Exhibit 10.3

Execution Version

MASTER TOLLING AGREEMENT

(Operating Assets)

Effective as of November 1, 2015

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TABLE OF CONTENTS

 

ARTICLE 1 DEFINITIONS AND INTERPRETATIONS

     1   

1.1

 

DEFINITIONS

     1   

1.2

 

INTERPRETATION

     1   

ARTICLE 2 AGREEMENT TO PURCHASE SERVICES

     1   

2.1

 

MINIMUM THROUGHPUT COMMITMENT

     1   

2.2

 

MEASUREMENT AND OWNERSHIP OF DELIVERED VOLUMES

     3   

2.3

 

OBLIGATIONS OF HEP OPERATING

     3   

2.4

 

NOTIFICATION OF UTILIZATION

     3   

2.5

 

SCHEDULING AND ACCEPTING MOVEMENT

     3   

2.6

 

TAXES

     3   

2.7

 

TIMING OF PAYMENTS

     3   

2.8

 

INCREASES IN TOLLING FEES

     4   

2.9

 

NO GUARANTEED MINIMUM

     4   

ARTICLE 3 FORCE MAJEURE

     4   

ARTICLE 4 EFFECTIVENESS AND APPLICABLE TERM

     4   

ARTICLE 5 NOTICES

     5   

ARTICLE 6 DEFICIENCY PAYMENTS

     5   

6.1

 

DEFICIENCY NOTICE; DEFICIENCY PAYMENTS

     5   

6.2

 

DISPUTED DEFICIENCY NOTICES

     5   

6.3

 

PAYMENT OF AMOUNTS NO LONGER DISPUTED

     5   

6.4

 

CONTRACT QUARTERS INDEPENDENT

     6   

ARTICLE 7 RIGHT OF FIRST REFUSAL

     6   

ARTICLE 8 INDEMNITY; LIMITATION OF DAMAGES

     6   

8.1

 

INDEMNITY; LIMITATION OF LIABILITY

     6   

8.2

 

SURVIVAL

     6   

 

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ARTICLE 9 MISCELLANEOUS

     6   

9.1

 

AMENDMENTS AND WAIVERS

     6   

9.2

 

SUCCESSORS AND ASSIGNS

     7   

9.3

 

SEVERABILITY

     7   

9.4

 

CHOICE OF LAW

     7   

9.5

 

RIGHTS OF LIMITED PARTNERS

     7   

9.6

 

FURTHER ASSURANCES

     7   

9.7

 

HEADINGS

     7   

ARTICLE 10 GUARANTEE BY HOLLYFRONTIER

     8   

10.1

 

PAYMENT GUARANTY

     8   

10.2

 

GUARANTY ABSOLUTE

     8   

10.3

 

WAIVER

     8   

10.4

 

SUBROGATION WAIVER

     9   

10.5

 

REINSTATEMENT

     9   

10.6

 

CONTINUING GUARANTY

     9   

10.7

 

NO DUTY TO PURSUE OTHERS

     9   

ARTICLE 11 GUARANTEE BY THE PARTNERSHIP

     9   

11.1

 

PAYMENT AND PERFORMANCE GUARANTY

     9   

11.2

 

GUARANTY ABSOLUTE

     10   

11.3

 

WAIVER

     10   

11.4

 

SUBROGATION WAIVER

     10   

11.5

 

REINSTATEMENT

     11   

11.6

 

CONTINUING GUARANTY

     11   

11.7

 

NO DUTY TO PURSUE OTHERS

     11   

 

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EXHIBITS Exhibit A   –    Parties Exhibit B   –    Drop Down Transactions
Exhibit C   –    Applicable Assets; Minimum Throughput Commitment; Tolling Fees
and Adjustments; Applicable Term Exhibit D   –    Definitions Exhibit E   -   
Interpretations Exhibit F   -    Measurement of Delivered Volumes Exhibit G   -
   Increase in Tolling Fees as a Result of Changes in Applicable Law

 

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MASTER TOLLING AGREEMENT

(Operating Assets)

This Master Tolling Agreement (this “Agreement”) is dated as of November 2,
2015, to be effective as of the Effective Time (as defined below) by and between
the Persons set forth on Exhibit A (each hereinafter sometimes referred to as a
“Party” and sometimes collectively referred to as the “Parties”).

RECITALS:

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

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

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

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

ARTICLE 1

DEFINITIONS AND INTERPRETATIONS

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

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

ARTICLE 2

AGREEMENT TO PURCHASE SERVICES

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

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

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

 

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

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

(d) Reduction for Non-Force Majeure Events.

(1) If, as a result of HEP Operating’s operational difficulties or inability to
provide sufficient capacity for the Minimum Throughput Commitment, HEP Operating
fails to process and deliver to the Applicable Refinery Owner at least 95% of
the volumes of Products expected to be derived from the volume of Feedstock
processed with such Applicable Asset for a particular Contract Quarter based on
the applicable Conversion Ratio, then the Tolling Fee applicable to that
Contract Quarter will be reduced by a percentage equal to (A) 100% minus (B) the
percentage represented by the ratio of (i) the volume of Products actually
produced for the Contract Quarter to (ii) the volume of Products that would be
produced from the volume of Feedstock delivered for the Contract Quarter based
on the Conversion Ratio plus (C) 5%. If, as a result of a reduction to the
Tolling Fee for a Contract Quarter under this Section 2.2(d)(1) the Applicable
Refinery Owner shall have overpaid its Tolling Fees for the Contract Quarter,
the Applicable Refinery Owner shall receive a credit against its Tolling Fees
due for the following Contract Quarter in the amount of such overpayment.

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

This Section 2.2(d) shall not apply in the event HEP Operating gives a Force
Majeure Notice in accordance with the terms of Article IX of the Omnibus
Agreement, in which case the Minimum Throughput Commitment shall be suspended to
the extent contemplated in Article IX of the Omnibus Agreement and Article 3 of
this Agreement.

(e) Pro-Rationing for Partial Periods. Notwithstanding the other provisions of
this Section 2.1, in the event that the Effective Time is any date other than
the first day of a Contract Quarter, then the Minimum Throughput Commitment for
the initial partial Contract Quarter shall be prorated based upon the number of
actual days between the date on which the Effective Time occurs and the end of
such partial Contract Quarter. Similarly, notwithstanding the other provisions
of this Section 2.1, if the end of the Applicable Term is on a day other than
the last day of a Contract Quarter, then the Minimum Throughput Commitment shall
be prorated based upon the number of actual days between the beginning of such
partial Contract Quarter and the last day of the Applicable Term.

 

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

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

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

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

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

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

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

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

2.7 Taxes. The Applicable Refinery Owner will pay all taxes, import duties,
license fees and other charges by any Governmental Authority levied on or with
respect to the Feedstocks processed and Products delivered to the Applicable
Refinery Owner by HEP Operating. HEP Operating will pay all property and ad
valorem taxes levied on, or with respect to, the Applicable Assets. Should
either Party be required to pay or collect any taxes, duties, charges and or
assessments pursuant to any Applicable Law or authority now in effect or
hereafter to become effective which are payable by the any other Party pursuant
to this Section 2.6, the Party subject to such tax shall promptly reimburse the
Party collecting or paying the tax on its behalf for the amount of such tax.

2.8 Timing of Payments. The Applicable Refinery Owner will make payments to HEP
Operating by electronic payment with immediately available funds on a monthly
basis during the Applicable Term with respect to services rendered or
reimbursable costs or expenses incurred by HEP Operating under this Agreement in
the prior month. Payments not received by HEP Operating on or prior to the tenth
day following the invoice date will accrue interest at the Prime Rate from the
applicable payment due date until the date payment is made.

 

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

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

ARTICLE 3

FORCE MAJEURE

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

ARTICLE 4

EFFECTIVENESS AND APPLICABLE TERM

This Agreement shall be effective as to each group of Applicable Assets as of
the Effective Time and, unless terminated earlier in accordance with its terms,
shall terminate with respect to each group of Applicable Assets upon the
expiration of the initial term set forth on Exhibit C (the “Initial Term”);
provided that, at the end of the Initial Term for each group of Applicable
Assets, the Applicable Refinery Owner shall have the option to extend the
Applicable Term for such group of Applicable Assets for an extension term beyond
the Initial Term if, and to the extent, provided in Exhibit C (an “Extension
Term”).

 

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In the event an Extension Term is available for a group of Applicable Assets,
the Applicable Refinery Owner shall give HEP Operating written notice of its
exercise of its option to extend the Applicable Term with respect to such group
of Applicable Assets at least 12 months prior to the end of the Initial Term for
such group of Applicable Assets.

ARTICLE 5

NOTICES

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

ARTICLE 6

DEFICIENCY PAYMENTS

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

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

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

 

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

ARTICLE 7

RIGHT OF FIRST REFUSAL

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

ARTICLE 8

INDEMNITY; LIMITATION OF DAMAGES

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

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

ARTICLE 9

MISCELLANEOUS

9.1 Amendments and Waivers. No amendment or modification of this Agreement shall
be valid unless it is in writing and signed by the Parties. No waiver of any
provision of this Agreement shall be valid unless it is in writing and signed by
the Party against whom the waiver is sought to be enforced. Any of the exhibits
to this Agreement may be amended, modified, revised or updated by the Parties if
each of the Parties executes an amended, modified, revised or updated exhibit,
and attaches it to this Agreement. Such amended, modified, revised or updated
exhibits shall be sequentially numbered (e.g. Exhibit A-1, Exhibit A-2, etc.),
dated and appended as an additional exhibit to this Agreement and shall replace
the prior exhibit, in its entirety, after its date of effectiveness, except as
specified therein. No 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.

 

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9.2 Successors and Assigns. This Agreement shall inure to the benefit of, and
shall be binding upon, the Parties and their respective successors and permitted
assigns. Neither this Agreement nor any of the rights or obligations hereunder
shall be assigned without the prior written consent of the Applicable Refinery
Owner (in the case of any assignment by HEP Operating) or HEP Operating (in the
case of any assignment by an Applicable Refinery Owner), in each case, such
consent is not to be unreasonably withheld or delayed; provided, however, that
(i) HEP Operating may make such an assignment (including a partial pro rata
assignment) to an Affiliate of HEP Operating without the Applicable Refinery
Owner’s consent (but subject to the provision of written notice to the
Applicable Refinery Owner), (ii) an Applicable Refinery Owner may make such an
assignment (including a pro rata partial assignment) to an Affiliate of such
Applicable Refinery Owner without HEP Operating’s consent (but subject to the
provision of written notice to HEP Operating), (iii) an Applicable Refinery
Owner may make a collateral assignment of its rights and obligations hereunder
and/or grant a security interest in its rights and obligations hereunder, and
HEP Operating shall execute an acknowledgement of such collateral assignment in
such form as may from time-to-time be reasonably requested, and (iv) HEP
Operating may make a collateral assignment of its rights hereunder and/or grant
a security interest in its rights and obligations hereunder to a bona fide third
party lender or debt holder, or trustee or representative for any of them,
without an Applicable Refinery Owner’s consent, if such third party lender, debt
holder or trustee shall have executed and delivered to such Applicable Refinery
Owner a non-disturbance agreement in such form as is reasonably satisfactory to
such Applicable Refinery Owner and such third party lender, debt holder or
trustee, and such Applicable Refinery Owner executes an acknowledgement of such
collateral assignment in such form as may from time to time be reasonably
requested. Any attempt to make an assignment otherwise than as permitted by the
foregoing shall be null and void. The Parties agree to require their respective
successors, if any, to expressly assume, in a form of agreement reasonably
acceptable to the other Parties, their obligations under this Agreement.

9.3 Severability. If any provision of this Agreement shall be held invalid or
unenforceable by a court or regulatory body of competent jurisdiction, the
remainder of this Agreement shall remain in full force and effect.

9.4 Choice of Law. This Agreement shall be subject to and governed by the laws
of the State of Delaware, excluding any conflicts-of-law rule or principle that
might refer the construction or interpretation of this Agreement to the laws of
another state.

9.5 Rights of Limited Partners. The provisions of this Agreement are enforceable
solely by the Parties, and no limited partner of the Partnership shall have the
right, separate and apart from the Partnership, to enforce any provision of this
Agreement or to compel any Party to comply with the terms of this Agreement.

9.6 Further Assurances. In connection with this Agreement and all transactions
contemplated by this Agreement, each signatory Party hereto agrees to execute
and deliver such additional documents and instruments and to perform such
additional acts as may be necessary or appropriate to effectuate, carry out and
perform all of the terms, provisions and conditions of this Agreement and all
such transactions.

9.7 Headings. Headings of the Sections of this Agreement are for convenience of
the Parties only and shall be given no substantive or interpretative effect
whatsoever. All references in this Agreement to Sections are to Sections of this
Agreement unless otherwise stated.

 

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ARTICLE 10

GUARANTEE BY HOLLYFRONTIER

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

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

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

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

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

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

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

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

The obligations of HollyFrontier hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Applicable Refinery Owner Payment Obligations or otherwise.

10.3 Waiver. HollyFrontier hereby waives promptness, diligence, all setoffs,
presentments, protests and notice of acceptance and any other notice relating to
any of the Applicable Refinery Owner Payment Obligations and any requirement for
HEP Operating to protect, secure, perfect or insure any security interest or
lien or any property subject thereto or exhaust any right or take any action
against the Applicable Refinery Owner, any other entity or any collateral.

 

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

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

10.6 Continuing Guaranty. This Article 10 is a continuing guaranty and shall
(i) remain in full force and effect until the first to occur of the indefeasible
payment in full of all of the Applicable Refinery Owner Payment Obligations,
(ii) be binding upon HollyFrontier, its successors and assigns and (iii) inure
to the benefit of and be enforceable by HEP Operating and its respective
successors, transferees and assigns.

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

ARTICLE 11

GUARANTEE BY THE PARTNERSHIP

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

 

9

--------------------------------------------------------------------------------

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

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

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

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

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

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

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

The obligations of the Partnership hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
HEP Operating Obligations or otherwise.

11.3 Waiver. The Partnership hereby waives promptness, diligence, all setoffs,
presentments, protests and notice of acceptance and any other notice relating to
any of the HEP Operating Payment Obligations and any requirement for the
Applicable Refinery Owner to protect, secure, perfect or insure any security
interest or lien or any property subject thereto or exhaust any right or take
any action against HEP Operating, any other entity or any collateral.

11.4 Subrogation Waiver. The Partnership agrees that for so long as there is a
current or ongoing default or breach of this Agreement by HEP Operating, the
Partnership shall not have any rights (direct or indirect) of subrogation,
contribution, reimbursement, indemnification or other rights of payment or
recovery from HEP Operating for any payments made by the Partnership under this
Article 11, and each of the Partnership hereby irrevocably waives and releases,
absolutely and unconditionally, any such rights of subrogation, contribution,
reimbursement, indemnification and other rights of payment or recovery it may
now have or hereafter acquire against HEP Operating during any period of default
or breach of this Agreement by HEP Operating until such time as there is no
current or ongoing default or breach of this Agreement by HEP Operating.

 

10

--------------------------------------------------------------------------------

11.5 Reinstatement. The obligations of the Partnership under this Article 11
shall continue to be effective or shall be reinstated, as the case may be, if at
any time any payment of any of the HEP Operating Payment Obligations is
rescinded or must otherwise be returned to HEP Operating or any other entity,
upon the insolvency, bankruptcy, arrangement, adjustment, composition,
liquidation or reorganization of HEP Operating or such other entity, or for any
other reason, all as though such payment had not been made.

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

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

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

 

11

--------------------------------------------------------------------------------

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

 

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

/s/ Richard L. Voliva III

  Richard L. Voliva III   Vice President and Chief Financial Officer APPLICABLE
REFINERY OWNER: Frontier El Dorado Refining LLC By:  

/s/ Douglas S. Aron

  Douglas S. Aron   Executive Vice President and Chief Financial Officer

 

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

--------------------------------------------------------------------------------

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

/s/ Douglas S. Aron

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

/s/ Richard L. Voliva III

  Richard L. Voliva III   Vice President and Chief Financial Officer

 

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

--------------------------------------------------------------------------------

Exhibit A

to

Master Tolling Agreement

 

 

Parties

Frontier El Dorado and HEP Operating, as to the El Dorado Assets

 

Exhibit A-1

--------------------------------------------------------------------------------

Exhibit B

to

Master Tolling Agreement

 

 

Drop Down Transactions

 

1. Sale of all the outstanding membership interests in El Dorado Operating LLC
from Frontier El Dorado to HEP Operating, effective November 1, 2015. El Dorado
Operating LLC owns a naphtha fractionation column at the Refinery Complex.

 

Exhibit B-1

--------------------------------------------------------------------------------

Exhibit C

to

Master Tolling Agreement

 

 

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

 

Applicable
Assets

 

Type of
Applicable
Asset

 

Products

  Minimum
Throughput
Commitment
(on a BPD
basis)   Tolling
Fee  

Tolling Fee
Adjustment

 

PPI
Adjustment
Minimum/
Cap

  Fee Adjustment
Commencement
Date   Assumed
OPEX     Purchase Price     Accrued
Turnaround
Cost     Assumed
Fuel Gas
Cost    

Initial Term
(all times are
Dallas, TX
time)

 

Extension
Term (all
times are
Dallas, TX
time)

El Dorado Assets   Naphtha Fractionation Column  

Isopentane1

 

ISOM Feed

 

Int. Naphtha

 

Reformer Feed

  48,750
BPD   $.36/BBL2  

PPI/HFC Merit Comp Adjustment3

 

OPEX Adjustment4

 

CAPEX Adjustment5

 

Turnaround Surcharge6

 

Fuel Gas Surcharge7

  Subject to 1% Minimum/ 3% Cap3   July 1, 2017   $ 3.3M 4    $ 25,851,371     
$ 1.6M 5    $ 73,610 7    12:01 a.m. on November 1, 2015 (the “Effective Time”)
to 12:00 midnight on October 31, 2030   The Applicable Refinery Owner shall have
the option to extend the Applicable Term beyond the Initial Term for one
additional five (5) year period beginning at 12:01 am on November 1, 2030 and
ending at 12:00 midnight on October 31, 2035 on the same terms and conditions as
in existence for the Initial Term.

 

1. The “Feedstock” is light naphtha and heavy naphtha.

2. The Tolling Fee shall never be less than $.36 per BBL of Feedstock, subject
to a one-time potential reduction in the Tolling Fee for the adjustment in
paragraph 4 below.

 

Exhibit C-1

--------------------------------------------------------------------------------

3. The Tolling Fee, as previously adjusted on a cumulative basis, shall be
adjusted on July 1 of each calendar year, commencing July 1, 2017, by an amount
equal to a percentage calculated as follows: (A) 0.75 × the change in the PPI as
described below, plus (B) 0.25 × the annual HollyFrontier Merit Compensation
Adjustment (positive or negative) for such calendar year. The change in the PPI
is the upper change in the annual change rounded to four decimal places of the
Producers Price Index-Commodities-Finished Goods, (PPI), et al. (“PPI”),
produced by the U.S. Department of Labor, Bureaus of Labor Statistics. The
series ID is WPUSOP3000– located at http://www.bls.gov/data/. The change in PPI
for each year shall be calculated as follows: annual PPI index (most current
year) less annual PPI index (most current year minus 1) divided by annual PPI
index (most current year minus 1); provided that the change in PPI in any year
shall not be less than one percent (1%) or more than three percent (3%). For the
avoidance of doubt, if the change in PPI in any year is less than one percent
(1%) it will be rounded up to one percent (1%) and if the change in PPI in any
year is greater than three percent (3%) it will be rounded down to three percent
(3%). If either index is no longer published, the Parties shall negotiate in
good faith to agree on a new index (as applicable) that gives comparable
protection against inflation or deflation, and the same method of adjustment for
increases or decreases in the new index shall be used to calculate increases or
decreases in the Tolling Fee. If the Parties are unable to agree on a new index,
a new index will be determined in accordance with the dispute resolution
provisions set forth in the Article VIII of Omnibus Agreement, and the same
method of adjustment for increases or decreases in the new index shall be used
to calculate increases or decreases in the Tolling Fee. The annual HollyFrontier
Merit Compensation Adjustment is the company-wide increase (or decrease) in
salary for the year in which the adjustment occurs as determined by the
HollyFrontier Board of Directors. Examples of the annual Tolling Fee adjustment
under various scenarios are as follows:

(1) if the change in PPI is 0% and the HFC Merit Compensation Adjustment is
3.5%, the Tolling Fee adjustment would be (0.75 × 1%) + (0.25 × 3.5%) = 1.625%

(2) if the change in PPI is 2% and the HFC Merit Compensation Adjustment is 2%,
the Tolling Fee adjustment would be (0.75 × 2%) + (0.25 × 2%) = 2%

(3) if the change in PPI is 5% and the HFC Merit Compensation Adjustment is 2%,
the Tolling Fee adjustment would be (0.75 × 3%) + (0.25 × 2%) = 2.75%

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

 

4. At the end of the first four (4) Contract Quarters during the Applicable
Term, HEP Operating shall calculate the aggregate operating expenses incurred in
the operation of the Applicable Asset (but such calculation shall not include
turnaround accruals, capitalized catalyst costs, and extraordinary and
non-recurring items of expense that are not reasonably expected to recur in
future periods during the Applicable Term) (“OPEX”). In the event that such
aggregate OPEX exceed the Assumed OPEX set forth above, (A) the Applicable
Refinery Owner shall, within ten (10) days of receiving an invoice from HEP
Operating, reimburse HEP Operating for such OPEX incurred during such initial
four (4) Contract Quarters in excess of the Assumed OPEX, and (B) from and after
the first four (4) Contract Quarters during the Applicable Term, HEP Operating
shall increase the Tolling Fee for processing with the Applicable Asset by the
amount necessary to recover such aggregate OPEX in excess of the Assumed OPEX
for the remainder of the Applicable Term, and the Parties shall execute an
amended, modified, revised or updated Exhibit C reflecting such aggregate OPEX
as the new Assumed OPEX. In the event that such aggregate OPEX is less than the
Assumed OPEX, HEP Operating shall decrease the Tolling Fee by the amount
necessary to account for the difference between the Assumed OPEX and such actual
OPEX for the remainder of the Applicable Term, and the Parties shall execute an
amended, modified, revised or updated Exhibit C reflecting such aggregate OPEX
as the new Assumed OPEX.

5. At the end of the first four (4) Contract Quarters during the Applicable
Term, HEP Operating shall determine its aggregate capital expenditures relating
to the construction and start-up of the Applicable Asset (“CAPEX”). HEP
Operating shall amend and increase the Tolling Fee for the remainder of the
Initial Term by the following formula: (aggregate CAPEX/9) ÷ (48,750 × 365.25).

 

Exhibit C-2

--------------------------------------------------------------------------------

6. After the first turnaround on the Applicable Asset during the Applicable
Term, HEP Operating will calculate its aggregate Turnaround Costs incurred in
connection therewith. In the event such aggregate Turnaround Costs for the
Applicable Asset exceeds the Accrued Turnaround Cost set forth above then (A) a
turnaround surcharge (the “Turnaround Surcharge”) will be added to the Tolling
Fee based on each BBL of Feedstock (using the Minimum Throughput Commitment) in
order to allow HEP Operating to recover (i) such Turnaround Costs in excess of
the Accrued Turnaround Cost plus (ii) a ten percent (10%) return on such excess
(the aggregate amount specified in clauses (i) and (ii), the “Turnaround
Payment”). Such Turnaround Surcharge shall be paid by the Applicable Refinery
Owner to HEP Operating on each BBL of Feedstock processed through the Applicable
Asset until the earlier to occur of (i) the expiration of the Applicable Term or
(ii) the recovery by HEP Operating of the Turnaround Payment. In addition, the
Tolling Fee will be adjusted by the amount necessary to recover the new
estimated turnaround expense for the remainder of the Applicable Term (based on
the Minimum Throughput Commitment).

7. If at the end of any calendar month during the Applicable Term the aggregate
cost of gas incurred by HEP Operating in connection with the operation of the
Applicable Assets exceeds $73,610 (the “Assumed Fuel Gas Cost”), the Applicable
Refinery Owner shall promptly pay to HEP Operating an amount equal to the
positive difference, if any, of (i) the aggregate cost of fuel gas incurred by
HEP Operating in connection with the operation of the Applicable Assets during
such calendar month less (ii) the Assumed Fuel Gas Cost.

 

Exhibit C-3

--------------------------------------------------------------------------------

Exhibit D

to

Master Tolling Agreement

 

 

Definitions

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

“Affiliate” means, with to respect to a specified Person, any other Person
controlling, controlled by or under common control with that first Person. As
used in this definition, the term “control” includes (i) with respect to any
Person having voting securities or the equivalent and elected directors,
managers or persons performing similar functions, the ownership of or power to
vote, directly or indirectly, voting securities or the equivalent representing
50% or more of the power to vote in the election of directors, managers or
Persons performing similar functions, (ii) ownership of 50% or more of the
equity or equivalent interest in any person and (iii) the ability to direct the
business and affairs of any Person by acting as a general partner, manager or
otherwise. Notwithstanding the foregoing, for purposes of this Agreement, the
Applicable Refinery Owner, on the one hand, and HEP Operating, on the other
hand, shall not be considered affiliates of each other.

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

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

“Applicable Asset” means each of the El Dorado Assets, individually; and
“Applicable Assets” means all of the foregoing assets, collectively.

“Applicable Law” means any applicable statute, law, regulation, ordinance, rule,
judgment, rule of law, order, decree, permit, approval, concession, grant,
franchise, license, agreement, requirement, or other governmental restriction or
any similar form of decision of, or any provision or condition of any permit,
license or other operating authorization issued under any of the foregoing by,
or any determination of, any Governmental Authority having or asserting
jurisdiction over the matter or matters in question, whether now or hereafter in
effect and in each case as amended (including, without limitation, all of the
terms and provisions of the common law of such Governmental Authority), as
interpreted and enforced at the time in question.

“Applicable Refinery Owner” means, with respect to the El Dorado Refinery,
Frontier El Dorado.

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

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

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

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

 

Exhibit D-1

--------------------------------------------------------------------------------

“BBL” means barrel.

“BPD” means barrels per day.

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

“CAPEX” has the meaning set forth in Exhibit C.

“Contract Quarter” means a three-month period that commences on
January 1, April 1, July 1 or October 1 and ends on
March 31, June 30, September 30, or December 31, respectively.

“Control” (including with correlative meaning, the term “controlled by”) means,
as used with respect to any Person, the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.

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

“Damages” has the meaning set forth in Section 8.1.

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

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

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

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

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

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

“Feedstock” has the meaning set forth in Exhibit C.

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

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

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

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

“Governmental Authority” means any federal, state, local or foreign government
or any provincial, departmental or other political subdivision thereof, or any
entity, body or authority exercising executive, legislative, judicial,
regulatory, administrative or other governmental functions or any court,
department, commission, board, bureau, agency, instrumentality or administrative
body of any of the foregoing.

“HEP Operating” has the meaning set forth in the Preamble.

 

Exhibit D-2

--------------------------------------------------------------------------------

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

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

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

“HollyFrontier” means HollyFrontier Corporation, a Delaware corporation.

“Initial Term” has the meaning set forth in Section 4.

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

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

“Omnibus Agreement” means the Thirteenth Amended and Restated Omnibus Agreement,
effective as of November 1, 2015.

“OPEX” has the meaning set forth in Exhibit C.

“Parties” has the meaning set forth in the Preamble.

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

“Party” has the meaning set forth in the Preamble.

“Person” means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.

“PPI” has the meaning set forth in Exhibit C.

“Prime Rate” means the lesser of (i) the prime rate per annum announced by Union
Bank, N.A., or if Union Bank, N.A. no longer announces a prime rate for any
reason, the prime rate per annum announced by the largest U.S. bank measured by
deposits from time to time as its base rate on corporate loans, automatically
fluctuating upward or downward with each announcement of such prime rate and
(ii) the maximum lawful rate permitted by Applicable Law.

“Products” has the meaning set forth in Exhibit C.

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

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

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

 

Exhibit D-3

--------------------------------------------------------------------------------

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

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

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

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

 

Exhibit D-4

--------------------------------------------------------------------------------

Exhibit E

to

Master Tolling Agreement

 

 

Interpretations

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

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

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

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

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

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

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

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

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

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

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

 

Exhibit E-1

--------------------------------------------------------------------------------

Exhibit F

to

Master Tolling Agreement

 

 

Measurement of Delivered Volumes

 

Applicable Asset

  

Type of Applicable Asset

  

Measurement of Volumes

El Dorado

Assets

   Naphtha Fractionation Column   

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

 

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

 

1. The expected conversion ratio of light naphtha and heavy naphtha to
isopentane, ISOM feed, intermediate naphtha and reformer feed is 1 BBL to 1 BBL.

Examples of the reduction in Tolling Fees and the Minimum Throughput Commitment
for non-Force Majeure Events that may occur under Section 2.1(d)(1) and (2) of
the Agreement are as follows:

Section 2.1(d)(1) – The Minimum Throughput Commitment of 48,750 BPD of light
naphtha and heavy naphtha converts to 48,750 BPD of isopentane, ISOM feed,
intermediate naphtha and reformer feed (the “NFC Products”) based on a
Conversion Ratio of 1 to 1. If the NFC Products produced are 46,312.5 BPD
(95%) or more, then there would be no adjustment to the Tolling Fee.

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

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

 

Exhibit F-1

--------------------------------------------------------------------------------

Section 2.1(d)(2) – If the Aggregate Capacity of any Applicable Asset for any
Contract Quarter is less than the Minimum Throughput Commitment for such
Applicable Asset for such Contract Quarter, then the Minimum Throughput
Commitment for such Applicable Asset for such Contract Quarter will be reduced
by a percentage equal to (A) 100% minus (B) the percentage represented by the
ratio of (i) the Aggregate Capacity for such Applicable Asset for such Contract
Quarter to (ii) the Minimum Throughput Commitment for such Applicable Asset for
such Contract Quarter.

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

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

 

Exhibit F-2

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Exhibit G

to

Master Tolling Agreement

 

 

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

 

Applicable Assets

  

Types of Tolling Fees that may be increased (as applicable)

  

Threshold

El Dorado Assets    Naphtha Fractionation Column Tolling Fee   

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

 

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

 

Exhibit G-1