EX-10.3



 Exhibit 10.3 
  

 
  

EXECUTION VERSION 

CONSTRUCTION PAYMENT AGREEMENT 

(Artesia Rail Yard) 

BETWEEN 
 HEP REFINING,
L.L.C. 
 AND 

HOLLYFRONTIER REFINING AND MARKETING LLC 

with an Effective Date of 

November 1, 2014 
  

 
  







 TABLE OF CONTENTS 

 

							
	 	 	 	  	Page No.	 
	 ARTICLE I DEFINITIONS AND CONSTRUCTION
	  	 	1	  
			
	 1.1
	 	 Certain Defined Terms
	  	 	1	  
	 1.2
	 	 Interpretation
	  	 	1	  
		
	 ARTICLE II CONSTRUCTION OF TRACK; REIMBURSEMENT FOR TRACK CONSTRUCTION
	  	 	1	  
			
	 2.1
	 	 Construction of Track
	  	 	1	  
	 2.2
	 	 Reimbursement for Track Construction
	  	 	2	  
	 2.3
	 	 Adjustment for Annual Payment Amount
	  	 	2	  
	 2.4
	 	 Place of Payment
	  	 	2	  
	 2.5
	 	 Early Termination
	  	 	2	  
		
	 ARTICLE III DEFAULTS; REMEDIES; TERMINATION
	  	 	2	  
			
	 3.1
	 	 Default by HFRM
	  	 	2	  
	 3.2
	 	 HEP’s Remedies
	  	 	3	  
	 3.3
	 	 Default by HEP
	  	 	3	  
	 3.4
	 	 HFRM’s Remedies
	  	 	3	  
		
	 ARTICLE IV GUARANTEE
	  	 	4	  
			
	 4.1
	 	 Guarantee by HollyFrontier
	  	 	4	  
	 4.2
	 	 Guaranty Absolute
	  	 	4	  
	 4.3
	 	 Waiver
	  	 	4	  
	 4.4
	 	 Subrogation Waiver
	  	 	4	  
	 4.5
	 	 Reinstatement
	  	 	5	  
	 4.6
	 	 Continuing Guaranty
	  	 	5	  
	 4.7
	 	 No Duty to Pursue Others
	  	 	5	  
		
	 ARTICLE V GENERAL PROVISIONS
	  	 	5	  
			
	 5.1
	 	 Assignment Prohibition
	  	 	5	  
	 5.2
	 	 Severability
	  	 	5	  
	 5.3
	 	 Time of Essence
	  	 	5	  
	 5.4
	 	 Captions
	  	 	5	  
	 5.5
	 	 Entire Agreement; Amendment
	  	 	5	  
	 5.6
	 	 Schedules and Exhibits
	  	 	5	  
	 5.7
	 	 Notices
	  	 	6	  
	 5.8
	 	 Waivers
	  	 	7	  
	 5.9
	 	 No Partnership
	  	 	7	  
	 5.10
	 	 No Third Party Beneficiaries
	  	 	7	  
	 5.11
	 	 Mutual Cooperation; Further Assurances
	  	 	7	  
	 5.12
	 	 Binding Effect
	  	 	7	  
	 5.13
	 	 Choice of Law
	  	 	7	  
	 5.14
	 	 Survival
	  	 	8	  








 SCHEDULES 
  


					
	Schedules	    		 	
	 Schedule 2.2
	    	—	 	Calculation of Annual Payment Amount
	 Schedule 2.5
	    	—	 	Calculation of Early Termination Payment Amount


  
 ii 








 CONSTRUCTION PAYMENT AGREEMENT 

(Artesia Rail Yard) 
 THIS
CONSTRUCTION PAYMENT AGREEMENT (this “Agreement”) is made and entered as of October 16, 2015 into to be effective as of the 1st day of November, 2014 (the
“Effective Date”), between HEP REFINING, L.L.C., a Delaware limited liability company (herein called “HEP”), and HOLLYFRONTIER REFINING & MARKETING LLC, a Delaware limited
liability company (herein called “HFRM”). HEP and HFRM are referred to individually as a “Party” and collectively as the “Parties.” 

RECITALS: 
 A. HFRM
has subleased from HEP certain land situated at or near the railway station of Artesia, County of Eddy, New Mexico (the “Land”) pursuant to a certain Sublease Agreement dated to be effective as of November 1, 2014 (the
“Ground Sublease”). 
 B. Pursuant to Section 7.1 of the Ground Sublease, HEP has constructed on the
Land a railroad track siding consisting of approximately 8,300 track feet of siding (rail storage), two mainline switches and three industry switches (the “Track”), which is owned by HEP. As used herein, the term Track does
not include (i) the Land and (ii) the Additional Improvements. 
 C. HEP has agreed to lease the Track to HFRM pursuant to a
certain Track Lease Agreement dated to be effective as of November 1, 2014 (the “Track Lease”). 
 D. HFRM has
agreed to reimburse HEP in the amount of $4,194,014 (the “Track Construction Cost”) for costs incurred by HEP in constructing the Track, subject to the terms and conditions set forth in this Agreement. 

AGREEMENT: 

NOW, THEREFORE, for and in consideration of covenants, obligations and undertakings of the Parties set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, HEP and HFRM covenant and agree as follows: 

ARTICLE I 

DEFINITIONS AND CONSTRUCTION 

1.1 Certain Defined Terms. Unless the context otherwise requires, capitalized terms used in this Agreement shall have the
respective meanings set forth in Appendix A hereto. 
 1.2 Interpretation. Interpretation matters are set forth in
Appendix B hereto. 
 ARTICLE II 

CONSTRUCTION OF TRACK; REIMBURSEMENT FOR TRACK CONSTRUCTION 

2.1 Construction of Track. HEP represents and warrants that HEP designed, fabricated, constructed, installed and tested the
Track in accordance with applicable law, all applicable requirements of the Ground Sublease, and current and generally accepted industry practices, and pursuant to drawings and specifications previously approved by HFRM. 







 2.2 Reimbursement for Track Construction. As payment to HEP for the Track
Construction Cost, during each Contract Year during the Term HFRM shall pay to HEP the Track Construction Cost divided by 9.2, as such amount may be adjusted pursuant to Section 2.2 (the “Annual Payment
Amount”). The Annual Payment Amount shall be paid in equal quarterly payments (each, a “Quarterly Payment”) on or before the last day of each Contract Quarter during the Term, with the first such payment being
due ten (10) business days after the date this Agreement is signed by both Parties. 
 2.3 Adjustment of Annual Payment
Amount. The Annual Payment Amount shall be adjusted on the first day of each Contract Year, commencing in 2015, by an amount equal to the annual change in the PPI rounded to four decimal places; provided, however, that (a) the
cumulative annual percentage increase in the Annual Payment Amount during the term of this Agreement shall not exceed three percent (3%), and (b) Annual Payment Amount, as adjusted, shall not be decreased below the Annual Payment Amount
applicable as of the Commencement Date. The change factor shall be calculated as follows: annual PPI index (most current year) less annual PPI index (most current year minus 1) divided by annual PPI index (most current year minus 1).
The formula for determining adjustments in the Annual Payment Amount is set forth on Schedule 2.3. 
 2.4 Place of
Payment. The Quarterly Payments shall be payable in lawful money of the United States of America at HEP’s address set forth in Section 5.7. The Annual Payment Amount shall be paid without any claim on the part of HFRM for
diminution, setoff or abatement and nothing shall suspend, abate or reduce any Annual Payment Amount to be paid hereunder, except as expressly provided herein. 

2.5 Early Termination. In the event the Track Lease is terminated prior to its Expiration Date (as defined therein) for reasons
other than the fault or breach of HEP pursuant to the Track Lease or Railroad Lease (as defined in the Track Lease), then, as HEP’s exclusive remedy hereunder, HFRM shall pay to HEP and HEP shall accept, an amount sufficient to reimburse HEP
for the remaining unamortized amount of the Track Construction Cost (the “Early Termination Amount”), such amount to be calculated as provided in Schedule 2.5 and paid to HEP within thirty (30) days of the
date of such early termination. The Early Termination Amount shall not be payable to HEP in the event the Track Lease is terminated prior to its Expiration Date due to the fault or breach of HEP under the Track Lease or the Railroad Lease (as
defined in the Track Lease). The rights and obligations set forth in this Section 2.5 shall survive any termination of the Track Lease or this Agreement. 

ARTICLE III 

DEFAULTS; REMEDIES; TERMINATION 

3.1 Default by HFRM. The occurrence of any one or more of the following events shall constitute a material default and breach of
this Agreement by HFRM: 
 (a) The failure by HFRM to make when due any payment of a Quarterly Payment or any other payment required to be
made by HFRM hereunder, if such failure continues for a period of 90 days following written notice from HEP; 
 (b) The failure by HFRM to
observe or perform any of the other covenants, conditions or provisions of this Agreement to be observed or performed by HFRM, if such failure continues for a period of thirty (30) days following written notice from HEP of such failure;
provided, however, if a reasonable time to cure such default would exceed thirty (30) days, HFRM shall not be in default so long as HFRM begins to cure such default within thirty (30) days of receiving written notice from HEP and
thereafter completes the curing of such default within reasonable period of time (under the circumstances) following the receipt of such written notice from HEP; or 

  
 2 








 (c) The occurrence of any Bankruptcy Event. 

3.2 HEP’s Remedies. 

(a) In the event of any such material default under or material breach of the terms of this Agreement by HFRM, HEP may, at HEP’s option,
at any time thereafter that such default or breach remains uncured, without further notice or demand, terminate this Agreement and pursue all of its rights and remedies available under law or in equity, including, but not limited to, the remedies
provided for in Section 2.5. 
 (b) If, by the terms of this Agreement, HFRM is required to do or perform any act or to pay any
sum to a Third Party, and fails or refuses to do so, HEP, after thirty (30) days written notice to HFRM, without waiving any other right or remedy hereunder for such default, may do or perform such act, at HFRM’s expense, or pay such sum
for and on behalf of HFRM, and the amounts so expended by HEP shall be repayable on demand, and bear interest from the date expended by HEP until paid at a rate equal to an interest rate equal to the “Prime Rate” as published in The
Wall Street Journal, Southwest Edition, in its listing of “Money Rates” plus two percent (2%) (the “Default Rate”). Past due payments required hereunder shall bear interest from maturity until paid at the Default
Rate. 
 3.3 Default by HEP. The occurrence of any one or more of the following events shall constitute a material default and
breach of this Agreement by HEP: 
 (a) The failure by HEP to observe or perform any of the other covenants, conditions or provisions of
this Agreement to be observed or performed by HEP, if such failure continues for a period of 30 days following written notice from HFRM; provided, however, if a reasonable time to cure such default would exceed thirty (30) days, HEP shall not
be in default so long as HEP begins to cure such default within thirty (30) days of receiving written notice from HFRM and thereafter completes the curing of such default within a reasonable period of time following the receipt of such written
notice from HFRM; or 
 (b) The occurrence of a Bankruptcy Event. 

3.4 HFRM’s Remedies. In the event of any such material default under or material breach of the terms of this Agreement by
HEP, HFRM may, at HFRM’s option, at any time thereafter that such default or breach remains uncured, after ten days prior written notice to HFRM, perform any act that HEP is required to do or perform any act or to pay any sum to a Third Party,
at HEP’s expense (to the extent the terms of this Agreement require such performance at HEP’s expense) or pay such sum for and on behalf of HEP, and the amounts so expended by HFRM shall be repayable on demand, and bear interest from the
date expended by HFRM until paid at the Default Rate. HFRM may, at HFRM’s option, deduct any such amounts so expended by HFRM from the Quarterly Payment(s) and any other amounts owed hereunder and any such action on the part of HFRM shall be in
addition to any other remedy that may be available to HFRM for default or breach of contract, or otherwise, including the right of setoff 

  
 3 








 ARTICLE IV 

GUARANTEES 
 4.1
Guarantee by HollyFrontier. HollyFrontier Corporation, a Delaware corporation (“HollyFrontier”) unconditionally, absolutely, continually and irrevocably guarantees, as principal and not as surety, to HEP the punctual
and complete payment in full when due of all amounts due from HFRM under this Agreement (collectively, the “HFRM Payment Obligations”). HollyFrontier agrees that HEP shall be entitled to enforce directly against HollyFrontier any of
the HFRM Payment Obligations. 
 4.2 Guaranty Absolute. HollyFrontier hereby guarantees that the HFRM Payment Obligations will
be paid strictly in accordance with the terms of the Agreement. The obligations of HollyFrontier under this Agreement constitute a present and continuing guaranty of payment, and not of collection or collectability. The liability of HollyFrontier
under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of: 
 (a) any
assignment or other transfer of this Agreement or any of the rights thereunder of HEP; 
 (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 of partial payment or performance from HFRM; 
 (d) any bankruptcy, insolvency, reorganization,
arrangement, composition, adjustment, dissolution, liquidation or other like proceeding relating to HFRM or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding; 

(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 (a) through (d); or 
 (f) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, a guarantor. 
 The obligations of 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 HFRM Payment Obligations or otherwise. 
 4.3 Waiver.
HollyFrontier hereby waives promptness, diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HFRM Payment Obligations and any requirement for HEP to protect, secure, perfect or insure
any security interest or lien or any property subject thereto or exhaust any right or take any action against HFRM, any other entity or any collateral. 

4.4 Subrogation Waiver. HollyFrontier agrees that for so long as there is a current or ongoing default or breach of this
Agreement by HFRM, HollyFrontier shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from HFRM for any payments made by HollyFrontier under this
Article IV, and HollyFrontier 

  
 4 








 
hereby irrevocably waives and releases, absolutely and unconditionally, any such rights of subrogation, contribution, reimbursement, indemnification and other rights of payment or recovery it may
now have or hereafter acquire against HFRM during any period of default or breach of this Agreement by HFRM until such time as there is no current or ongoing default or breach of this Agreement by HFRM. 

4.5 Reinstatement. The obligations of HollyFrontier under this Article IV shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment of any of the HFRM Payment Obligations is rescinded or must otherwise be returned to HFRM or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment, composition,
liquidation or reorganization of HFRM or such other entity, or for any other reason, all as though such payment had not been made. 
 4.6
Continuing Guaranty. This Article IV is a continuing guaranty and shall (i) remain in full force and effect until the first to occur of the indefeasible payment in full of all of the HFRM Payment Obligations, (ii) be
binding upon HollyFrontier, its successors and assigns and (iii) inure to the benefit of and be enforceable by HEP and its respective successors, transferees and assigns. 

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

ARTICLE V 
 GENERAL
PROVISIONS 
 5.1 Assignment Prohibition. HFRM shall not, either voluntarily or by operation of law, assign, transfer,
mortgage, encumber, pledge or hypothecate this Agreement or HFRM’s interest in this Agreement, in whole or in part, without the prior written consent of HEP, which shall not be unreasonably withheld. 

5.2 Severability. The invalidity or unenforceability of any provision of this Agreement, as determined by a court of competent
jurisdiction, shall in no way affect the validity or enforceability of any other provision hereof. 
 5.3 Time of Essence.
Time is of the essence in the performance of all obligations hereunder. 
 5.4 Captions. The headings to Articles, Sections
and other subdivisions of this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. 

5.5 Entire Agreement; Amendment. This Agreement, including the exhibits and schedules attached hereto, constitutes the entire
agreement and understanding between the parties hereto with respect to the reimbursement of HEP by HFRM for the Track Construction Cost, and supersedes all prior and contemporaneous agreements and undertakings of the parties, in connection herewith.
This Agreement may be modified in writing only, signed by the parties in interest at the time of modification. 
 5.6 Schedules and
Exhibits. All schedules and exhibits hereto which are referred to herein are hereby made a part hereof and incorporated herein by such reference. 

  
 5 








 5.7 Notices. Any notice or other communication given under this Agreement shall be
in writing and shall be (i) delivered personally, (ii) sent by documented overnight delivery service, (iii) sent by email transmission, or (iv) sent by first class mail, postage prepaid (certified or registered mail, return
receipt requested). Such notice shall be deemed to have been duly given (x) if received, on the date of the delivery, with a receipt for delivery, (y) if refused, on the date of the refused delivery, with a receipt for refusal, or
(z) with respect to email transmissions, on the date the recipient confirms receipt. Notices or other communications shall be directed to the following addresses: 

Notices to HEP: 
 HEP Refining,
L.L.C. 
 2828 N. Harwood Street, Suite 1300 

Dallas, Texas 75201 
 Attn:
President 
 Email address: president-hep@hollyenergy.com 

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

HEP Refining, L.L.C. 
 2828 N.
Harwood Street, Suite 1300 
 Dallas, Texas 75201 

Attn: General Counsel 
 Email
address: general.counsel@hollyenergy.com 
 Notices to HFRM: 

HollyFrontier Refining & Marketing LLC 

2828 N. Harwood Street, Suite 1300 

Dallas, Texas 75201 
 Attn:
President 
 Email address: president@hollyfrontier.com 

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

HollyFrontier Refining & Marketing LLC 

2828 N. Harwood Street, Suite 1300 

Dallas, Texas 75201 
 Attn:
General Counsel 
 Email address: generalcounsel@hollyfrontier.com 

  
 6 








 Notices to HollyFrontier: 

HollyFrontier Corporation 

2828 N. Harwood Street, Suite 1300 

Dallas, Texas 75201 
 Attn:
President 
 Email address: president@hollyfrontier.com 

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

HollyFrontier Corporation 

2828 N. Harwood Street, Suite 1300 

Dallas, Texas 75201 
 Attn:
General Counsel 
 Email address: generalcounsel@hollyfrontier.com 

Any Party or HollyFrontier may at any time change its address for service from time to time by giving notice to the other Parties and
HollyFrontier in accordance with this Section 5.7. 
 5.8 Waivers. No waiver or waivers of any breach or default
or any breaches or defaults by either Party of any term, condition or liability of or performance by the other party of any duty or obligation hereunder shall be deemed or construed to be a waiver or waivers of subsequent breaches or defaults of any
kind, character or description under any circumstance. The acceptance of a Quarterly Payment hereunder by HEP shall not be a waiver of any preceding breach by HFRM of any provision hereof, other than the failure of HFRM to pay the particular
Quarterly Payment so accepted, regardless of HEP’s knowledge of such preceding breach at the time of acceptance of such Quarterly Payment. 

5.9 No Partnership. The relationship between HEP and HFRM at all times shall remain solely that of landlord and tenant and shall
not be deemed a partnership or joint venture. 
 5.10 No Third Party Beneficiaries. Subject to the provisions of
Section 5.12 hereof, this Agreement inures to the sole and exclusive benefit of HEP and HFRM, their respective Affiliates, successors, legal representatives and assigns, and confers no benefit on any Third Party. 

5.11 Mutual Cooperation; Further Assurances. Upon request by either Party from time to time during the Term, each Party hereto
agrees to execute and deliver all such other and additional instruments, notices and other documents and do all such other acts and things as may be reasonably necessary to carry out the purposes of this Agreement and to more fully assure the
Parties’ rights and interests provided for hereunder. 
 5.12 Binding Effect. Subject to the provisions of Article
IV, and except as herein otherwise expressly provided, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns. 

5.13 Choice of Law. The provisions of this Agreement shall be governed by and construed in accordance with the laws of the State
of Texas, excluding any conflicts-of-law rule or principle that might require the application of laws of another jurisdiction. 

  
 7 








 5.14 Survival. All obligations of HEP and HFRM that shall have accrued under this
Agreement prior to the expiration or earlier termination hereof shall survive such expiration or termination to the extent the same remain unsatisfied as of the expiration or earlier termination of this Agreement. HEP and HFRM further expressly
agree that all provisions of this Agreement which contemplate performance after the expiration or earlier termination hereof shall survive such expiration or earlier termination of this Agreement. 

[Remainder of Page Intentionally Left Blank] 

  
 8 








 The parties hereto have executed this Agreement to be effective as of the Effective Date. 

 

							
		 	HEP:
			
		 		 	 HEP REFINING, L.L.C.,
 a Delaware
limited liability company

				
		 		 	By:	 	 /s/ Bruce R. Shaw

		 		 	Name:	 	Bruce R. Shaw
		 		 	Title:	 	President
		
		 	HFRM:
			
		 		 	HOLLYFRONTIER REFINING & MARKETING LLC, a Delaware limited liability company
				
		 		 	By:	 	 /s/ Michael C. Jennings

		 		 	Name:	 	Michael C. Jennings
		 		 	Title:	 	CEO and President

 ACKNOWLEDGEMENT AND AGREEMENT 

HollyFrontier Corporation hereby agrees solely to the provisions of Article IV of the foregoing Agreement. 

 

							
		 		 	HOLLYFRONTIER CORPORATION,
		 		 	a Delaware corporation
				
		 		 	By:	  	 /s/ Michael C. Jennings

		 		 	Name:	  	Michael C. Jennings
		 		 	Title:	  	CEO and President


  
 9 








 APPENDIX A 

TO 
 CONSTRUCTION
PAYMENT AGREEMENT 
  
  

Defined Terms 

“Affiliates” 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 Holly Entities, on the one hand, and the HEP Entities, on the other hand, shall not be considered affiliates of each other. 

“Bankruptcy Event” means, in relation to any Party, (i) the making of a general assignment for the benefit of
creditors by such Party; (ii) the entering into of any arrangement or composition with creditors as a result of insolvency (other than for the purposes of a solvent reconstruction or amalgamation); (iii) the institution by such Party of
proceedings (a) seeking to adjudicate such Party as bankrupt or insolvent or seeking protection or relief from creditors, or (b) seeking liquidation, winding up, or rearrangement, reorganization or adjustment of such Party or its debts
(other than for purposes of a solvent reconstruction or amalgamation), or (c) seeking the entry of an order for the appointment of a receiver, trustee or other similar official for such Party or for all or a substantial part of such
Party’s assets; or (iv) the institution of any proceeding of the type described in (iii) above against such Party, which proceeding shall not have been dismissed within ninety (90) days following its institution. 

“Contract Quarter” means a three-month period that commences on July 1, October 1, January 1,
or April 1, and ends on September 30, December 31, March 31 or June 30, respectively, except that the initial Contract Quarter shall commence on the Effective Date and end on December 31, 2014. 

“Contract Year” means a year that commences on July 1 and ends on the last day of June, except that the initial
Contract Year shall commence on the Effective Date. 
 “Expiration Date” means October 31, 2039. 

“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. 
 “Person” means any individual or entity,
including any partnership, corporation, association, joint stock company, trust, joint venture, limited liability company, unincorporated organization or Governmental Authority (or any department, agency or political subdivision thereof). 

“PPI” means the Producers Price Index Finished Good Index. 

  
 Appendix A 








 “Railroad” means BNSF Railway Company, a Delaware corporation. 

“Substantial Completion” means the stage in the construction of the Track when the Track is sufficiently complete in
accordance with the drawings and specifications so that HFRM can occupy and utilize the Track for its intended purpose pursuant to the Track Lease. 

“Term” means the period commencing on 12:01 a.m. of the Commencement Date and expiring at midnight on the Expiration
Date. 
 “Third Party” shall mean a Person which is not (a) HEP or an Affiliate of HEP, (b) HFRM or an
Affiliate of HFRM or (c) a Person that, after the signing of this Agreement becomes a successor entity of HEP, HFRM or any of their respective Affiliates. An employee of HEP or HFRM shall not be deemed an Affiliate. 

In addition, the following terms have the meanings given to them in the Sections indicated in the following table: 

 

			
	 Term
	  	 Section

	 Agreement
	  	Recitals
	 Annual Payment Amount
	  	Section 2.2
	 Default Rate
	  	Section 3.2(b)
	 Early Termination Amount
	  	Section 2.5
	 Effective Date
	  	Preface
	 HEP
	  	Preface
	 HFRM
	  	Preface
	 HFRM Payment Obligations
	  	Section 6.1
	 HollyFrontier
	  	Section 6.1
	 Party and Parties
	  	Preface
	 Quarterly Payment
	  	Section 2.2
	 Track
	  	Recitals
	 Track Construction Cost
	  	Recitals
	 Track Lease
	  	Recitals


  
 Appendix A 








 APPENDIX B 

TO 
 CONSTRUCTION
PAYMENT AGREEMENT 
  
  

Interpretation 
 As used
in this Agreement, unless a clear contrary intention appears: 
 (a) the singular includes the plural and vice versa; 

(b) reference to any Person includes such Person’s successors and assigns but, in the case of a Party, only if such successors and
assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; 

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

(e) “hereunder”, “hereof”, “hereto” and words of similar import will be deemed references to this Agreement as a
whole and not to any particular Section or other provision hereof or thereof; 
 (f) “including” (and with correlative meaning
“include”) means including without limiting the generality of any description preceding such term; and 
 (g) relative to the
determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and ‘through” means “through and including.” 

  
 Appendix B 








 SCHEDULE 2.3 

CALCULATION OF ADJUSTMENTS TO ANNUAL PAYMENT AMOUNT 

ARTESIA RAIL SIDING PPI FORMULA TABLE 
 Example

  

													
	 Beginning

of Year [x]
	 	 APA

($)
	 	 PPI

Data point
	 	 PPI

change
	 	 APA w/

cumulative
PPI change
	 	 PPI

3% max
	 	 APA w/

cumulative
 3%
max

	 1
	 	455,871	 	100.0	 	n/a	 		 	n/a	 	
	 2
	 	469,547	 	104.0	 	4.00%	 	474,106	 	103.0	 	469,547
	 3
	 	478,665	 	105.0	 	0.96%	 	478,665	 	106.1	 	483,634
	 4
	 	494,620	 	108.5	 	3.33%	 	494,620	 	109.3	 	498,143
	 5
	 	513,087	 	113.0	 	4.15%	 	515,134	 	112.6	 	513,087
	 6
	 	524,252	 	115.0	 	1.77%	 	524,252	 	115.9	 	528,480
	 7
	 	544,334	 	120.0	 	4.35%	 	547,045	 	119.4	 	544,334
	 8
	 	549,325	 	120.5	 	0.42%	 	549,325	 	123.0	 	560,664
	 9
	 	565,280	 	124.0	 	2.90%	 	565,280	 	126.7	 	577,484
	 10
	 	594,808	 	135.0	 	8.87%	 	615,426	 	130.5	 	594,808
	 11
	 	612,653	 	136.0	 	0.74%	 	619,985	 	134.4	 	612,653
	 12
	 	624,543	 	137.0	 	0.74%	 	624,543	 	138.4	 	631,032
	 13
	 	629,102	 	138.0	 	0.73%	 	629,102	 	142.6	 	649,963
	 14
	 	633,661	 	139.0	 	0.72%	 	633,661	 	146.9	 	669,462
	 15
	 	642,778	 	141.0	 	1.44%	 	642,778	 	151.3	 	689,546
	 16
	 	661,013	 	145.0	 	2.84%	 	661,013	 	155.8	 	710,232
	 17
	 	683,807	 	150.0	 	3.45%	 	683,807	 	160.5	 	731,539
	 18
	 	729,394	 	160.0	 	6.67%	 	729,394	 	165.3	 	753,485
	 19
	 	776,090	 	175.0	 	9.38%	 	797,774	 	170.2	 	776,090
	 20
	 	799,373	 	176.0	 	0.57%	 	802,333	 	175.4	 	799,373
	 21
	 	797,774	 	175.0	 	-0.57%	 	797,774	 	180.6	 	823,354
	22	 	829,685	 	182.0	 	4.00%	 	829,685	 	186.0	 	848,055
	 23
	 	857,038	 	188.0	 	3.30%	 	857,038	 	191.6	 	873,496
	 24
	 	888,949	 	195.0	 	3.72%	 	888,949	 	197.4	 	899,701
	 25
	 	911,742	 	200.0	 	2.56%	 	911,742	 	203.3	 	926,692

 APA in Year 1 = $4,194,014 divided by 9.2 







 SCHEDULE 2.5 

CALCULATION OF EARLY TERMINATION AMOUNT 

The Early Termination Amount equals the number of years left in the Term of this Agreement multiplied by the adjusted Annual Payment Amount (the
“APA”) (as calculated pursuant to Section 2.3 and Schedule 2.3 of this Agreement) for the year that the early termination occurs. 

Example of the calculation of the Early Termination Amount: 

If the APA in Year 8 is $560,664 and early termination occurs in Year 8, then the Early Termination Amount equals: 

(25-8) x Annual Payment Amount in Year 8 = 17 x $560,664 = $9,531,288 

ARTESIA RAIL SIDING PPI FORMULA TABLE 
 Early
Termination Example 
  

													
	 Beginning

of Year [x]
	 	 APA

($)
	 	 PPI

Data point
	 	 PPI

change
	 	 APA w/

cumulative
 PPI
change
	 	 PPI

3% max
	 	 APA w/

cumulative
 3%
max

	 1
	 	455,871	 	100.0	 	n/a	 		 	n/a	 	
	 2
	 	469,547	 	104.0	 	4.00%	 	474,106	 	103.0	 	469,547
	 3
	 	478,665	 	105.0	 	0.96%	 	478,665	 	106.1	 	483,634
	 4
	 	494,620	 	108.5	 	3.33%	 	494,620	 	109.3	 	498,143
	 5
	 	513,087	 	113.0	 	4.15%	 	515,134	 	112.6	 	513,087
	 6
	 	524,252	 	115.0	 	1.77%	 	524,252	 	115.9	 	528,480
	 7
	 	544,334	 	120.0	 	4.35%	 	547,045	 	119.4	 	544,334
	 8
	 	549,325	 	120.5	 	0.42%	 	549,325	 	123.0	 	560,664
	 9
	 	565,280	 	124.0	 	2.90%	 	565,280	 	126.7	 	577,484
	 10
	 	3,255,450