Monument)
     Monument Sweet
     Riley (includes Baumgart)
     Russell (excludes Riley and Baumgart volumes already counted at Riley)
     Wood (includes Seminole)
     Lovington Station 126 – Chevron LACTs

The Parties may, by mutual written agreement, amend the lists above to add or remove stations, or to change measurement points.
(u)      Beeson to Lovington System Expansion .
(i)      HEP Pipeline agrees to use commercially reasonable efforts to complete the following expansion projects (the “ Beeson to Lovington System Expansion ”): (A) the installation of a larger pump at the Beeson station to increase pumping capacity at the Beeson station; and (B) the replacement of 5 miles of existing 8-inch pipeline with 10-inch pipeline beginning at the Beeson station end of the Beeson Pipeline.
(ii)      Effective as of the Beeson System Expansion Commencement Date, (A) the HollyFrontier Entities shall pay to the Partnership Entities an extra surcharge of $0.03165 per barrel for making shipments of Crude Oil and service on the Crude Oil Trunk Pipelines (as adjusted pursuant to Section 2(u)(iii) below, the “ Surcharge Tariff ”) on the first 79,000 bpd, which is added to the tariff rate (as such tariff rate may be revised pursuant to Section 2(q)(ii) ) set forth in Exhibit A attached hereto (as such exhibit may be amended from time to time in accordance with this Agreement) and (B) the Minimum Trunk Pipeline Revenue Commitment per Year shall be increased by the amount set forth on Schedule I “Minimum Pipeline Revenue Commitment” attached hereto (as such schedule may be amended from time to time in accordance with this Agreement) listed next to “Beeson System Expansion Commencement Date”.
(iii)      In the event that the actual, reasonable and necessary costs, or as otherwise approved by HFRM (the “ Actual Construction Costs ”), incurred by HEP Pipeline to construct the Beeson to Lovington System Expansion are more or less than $7,500,000 (the “ Construction Cost Estimate ”), then the Surcharge Tariff shall automatically be increased or decreased, as applicable, by the same percentage by which the Actual Construction Costs exceeded or were less than the Construction Cost Estimate; provided, however , that in no event shall the amount of such overage used to calculate the increase or decrease in the Surcharge Tariff exceed 33 1/3% of the original Surcharge Tariff. For example:

 
12


A.      If the Actual Construction Cost is $8,250,000 (10% above the Construction Cost Estimate), the Surcharge Tariff would be increased to be $0.034815 (a 10% increase);
B.      If the Actual Construction Cost is $6,750,000 (10% below the Construction Cost Estimate), the Surcharge Tariff would be decreased to be $0.028485 (a 10% decrease); or
C.      If the Actual Construction Cost is $10,625,250 (41.67% above the Construction Cost Estimate), the Surcharge Tariff would be increased to be $0.04220 per gallon (a 33 1/3% increase).
Section 3.      Force Majeure
In the event that any Party is rendered unable, wholly or in part, by a Force Majeure event from performing its obligations under this Agreement, then, upon the delivery of notice and full particulars of the Force Majeure event in writing within a reasonable time after the occurrence of the Force Majeure event relied on (“ Force Majeure Notice ”), the obligations of the Parties, so far as they are affected by the Force Majeure event, shall be suspended for the duration of any inability so caused. Any suspension of the obligations of the Parties as a result of this Section 3 for a period of more than thirty (30) consecutive days shall extend the Term (to the extent so affected) for a period equivalent to the duration of the inability set forth in the Force Majeure Notice. The HollyFrontier Entities will be required to pay any amounts accrued and due under this Agreement at the time of the Force Majeure event. The cause of the Force Majeure event shall so far as possible be remedied with all reasonable dispatch, except that no Party shall be compelled to resolve any strikes, lockouts or other industrial disputes other than as it shall determine to be in its best interests. In the event a Force Majeure event prevents the Partnership Entities or the HollyFrontier Entities from performing substantially all of their respective obligations under this Agreement for a period of more than one (1) year, this Agreement may be terminated by the Partnership Entities or the HollyFrontier Entities by providing written notice thereof to the other Party. Nothing in this Section 3 shall alter the liability of the Partnership Entities as set forth in the applicable rules and regulations tariffs for the Pipeline Assets.
Section 4.      Agreement to Remain Shipper
With respect to any Refined Product that is produced at a Refinery and transported in the Roswell Products Pipeline or Woods Cross Pipelines or any Crude Oil that is acquired by the HollyFrontier Entities and transported on the Crude Oil Trunk Pipelines, Crude Oil Gathering Pipelines or Woods Cross Pipelines and stored in the Artesia Crude Oil Pipeline Tankage or Lovington Crude Oil Pipeline Tankage, the HollyFrontier Entities agree that they will continue their historical commercial practice of owning such Crude Oil or Refined Product, as applicable, from such point as (i) the Refined Product leaves the Refinery until at least such point as it will not be further transported in the Roswell Products Pipeline or Woods Cross Pipelines and to continue acting in the capacity of the shipper of such Refined Product for their own account at all times that such Refined Product is in the Roswell Products Pipeline or Woods Cross Pipeline; and (ii) the Crude Oil is received into the Crude Oil Trunk Pipelines, Crude Oil Gathering Pipelines or Woods Cross

 
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Pipelines by the Partnership Entities until such time that it is delivered to the Artesia Crude Oil Pipeline Tankage at the Artesia Refinery or delivered to the Lovington Crude Oil Pipeline Tankage at the Lovington Refinery.
Section 5.      Agreement Not to Challenge Tariffs
The HollyFrontier Entities agree to any tariff rate changes for the Pipeline Assets in accordance with this Agreement. The HollyFrontier Entities agree (a) not to challenge, nor to cause their Affiliates to challenge, nor to encourage or recommend to any other Person that it challenge, or voluntarily assist in any way any other Person in challenging, in any forum, tariffs (including joint tariffs) of the Partnership Entities that the Partnership Entities have filed or may file containing rates, rules or regulations that are in effect at any time during the Term and regulate the transportation of the Crude Oil or Refined Product, and (b) not to protest or file a complaint, nor cause their Affiliates to protest or file a complaint, nor encourage or recommend to any other Person that it protest or file a complaint, or voluntarily assist in any way any other Person in protesting or filing a complaint, with respect to regulatory filings that the Partnership Entities have made or may make at any time during the Term to change tariffs (including joint tariffs) for transportation of Crude Oil or Refined Product in each case so long as such tariffs, regulatory filings or rates changed do not conflict with the terms of this Agreement.
Section 6.      Effectiveness and Term
This Agreement shall be effective as of the Effective Time, and shall terminate at 12:01 a.m. Dallas, Texas, time on February 28, 2023, unless extended by written mutual agreement of the Parties or as set forth in Section 7 (the “ Term ”); provided , however , that Section 5 shall survive the termination of this Agreement. The Party(ies) desiring to extend this Agreement pursuant to this Section 6 shall provide prior written notice to the other Parties of its desire to so extend this Agreement; such written notice shall be provided not more than twenty-four (24) months and not less than the later of twelve (12) months prior to the date of termination or ten (10) days after receipt of a written request from another Party (which request may be delivered no earlier than twelve (12) months prior to the date of termination) to provide any such notice or lose such right.
Section 7.      Right to Enter into a New Agreement
(a)      Prior Written Notice . In the event that the HollyFrontier Entities provide prior written notice to the Partnership Entities of the desire of the HollyFrontier Entities to extend this Agreement by written mutual agreement of the Parties, the Parties shall negotiate in good faith to extend this Agreement by written mutual agreement, but, if such negotiations fail to produce a written mutual agreement for extension by a date six months prior to the termination date, then the Partnership Entities shall have the right to negotiate to enter into one or more pipeline and tankage agreements with one or more third parties to begin after the date of termination, provided that until the end of one year following termination without renewal of this Agreement, the HollyFrontier Entities will have the right to enter into a new pipelines and tankage agreement with the Partnership Entities on commercial terms that substantially match the terms upon which the Partnership Entities propose to enter into an agreement with a third party for similar services with respect to all or a material portion of the Drop-Down Assets. In such circumstances, the Partnership Entities shall give the

 
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HollyFrontier Entities forty-five (45) days prior written notice of any proposed new pipelines and tankage agreement with a third party, and such notice shall inform the HollyFrontier Entities of the fee schedules, tariffs, duration and any other terms of the proposed third party agreement and the HollyFrontier Entities shall have forty-five (45) days following receipt of such notice to agree to the terms specified in the notice or the HollyFrontier Entities shall lose the rights specified by this Section 7(a) with respect to the assets that are the subject of such notice.
(b)      No Prior Written Notice . In the event that the HollyFrontier Entities fail to provide prior written notice to the Partnership Entities of the desire of the HollyFrontier Entities to extend this Agreement by written mutual agreement of the Parties pursuant to Section 6 , the Partnership Entities shall have the right, during the period from the date of the HollyFrontier Entities’ failure to provide written notice pursuant to Section 6 to the date of termination of this Agreement, to negotiate to enter into a new pipelines and tankage agreement with a third party, provided however that at any time during the twelve (12) months prior to the expiration of the Term, the HollyFrontier Entities will have the right to enter into a new pipelines and tankage agreement with the Partnership Entities on commercial terms that substantially match the terms upon which the Partnership Entities propose to enter into an agreement with a third party for similar services with respect to all or a material portion of the Drop-Down Assets. In such circumstances, the Partnership Entities shall give the HollyFrontier Entities forty-five (45) days prior written notice of any proposed new pipelines and tankage agreement with a third party, and such notice shall inform the HollyFrontier Entities of the fee schedules, tariffs, duration and any other terms of the proposed third party agreement and the HollyFrontier Entities shall have forty-five (45) days following receipt of such notice to agree to the terms specified in the notice or the HollyFrontier Entities shall lose the rights specified by this Section 7(b) with respect to the assets that are the subject of such notice.
Section 8.      Notices
(a)      Notices . Any notice or other communication given under this Agreement shall be in writing and shall be (i) delivered personally, (ii) sent by documented overnight delivery service, (iii) sent by email transmission, or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed to have been duly given (x) if received, on the date of the delivery, with a receipt for delivery, (y) if refused, on the 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 HollyFrontier Entities:

c/o HollyFrontier Corporation
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attn: President
Email address: president@hollyfrontier.com

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

c/o HollyFrontier Corporation
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attn: General Counsel
Email address: generalcounsel@hollyfrontier.com

Notices to the Partnership Entities:

c/o Holly Energy Partners, L.P.
2828 N. Harwood, Suite 1300
Dallas, TX 75201
Attn: President
Email address: president@hollyenergy.com

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

c/o Holly Energy Partners, L.P.
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attn: General Counsel
Email address: general.counsel@hollyenergy.com

(b)      Address Change . Any Party may at any time change its address for service from time to time by giving notice to the other Parties in accordance with this Section 8 .

Section 9.      Deficiency Payments
(a)      Deficiency Notice . As soon as practicable following the end of each Contract Quarter under this Agreement, the Partnership Entities shall deliver to the HollyFrontier Entities a written notice (the “ Deficiency Notice ”) detailing any failure of the HollyFrontier Entities to meet their obligations under Section 2(a)(i) , Section 2(c) , Section 2(d) or Section 2(p) , provided that the HollyFrontier Entities’ obligations pursuant to the Minimum Trunk Pipeline Revenue Commitment, Minimum Gathering Pipeline Revenue Commitment, Minimum Woods Cross Pipeline Revenue Commitment and the Minimum Roswell Pipeline Revenue Commitment shall, in each case, be assessed on a quarterly basis for the purposes of this Section 9 . The Deficiency Notice shall (i) specify in reasonable detail the nature of any deficiency and (ii) specify the approximate dollar amount that the Partnership Entities believe would have been paid by the HollyFrontier Entities to the Partnership Entities if the HollyFrontier Entities had complied with their respective obligations pursuant to Section 2(a)(i) , Section 2(c) , Section 2(d) or Section 2(p) , as applicable (the “ Deficiency

 
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Payment ”). The HollyFrontier Entities shall pay the Deficiency Payment to the Partnership Entities upon the later of: (A) ten (10) days after their receipt of the Deficiency Notice and (B) thirty (30) days following the end of the related Contract Quarter.
(b)      Disagreement regarding Deficiency Notice . If the HollyFrontier Entities disagree with the Deficiency Notice, then, following the payment of the Deficiency Payment to the Partnership Entities, the HollyFrontier Entities shall send written notice thereof to the Partnership Entities and a senior officer of HollyFrontier (on behalf of the HollyFrontier Entities) and a senior officer of the Partnership (on behalf of the Partnership Entities) shall meet or communicate by telephone at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary and shall negotiate in good faith to attempt to resolve any differences that they may have with respect to matters specified in the Deficiency Notice. During the 30-day period following the payment of the Deficiency Payment, the HollyFrontier Entities shall have access to the working papers of the Partnership Entities relating to the Deficiency Notice. If such differences are not resolved within thirty (30) days following the payment of the Deficiency Payment, the HollyFrontier Entities and the Partnership Entities shall, within forty-five (45) days following the payment of the Deficiency Payment, submit any and all matters which remain in dispute and which were properly included in the Deficiency Notice to arbitration in accordance with Section 12(e) .
(c)      Refund . If it is finally determined pursuant to this Section 9 that the HollyFrontier Entities are not required to make any or all of the Deficiency Payment (the “ Refund ”), the Partnership Entities shall promptly pay to the HollyFrontier Entities the Refund, together with interest thereon at the Prime Rate, in immediately available funds.
(d)      No Carry-Over Deficiency . The Parties acknowledge and agree that there shall be no carry-over of deficiency volumes with respect to the Minimum Pipeline Revenue Commitment.
(e)      No Aggregation . The Parties acknowledge and agree that the Minimum Pipeline Revenue Commitment shall not be aggregated for purposes of determining any deficiency pursuant to this Section 9 .
(f)      No Right to Setoff . No Party shall have a right to setoff revenue in excess of the minimum revenue commitment of the Minimum Trunk Pipeline Revenue Commitment, the Minimum Gathering Pipeline Revenue Commitment, the Minimum Woods Cross Pipeline Revenue Commitment or the Minimum Roswell Pipeline Revenue Commitment with respect to any deficiency under the Minimum Trunk Pipeline Revenue Commitment, the Minimum Gathering Pipeline Revenue Commitment, the Minimum Woods Cross Pipeline Revenue Commitment or the Minimum Roswell Pipeline Revenue Commitment.

 
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Section 10.      Right of First Refusal The Parties acknowledge the right of first refusal of the HollyFrontier Entities with respect to the Drop-Down Assets provided in the Omnibus Agreement.
Section 11.      Limitation of Damages
(a)      Limitation . NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT AND EXCEPT FOR CLAIMS MADE BY THIRD PARTIES WHICH SHALL NOT BE LIMITED BY THIS PARAGRAPH, THE PARTIES AGREE THAT THE RECOVERY BY ANY PARTY OF ANY LIABILITIES, DAMAGES, COSTS OR OTHER EXPENSES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH OR NONFULFILLMENT BY A PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS OR OTHER OBLIGATIONS UNDER THIS AGREEMENT, OR IN CONNECTION WITH A CLAIM FOR INDEMNIFICATION UNDER THIS SECTION 11 , SHALL BE LIMITED TO ACTUAL DAMAGES AND SHALL NOT INCLUDE OR APPLY TO, NOR SHALL ANY PARTY BE ENTITLED TO RECOVER, ANY INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) SUFFERED OR INCURRED BY ANY PARTY; PROVIDED , HOWEVER , THAT SUCH RESTRICTION AND LIMITATION SHALL NOT APPLY (x) AS A RESULT OF A THIRD PARTY CLAIM FOR SUCH INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES OR (y) TO INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) THAT ARE A RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE BREACHING OR NONFULFILLING PARTY OR ITS AFFILIATES.
(b)      HollyFrontier Entity Indemnity . Each HollyFrontier Entity shall indemnify, defend, and hold harmless Operating Partnership and its Affiliates from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorneys’ fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by such HollyFrontier Entity to the extent resulting or arising from, or attributable to, acts or omissions of such HollyFrontier Entity in connection with the performance of such HollyFrontier Entity’s obligations under this Agreement that constitute negligence.
(c)      Operating Partnership Indemnity . Operating Partnership shall indemnify, defend, and hold harmless the HollyFrontier Entities and their Affiliates from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorneys’ fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by the HollyFrontier Entities and their Affiliates, including loss of Crude Oil from the Pipeline System, to the extent resulting or arising from, or attributable, to (i) events and conditions associated with

 
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the operation of the Pipeline System, or (ii) acts or omissions of Operating Partnership and its Affiliates in connection with the performance of Operating Partnership’s obligations under this Agreement that constitute negligence; provided, however, that, with respect to loss of Crude Oil from the Pipeline System, Operating Partnership will only be liable for losses in excess of 1,000 barrels with respect to each individual incident of Crude Oil loss.
Section 12.      Miscellaneous
(a)      Amendments and Waivers . No amendment or modification of this Agreement shall be valid unless it is in writing and signed by the Parties. No waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the Party against whom the waiver is sought to be enforced. Any of the exhibits or schedules to this Agreement may be amended, modified, revised or updated by the Parties if each of the Parties executes an amended, modified, revised or updated exhibit or schedule, as applicable, and attaches it to this Agreement. Such amended, modified, revised or updated exhibits or schedules shall be sequentially numbered (e.g. 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, after its date of effectiveness, except as specified therein. No failure or delay in exercising any right hereunder, and no course of conduct, shall operate as a waiver of any provision of this Agreement. No single or partial exercise of a right hereunder shall preclude further or complete exercise of that right or any other right hereunder.
(b)      Successors and Assigns . This Agreement shall inure to the benefit of, and shall be binding upon, the HollyFrontier Entities, the Partnership Entities 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 HollyFrontier Entities (in the case of any assignment by the Partnership Entities) or the Partnership Entities (in the case of any assignment by the HollyFrontier Entities), in each case, such consent is not to be unreasonably withheld or delayed; provided , however , that (i) the Partnership Entities may make such an assignment (including a partial pro rata assignment) to an Affiliate of the Partnership Entities without the HollyFrontier Entities’ consent, (ii) the HollyFrontier Entities may make such an assignment (including a pro rata partial assignment) to an Affiliate of the HollyFrontier Entities without the Partnership Entities’ consent, (iii) the HollyFrontier Entities may make a collateral assignment of their rights and obligations hereunder, and (iv) the Partnership Entities may make a collateral assignment of their rights hereunder and/or grant a security interest in their rights and obligations hereunder to a bona fide third party lender or debt holder, or trustee or representative for any of them, without the HollyFrontier Entities’ consent, if such third party lender, debt holder or trustee shall have executed and delivered to the HollyFrontier Entities a non-disturbance agreement in such form as is reasonably satisfactory to the HollyFrontier Entities and such third party lender, debt holder or trustee and HollyFrontier 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.

 
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(c)      Severability . If any provision of this Agreement shall be held invalid or unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect.
(d)      Choice of Law . This Agreement shall be subject to and governed by the laws of the State of Delaware, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.
(e)      Arbitration Provision . Any and all Arbitrable Disputes must be resolved through the use of binding arbitration using three arbitrators, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as supplemented to the extent necessary to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code). If there is any inconsistency between this Section 11(e) and the Commercial Arbitration Rules or the Federal Arbitration Act, the terms of this Section 11(e) will control the rights and obligations of the Parties. Arbitration must be initiated within the time limits set forth in this Agreement, or if no such limits apply, then within a reasonable time or the time period allowed by the applicable statute of limitations. Arbitration may be initiated by a Party (“ Claimant ”) serving written notice on the other Party (“ Respondent ”) that the Claimant elects to refer the Arbitrable Dispute to binding arbitration. Claimant’s notice initiating binding arbitration must identify the arbitrator Claimant has appointed. The Respondent shall respond to Claimant within thirty (30) days after receipt of Claimant’s notice, identifying the arbitrator Respondent has appointed. If the Respondent fails for any reason to name an arbitrator within the 30-day period, Claimant shall petition the American Arbitration Association for appointment of an arbitrator for Respondent’s account. The two arbitrators so chosen shall select a third arbitrator within thirty (30) days after the second arbitrator has been appointed. The Claimant will pay the compensation and expenses of the arbitrator named by it, and the Respondent will pay the compensation and expenses of the arbitrator named by or for it. The costs of petitioning for the appointment of an arbitrator, if any, shall be paid by Respondent. The Claimant and Respondent will each pay one-half of the compensation and expenses of the third arbitrator. All arbitrators must (i) be neutral parties who have never been officers, directors or employees of any of the HollyFrontier Entities, the Partnership Entities 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. The HollyFrontier Entities, the Partnership Entities 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 the HollyFrontier Entities, the Partnership Entities or their Affiliates to the extent that the issues raised in such disputes are related. Without the written consent of the Parties, no unrelated disputes or third party disputes may be joined to an arbitration pursuant to this Agreement.
(f)      Rights of Limited Partners . The provisions of this Agreement are enforceable solely by the Parties, and no limited partner of the Partnership shall have the right, separate and apart from

 
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the Partnership, to enforce any provision of this Agreement or to compel any Party to comply with the terms of this Agreement.
(g)      Further Assurances . In connection with this Agreement and all transactions contemplated by this Agreement, each signatory Party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.
(h)      Headings . Headings of the Sections of this Agreement are for convenience of the Parties only and shall be given no substantive or interpretative effect whatsoever. All references in this Agreement to Sections are to Sections of this Agreement unless otherwise stated.
(i)      No Novation . This Agreement shall be considered an amendment and restatement of the Original Pipelines Agreement, and the Original Pipelines Agreement is hereby ratified, approved and confirmed in every respect. This Agreement is not intended to constitute a novation of the Original Pipelines Agreement and all of the obligations owing by the Parties under the Original Pipelines Agreement shall continue (and from and after the date of this Agreement, as amended hereby).
Section 13.      Guarantee by HollyFrontier
(a)      Payment Guaranty . HollyFrontier unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to the Partnership Entities the punctual and complete payment in full when due of all amounts due from the HollyFrontier Entities under this Agreement (collectively, the “ HollyFrontier Payment Obligations ”). HollyFrontier agrees that the Partnership Entities shall be entitled to enforce directly against HollyFrontier any of the HollyFrontier Payment Obligations.
(b)      Guaranty Absolute . HollyFrontier hereby guarantees that the HollyFrontier 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:
(i)      any assignment or other transfer of this Agreement or any of the rights thereunder of the Partnership Entities;
(ii)      any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to this Agreement;
(iii)      any acceptance by the Partnership Entities of partial payment or performance from the HollyFrontier Entities;
(iv)      any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to the HollyFrontier

 
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Entities or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding;
(v)      any absence of any notice to, or knowledge of, Holly, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (i) through (iv); or
(vi)      any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor.
The obligations of 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 HollyFrontier Payment Obligations or otherwise.
(c)      Waiver . HollyFrontier hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HollyFrontier Payment Obligations and any requirement for the Partnership Entities 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 HollyFrontier Entities, any other entity or any collateral.
(d)      Subrogation Waiver . HollyFrontier agrees that for so long as there is a current or ongoing default or breach of this Agreement by any of the HollyFrontier Entities, HollyFrontier shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from the HollyFrontier Entities for any payments made by HollyFrontier under this Section 13 , 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 HollyFrontier Entities during any period of default or breach of this Agreement by any of the HollyFrontier Entities until such time as there is no current or ongoing default or breach of this Agreement by the HollyFrontier Entities.
(e)      Reinstatement . The obligations of HollyFrontier under this Section 13 shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the HollyFrontier Payment Obligations is rescinded or must otherwise be returned to the HollyFrontier Entities or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of the HollyFrontier Entities or such other entity, or for any other reason, all as though such payment had not been made.
(f)      Continuing Guaranty . This Section 13 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 HollyFrontier Payment Obligations, (ii) be binding upon Holly, its successors and assigns and (iii) inure to the benefit of and be enforceable by the Partnership Entities and their respective successors, transferees and assigns.

 
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(g)      No Duty to Pursue Others . It shall not be necessary for the Partnership Entities (and HollyFrontier hereby waives any rights which HollyFrontier may have to require the Partnership Entities), in order to enforce such payment by Holly, first to (i) institute suit or exhaust its remedies against the HollyFrontier Entities or others liable on the HollyFrontier Payment Obligations or any other person, (ii) enforce the Partnership Entities’ rights against any other guarantors of the HollyFrontier Payment Obligations, (iii) join the HollyFrontier Entities or any others liable on the HollyFrontier Payment Obligations in any action seeking to enforce this Section 13 , (iv) exhaust any remedies available to the Partnership Entities against any security which shall ever have been given to secure the HollyFrontier Payment Obligations, or (v) resort to any other means of obtaining payment of the HollyFrontier Payment Obligations.
Section 14.      Guarantee by the Partnership and Operating Partnership .
(a)      Payment and Performance Guaranty . Each of the Partnership and the Operating Partnership unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to the HollyFrontier Entities the punctual and complete payment in full when due of all amounts due from the Partnership Entities under the Agreement (collectively, the “ HEP Payment Obligations ”) and the punctual and complete performance of all other obligations of the Partnership Entities under this Agreement (collectively, the “HEP Performance Obligations”, together with the HEP Payment Obligations, the “ HEP Obligations ”). Each of the Partnership and the Operating Partnership agrees that the HollyFrontier Entities shall be entitled to enforce directly against the Partnership and the Operating Partnership any of the HEP Obligations.
(b)      Guaranty Absolute . Each of the Partnership and the Operating Partnership hereby guarantees that the HEP 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 each of the Partnership and the Operating Partnership under this Agreement constitute a present and continuing guaranty of payment and performance, and not of collection or collectability. The liability of each of the Partnership and the Operating Partnership under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of:
(i)      any assignment or other transfer of the Agreement or any of the rights thereunder of the HollyFrontier Entities;
(ii)      any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to the Agreement;
(iii)      any acceptance by the HollyFrontier Entities of partial payment or performance from the Partnership Entities;
(iv)      any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to the Partnership Entities or any action taken with respect to the Agreement by any trustee or receiver, or by any court, in any such proceeding;

 
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(v)      any absence of any notice to, or knowledge of, the Partnership or the Operating Partnership, of the existence or occurrence of any of the matters or events set forth in the foregoing subsections (i) through (iv); or
(vi)      any other circumstance which might otherwise constitute a defense available to, or a discharge of, a guarantor.
The obligations of each of the Partnership and the Operating Partnership hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the HEP Obligations or otherwise.
(c)      Waiver . Each of the Partnership and the Operating Partnership hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HEP Payment Obligations and any requirement for the HollyFrontier Entities 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 Partnership Entities, any other entity or any collateral.
(d)      Subrogation Waiver . Each of the Partnership and the Operating Partnership agrees that for so long as there is a current or ongoing default or breach of this Agreement by any of the Partnership Entities, the Partnership and the Operating Partnership shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from the Partnership Entities for any payments made by the Partnership or the Operating Partnership under this Section 14 , and each of the Partnership and the Operating Partnership hereby irrevocably waives and releases, absolutely and unconditionally, any such rights of subrogation, contribution, reimbursement, indemnification and other rights of payment or recovery it may now have or hereafter acquire against the Partnership Entities during any period of default or breach of this Agreement by any of the Partnership Entities until such time as there is no current or ongoing default or breach of this Agreement by the Partnership Entities.
(e)      Reinstatement . The obligations of the Partnership and the Operating Partnership under this Section 14 shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment of any of the HEP Payment Obligations is rescinded or must otherwise be returned to the Partnership Entities or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation or reorganization of the Partnership Entities or such other entity, or for any other reason, all as though such payment had not been made.
(f)      Continuing Guaranty . This Section 14 is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible payment and/or performance in full of all of the HEP Payment Obligations, (ii) be binding upon the Partnership, the Operating Partnership, and each of their respective successors and assigns and (iii) inure to the benefit of and be enforceable by the HollyFrontier Entities and their respective successors, transferees and assigns.

 
24


(g)      No Duty to Pursue Others . It shall not be necessary for the HollyFrontier Entities (and each of the Partnership and the Operating Partnership hereby waives any rights which the Partnership or the Operating Partnership, as applicable, may have to require the HollyFrontier Entities), in order to enforce such payment by the Partnership or the Operating Partnership, first to (i) institute suit or exhaust its remedies against the Partnership Entities or others liable on the HEP Obligations or any other person, (ii) enforce the HollyFrontier Entities’ rights against any other guarantors of the HEP Obligations, (iii) join the Partnership Entities or any others liable on the HEP Obligations in any action seeking to enforce this Section 14 , (iv) exhaust any remedies available to the HollyFrontier Entities against any security which shall ever have been given to secure the HEP Obligations, or (v) resort to any other means of obtaining payment of the HEP Obligations.
[Remainder of page intentionally left blank. Signature pages follow.]


 
25



IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of the date first written above.
 
 
 
 
PARTNERSHIP ENTITIES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HOLLY ENERGY PARTNERS - OPERATING, L.P.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Bruce R. Shaw
 
 
 
 
 
 
Bruce R. Shaw
 
 
 
 
 
 
President
 

 
 
 
 
HEP WOODS CROSS, L.L.C.
 
 
 
 
HEP PIPELINE, L.L.C.
 
 
 
 
By:
HOLLY ENERGY PARTNERS - OPERATING, L.P.
 
 
 
 
 
Sole Member
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Bruce R. Shaw
 
 
 
 
Name:
Bruce R. Shaw
 
 
 
 
Title:
President

 
 
 
 
HOLLYFRONTIER ENTITIES:
 
 
 
 
 
NAVAJO REFINING COMPANY, L.L.C.
 
 
 
 
 
HOLLY REFINING & MARKETING COMPANY - WOODS CROSS LLC
 
 
 
 
 
HOLLYFRONTIER REFINING & MARKETING LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Michael C. Jennings
 
 
 
 
 
 
Michael C. Jennings
 
 
 
 
 
 
Chief Executive Officer and President






[Signature Page 1 of 2 to the Third Amended and Restated Crude Pipelines and Tankage Agreement]



ACKNOWLEDGED AND AGREED
FOR PURPOSES OF Section 2(p)(iii) ,
Section 9(b) AND Section 13 AND
ACKNOWLEDGING THE THIRD AMENDMENT
AND RESTATEMENT OF THE ORIGINAL
PIPELINES AGREEMENT:

HOLLYFRONTIER CORPORATION


By: /s/ Michael C. Jennings    
Michael C. Jennings
Chief Executive Officer and President


ACKNOWLEDGED AND AGREED
FOR PURPOSES OF Section 2(p)(iii) ,
Section 9(b) , Section 12(f) AND Section 14
AND ACKNOWLEDGING THE THIRD AMENDMENT
AND RESTATEMENT OF THE ORIGINAL
PIPELINES AGREEMENT:

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/ Bruce R. Shaw    
Bruce R. Shaw
President




[Signature Page 2 of 2 to the Third Amended and Restated Crude Pipelines and Tankage Agreement]



Annex A

Definitions

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 (a) 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, (b) ownership of 50% or more of the equity or equivalent interest in any person and (c) 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 HollyFrontier Entities, on the one hand, and the Partnership Entities, on the other hand, shall not be considered affiliates of each other.
Agreement ” has the meaning set forth in the preamble to this Agreement.
Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, agreement, requirement, or other governmental restriction or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued under any of the foregoing by, or any determination of, any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each case as amended (including, without limitation, all of the terms and provisions of the common law of such Governmental Authority), as interpreted and enforced at the time in question.
Arbitrable Dispute ” means any and all disputes, Claims, controversies and other matters in question between any of the Partnership Entities, on the one hand, and any of the HollyFrontier Entities, 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 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 Crude Oil Pipeline Tankage ” means the following crude oil tankage associated with the Artesia Delivery System:
(a) Abo Station Tank 1007;
(b) Artesia Station Tank 970;
(c) Barnsdall Station Tank 1028;
(d) Beeson Station Tanks 972 and 973;
(e) Maljamar Park Station Tanks 46, 47 and 48; and
(f) Henshaw Station Tanks 1048 and 1049.

Annex A



Artesia Delivery System ” means
(a) the following crude oil pipelines:
(i) the Beeson to North Artesia pipeline (6-inch) – 11 miles;
(ii) the Barnsdall to North Artesia pipeline (4/6-inch) – 7 miles;
(iii) the Barnsdall jumper pipeline to Lovington pipeline (8-inch) – 2 miles;
(iv) the Artesia Station to North Artesia pipeline (4-inch) – 4 miles;
(v) the North Artesia to Evans Junction pipeline (8-inch) – 6 miles;
(vi) the Abo to Evans Junction pipeline (6-inch) – 1.2 miles; and
(vii) the Artesia to Bad Luck pipeline (12-inch) – 13 miles and
(b) the Artesia Crude Oil receiving, metering and handling facilities.
Artesia Refinery ” means the refining facilities owned by Navajo Refining in Artesia.
bpd ” means barrels per day.
bpq ” means barrels per quarter.
Beeson Pipeline ” means the 37-mile Crude Oil pipeline from Beeson station to Lovington, New Mexico (8-inch), as expanded by the Beeson to Lovington System Expansion.
Beeson System Expansion Commencement Date ” means the date on which, in the reasonable opinion of HEP Pipeline, the Beeson to Lovington System Expansion is available for service and operating as expected in delivering Crude Oil, which date has been specified in written notice from HEP Pipeline to HFRM at least 30 days prior to such Beeson System Expansion Commencement Date; provided, however , that if the Beeson to Lovington System Expansion is, in the discretion of HEP Pipeline, substantially complete, then the parties may agree in writing to a commencement date prior to the Beeson to Lovington System Expansion being fully completed.
Buyer Parties ” has the meaning set forth in the recitals to this Agreement.
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.
Contract Quarter ” means a three-month period that commences on July 1, October 1, January 1, or April 1, and ends on September 30, December 31, March 31 or June 30, respectively, except that the initial Contract Quarter commenced on March 1, 2008.

Annex A



Contract Year ” means a year that commences on July 1 and ends on the last day of June, except that the initial Contract Year commenced on March 1, 2008.
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.
Crude Oil ” means the direct liquid product of oil wells, oil processing plants, the indirect liquid petroleum products of oil or gas wells, oil sands or a mixture of such products, but does not include natural gas liquids or Refined Products.
Crude Oil Gathering Lease Connection Pipelines ” means the following pipelines:
(a) Barnsdall Station lease connection pipelines;
(b) Maljamar Park lease connection pipelines;
(c) Beeson Station lease connection pipelines;
(d) Burton Flats lease connection pipelines;
(e) Abo Station lease connection pipelines;
(f) Artesia Station lease connection pipelines;
(g) Eagle lease connection pipelines;
(h) North Monument lease connection pipelines;
(i) South Monument lease connection pipelines;
(j) Monument Sweet lease connection pipelines;
(k) Russell Station lease connection pipelines;
(l) Riley Station lease connection pipelines;
(m) Wood Station (Seminole Gathering) lease connection pipelines;
(n) Baumgart Station lease connection pipelines;
(o) Chevron Lacts at Lovington Station 126 lease connection pipelines; and
(p) the Devon Lease Connection Pipelines.
Crude Oil Gathering Pipelines ” means the following pipelines:

Annex A



(a) Abo Station to BP Sweet System (4 inch) – 1.2 miles;
(b) Artesia Station to Abo Trunk Line (6 inch) – 6.5 miles;
(c) Maljamar Park to Beeson Station (4 inch) – approximately 14 miles;
(d) Wood Station to Russell Station (6 inch) – 13.5 miles;
(e) Riley Station to Russell Station (6 inch) – 5 miles;
(f) Baumgart Station to Riley Station (6 inch) – 7 miles; and
(g) the Crude Oil Gathering Lease Connection Pipelines.
Crude Oil Trunk Pipelines ” means the Artesia Delivery System, the Lovington Delivery System, and the Beeson Pipeline.
Devon Lease Connection Pipelines ” means the 25 Devon Parkway and Devon Hackberry lease connection pipelines set forth on Exhibit D to the Malaga TSA.
Drop-Down Assets ” means, collectively, the Pipeline Assets and Tankage Assets.
Effective Time ” means 12:01 a.m., Dallas, Texas time, on March 1, 2008.
First Amended Pipelines Agreement ” means that certain Amended and Restated Pipelines and Tankage Agreement entered into on December 1, 2009, to be effective as of January 1, 2009, as amended, among Holly, Navajo Pipeline, Navajo Refining, Woods Cross Refining, the Partnership, the Operating Partnership, HEP Pipeline and HEP Woods Cross.
Force Majeure ” means acts of God; strikes, lockouts or other industrial disturbances; acts of the public enemy, wars, blockades, insurrections, civil disturbances, riots; storms, floods, washouts; arrests, the emergency, disaster or crisis order of any Governmental Authority having jurisdiction while the same is in force and effect; explosions, breakage, accident to machinery, storage tanks or lines of pipe; inability to obtain or unavoidable delay in obtaining material or equipment; and any other causes whether of the kind herein enumerated or otherwise not reasonably within the control of the Party claiming suspension and which by the exercise of due diligence such Party is unable to prevent or overcome. Notwithstanding anything in this Agreement to the contrary, inability of a Party to make payments when due, be profitable or to secure funds, arrange bank loans or other financing, obtain credit or have adequate capacity or production (other than for reasons of Force Majeure) shall not be regarded as events of Force Majeure.
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.

Annex A



HollyFrontier ” means HollyFrontier Corporation (formerly known as Holly Corporation), a Delaware corporation.
Lovington Crude Oil Pipeline Tankage ” means the following crude oil tankage associated with the Lovington Delivery System:
(a) Crouch Station Tank 1038;
(b) Monument Junction Tank;
(c) Hobbs Station Tanks 5201 and 5202;
(d) Russell Station Tanks 5101, 5102 and 5103;
(e) Wood Station Tanks 5301 and 5302;
(f) Riley Station Tanks 5001 and 5003; and
(g) Baumgart Station Tank 5002.
Lovington Delivery System ” means the following crude oil pipelines:
(a) the Russell to Lovington pipeline (12-inch) – 23 miles;
(b) the Hobbs to Lovington pipeline (8-inch) – 20 miles;
(c) the Crouch to Lovington pipeline (6/8-inch) – 11 miles;
(d) the Russell to Hobbs pipeline (6-inch) – 20 miles; and
(e) the Gaines to Hobbs pipeline (6-inch) – 6 miles.
Lovington Refinery ” means the refining facilities owned by Navajo Refining near Lovington, New Mexico.
Malaga TSA ” means that certain Transportation Services Agreement dated as of July 16, 2013, to be effective as of 12:01 a.m., Dallas, Texas time, on June 1, 2013, by and between HFRM and the Operating Partnership, pursuant to which the Operating Partnership will provide certain transportation services for HFRM on the Pipeline System (as defined in the Malaga TSA), and as amended and restated by that certain Amended and Restated Transportation Services Agreement dated as of September 26, 2014.
Minimum Pipeline Revenue Commitment ” means the Minimum Roswell Pipeline Revenue Commitment, the Minimum Trunk Pipeline Revenue Commitment, the Minimum Gathering Pipeline Revenue Commitment and the Minimum Woods Cross Pipeline Revenue Commitment.
Navajo Pipeline ” means Navajo Pipeline Co., L.P., a Delaware limited partnership.

Annex A



Omnibus Agreement ” means the Eleventh Amended and Restated Omnibus Agreement, dated as of the date hereof, by and among Holly, the Partnership and certain of their respective subsidiaries.
Original Pipelines Agreement ” means that certain Pipelines and Tankage Agreement dated February 29, 2008, as amended.
Partnership ” means Holly Energy Partners, L.P., a Delaware limited partnership.
Person ” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.
Pipeline Assets ” means, collectively: (i) the Crude Oil Trunk Pipelines; (ii) the Crude Oil Gathering Pipelines; (iii) the Woods Cross Pipelines; and (iv) the Roswell Products Pipeline.
PPI ” means the Producers Price Index-Commodities-Finished Goods, (PPI), et al., produced by the U.S. Department of Labor, Bureaus of Labor Statistics, series ID WPUSOP3000 (as of December 31, 2007) – located at http://www.bls.gov/data/.
Prime Rate ” means the prime rate per annum announced by Union Bank, N.A., or if Union Bank, N.A. no longer announces a prime rate for any reason, the prime rate per annum announced by the largest U.S. bank measured by deposits from time to time as its base rate on corporate loans, automatically fluctuating upward or downward with each announcement of such prime rate.
Product ” means Refined Products and Crude Oil.
Refined Product ” means jet fuel, gasoline, kerosene and diesel fuel.
Refineries ” means, collectively, the Artesia Refinery, the Lovington Refinery and the Woods Cross Refinery.
Refinery Tankage ” means, collectively:
(a) the crude oil tanks 1201A and 1201B at the Lovington Refinery;
(b) the crude oil tanks 103, 121 and 126 at the Woods Cross Refinery;
(c) the crude oil tank 437 at such time as HollyFrontier completes relocation of the tank within the Artesia Refinery; and
(d) the crude oil tank which will replace the current crude oil tank 439 at the Artesia Refinery, upon such time as HollyFrontier completes construction of the replacement tank.
Roswell Products Pipeline ” means the Artesia to Roswell (4-inch) – 36 mile pipeline that is currently dedicated to the transport of jet fuel.

Annex A



Roswell Terminal ” means the terminal leased by HEP Pipeline, L.L.C. from the City of Roswell, and located in the Roswell International Air Center in Roswell, New Mexico and Tanks 1216, 1218 and 1219.
Tankage Assets ” means, collectively,
(a) the Refinery Tankage;
(b) the Artesia Crude Oil Pipeline Tankage; and
(c) the Lovington Crude Oil Pipeline Tankage.
Woods Cross Crude Oil Pipeline ” means the 4 mile pipeline from Chevron to the Woods Cross Refinery (12 inch).
Woods Cross Pipelines ” means, collectively:
(a) the Woods Cross Crude Oil Pipeline;
(b) the Woods Cross Product Pipeline (Woods Cross-Chevron); and
(c) the Woods Cross Product Pipeline (Woods Cross-Pioneer).
Woods Cross Product Pipeline (Woods Cross-Chevron) ” means the 4 mile pipeline from Woods Cross Refinery to Chevron (8 inch).
Woods Cross Product Pipeline (Woods Cross-Pioneer) ” means the 2 mile pipeline from Woods Cross Refinery to Pioneer Pipeline (10 inch).
Woods Cross Refinery ” means the refining facilities located in Woods Cross, Utah.
Woods Cross Refining ” means Woods Cross Refining Company, L.L.C., a Delaware limited liability company.
In addition, the following terms have the meanings given to them in the Sections indicated in the following table:

Term
 
Section
Actual Construction Costs
 
Section 2(u)(iii)
Additives
 
Section 2(g)
Beeson to Lovington System Expansion
 
Section 2(u)(i)
Capital Calculation Notice
 
Section 2(p)(ii)
Capital Fee
 
Section 2(p)(i)
Claimant
 
Section 12(e)
Construction Cost Estimate
 
Section 2(u)(iii)
Deficiency Notice
 
Section 9(a)

Annex A



Deficiency Payment
 
Section 9(a)
DRA
 
Section 2(g)
Force Majeure Notice
 
Section 3
Gathering Pipeline Minimum Capacity
 
Section 2(a)(ii)
HEP Pipeline
 
Preamble
HEP Woods Cross
 
Preamble
HollyFrontier Entities
 
Preamble
HFRM
 
Preamble
Holly Refining – Woods Cross
 
Preamble
Incremental Capital
 
Section 2(p)(i)
Initial Tank Inspection Period
 
Section 2(h)
Initial Tank Inspections
 
Section 2(h)
Lease Connection Expense Cap
 
Section 2(p)
Letter Agreement
 
Recitals
Minimum Gathering Pipeline Revenue Commitment
 
Section 2(a)(i)
Minimum Roswell Pipeline Revenue Commitment
 
Section 2(a)(i)
Minimum Trunk Pipeline Revenue Commitment
 
Section 2(a)(i)
Minimum Woods Cross Pipeline Revenue Commitment
 
Section 2(a)(i)
Navajo Refining
 
Preamble
Operating Partnership
 
Preamble
Parties ” or “ Party
 
Preamble
Partnership Entities
 
Preamble
Purchase Agreement
 
Recitals
Refund
 
Section 9(c)
Respondent
 
Section 12(e)
Roswell Pipeline Minimum Capacity
 
Section 2(a)(ii)
Roswell Terminal Payment
 
Section 2(d)
Seller Parties
 
Section 2(d)
Surcharge Tariff
 
Section 2(u)(ii)
Tankage Revenue Commitment
 
Section 2(c)
Term
 
Section 6
Trunk Pipeline Minimum Capacity
 
Section 2(a)(ii)
Volume Incentive Tariff
 
Section 2(b)(iii)
Woods Cross Minimum Capacity
 
Section 2(a)(ii)





Annex A



SCHEDULE I
MINIMUM PIPELINE REVENUE COMMITMENT
Contract Year
Minimum Trunk Pipeline Revenue Commitment per Year
Minimum Gathering Pipeline Revenue Commitment per Year
Minimum Woods Cross Pipeline Revenue Commitment per Year
Minimum Roswell Pipeline Revenue Commitment per Contract Quarter
March 1, 2008
$13,552,450
$9,125,000
$730,000
$35,000
July 1, 2008
$14,076,293
$9,477,709
$758,217
$36,353
July 1, 2009
$14,963,451
$10,075,041
$806,003
$38,644
July 1, 2010
$14,963,451
$10,075,041
$806,003
$38,644
July 1, 2011
$15,596,689
$10,501,407
$840,113
$40,279
July 1, 2012
$16,524,864
$11,126,356
$890,108
$42,677
July 1, 2013
$16,845,827
$11,342,463
$907,397
$43,506
July 1, 2014
$17,054,007
$11,482,633
$918,611
Cancelled
Beeson System Expansion Commencement Date
$17,054,007 + (79,000 x Surcharge Tariff x 365)
If the Surcharge Tariff is $0.03165, then the new Minimum Trunk Pipeline Revenue Commitment Per Year would be:
$17,966,635
$11,482,633
$918,611
Cancelled





Schedule I-1




SCHEDULE II
VOLUME INCENTIVE TARIFF

Contract Year
Volume Incentive Tariff
January 1, 2009
$0.3258 per barrel
July 1, 2009
$0.3658 per barrel
July 1, 2010
$0.3658 per barrel
July 1, 2011
$0.3910 per barrel
July 1, 2012
$0.4246 per barrel
July 1, 2013
$0.4441 per barrel
July 1, 2014
$0.4614 per barrel






Schedule II-1




SCHEDULE III
TANKAGE REVENUE COMMITMENT

Contract Year
Tankage Revenue Commitment per Month
March 1, 2008
$184,000
July 1, 2008
$193,504
July 1, 2009
$208,215
July 1, 2010
$208,215
July 1, 2011
$222,544
July 1, 2012
$241,685
July 1, 2013
$252,784
July 1, 2014
$262,607






Schedule III-1




SCHEDULE IV
ROSWELL TERMINAL PAYMENT

Contract Year
Roswell Terminal Payment per Year
March 1, 2008
$100,000
July 1, 2008
$103,865
July 1, 2009
$110,411
July 1, 2010
$110,411
July 1, 2011
$115,083
July 1, 2012
$121,932
July 1, 2013
$124,300
July 1, 2014
Cancelled






Schedule IV-1






EXHIBIT A

Attached to and made part of the
Third Amended and Restated Crude Pipelines and Tankage Agreement


Crude Oil Trunk Pipeline Tariff Rate


 
 
 
 
 
 
 
 
 
If the average volume is equal to or in excess of 85,000 bpd in any month
 
Contract Year
Volumes less than 85,000 bpd average volume in any month
The first 85,000 bpd average volume in any month
The next 7,500 bpd average volume in any month
Any excess up to a maximum of 110,000 bpd average volume in any month
Any excess above 110,000 bpd average volume in any month
 
March 1, 2008
$0.47 per barrel
$0.40 per barrel
$0.30 per barrel
$0.20 per barrel
To be mutually agreed upon by the Parties
 
July 1, 2008
$0.4943 per barrel
$0.4243 per barrel
$0.3243 per barrel
$0.2243 per barrel
To be mutually agreed upon by the Parties
 
July 1, 2009
$0.5317 per barrel
$0.4619 per barrel
$0.3619 per barrel
$0.2619 per barrel
To be mutually agreed upon by the Parties
 
July 1, 2010
$0.5317 per barrel
$0.4619 per barrel
$0.3619 per barrel
$0.2619 per barrel
To be mutually agreed upon by the Parties
 
July 1, 2011
$0.5685 per barrel
$0.4937 per barrel
$0.3868 per barrel
$0.2799 per barrel
To be mutually agreed upon by the Parties
 
July 1, 2012
$0.6174 per barrel
$0.5362 per barrel
$0.4201 per barrel
$0.3040 per barrel
To be mutually agreed upon by the Parties
 
July 1, 2013
$0.6458 per barrel
$0.5608 per barrel
$0.4394 per barrel
$0.3180 per barrel
To be mutually agreed upon by the Parties
 
July 1, 2014
$0.6709 per barrel
$0.5826 per barrel
$0.4565 per barrel
$0.3304 per barrel
To be mutually agreed upon by the Parties
 




Exhibit A – Page 1 to Third Amended and Restated Crude Pipelines and Tankage Agreement





EXHIBIT B

Attached to and made part of the
Third Amended and Restated Crude Pipelines and Tankage Agreement


Crude Oil Gathering Pipelines Tariff Rate


 
 
Contract Year
Crude Oil Gathering Pipelines Tariff Rate
March 1, 2008
$0.50 per barrel (which includes storage in the Artesia Crude Oil Pipeline Tankage and Lovington Crude Oil Pipeline Tankage)
July 1, 2008
$0.5258 per barrel (which includes storage in the Artesia Crude Oil Pipeline Tankage and Lovington Crude Oil Pipeline Tankage)
July 1, 2009
$0.5658 per barrel (which includes storage in the Artesia Crude Oil Pipeline Tankage and Lovington Crude Oil Pipeline Tankage)
July 1, 2010
$0.5658 per barrel (which includes storage in the Artesia Crude Oil Pipeline Tankage and Lovington Crude Oil Pipeline Tankage)
July 1, 2011
$0.6047 per barrel (which includes storage in the Artesia Crude Oil Pipeline Tankage and Lovington Crude Oil Pipeline Tankage)
July 1, 2012
$0.6567 per barrel (which includes storage in the Artesia Crude Oil Pipeline Tankage and Lovington Crude Oil Pipeline Tankage)
July 1, 2013
$0.6869 per barrel (which includes storage in the Artesia Crude Oil Pipeline Tankage and Lovington Crude Oil Pipeline Tankage)
July 1, 2014
$0.7136 per barrel (which includes storage in the Artesia Crude Oil Pipeline Tankage and Lovington Crude Oil Pipeline Tankage)








Exhibit B – Page 1 to Third Amended and Restated Crude Pipelines and Tankage Agreement





EXHIBIT C

Attached to and made part of the
Third Amended and Restated Crude Pipelines and Tankage Agreement


Woods Cross Pipelines Tariff Rate


 
 
Contract Year
Woods Cross Pipelines Tariff Rate
March 1, 2008
$0.25 per barrel
July 1, 2008
$0.2629 per barrel
July 1, 2009
$0.2829 per barrel
July 1, 2010
$0.2829 per barrel
July 1, 2011
$0.3024 per barrel
July 1, 2012
$0.3284 per barrel
July 1, 2013
$0.3435 per barrel
July 1, 2014
$0.3568 per barrel








Exhibit C – Page 1 to Third Amended and Restated Crude Pipelines and Tankage Agreement





EXHIBIT D

Attached to and made part of the
Third Amended and Restated Crude Pipelines and Tankage Agreement


Roswell Product Pipeline Tariff Rate


 
 
Contract Year
Roswell Product Pipeline Tariff Rate
March 1, 2008
$0.45 per barrel with a $0.50 per barrel capital recovery surcharge (to be indexed and which expires February 28, 2013)
July 1, 2008
$0.4732 per barrel with a $0.50 per barrel capital recovery surcharge (to be indexed and which expires February 28, 2013)
July 1, 2009
$0.5092 per barrel with a $0.50 per barrel capital recovery surcharge (to be indexed and which expires February 28, 2013)
July 1, 2010
$0.5092 per barrel with a $0.50 per barrel capital recovery surcharge (to be indexed and which expires February 28, 2013)
July 1, 2011
$0.5442 per barrel with a $0.50 per barrel capital recovery surcharge (to be indexed and which expires February 28, 2013)
July 1, 2012
$0.5910 per barrel with a $0.50 per barrel capital recovery surcharge (to be indexed and which expires February 28, 2013)
July 1, 2013
$0.6181 per barrel
July 1, 2014
Roswell Products Pipeline has been laid down with nitrogen and is no longer active.*

* While the Roswell Products Pipeline is laid down with nitrogen and no longer active, the Partnership Entities shall pay ordinary maintenance costs and expenses; provided, however, that if there are any material increases in such maintenance costs and expenses or if the HollyFrontier Entities desire that the Roswell Products Pipeline become operational again, the HollyFrontier Entities and the Partnership Entities hereby agree to negotiate the terms of any reimbursement of such maintenance costs and expenses and the costs and expenses of making the Roswell Products Pipeline operational again.








Exhibit D – Page 1 to Third Amended and Restated Crude Pipelines and Tankage Agreement





EXHIBIT E

Attached to and made part of the
Third Amended and Restated Crude Pipelines and Tankage Agreement


Flow Reversal Rate


 
 
Contract Year
Flow Reversal Rate
March 1, 2008
$0.40 per barrel
July 1, 2008
$0.40 per barrel
July 1, 2009
$0.5319 per barrel
July 1, 2010
$0.5319 per barrel
July 1, 2011
$0.5685 per barrel
July 1, 2012
$0.6174 per barrel
July 1, 2013
$0.6458 per barrel
July 1, 2014
$0.6709 per barrel









Exhibit E – Page 1 to Third Amended and Restated Crude Pipelines and Tankage Agreement


EXECUTION VERSION












ELEVENTH AMENDED AND RESTATED OMNIBUS AGREEMENT
among
HOLLYFRONTIER CORPORATION
HOLLY ENERGY PARTNERS, L.P.
and
CERTAIN OF THEIR RESPECTIVE SUBSIDIARIES








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TABLE OF CONTENTS
 
 
 
 
Page
Article I
 
Definitions
 
4
1.1
 
Definitions
 
4
Article II
 
Business Opportunities
 
11
2.1
 
Restricted Businesses
 
11
2.2
 
Permitted Exceptions
 
11
2.3
 
Procedures
 
12
2.4
 
Scope of Prohibition
 
14
2.5
 
Enforcement
 
14
2.6
 
Limitation on Acquisitions of Subject Assets by Partnership
 
14
Article III
 
Indemnification
 
14
3.1
 
Environmental Indemnification
 
14
3.2
 
Limitations Regarding Environmental Indemnification
 
17
3.3
 
Right of Way Indemnification
 
17
3.4
 
Additional Indemnification
 
17
3.5
 
Indemnification Procedures
 
18
3.6
 
Limitation on Indemnification Obligations
 
19
3.7
 
Exclusion from Indemnification
 
20
Article IV
 
General and Administrative Expenses
 
20
4.1
 
General
 
20
Article V
 
Right of First Refusal
 
21
5.1
 
Holly Right of First Refusal: Prohibition on Transfer of Refinery Related Assets
 
21
5.2
 
Procedures
 
22
Article VI
 
Holly Purchase Option
 
24
6.1
 
Option to Purchase Tulsa Transferred Assets
 
24
Article VII
 
Miscellaneous
 
24
7.1
 
Choice of Law
 
24
7.2
 
Arbitration Provision
 
24
7.3
 
Notice
 
25
7.4
 
Entire Agreement
 
26
7.5
 
Termination of Article II
 
26
7.6
 
Amendment or Modification
 
26
7.7
 
Assignment
 
26
7.8
 
Additional Partnership Entities
 
27
7.9
 
Counterparts
 
27
7.10
 
Severability
 
27
7.11
 
Further Assurances
 
27
7.12
 
Rights of Limited Partners
 
27
7.13
 
Headings
 
27
7.14
 
[Intentionally omitted]
 
27
7.15
 
Limitation of Damages
 
27



i


ELEVENTH AMENDED AND RESTATED OMNIBUS AGREEMENT
THIS ELEVENTH AMENDED AND RESTATED OMNIBUS AGREEMENT (the “ Agreement ”) is being entered into on March 12, 2015, to be effective as of January 1, 2015, by and among HollyFrontier Corporation, a Delaware corporation (“ Holly ”), the other Holly Entities (as defined herein) listed on the signature pages hereto, Holly Energy Partners, L.P., a Delaware limited partnership (the “ Partnership ”), and the other Partnership Entities (as defined herein) listed on the signature pages hereto, and amends and restates in its entirety the Tenth Amended and Restated Omnibus Agreement entered into on September 26, 2014 (as amended, the “ Tenth Amended Omnibus Agreement ”) among Holly, Navajo Pipeline Co., L.P., a Delaware limited partnership (“ Navajo Pipeline ”), Holly Logistic Services, L.L.C., a Delaware limited liability company (“ Holly GP ”), HEP Logistics Holdings, L.P., a Delaware limited partnership (the “ General Partner ”), the Partnership, HEP Logistics GP, L.L.C., a Delaware limited liability company (the “ OLP GP ”), and Holly Energy Partners – Operating, L.P., a Delaware limited partnership (the “ Operating Partnership ”) and the other Holly Entities and Partnership Entities signatory thereto.
R E C I T A L S:
WHEREAS, the Parties entered into an Omnibus Agreement on July 13, 2004 (as amended, the “ Original Omnibus Agreement ”) to evidence their agreement, as more fully set forth in Article II , with respect to those business opportunities that the Holly Entities and Holly GP would not engage in, directly or indirectly, during the term of the Original Omnibus Agreement unless the Partnership declined to engage in any such business opportunity for its own account;
WHEREAS, the Parties entered into the Original Omnibus Agreement to evidence their agreement, as more fully set forth in Article III , with respect to certain indemnification obligations of the Parties to each other;
WHEREAS, the Parties entered into the Original Omnibus Agreement to evidence their agreement, as more fully set forth in Article IV , with respect to the amount to be paid by the Partnership for the general and administrative services to be performed by Holly and its Affiliates (as defined herein) for and on behalf of the Partnership Entities and their Subsidiaries;
WHEREAS, the Parties entered into the Original Omnibus Agreement to evidence their agreement, as more fully set forth in Article V , with respect to Holly’s right of first refusal relating to the Assets (as defined herein);
WHEREAS, in connection with that certain LLC Interest Purchase Agreement dated as of June 1, 2009, by and among Holly, Navajo Pipeline and the Operating Partnership, pursuant to which Navajo Pipeline transferred and conveyed to the Operating Partnership, and the Operating Partnership has acquired, all of the limited liability company interests of Lovington-Artesia, L.L.C., the entity that owns the 16” Lovington/Artesia Intermediate Pipeline (as defined herein), the Parties amended and restated the Original Omnibus Agreement and entered into the First Amended and Restated Omnibus Agreement (the “ First Amended Omnibus Agreement ”);

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WHEREAS, in connection with that certain Asset Purchase Agreement dated as of August 1, 2009, by and between Holly Refining & Marketing – Tulsa LLC (“ Holly Tulsa ”) and HEP Tulsa LLC (“ HEP Tulsa ”), pursuant to which Holly Tulsa transferred and conveyed to HEP Tulsa, and HEP Tulsa acquired, the Tulsa Transferred Assets (as defined herein), the Parties amended and restated the First Amended Omnibus Agreement and entered into the Second Amended and Restated Omnibus Agreement (the “ Second Amended Omnibus Agreement ”);
WHEREAS, in connection with (i) that certain Asset Sale and Purchase Agreement dated as of October 19, 2009, by and among Holly Tulsa, HEP Tulsa and Sinclair Tulsa Refining Company (“ Sinclair ”), pursuant to which HEP Tulsa acquired the Sinclair Transferred Assets (as defined herein), (ii) that certain Asset Purchase Agreement dated as of December 1, 2009, by and among Holly, Navajo Pipeline and HEP Pipeline L.L.C. (“HEP Pipeline”), pursuant to which Navajo Pipeline agreed to transfer and convey to HEP Pipeline, and HEP Pipeline agreed to acquire, the Beeson Pipeline (as defined herein), and (iii) that certain LLC Interest Purchase Agreement by and among Holly, Navajo Pipeline and the Operating Partnership, pursuant to which Navajo Pipeline agreed to transfer and convey to the Operating Partnership, and the Operating Partnership agreed to acquire, all of the limited liability company interests of Roadrunner Pipeline, L.L.C., the entity that owns the Roadrunner Pipeline (as defined herein), the Parties amended and restated the Second Amended Omnibus Agreement and entered into the Third Amended and Restated Omnibus Agreement (the “ Third Amended Omnibus Agreement ”);
WHEREAS, in connection with that certain LLC Interest Purchase Agreement dated as of March 31, 2010, by and among Holly, Lea Refining Company, Holly Tulsa, HEP Refining, L.L.C. (“ HEP Refining ”) and HEP Tulsa (the “ March 2010 Drop Down LLC Interest Purchase Agreement ”), pursuant to which Holly, Lea Refining Company and Holly Tulsa agreed to transfer and convey to HEP Refining and HEP Tulsa the Additional Tulsa East Assets (as defined herein) and the Additional Lovington Assets (as defined herein), the Parties amended and restated the Third Amended Omnibus Agreement and entered into the Fourth Amended and Restated Omnibus Agreement (the “ Fourth Amended Omnibus Agreement ”);
WHEREAS, in connection with the construction of the Tulsa Interconnecting Pipelines (as defined herein), Holly Tulsa, HEP Tulsa and Holly Energy Storage – Tulsa LLC entered into 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 Holly Tulsa with respect to the Tulsa Interconnecting Pipelines (the “ Tulsa Throughput Agreement ”), the Parties amended and restated the Fourth Amended Omnibus Agreement and entered into the Fifth Amended and Restated Omnibus Agreement (the “ Fifth Amended Omnibus Agreement ”);
WHEREAS, in connection with that certain LLC Interest Purchase Agreement effective as of November 1, 2011, by and among Holly, Frontier Refining LLC (“ Frontier Cheyenne ”), Frontier El Dorado Refining LLC (“ Frontier El Dorado ”), the Operating Partnership and the Partnership, (the “ November 2011 Frontier Drop Down LLC Interest Purchase Agreement ”), pursuant to which Frontier Cheyenne and Frontier El Dorado agreed sell to the Operating Partnership the entities that own the Cheyenne Assets (as defined herein) and the El Dorado Assets (as defined

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herein), the Parties amended and restated the Fifth Amended Omnibus Agreement and entered into the Sixth Amended and Restated Omnibus Agreement (the “ Sixth Amended Omnibus Agreement ”);
WHEREAS, in connection with that certain LLC Interest Purchase Agreement dated as of July 12, 2012, by and among Holly, HEP UNEV Holdings LLC (“ HEP UNEV ”) and the Partnership (the “ UNEV LLC Interest Purchase Agreement ”), pursuant to which Holly 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 (as defined herein), the Parties amended and restated the Sixth Amended Omnibus Agreement and entered into the Seventh Amended and Restated Omnibus Agreement (the “ Seventh Amended Omnibus Agreement ”);
WHEREAS, in connection with that certain Transportation Services Agreement (Malaga) dated as of July 16, 2013, to be effective as of 12:01 a.m., Dallas, Texas time, on June 1, 2013, by and between HollyFrontier Refining & Marketing LLC (“ HFRM ”) and Operating Partnership, pursuant to which Operating Partnership will provide certain transportation services for HFRM on the Malaga Pipeline System (as defined herein), the Parties amended and restated the Seventh Amended Omnibus Agreement and entered into the Eighth Amended and Restated Omnibus Agreement (the “ Eighth Amended Omnibus Agreement ”);
WHEREAS, in connection with that certain Second Amended and Restated Pipeline Delivery, Tankage and Loading Rack Throughput Agreement (El Dorado), dated as of January 7, 2014, and effective as of November 1, 2011, by and between Frontier El Dorado and El Dorado Logistics LLC (the “ El Dorado Throughput Agreement ”), pursuant to which El Dorado Logistics LLC will construct new storage tank assets, the Parties amended and restated the Eighth Amended Omnibus Agreement and entered into the Ninth Amended and Restated Omnibus Agreement (the “ Ninth Amended Omnibus Agreement ”);
WHEREAS, in connection with that certain Amended and Restated Transportation Services Agreement (Malaga), dated as of September 26, 2014, by and between HFRM and Operating Partnership (the “ Malaga TSA ”), pursuant to which Operating Partnership will provide certain transportation services for HFRM on the Malaga Pipeline System (as defined herein), the Parties amended and restated the Ninth Amended Omnibus Agreement and entered into the Tenth Amended Omnibus Agreement; and
WHEREAS, in connection with that certain Unloading and Blending Services Agreement (Artesia), dated as of March 12, 2015, by and among HFRM, Operating Partnership and HEP Refining, pursuant to which HEP Refining will construct 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 Navajo Refining Company, L.L.C. (“ Navajo Refining ”) in Artesia, New Mexico (collectively, the “ Artesia Blending Facility ”), and in connection with that certain Third Amended and Restated Crude Pipelines and Tankage Agreement, dated as of March 12, 2015, by and among Navajo Refining, Holly Refining & Marketing Company – Woods Cross LLC, HFRM, Operating Partnership, HEP Pipeline, and HEP Woods Cross, L.L.C., pursuant to which HEP Pipeline will complete the following expansion projects: the installation of a larger pump at the Beeson station and the replacement of 5 miles of existing 8-inch pipeline with 10-inch pipeline beginning at the Beeson station end of the Beeson Pipeline (the “ Beeson to Lovington System

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Expansion ”), the Parties desire to amend and restate the Tenth Amended Omnibus Agreement as provided herein.
In consideration of the premises and the covenants, conditions, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:
ARTICLE I
Definitions
1.1      Definitions .
As used in this Agreement, the following terms shall have the respective meanings set forth below:
8” and 10” Lovington/Artesia Intermediate Pipelines ” means the 8-inch pipeline running from Lovington, New Mexico to Artesia, New Mexico and the 10-inch pipeline running from Lovington, New Mexico to Artesia, New Mexico, each owned by Navajo 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.
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 the Partnership’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 Holly, Navajo Pipeline, Woods Cross Refining Company, L.L.C., a Delaware limited liability company, and Navajo Refining Company, L.L.C., as the seller parties, and the Partnership, the Operating Partnership, HEP Woods Cross, L.L.C., a Delaware limited liability company, and HEP Pipeline, L.L.C., a Delaware limited liability company, as the buyer parties.
Acquisition Proposal ” is defined in Section 5.2(a) .
Additional Tulsa East Assets ” means the Transferred Tulsa East Assets as defined in the March 2010 Drop Down LLC Interest Purchase Agreement.
Additional Lovington Assets ” means the Transferred Lovington Assets as defined in the March 2010 Drop Down LLC Interest Purchase Agreement.
Administrative Fee ” is defined in Section 4.1(a) .
Affiliate ” is defined in the Partnership Agreement.
Agreement ” is defined in the introduction to this Agreement.

4


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 any of the Partnership Entities, on the one hand, and any of the Holly Entities, 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 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 ” is defined in the recitals to this Agreement.
Assets ” means all of the following 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), by the Holly Entities to the Partnership Entities: (i) the 2004 Product Pipelines, Terminal and Related Assets, (ii) the 8” and 10” Lovington/Artesia Intermediate Pipelines, (iii) the 2008 Crude Pipelines, Tanks and Related Assets, (iv) the 16” Lovington/Artesia Intermediate Pipeline, (v) the Tulsa Transferred Assets, (vi) the Beeson Pipeline, (vii) the Roadrunner Pipeline, (viii) the Additional Lovington Assets, (ix) the Additional Tulsa East Assets, (x) the Sinclair Assets, (xi) the Tulsa Interconnecting Pipelines, (xii) the Cheyenne Assets, (xiii) the El Dorado Assets, (xiv) the UNEV Pipeline, (xv) the Malaga Pipeline System, (xvi) the El Dorado New Tank, (xvii) the Artesia Blending Facility, and (xviii) the Beeson to Lovington System Expansion.
Beeson Pipeline ” means the 8” crude oil pipeline extending from Beeson station to Lovington, New Mexico, owned by HEP Pipeline, L.L.C.
Beeson to Lovington System Expansion ” is defined in the recitals of this Agreement.
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 the 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

5


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 Exchange Act) (in the case of Holly, other than a group consisting of some of all of the current control persons of Holly), being or becoming the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) 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.
Claim ” means any existing or threatened future claim, demand, suit, action, investigation, proceeding, governmental action or cause of action of any kind or character (in each case, whether civil, criminal, investigative or administrative), known or unknown, under any theory, including those based on theories of contract, tort, statutory liability, strict liability, employer liability, premises liability, products liability, breach of warranty or malpractice.
Claimant ” is defined in Section 7.2 .
Closing Date ” means the date of the closing of the Partnership’s initial public offering of Common Units. For purposes of Article III , Closing Date shall mean, with respect to a group of Assets (e.g. the 8” and 10” Lovington/Artesia Intermediate Pipelines), the effective date of the purchase of such Assets or the stock, partnership interests or membership interests of the entity that directly or indirectly owned such Assets, by a Partnership Entity.
Common Units ” is defined in the Partnership Agreement.
Contribution Agreement ” means that certain Contribution, Conveyance and Assumption Agreement, dated as of July 13, 2004, among Holly, Navajo Pipeline, Holly GP, the General Partner, the Partnership, 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 ” is defined in Section 3.1 .
Disposition Notice ” is defined in Section 5.2(a) .
Eighth Amended Omnibus Agreement ” is defined in the recitals to this Agreement.
El Dorado Assets ” is defined in the November 2011 Frontier Drop Down LLC Interest Purchase Agreement.
El Dorado New Tank ” means that certain petroleum products storage tank, which tank is being constructed in accordance with the specifications set forth in the El Dorado Throughput Agreement.

6


El Dorado Throughput Agreement ” is defined in the recitals to this Agreement
Environmental Laws ” means all federal, state, and local laws, statutes, rules, regulations, orders, and ordinances, now or hereafter in effect, relating to protection of the environment including, without limitation, the federal Comprehensive Environmental Response, Compensation, and Liability Act, the Superfund Amendments Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act, and other environmental conservation and protection laws, each as amended from time to time.
Exchange Act ” means the Securities Exchange Act of 1934, as amended.
Fifth Amended Omnibus Agreement ” is defined in the recitals to this Agreement.
First Amended Omnibus Agreement ” is defined in the recitals to this Agreement.
First ROFR Acceptance Deadline ” is defined in Section 5.2(a) .
Fourth Amended Omnibus Agreement ” is defined in the recitals 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, without limitation, any hazardous substance as defined under the Comprehensive Environmental Response, Compensation, and Liability Act, and (b) petroleum, crude oil, gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel, and other refined petroleum hydrocarbons.
HFRM ” is defined in the recitals to this Agreement.
Holly ” is defined in the introduction to this Agreement.
Holly Entities ” means Holly and each other entity listed on the signature pages hereto as Holly Entity.
Holly Entity ” means any of the Holly Entities.
Holly Group ” means the Holly Entities and any Person controlled, directly or indirectly, by Holly other than the Partnership Entities.

7


Holly Group Member ” means any member of the Holly Group.
Indemnified Party ” means the Partnership Entities or the Holly Entities, as the case may be, in their capacity as the parties entitled to indemnification in accordance with Article III .
Indemnifying Party ” means either the Partnership Entities or the Holly Entities, as the case may be, in their capacity as the parties from whom indemnification may be required in accordance with Article III , including Section 3.6 .
Initial Tank Inspection ” is defined in Section 3.1(c) .
Initial Tank Inspection Period ” is defined in Section 3.1(c) .
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 ” is defined in the recitals to this Agreement.
March 2010 Drop Down LLC Interest Purchase Agreement ” is defined in the recitals to this Agreement.
Navajo Pipeline ” is defined in the introduction to this Agreement.
Navajo Refining ” is defined in the recitals to this Agreement.
Ninth Amended Omnibus Agreement ” is defined in the recitals to this Agreement.
November 2011 Frontier Drop Down LLC Interest Purchase Agreement ” is defined in the recitals to this Agreement.
Offer ” is defined in Section 2.3(b)(i) .
Offer Price ” is defined in Section 5.2(a) .
OLP GP ” is defined in the introduction to this Agreement.
Operating Partnership ” is defined in the introduction to this Agreement.
Original Omnibus Agreement ” is defined in the recitals to this Agreement.
Partnership ” is defined in the introduction to this Agreement.
Partnership Agreement ” means the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated July 13, 2004, as amended by Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated February 28, 2005, as amended by Amendment No. 2 to the First Amended and Restated

8


Agreement of Limited Partnership of Holly Energy Partners, L.P., dated July 6, 2005, as amended by Amendment No. 3 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated April 11, 2008, as amended pursuant to that certain Limited Partial Waiver of Incentive Distribution Rights, dated July 12, 2012, and as amended by that certain Amendment No. 4 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated January 16, 2013, as such agreement is in effect on the date of this Agreement. 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.
Partnership Entities ” means the Partnership and each other entity listed on the signature pages hereto as a Partnership Entity.
Partnership Entity ” means any of the Partnership Entities.
Partnership Group ” means the Partnership Entities and any Subsidiary of any such Person, treated as a single consolidated entity.
Partnership Group Member ” means any member of the Partnership Group.
Party ” means each of the entities listed on the signature page to this Agreement, collectively the “ Parties ”.
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.
Proposed Transferee ” is defined in Section 5.2(a) .
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 Holly Entities in the performance of similar tasks or projects, or by the Partnership 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 Holly Refining & Marketing – Tulsa LLC, a Delaware limited liability company, as the seller, and HEP Tulsa LLC, a Delaware limited liability company, as the buyer.
Respondent ” is defined in Section 7.2 .
Restricted Businesses ” is defined in Section 2.1 .
Retained Assets ” means the pipelines, terminals and other assets and investments owned by any of the Holly Group Members on the date of the Contribution Agreement that were not

9


conveyed, contributed or otherwise transferred to the Partnership Entities pursuant to the Contribution Agreement or otherwise.
Roadrunner Pipeline ” means 16” crude oil pipeline extending from Slaughter station in Texas to Lovington, New Mexico owned by Roadrunner Pipeline, L.L.C.
ROFR Acceptance Deadline ” means the First ROFR Acceptance Deadline or the Second ROFR Acceptance Deadline, as applicable.
Sale Assets ” is defined in Section 5.2(a) .
Second Amended Omnibus Agreement ” is defined in the recitals to this Agreement.
Second ROFR Acceptance Deadline ” is defined in Section 5.2(a) .
Seventh Amended Omnibus Agreement ” is defined in the recitals to this Agreement.
Sinclair Transferred Assets ” means the HEP Tulsa Assets as defined in the Asset Sale and Purchase Agreement dated October 19, 2009 by and among Holly Tulsa, HEP Tulsa and Sinclair.
Sixth Amended Omnibus Agreement ” is defined in the recitals to this Agreement.
Subject Assets ” is defined in Section 2.2(c) .
Subsidiary ” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.
Tenth Amended Omnibus Agreement ” is defined in the introduction to this Agreement.
Third Amended Omnibus Agreement ” is defined in the recitals to this Agreement.
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.

10


Tulsa Interconnecting Pipelines ” means the Interconnecting Pipelines as defined in the Tulsa Throughput Agreement.
Tulsa Throughput Agreement ” is defined in the recitals to this Agreement.
Tulsa Transferred Assets ” means the Transferred Assets as defined in the Asset Purchase Agreement, dated August 1, 2009, between Holly Refining & Marketing – Tulsa LLC, a Delaware limited liability company, as the seller, and HEP Tulsa LLC, a Delaware limited liability company, as the buyer.
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 Tanks ” is defined in Section 3.1(a)(iii) .
UNEV LLC Interest Purchase Agreement ” is defined in the recitals to this Agreement.
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 to Las Vegas, Nevada and other related assets owned by UNEV Pipeline, LLC.
UNEV Profits Interest ” means the membership interest in HEP UNEV held directly or indirectly by Holly.
Units ” is defined in the Partnership Agreement.
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.
ARTICLE II
Business Opportunities
2.1      Restricted Businesses . For so long as a Holly Group Member controls the Partnership, and except as permitted by Section 2.2 , Holly GP and each of the Holly Group Members shall be prohibited from engaging in or acquiring or investing in any business having assets engaged in the following businesses (the “ Restricted Businesses ”): the ownership and/or operation of crude oil pipelines or terminals, intermediate product pipelines or terminals, refined products pipelines or terminals, truck racks or crude oil gathering systems in the continental United States.
2.2      Permitted Exceptions . Notwithstanding any provision of Section 2.1 to the contrary, Holly GP and the Holly Group Members may engage in the following activities under the following circumstances:

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(a)      the ownership and/or operation of any of the Retained Assets (including replacements of the Retained Assets);
(b)      any Restricted Business conducted by a Holly Group Member or Holly GP with the approval of the General Partner;
(c)      the ownership and/or operation of any asset or group of related assets used in the activities described in Section 2.1 that are acquired or constructed by a Holly Group Member or Holly GP after the Closing Date (the “ Subject Assets ”) if, in the case of an acquisition, the fair market value of the Subject Assets (as determined in good faith by the Board of Directors of Holly), or, in the case of construction, the estimated construction cost of the Subject Assets (as determined in good faith by the Board of Directors of Holly), is less than $5 million at the time of such acquisition or completion of construction, as the case may be;
(d)      the ownership and/or operation of any Subject Assets acquired by a Holly Group Member or Holly GP after the Closing Date with a fair market value (as determined in good faith by the Board of Directors of Holly) equal to or greater than $5 million at the time of the acquisition; provided , the Partnership has been offered the opportunity to purchase the Subject Assets in accordance with Section 2.3 and the Partnership has elected not to purchase the Subject Assets;
(e)      the ownership and/or operation of any Subject Assets constructed by a Holly Group Member or Holly GP after the Closing Date with a construction cost (as determined in good faith by the Board of Directors of Holly) equal to or greater than $5 million at the time of completion of construction that the Partnership has been offered the opportunity to purchase in accordance with Section 2.3 and the Partnership has elected not to purchase; and
(f)      the ownership of the UNEV Profits Interest.
2.3      Procedures .
(a)      In the event that Holly GP or a Holly Group Member becomes aware of an opportunity to acquire Subject Assets with a fair market value (as determined in good faith by the Board of Directors of Holly) equal to or greater than $5 million, then subject to Section 2.3(b) , then as soon as practicable, Holly GP or such Holly Group Member shall notify the General Partner of such opportunity and deliver to the General Partner, or provide the General Partner access to, all information prepared by or on behalf of, or material information submitted or delivered to, Holly GP or such Holly 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, the General Partner, on behalf of the Partnership, shall notify Holly GP or the Holly Group Member that either (i) the General Partner, on behalf of the Partnership, has elected not to cause a Partnership Group Member to pursue the opportunity to purchase the Subject Assets, or (ii) the General Partner, on behalf of the Partnership, has elected to cause a Partnership Group Member to pursue the opportunity to purchase the Subject Assets. If, at any time, the General Partner abandons such opportunity (as evidenced in writing by the General Partner following the request of Holly GP or the Holly Group Member), Holly GP or the Holly Group Member under this Section 2.3(a) may pursue such

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opportunity. Any Subject Assets which are permitted to be acquired by Holly GP or a Holly Group Member must be so acquired (i) within 12 months of the later to occur of (A) the date that Holly GP or the Holly Group Member becomes able to pursue such acquisition in accordance with the provisions of this Section 2.3(a) , 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 Holly Group Member than were offered to the Partnership. If either of these conditions are not satisfied, the opportunity must be reoffered to the Partnership in accordance with this Section 2.3(a) .
(b)      Notwithstanding Section 2.3(a) , in the event that (i) Holly GP or a Holly Group Member becomes aware of an opportunity to make an acquisition that includes both Subject Assets and assets that are not Subject Assets and the Subject Assets have a fair market value (as determined in good faith by the Board of Directors of Holly) 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 Holly) of the total assets being considered for acquisition or (ii) Holly GP or a Holly Group Member desires to construct Subject Assets with an estimated construction cost (as determined in good faith by the Board of Directors of Holly) equal to or greater than $5 million, then Holly GP or the Holly Group Member may make such acquisition without first offering the opportunity to the Partnership or may construct such Subject Assets as long as it complies with the following procedures:
(i)      Within 90 days after the consummation of the acquisition or the completion of construction by Holly GP or a Holly Group Member of the Subject Assets, as the case may be, Holly GP or the Holly Group Member shall notify the General Partner in writing of such acquisition or construction and offer the Partnership Group the opportunity to purchase such Subject Assets in accordance with this Section 2.3(b) (the “ Offer ”). The Offer shall set forth the terms relating to the purchase of the Subject Assets and, if Holly GP or any Holly Group Member desires to utilize the Subject Assets, the Offer will also include the commercially reasonable terms on which the Partnership Group will provide services to Holly GP or the Holly Group Member to enable Holly GP or the Holly Group Member to utilize the Subject Assets. As soon as practicable, but in any event within 30 days after receipt of such written notification, the General Partner shall notify Holly GP or the Holly Group Member in writing that either (x) the General Partner has elected not to cause a Partnership Group Member to purchase the Subject Assets, in which event Holly GP or the Holly Group Member shall be forever free to continue to own or operate such Subject Assets, or (y) the General Partner has elected to cause a Partnership Group Member to purchase the Subject Assets, in which event the following procedures shall apply.
(ii)      If Holly GP or the Holly Group Member and the General Partner within 60 days after receipt by the General Partner of the Offer are able to agree on the fair market value of the Subject Assets that are subject to the Offer and the other terms of the Offer including, without limitation, the terms, if any, on which the Partnership Group will provide services to Holly GP or the Holly Group Member to enable it to utilize the Subject Assets, a Partnership Group Member shall purchase the Subject Assets for the agreed upon fair market value as soon as commercially practicable after such agreement has been reached and, if applicable, enter into an

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agreement with Holly GP or the Holly Group Member to provide services in a manner consistent with the Offer.
(iii)      If Holly GP or the Holly Group Member and the General Partner are unable to agree within 60 days after receipt by the General Partner of the Offer on the fair market value of the Subject Assets that are subject to the Offer or the other terms of the Offer including, if applicable, the terms on which the Partnership Group will provide services to Holly GP or the Holly Group Member to enable it to utilize the Subject Assets, Holly GP or the Holly Entity and the General Partner will engage a mutually agreed upon investment banking firm to determine the fair market value of the Subject Assets and/or the other terms on which the Partnership Group and Holly GP or the Holly Group Member are unable to agree. Such investment banking firm will determine the fair market value of the Subject Assets and/or the other terms on which the Partnership Group and Holly GP or the Holly Group Member are unable to agree within 30 days of its engagement and furnish Holly GP or the Holly Group Member and the General Partner its determination. The fees of the investment banking firm will be split equally between Holly GP or the Holly Group Member and the Partnership Group. Once the investment banking firm has submitted its determination of the fair market value of the Subject Assets and/or the other terms on which the Partnership Group and Holly GP or the Holly Group Member are unable to agree, the General Partner will have the right, but not the obligation, to cause a Partnership Group Member to purchase the Subject Assets pursuant to the Offer as modified by the determination of the investment banking firm. The Partnership Group will provide written notice of its decision to Holly GP or the Holly 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 Subject Assets. If the General Partner elects to cause a Partnership Group Member to purchase the Subject Assets, then the Partnership Group Member shall purchase the Subject 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 Holly Group Member to provide services in a manner consistent with the Offer, as modified by the determination of the investment banking firm, if applicable.
2.4      Scope of Prohibition . Except as provided in this Article II and the Partnership Agreement, Holly GP and each Holly Group Member shall be free to engage in any business activity, including those that may be in direct competition with any Partnership Group Member.
2.5      Enforcement . Holly GP and the Holly Group Members agree and acknowledge that the Partnership Group does not have an adequate remedy at law for the breach by Holly GP and the Holly Group of the covenants and agreements set forth in this Article II , and that any breach by Holly GP or the Holly Group of the covenants and agreements set forth in this Article II would result in irreparable injury to the Partnership Group. Holly GP and the Holly Group Members further agree and acknowledge that any Partnership Group Member may, in addition to the other remedies which may be available to the Partnership Group, file a suit in equity to enjoin Holly GP and the Holly Group from such breach, and consent to the issuance of injunctive relief under this Agreement.

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

3.1      Environmental Indemnification .
(a)      Subject to Section 3.2 , the Holly Entities shall indemnify, defend and hold harmless the Partnership Entities for a period of 10 years after the Closing Date or, solely with respect to the 2008 Crude Pipelines, Tanks and Related Assets, 15 years after the Closing Date, as applicable, from and against environmental and Toxic Tort losses (including, without limitation, economic losses, diminution in value suffered by third parties, and lost profits), damages, injuries (including, without limitation, personal injury and death), liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorney’s and expert’s fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by the Partnership Entities or any third party to the extent arising out of:
(i)      any violation or correction of violation of Environmental Laws associated with the ownership or operation of the Assets, or
(ii)      any event or condition associated with ownership or operation of the Assets (including, without limitation, the presence of Hazardous Substances on, under, about or migrating to or from the Assets or the disposal or release of Hazardous Substances generated by operation of the Assets at non-Asset locations), including, without limitation, (A) 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, (B) 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 (C) the cost and expense for any environmental or Toxic Tort pre-trial, trial, or appellate legal or litigation support work;
but only to the extent that such violation complained of under Section 3.1(a)(i) or such events or conditions included under Section 3.1(a)(ii) occurred before the Closing Date (collectively, “ Covered Environmental Losses ”); or

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(iii)      the operation or ownership by Holly and its Affiliates of any assets not constituting part of the Assets, including but not limited to underground pipelines retained by the Holly Entities which serve the refineries in Lovington, New Mexico, Artesia, New Mexico and Woods Cross, Utah or the tanks that are part of the 2008 Crude Pipelines, Tanks and Related Assets to the extent not transferred to the Partnership Entities (the “ Transferred Tanks ”), except to the extent arising out of the negligent acts or omissions or willful misconduct of a member of the Partnership Entities.
(b)      To the extent that a good faith claim by the Partnership Entities for indemnification under Section 3.1(a)(i) or Section 3.1(a)(ii) 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 Holly Entities refuse to provide such indemnification, then the burden of proof shall be on the Holly Entities to demonstrate that the events or conditions giving rise to the claim arose after the Closing Date.
(c)      The Holly Entities shall, during the period that commences on the Closing Date and ends five (5) years thereafter (the “ Initial Tank Inspection Period ”), reimburse the Partnership Entities 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 Transferred Tanks as a result of any discovery made during the Initial Tank Inspections; provided , however , that (i) the Holly Entities shall not reimburse the Partnership Entities with respect to the relocated crude oil Tank 437 in the Artesia refinery complex and the new crude oil tank to replace crude oil Tank 439 in the Artesia refinery complex more particularly described in the definition of 2008 Crude Pipelines, Tanks and Related Assets, and (ii) upon expiration of the Initial Tank Inspection Period, all of the obligations of the Holly Entities pursuant to this Section 3.1(c) shall terminate, except that the Initial Tank Inspection Period shall be extended if, and only to the extent that (A) inaccessibility of the Transferred 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 (B) the Holly Entities received notice from the Partnership Entities regarding such delay at the time it occurred.
(d)      The Partnership Entities shall indemnify, defend and hold harmless the Holly Entities from and against environmental and Toxic Tort losses (including, without limitation, economic losses, diminution in value and lost profits suffered by third parties), damages, injuries (including, without limitation, personal injury and death), liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorney’s and expert’s fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by the Holly Entities or any third party to the extent arising out of:
(i)      any violation or correction of violation of Environmental Laws associated with the operation of the Assets by a Person other than a Holly Entity or ownership and operation of the Assets by a Person other than a Holly Entity, or

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(ii)      any event or condition associated with the operation of the Assets by a Person other than a Holly Entity or ownership and operation of the Assets by a Person other than a Holly Entity (including, but not limited to, the presence of Hazardous Substances on, under, about or migrating to or from the Assets or the disposal or release of Hazardous Substances generated by operation of the Assets at non-Asset locations) except, where a Holly Entity is operating an Asset, to the extent resulting from the negligent acts or omissions or willful misconduct of such Holly Entity including, without limitation, (A) 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, (B) 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 (C) the cost and expense for any environmental or Toxic Tort pre-trial, trial, or appellate legal or litigation support work;
but only to the extent such violation complained of under Section 3.1(d)(i) or such events or conditions included under Section 3.1(d)(ii) occurred after the Closing Date; provided , however , that nothing stated above shall make the Partnership Entities responsible for any post-Closing Date negligent actions or omissions or willful misconduct by the Holly Entities.
(e)      Notwithstanding anything in this Agreement to the contrary, as used in Section 3.1(a) the definition of Assets shall not include the 16” Lovington/Artesia Intermediate Pipeline, the Beeson Pipeline, the Roadrunner Pipeline, the Tulsa Interconnecting Pipelines, the UNEV Pipeline, the Malaga Pipeline System (other than 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 Partnership Entities as part of the 2004 Product Pipelines, Terminal and Related Assets), the El Dorado New Tank, the Artesia Blending Facility, or the Beeson to Lovington System Expansion.
3.2      Limitations Regarding Environmental Indemnification . The aggregate liability of the Holly Entities in respect of all Covered Environmental Losses under Section 3.1(a) shall not exceed (1) with respect to Assets other than the 2008 Crude Pipelines, Tanks and Related Assets, $15.0 million plus an additional $2.5 million in the case of Covered Environmental Losses related to the 8” and 10” Lovington/Artesia Intermediate Pipelines (for clarity, the first $15,000,000 million limit would apply to Covered Environmental Losses associated with the 8” and 10” Lovington/Artesia Intermediate Pipelines and the 2004 Product Pipelines, Terminal and Related Assets, while the limit between $15,000,000 and $17,500,000 would apply only to Covered Environmental Losses associated with the 8” and 10” Lovington/Artesia Intermediate Pipelines) and (2) $7.5 million in the case of Covered Environmental Losses related to the 2008 Crude Pipelines, Tanks and Related Assets. The Holly Entities will not have any obligation under Section 3.1 with respect to any Assets until the Covered Environmental Losses of the Partnership Entities exceed $200,000.
3.3      Right of Way Indemnification . The Holly Entities shall indemnify, defend and hold harmless the Partnership Entities from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorney's and expert's fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by the Partnership Entities to the extent

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arising out of (a) the failure of the applicable Partnership Entity to be the owner of such valid and indefeasible easement rights or fee ownership 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 Partnership Entity on the Closing Date is located as of the Closing Date; (b) the failure of the applicable Partnership Entity to have the consents, licenses and permits necessary to allow any such pipeline referred to in clause (a) of this Section 3.3 to cross the roads, waterways, railroads and other areas upon which any such pipeline is located as of the Closing Date; and (c) the cost of curing any condition set forth in clause (a) or (b) above that does not allow any Asset to be operated in accordance with Prudent Industry Practice, to the extent that the Holly Entities are notified in writing of any of the foregoing within 10 years after the Closing Date or, solely with respect to the 2008 Crude Pipelines, Tanks and Related Assets, 15 years after the Closing Date, as applicable.
3.4      Additional Indemnification .
(a)      In addition to and not in limitation of the indemnification provided under Section 3.1(a) and Section 3.3 , the Holly Entities shall indemnify, defend, and hold harmless the Partnership Entities from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorney’s and expert’s fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by the Partnership Entities to the extent arising out of (i) events and conditions associated with the operation of the Assets occurring before the Closing Date (other than Covered Environmental Losses which are provided for under Section 3.1 and Section 3.2 ) to the extent that the Holly Entities are notified in writing of any of the foregoing within five years after the Closing Date, (ii) all legal actions pending against the Holly Entities on July 13, 2004, (iii) the completion of remediation projects at the Partnership’s El Paso, Albuquerque and Mountain Home terminals that were ongoing or scheduled as of July 13, 2004, (iv) events and conditions associated with the Retained Assets and whether occurring before or after the Closing Date, and (v) all federal, state and local tax liabilities attributable to the operation or ownership of the Assets prior to the Closing Date, including any such tax liabilities of the Holly Entities that may result from the consummation of the formation transactions for the Partnership Entities and the General Partner.
(b)      In addition to and not in limitation of the indemnification provided under Section 3.1(b) or the Partnership Agreement, the Partnership Entities shall indemnify, defend, and hold harmless the Holly Entities from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorney’s and expert’s fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by the Holly Entities to the extent arising out of events and conditions associated with the operation of the Assets occurring on or after the Closing Date (other than Covered Environmental Losses which are provided for under Section 3.1 except, where a Holly Entity is operating an Asset, to the extent resulting from the negligent acts or omissions or willful misconduct of such Holly Entity), unless such indemnification would not be permitted under the Partnership Agreement by reason of one of the provisos contained in Section 7.7(a) of the Partnership Agreement.

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3.5      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, without limitation, the selection of counsel, determination of whether to appeal any decision of any court and the settling of any such matter or any issues relating thereto; provided , however , that no such settlement shall be entered into without the consent of the Indemnified Party unless it includes a full release of the Indemnified Party from such matter or issues, as the case may be.
(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, without limitation, the prompt furnishing to the Indemnifying Party of any correspondence or other notice relating thereto that the Indemnified Party may receive, permitting the name of the Indemnified Party to be utilized in connection with such defense, the making available to the Indemnifying Party of any files, records or other information of the Indemnified Party that the Indemnifying Party considers relevant to such defense and the making available to the Indemnifying Party of any employees of the Indemnified Party; provided , however , that in connection therewith the Indemnifying Party agrees to use reasonable efforts to minimize the impact thereof on the operations of the Indemnified Party and further agrees to maintain the confidentiality of all files, records, and other information furnished by the Indemnified Party pursuant to this Section 3.5 . In no event shall the obligation of the Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in connection with the defense of any claims covered by the indemnification set forth in this 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.
(d)      In determining the amount of any loss, cost, damage or expense for which the Indemnified Party is entitled to indemnification under this Agreement, the gross amount of the indemnification will be reduced by all amounts recovered by the Indemnified Party under contractual indemnities (other than insurance policies) from third Persons. An Indemnified Party shall be obligated to pursue all contractual indemnities that such Indemnified Party has with third Persons outside of this Agreement, provided , however , if the Indemnified Party’s right to such indemnification is assignable, the Indemnified Party may, in its sole discretion and in lieu of pursuing such claim, elect to assign such indemnification claim to the Indemnifying Party to pursue and shall reasonably cooperate with the Indemnifying Party (including, without limitation, making its relevant books, records, officers, information and testimony reasonably available to the Indemnifying Party) in the Indemnifying Party’s pursuit of such claim. In the event the Indemnified Party recovers under

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a contractual indemnity from a third Person outside of this Agreement, the amount recovered, less the reasonable out-of-pocket fees and expenses incurred by the Indemnified Party in recovering such amounts, shall reduce the amount such Indemnified Party may recover under this Article III and if the Indemnified Party receives any such amounts subsequent to an indemnification payment by the Indemnifying Party in respect of such losses, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by such Indemnifying Party in connection with providing such indemnification payment up to the amount so received by the Indemnified Party.
(e)      The date on which notification of a claim for indemnification is received by the Indemnifying Party shall determine whether such claim is timely made.
3.6      Limitation on Indemnification Obligations .
(a)      Notwithstanding anything in this Agreement to the contrary, when referring to the indemnification obligations of the Holly Entities in Article III , the definition of Holly Entities shall be deemed to mean solely (i) the Holly Entity or Holly Entities that own or operate, or owned or operated immediately prior to the transfer to the Partnership Entities, the Retained Asset, Asset or other property in question with respect to which indemnification is sought by reason of such Holly Entity’s or Holly Entities’ ownership or operation of the Retained Asset, 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 Partnership Entities for which it is entitled to indemnification under Article III and (ii) Holly.
(b)      Notwithstanding anything in this Agreement to the contrary, when referring to the indemnification obligations of the Partnership Entities in Article III , the definition of Partnership Entities shall be deemed to mean solely (i) the Partnership Entity or Partnership Entities that own or operate, or owned or operated, the Asset or other property in Partnership Entity’s or Partnership Group Entities’ ownership or operation of the 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 Holly Entities for which they are entitled to indemnification under Article III , (ii) the Partnership and (iii) the Operating Partnership.
(c)      For the avoidance of doubt, any indemnification obligations of the Holly 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 Partnership Entity designated by HEP UNEV (and not by UNEV Pipeline, LLC).
3.7      Exclusion from Indemnification . Notwithstanding anything in this Agreement to the contrary, as used in Article III the definition of Assets shall not include the Tulsa Transferred Assets, the Sinclair Transferred Assets or the Additional Tulsa East Assets, though the parties hereto acknowledge the environmental indemnity provided among certain of the Holly Entities and HEP

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Entities with respect to the Sinclair Transferred Assets and the Additional Tulsa East Assets contained in the Tulsa Throughput Agreement.
ARTICLE IV
General and Administrative Expenses
4.1      General
(a)      The Partnership will pay Holly an administrative fee (the “ Administrative Fee ”) in the amount set forth on Schedule I to this Agreement, payable in equal quarterly installments, for the provision by Holly and its Affiliates for the Partnership Group’s benefit of all the general and administrative services that Holly and its Affiliates have traditionally provided in connection with the Assets including, without limitation, the general and administrative services listed on Schedule I to this Agreement. The General Partner may agree on behalf of the Partnership to increases in the Administrative Fee in connection with expansions of the operations of the Partnership Group through the acquisition or construction of new assets or businesses.
(b)      At the end of each year, the Partnership will have the right to submit to Holly a proposal to reduce the amount of the Administrative Fee for that year if the Partnership believes, in good faith, that the general and administrative services performed by Holly and its Affiliates for the benefit of the Partnership Group for the year in question do not justify payment of the full Administrative Fee for that year. If the Partnership submits such a proposal to Holly, Holly agrees that it will negotiate in good faith with the Partnership to determine if the Administrative Fee for that year should be reduced and, if so, by how much.
(c)      The Administrative Fee shall not include and the Partnership Group shall reimburse Holly and its Affiliates for:
(i)      salaries of employees of Holly GP, to the extent, but only to the extent, such employees perform services for the Partnership Group;
(ii)      the cost of employee benefits relating to employees of Holly GP, such as 401(k), pension, and health insurance benefits, to the extent, but only to the extent, such employees perform services for the Partnership Group; and
(iii)      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 Holly and its Affiliates to the Partnership pursuant to Section 4.1(a) .
(d)      Either Holly, on the one hand, or the Partnership, 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      Holly Right of First Refusal: Prohibition on Transfer of Refinery Related Assets .

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(a)      The Partnership Entities hereby grant to Holly 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 Partnership Group Member) of the Assets that serve the Holly Entities’ refineries.
(b)      The Partnership Entities are prohibited from Transferring any of the Assets that serve the Holly Entities’ refineries to a Partnership Group Member that is not a party to this Agreement. In the event the Partnership Entities wish to Transfer any of the Assets that serve the Holly Entities’ refineries to a Partnership Group Member that is not a party to this Agreement, they shall first cause the proposed transferee Partnership Group Member to become a party to this Agreement.
(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 then owned directly or indirectly by the Partnership Entities.
5.2      Procedures .
(a)      If a Partnership Entity proposes to Transfer any of the Assets that serve the Holly Entities’ refineries to any Person pursuant to a bona fide third-party offer (an “ Acquisition Proposal ”), then the Partnership shall promptly give written notice (a “ Disposition Notice ”) thereof to Holly. The Disposition Notice shall set forth the following information in respect of the proposed Transfer: the name and address of the prospective acquiror (the “ Proposed Transferee ”), the Assets subject to the Acquisition Proposal (the “ Sale Assets ”), the purchase price offered by such Proposed Transferee (the “ Offer Price ”), reasonable detail concerning any non-cash portion of the proposed consideration, if any, to allow Holly to reasonably determine the fair market value of such non-cash consideration, the Partnership Entities’ estimate of the fair market value of any non-cash consideration and all other material terms and conditions of the Acquisition Proposal that are then known to the Partnership Entities. To the extent the Proposed Transferee’s offer 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 Holly and the Partnership Entities agree as to the fair market value of any non-cash consideration, Holly 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. In the event (i) Holly’s determination of the fair market value of any non-cash consideration described in the Disposition Notice (to be determined by Holly within 30 days of receipt of such Disposition Notice) is less than the fair market value of such consideration as determined by the Partnership Entities in the Disposition Notice and (ii) Holly and the Partnership Entities are unable to mutually agree upon the fair market value of such non-cash consideration within 30 days after Holly notifies the Partnership Entities of its

22


determination thereof, the Partnership Entities and Holly 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 Holly and the Partnership Entities. Holly will provide written notice of its decision regarding the exercise of its right of first refusal to purchase the Sale Assets to the Partnership 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 Holly not to purchase the Sale Assets. If Holly fails to exercise a right during any applicable period set forth in this Section 5.2(a) , Holly 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 Assets.
(b)      If Holly chooses to exercise its right of first refusal to purchase the Sale Assets under Section 5.2(a) , Holly and the Partnership Entities shall enter into a purchase and sale agreement for the Sale Assets which shall include the following terms:
(i)      Holly will agree to deliver cash for the Offer Price (or any other consideration agreed to by Holly and the Partnership Entities (each in their sole discretion));
(ii)      the Partnership Entities will represent that they have good and indefeasible 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 purchase of the Sale Assets, plus any other such matters as Holly may approve, which approval will not be unreasonably withheld. If Holly desires to obtain any title insurance with respect to the Sale Assets, the full cost and expense of obtaining the same (including but not limited to the cost of title examination, document duplication and policy premium) shall be borne by Holly;
(iii)      the Partnership Entities will grant to Holly the right, exercisable at Holly’s risk and expense, to make such surveys, tests and inspections of the Sale Assets as Holly may deem desirable, so long as such surveys, tests or inspections do not damage the Sale Assets or interfere with the activities of the Partnership Entities thereon and so long as Holly has furnished the Partnership Entities with evidence that adequate liability insurance is in full force and effect;
(iv)      Holly 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(b)(ii) or Section 5.2(b)(iii) above are, in the reasonable opinion of Holly, unsatisfactory;
(v)      the closing date for the purchase of the Sale Assets shall, unless otherwise agreed to by Holly and the Partnership Entities, occur no later than 90 days following receipt by the Partnership Entities of written notice by Holly of its intention to exercise its option to purchase the Sale Assets pursuant to Section 5.2(a) ;
(vi)      the Partnership Entities shall execute, have acknowledged and deliver to Holly a special warranty deed, assignment of easement, or comparable document, as appropriate,

23


in the applicable jurisdiction, on the closing date for the purchase of the Sale Assets constituting real property interests conveying the Sale Assets unto Holly free and clear of all encumbrances created by the Partnership Entities other than those set forth in Section 5.2(b)(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
(xiii)      neither the Partnership Entities nor Holly 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.
(c)      Holly and the Partnership Entities shall cooperate in good faith in obtaining all necessary governmental and other third Person 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 Holly 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 Holly nor the Partnership 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(d) .
(d)      If the Transfer to the Proposed Transferee is not consummated in accordance with the terms of the Acquisition Proposal within the later of (A) 180 days after the later of the applicable ROFR Acceptance Deadline, and (B) 10 days after the satisfaction of all governmental approval or filing requirements, if any, the Acquisition Proposal shall be deemed to lapse, and the Partnership or Partnership Entity 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.
ARTICLE VI
Holly 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 Holly with respect to the Tulsa Transferred Assets in the Purchase Option Agreement.
ARTICLE VII
Miscellaneous

7.1      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.

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7.2      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 and the Commercial Arbitration Rules or the Federal Arbitration Act, the terms of this Section 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 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 30 days after the second arbitrator has been appointed. The Claimant will pay the compensation and expenses of the arbitrator named by it, and the Respondent will pay the compensation and expenses of the arbitrator named by or for it. The costs of petitioning for the appointment of an arbitrator, if any, shall be paid by Respondent. The Claimant and Respondent will each pay one-half of the compensation and expenses of the third arbitrator. All arbitrators must (i) be neutral parties who have never been officers, directors or employees of any of the Holly Entities, the Partnership Entities or any of their affiliates and (ii) have not less than seven years experience in the petroleum transportation industry. The hearing will be conducted in Dallas, Texas and commence within 30 days after the selection of the third arbitrator. The Holly Entities, the Partnership Entities 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 the Holly Entities, the Partnership Entities or their Affiliates to the extent that the issues raised in such disputes are related. Without the written consent of Holly, on behalf of the Holly Entities, and the Partnership, on behalf of the Partnership Entities, no unrelated disputes or third party disputes may be joined to an arbitration pursuant to this Agreement.

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7.3      Notice .
(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 Holly 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: generalcounsel@hollyfrontier.com
Notices to the Partnership 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

26


(b)      Either Party may at any time change its address for service from time to time by giving notice to the other Party in accordance with this Section 7.3 .
7.4      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 all prior contracts or agreements, whether oral or written, relating to the matters contained herein.
7.5      Termination of Article II . The provisions of Article II of this Agreement may be terminated by Holly upon a Change of Control of Holly.
7.6      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 or schedules to this Agreement may be amended, modified, revised or updated by the parties hereto if each of Holly (on behalf of the Holly Entities) and the Partnership (on behalf of the Partnership Entities) 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 or schedules 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.
7.7      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.
7.8      Additional Partnership Entities . In the event the General Partner desires a Partnership Group Member who is not a party to this Agreement to acquire Subject Assets or a Partnership Entity wishes to Transfer any of the Assets that serve the Holly Entities’ refineries to a Partnership Group Member who is not a party to this Agreement, then the Partnership Group Member that is the proposed acquiror of the Subject Assets or transferee of the Assets that serve the Holly Entities’ refineries may become a party to this Agreement by executing a joinder in a form reasonably satisfactory to Holly (on behalf of the Holly Entities) and the Partnership (on behalf of the Partnership Entities).
7.9      Counterparts . This Agreement may be executed in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.
7.10      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.

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7.11      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.
7.12      Rights of Limited Partners . The provisions of this Agreement are enforceable solely by the Parties to this Agreement, 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 this Agreement to comply with the terms of this Agreement.
7.13      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.
7.14      [Intentionally omitted]
7.15      Limitation of Damages . NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER PROVISION OF THIS AGREEMENT AND EXCEPT FOR CLAIMS MADE BY THIRD PARTIES WHICH SHALL NOT BE LIMITED BY THIS SECTION, THE PARTIES AGREE THAT THE RECOVERY BY ANY PARTY, INCLUDING PURSUANT TO ARTICLE III , OF ANY LIABILITIES, DAMAGES, COSTS OR OTHER EXPENSES SUFFERED OR INCURRED BY IT (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 3.1 , 3.3 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, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) SUFFERED OR INCURRED BY ANY PARTY; PROVIDED , HOWEVER , THAT SUCH RESTRICTION AND LIMITATION SHALL NOT APPLY TO A PARTY’S OBLIGATION TO INDEMNIFY THE OTHER PARTY UNDER SECTIONS 3.1 , 3.3 OR 3.4 HEREOF, AS APPLICABLE, (y) AS A RESULT OF A THIRD PARTY CLAIM FOR SUCH INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES AGAINST SUCH INDEMNIFIED PARTY OR (z) INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES THAT ARE A RESULT OF SUCH INDEMNIFYING PARTY’S OR ITS AFFILIATES’ GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE). FOR PURPOSES OF THIS SECTION 7.15, “AFFILIATES” OF THE INDEMNIFYING PARTY SHALL NOT INCLUDE THE PARTNERSHIP GROUP MEMBERS WHEN A HOLLY ENTITY

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IS THE INDEMNIFYING PARTY AND SHALL NOT INCLUDE THE HOLLY GROUP MEMBERS WHEN THE INDEMNIFYING PARTY IS A PARTNERSHIP ENTITY.
[Remainder of Page Intentionally Left Blank.]


29



IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set forth above.
 
 
 
HOLLY ENTITIES:
 
 
 
 
 
 
 
 
HOLLYFRONTIER CORPORATION
 
 
 
HOLLY REFINING & MARKETING COMPANY -WOODS CROSS LLC
 
 
 
NAVAJO REFINING COMPANY, L.L.C.
 
 
 
NAVAJO PIPELINE CO., L.P.
 
 
 
HOLLY REFINING & MARKETING - TULSA LLC
 
 
 
FRONTIER REFINING LLC
 
 
 
FRONTIER EL DORADO REFINING LLC
 
 
 
 
By:
/s/ Michael C. Jennings
 
 
 
 
Name:
Michael C. Jennings
 
 
 
 
Title:
Chief Executive Officer and President


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




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

 
 
 
 
By:
/s/ Bruce R. Shaw
 
 
 
 
Name:
Bruce R. Shaw
 
 
 
 
Title:
President

 
 
 
HOLLY ENERGY PARTNERS - OPERATING, L.P.
 
 
 
HOLLY LOGISTIC SERVICES, L.L.C.
 
 
 
HEP LOGISTICS GP, L.L.C.
 
 
 
HEP TULSA LLC
 
 
 
ROADRUNNER PIPELINE, L.L.C.
 
 
 
 
 
 
 
 
HOLLY ENERGY STORAGE - LOVINGTON LLC
 
 
 
CHEYENNE LOGISTICS LLC
 
 
 
EL DORADO LOGISTICS LLC
 
 
 
HEP UNEV HOLDINGS LLC
 
 
 
HEP UNEV PIPELINE LLC

 
 
 
 
By:
/s/ Bruce R. Shaw
 
 
 
 
Name:
Bruce R. Shaw
 
 
 
 
Title:
President

 
 
 
 
HOLLY LOGISTICS HOLDINGS, L.P.
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
Holly Logistic Services, L.L.C.,
its General Partner
 
 
 
 
By:
/s/ Bruce R. Shaw
 
 
 
 
Name:
Bruce R. Shaw
 
 
 
 
Title:
President


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



    
 
HEP MOUNTAIN HOME, L.L.C.
 
HEP PIPELINE GP, L.L.C.
 
HEP PIPELINE, L.L.C.
 
HEP REFINING GP, L.L.C.
 
HEP REFINING, L.L.C.
 
HEP WOODS CROSS, L.L.C.
 
LOVINGTON-ARTESIA, L.L.C.
 
 
 
 
 
 
By:
HOLLY ENERGY PARTNERS - OPERATING, L.P.
 
 
Sole Member
 
 
 
 
By:
/s/ Bruce R. Shaw
 
 
 
 
Name:
Bruce R. Shaw
 
 
 
 
Title:
President

 
HEP NAVAJO SOUTHERN, L.P.
 
HEP PIPELINE ASSETS, LIMITED PARTNERSHIP
 
 
 
 
 
 
By:
HEP Pipeline GP, L.L.C.
 
 
General Partner

 
 
 
 
By:
/s/ Bruce R. Shaw
 
 
 
 
Name:
Bruce R. Shaw
 
 
 
 
Title:
President

 
HEP REFINING ASSETS, L.P.
 
 
 
 
 
 
By:
HEP Refining GP, L.L.C.
 
 
Its General Partner

 
 
 
 
By:
/s/ Bruce R. Shaw
 
 
 
 
Name:
Bruce R. Shaw
 
 
 
 
Title:
President





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



SCHEDULE I

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 March 1, 2008 through December 31, 2014
$2,300,000
Years beginning January 1, 2015
$2,380,500

General and Administrative Services
(1) executive services
(2)      finance, including treasury, and administration services
(3)      information technology services
(4)      legal services
(5)      health, safety and environmental services
(6)      human resources services



Schedule I