Exhibit 10.3
EXECUTION VERSION
 
 
AMENDED AND RESTATED OMNIBUS AGREEMENT
among
HOLLY CORPORATION
NAVAJO PIPELINE CO., L.P.
HOLLY LOGISTIC SERVICES, L.L.C.
HEP LOGISTICS HOLDINGS, L.P.
HOLLY ENERGY PARTNERS, L.P.
HEP LOGISTICS GP, L.L.C.
and
HOLLY ENERGY PARTNERS — OPERATING, L.P.
 
 

 

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TABLE OF CONTENTS

                              Page  
 
                Article I   Definitions     2  
 
  1.1   Definitions     2  
 
                Article II   Business Opportunities     7  
 
  2.1   Restricted Businesses     7  
 
  2.2   Permitted Exceptions     7  
 
  2.3   Procedures     8  
 
  2.4   Scope of Prohibition     10  
 
  2.5   Enforcement     10  
 
                Article III   Indemnification     10  
 
  3.1   Environmental Indemnification     10  
 
  3.2   Limitations Regarding Environmental Indemnification     12  
 
  3.3   Right of Way Indemnification     12  
 
  3.4   Additional Indemnification     13  
 
  3.5   Indemnification Procedures     14  
 
                Article IV   General and Administrative Expenses     15  
 
  4.1   General     15  
 
                Article V   Right of First Refusal     15  
 
  5.1   Holly Right of First Refusal     15  
 
  5.2   Procedures     16  
 
                Article VI   Miscellaneous     18  
 
  6.1   Choice of Law     18  
 
  6.2   Arbitration Provision     18  
 
  6.3   Notice     19  
 
  6.4   Entire Agreement     20  
 
  6.5   Termination of Article II     20  
 
  6.6   Amendment or Modification     20  
 
  6.7   Assignment     20  
 
  6.8   Counterparts     20  
 
  6.9   Severability     20  
 
  6.10   Further Assurances     20  
 
  6.11   Rights of Limited Partners     21  
 
  6.12   Headings     21  
 
  6.13   UNEV Option Agreement     21  

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AMENDED AND RESTATED
OMNIBUS AGREEMENT
     THIS AMENDED AND RESTATED OMNIBUS AGREEMENT is being entered into on
June 1, 2009 (the “Agreement”), by and among Holly Corporation, a Delaware
corporation (“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”), Holly Energy Partners, L.P., a Delaware
limited partnership (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 amends
and restates in its entirety the Omnibus Agreement entered into on July 13, 2004
(as amended, the “Original Omnibus Agreement”) among such parties. The
above-named entities are sometimes referred to in this Agreement each as a
“Party” and collectively as the “Parties.”
RECITALS:
          WHEREAS, the Parties entered into 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 (as defined herein) and
Holly GP would not engage in 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 Group (as defined herein);
          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 has agreed to transfer
and convey to the Operating Partnership, and the Operating Partnership has
agreed to acquire, 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 desire to amend and
restate the Original Omnibus Agreement in its entirety as follows:
     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:

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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” has the meaning given to
such term 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., a Delaware
limited liability company, 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).
     “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.
     “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

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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.
     “Assets” means all of the following assets conveyed, contributed, or
otherwise transferred by the Holly Entities to the Partnership Group: (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, and (iv) the 16” Lovington/Artesia Intermediate Pipeline.
     “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 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.
     “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 6.2.
     “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 (i) with respect to the 8” and 10” Lovington/Artesia Intermediate
Pipelines, the closing date of the purchase of the 8” and 10” Lovington/Artesia
Intermediate Pipelines by a Partnership Group Member, (ii) with respect to the
2008 Crude Pipelines, Tanks and Related Assets, the effective date of the
purchase of the 2008 Crude Pipelines, Tanks and Related Assets by a Partnership
Group Member, and (iii) with respect to the 16” Lovington/Artesia Intermediate
Pipeline, the effective date of the purchase of all of the limited liability
company interests of Lovington-Artesia, L.L.C., a Delaware limited liability
company, by a Partnership Group Member.

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     “Common Units” is defined in the Partnership Agreement.
     “Conflicts Committee” 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).
     “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.
     “First ROFR Acceptance Deadline” is defined in Section 5.2(a).
     “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.
     “Holly” is defined in the introduction to this Agreement.

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     “Holly Entities” means Holly and any Person controlled, directly or
indirectly, by Holly other than the Partnership Entities; and “Holly Entity”
means any of the Holly Entities.
     “Indemnified Party” means the Partnership Group or Holly, 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 Group or Holly, as the
case may be, in their capacity as the parties from whom indemnification may be
required in accordance with Article III.
     “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.
     “Navajo Pipeline” is defined in the introduction 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 introduction 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 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
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 Holly GP, the General Partner and each member
of the Partnership Group.
     “Partnership Entity” means any of the Partnership Entities.
     “Partnership Group” means the Partnership, the OLP GP, the Operating
Partnership and any Subsidiary of any such Person, treated as a single
consolidated entity.

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     “Partnership Group Member” means any member of the Partnership Group.
     “Party” and “Parties” are defined in the introduction to this Agreement.
     “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.
     “Respondent” is defined in Section 6.2.
     “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 Entities on the date of the Contribution
Agreement that were not conveyed, contributed or otherwise transferred to the
Partnership Group pursuant to the Contribution Agreement or otherwise.
     “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 ROFR Acceptance Deadline” is defined in Section 5.2(a).
     “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.

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     “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.
     “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).
     “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 Entity controls the
Partnership, and except as permitted by Section 2.2, Holly GP and each of the
Holly Entities 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 Entities may engage in the following
activities under the following circumstances:
          (a) the ownership and/or operation of any of the Retained Assets
(including replacements of the Retained Assets);
          (b) any Restricted Business conducted by a Holly Entity or Holly GP
with the approval of the Conflicts Committee;
          (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 Entity 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 Entity 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

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acquisition; provided, the Partnership has been offered the opportunity to
purchase the Subject Assets in accordance with Section 2.3 and the Partnership
(with the concurrence of the Conflicts Committee) has elected not to purchase
the Subject Assets; and
          (e) the ownership and/or operation of any Subject Assets constructed
by a Holly Entity 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 (with the concurrence of the Conflicts
Committee) has elected not to purchase.
     2.3 Procedures.
          (a) In the event that Holly GP or a Holly Entity 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 Entity 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 Entity 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 Entity that either (i) the
General Partner, on behalf of the Partnership, has elected, with the concurrence
of the Conflicts Committee, 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 (with the concurrence of the Conflicts
Committee) 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 with the approval of the Conflicts Committee (as evidenced in
writing by the General Partner following the request of Holly GP or the Holly
Entity), Holly GP or the Holly Entity under this Section 2.3(a) may pursue such
opportunity. Any Subject Assets which are permitted to be acquired by Holly GP
or a Holly Entity must be so acquired (i) within 12 months of the later to occur
of (A) the date that Holly GP or the Holly Entity 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 Entity 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 Entity 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 Entity 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 Entity may make such acquisition without first offering the
opportunity to the

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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 Entity of the Subject
Assets, as the case may be, Holly GP or the Holly Entity 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
Entity 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 Entity to enable Holly GP or the Holly Entity
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 Entity in writing that either (x) the General
Partner has elected, with the concurrence of the Conflicts Committee, not to
cause a Partnership Group Member to purchase the Subject Assets, in which event
Holly GP or the Holly Entity shall be forever free to continue to own or operate
such Subject Assets, or (y) the General Partner has elected (with the
concurrence of the Conflicts Committee) 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 Entity and the General Partner
(with the concurrence of the Conflicts Committee) 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 Entity 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 agreement with Holly GP or the Holly Entity to provide services in a manner
consistent with the Offer.
               (iii) If Holly GP or the Holly Entity 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 Entity 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 Entity 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 Entity are unable to agree within 30 days of its engagement and
furnish Holly GP or the Holly Entity and the General Partner its determination.
The fees of the investment banking firm will be split equally between Holly GP
or the Holly Entity 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
Entity are unable to agree, the General Partner will have the right, but not the
obligation, subject to the approval of the Conflicts Committee, to cause a
Partnership Group Member to purchase the Subject Assets pursuant to the Offer as

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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
Entity 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 Entity 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 Entity 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 Entities agree and acknowledge that
the Partnership Group does not have an adequate remedy at law for the breach by
Holly GP and the Holly Entities of the covenants and agreements set forth in
this Article II, and that any breach by Holly GP or the Holly Entities 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 Entities
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 Entities from such breach, and
consent to the issuance of injunctive relief under this Agreement.
ARTICLE III
Indemnification
     3.1 Environmental Indemnification.
          (a) Subject to Section 3.2, Holly shall indemnify, defend and hold
harmless the Partnership Group 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
Group or any third party by reason of or 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

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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
               (iii) the operation or ownership of any assets not transferred
under this Agreement, including but not limited to underground pipelines
retained by the Seller Parties 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 (the “Transferred Tanks”).
          (b) To the extent that a good faith claim by the Partnership Group for
indemnification under Section 3.1(a)(ii) or Section 3.1(a)(iii) 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 Group 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 Group 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
preformed during the Initial Tank Inspection Period, and (B) the Holly Entities
received notice from the Partnership Group regarding such delay at the time it
occurred.
          (d) The Partnership Group 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 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

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(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 by
reason of or 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, 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) 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;
and regardless of whether such violation complained of under Section 3.1(d)(i)
or such events or conditions included under Section 3.1(d)(ii) occurred before
or after the Closing Date, except to the extent that any of the foregoing are
Covered Environmental Losses for which the Partnership Group is entitled to
indemnification from Holly under this Article III; provided, however, that
nothing stated above shall make the Partnership Group responsible for any
post-Closing Date actions or omissions 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.
     3.2 Limitations Regarding Environmental Indemnification. The aggregate
liability of Holly 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 $17,500,00 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. Holly will not have any obligation
under Section 3.1 with respect to any Assets until the Covered Environmental
Losses of the Partnership Group exceed $200,000.
     3.3 Right of Way Indemnification. Holly shall indemnify, defend and hold
harmless the Partnership Group 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

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character, known or unknown, fixed or contingent, suffered or incurred by the
Partnership Group by reason of or arising out of (a) the failure of the
applicable Partnership Group Member 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 Group Member on the Closing Date is located as of the Closing Date;
(b) the failure of the applicable Partnership Group Member 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 Holly is 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, Holly shall indemnify, defend,
and hold harmless the Partnership Group 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
Group by reason of or arising out of (i) events and conditions associated with
the operation of the Assets and 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 Holly is 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 (iv) 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 Group
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
Group 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 by reason of or arising out of events and
conditions associated with the operation of the Assets and occurring on or after
the Closing Date (other than Covered Environmental Losses which are provided for
under Section 3.1), 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
(with the concurrence of the Conflicts Committee in the case of the Partnership
Group) 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 (i) any insurance
proceeds realized by the Indemnified Party, and such correlative insurance
benefit shall be net of any incremental insurance premiums that become due and
payable by the Indemnified Party as a result of such claim and (ii) all amounts
recovered by the Indemnified Party under contractual indemnities from third
Persons.
          (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.

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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, with the approval and consent of the Conflicts Committee, 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 one calendar year prior to the proposed date
of termination.
ARTICLE V
Right of First Refusal
     5.1 Holly Right of First Refusal.
          (a) The Partnership Group hereby grants 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

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or a Transfer to another Partnership Group Member) of the Assets that serve the
Holly Entities’ refineries.
          (b) 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.
     5.2 Procedures.
          (a) If a Partnership Group Member 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 Group’s 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 Group. 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 Group 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 Group
in the Disposition Notice and (ii) Holly and the Partnership Group are unable to
mutually agree upon the fair market value of such non-cash consideration within
30 days after Holly notifies the Partnership Group of its determination thereof,
the Partnership Group 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 Group. 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 Group 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.

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          (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 Group
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 (unless
Holly and the Partnership Group agree that consideration will be paid by means
of an interest-bearing promissory note or equity securities of Holly);
               (ii) the Partnership Group will represent that it has 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 Group 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 Group thereon and so long as Holly has
furnished the Partnership Group 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 Group, occur no later
than 90 days following receipt by the Partnership Group 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 Group shall execute, have acknowledged and
deliver to Holly a special warranty deed, assignment of easement, or comparable
document, as appropriate, in the applicable jurisdiction, on the closing date
for the purchase of the Sale Assets constituting real property interests
conveying the Sale Assets unto Holly free and clear of all encumbrances created
by the Partnership Group 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
               (viii) neither the Partnership Group 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(b) have not been obtained.

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          (c) Holly and the Partnership Group 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 60 days
and, if governmental approvals and waiting periods shall not have been obtained
or expired, as the case may be, by such 60th 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 member of the Partnership Group 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
Miscellaneous
     6.1 Choice of Law. This Agreement shall be subject to and governed by the
laws of the State of Texas, excluding any conflicts-of-law rule or principle
that might refer the construction or interpretation of this Agreement to the
laws of another state.
     6.2 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-

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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 energy
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.
     6.3 Notice. All notices or requests or consents provided for by, or
permitted to be given pursuant to, this Agreement must be in writing and must be
given by depositing same in the United States mail, addressed to the Person to
be notified, postpaid, and registered or certified with return receipt requested
or by delivering such notice in person or by telecopier or telegram to such
Party. Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient’s normal business hours or at the
beginning of the recipient’s next business day after receipt if not received
during the recipient’s normal business hours. All notices to be sent to a Party
pursuant to this Agreement shall be sent to or made at the address set forth
below or at such other address as such Party may stipulate to the other Parties
in the manner provided in this Section 6.3.
          if to the Holly Entities:
Holly Corporation
100 Crescent Court
Suite 1600
Dallas, Texas 75201
Attention: President
Fax: 214-615-9379
with a copy to (which shall not constitute notice):
Denise McWatters
General Counsel
Holly Corporation
100 Crescent Court
Suite 1600
Dallas, Texas 75201
Fax: 214-242-5063
          if to the Partnership Entities:
Holly Energy Partners, L.P.
c/o Holly Logistic Services, L.L.C.,
100 Crescent Court

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Suite 1600
Dallas, Texas 75201
Attention: Vice President and Chief Financial Officer
Fax: (214) 615-9371
     6.4 Entire Agreement. This Agreement 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.
     6.5 Termination of Article II. The provisions of Article II of this
Agreement may be terminated by Holly upon a Change of Control of Holly.
     6.6 Amendment or Modification. No amendment or modification of this
Agreement shall be valid unless it is in writing and signed by the parties
hereto and, in the case of any amendment or modification adverse to the
Partnership Group, approved by the Conflicts Committee of Holly GP. 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, and, in
the case of any waiver by the Partnership Entities, approved by the Conflicts
Committee of Holly GP. Except to the extent adverse to the Partnership Group (in
which case the approval of the Conflicts Committee of Holly GP shall also be
required), 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 Holly GP (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.
     6.7 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.
     6.8 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.
     6.9 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.
     6.10 Further Assurances. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.

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     6.11 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.
     6.12 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.
     6.13 UNEV Option Agreement. The Parties acknowledge and agree that,
notwithstanding anything in this Agreement to the contrary, the terms and
provisions of the Option Agreement, dated January 31, 2008, among Holly, Holly
UNEV Pipeline Company, Navajo Pipeline, Holly GP, the General Partner, the
Partnership, OLP GP and the Operating Partnership remain in full force and
effect.
[Remainder of Page Intentionally Left Blank]

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     IN WITNESS WHEREOF, the Parties have executed this Agreement on, and
effective as of, the Closing Date.

            HOLLY CORPORATION
      By:   /s/ David L. Lamp         David L. Lamp        President       
NAVAJO PIPELINE CO., L.P.

By:  Navajo Pipeline GP, L.L.C.,
        its General Partner
      By:   /s/ Bruce R. Shaw         Bruce R. Shaw        Vice President and
Chief Financial Officer        HOLLY LOGISTIC SERVICES, L.L.C.
      By:   /s/ Bruce R. Shaw         Bruce R. Shaw        Senior Vice President
and Chief Financial Officer        HEP LOGISTICS HOLDINGS, L.P.

By:  Holly Logistic Services, L.L.C.,
        its General Partner
      By:   /s/ Bruce R. Shaw         Bruce R. Shaw        Senior Vice President
and Chief Financial Officer     

[Signature Page 1 of 2 to Amended and Restated Omnibus Agreement]

 

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            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/ David G. Blair         David G. Blair        Senior Vice
President        HEP LOGISTICS GP, L.L.C.
      By:   /s/ David G. Blair         David G. Blair        Senior Vice
President        HOLLY ENERGY PARTNERS — OPERATING, L.P.

By:  HEP Logistics GP, L.L.C.,
        its General Partner
      By:   /s/ David G. Blair         David G. Blair        Senior Vice
President     

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

 

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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
  $ 2,300,000  

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-1