exv10w3






Exhibit
10.3


 

 










LEASE AND ACCESS AGREEMENT

(East Tulsa)




BETWEEN




HOLLY REFINING & MARKETING-TULSA LLC,




AS LESSOR




AND




HEP TULSA LLC,




AS LESSEE




December 1, 2009




 

 








 









 












TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page No.	 
	ARTICLE I 

DEFINITIONS AND CONSTRUCTION	 	 	 	 
	1.1 Certain Defined Terms
	 	 	1	 
	1.2 References
	 	 	4	 
	1.3 Headings
	 	 	5	 
	ARTICLE II

DEMISE OF PREMISES AND TERM	 	 	 	 
	2.1 Demise of Premises and Term.
	 	 	5	 
	2.2 Access.
	 	 	5	 
	2.3 Rent
	 	 	6	 
	2.4 Place of Payment
	 	 	6	 
	2.5 Net Lease
	 	 	6	 
	ARTICLE III

CONDUCT OF BUSINESS	 	 	 	 
	3.1 Use of Premises
	 	 	6	 
	3.2 Waste
	 	 	6	 
	3.3 Governmental Regulations
	 	 	6	 
	3.4 Air Quality Permits
	 	 	7	 
	3.5 Utilities
	 	 	7	 
	ARTICLE IV 

ALTERATIONS, ADDITIONS AND IMPROVEMENTS	 	 	 	 
	 
	ARTICLE V 

MAINTENANCE OF PREMISES	 	 	 	 
	5.1 Maintenance by Lessee
	 	 	8	 
	5.2 Operation of Premises
	 	 	8	 
	5.3 Surrender of Premises
	 	 	8	 
	5.4 Release of Hazardous Substances
	 	 	8	 
	ARTICLE VI 

TAXES, ASSESSMENTS	 	 	 	 
	6.1 Lessee’s Obligation to Pay
	 	 	9	 
	6.2 Manner of Payment
	 	 	9	 






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	 	 	Page No.	 
	ARTICLE VII	 	 	 	 
	EMINENT DOMAIN; CASUALTY; INSURANCE	 	 	 	 
	7.1 Total Condemnation of Premises 
	 	 	10	 
	7.2 Partial Condemnation 
	 	 	10	 
	7.3 Damages and Right to Additional Property 
	 	 	10	 
	7.4 Insurance 
	 	 	10	 
	ARTICLE VIII	 	 	 	 
	ASSIGNMENT AND SUBLETTING	 	 	 	 
	8.1 Assignment and Subletting
	 	 	11	 
	8.2 Release of Lessor
	 	 	11	 
	8.3 Release of Lessee
	 	 	11	 
	ARTICLE IX	 	 	 	 
	DEFAULTS; REMEDIES; TERMINATION	 	 	 	 
	9.1 Default by Lessee
	 	 	11	 
	9.2 Lessor’s Remedies.
	 	 	11	 
	9.3 Default by Lessor
	 	 	12	 
	ARTICLE X	 	 	 	 
	INDEMNITY	 	 	 	 
	10.1 Indemnification by Lessor
	 	 	12	 
	10.2 Indemnification by Lessee
	 	 	13	 
	10.3 Matters Involving a Third Party
	 	 	13	 
	10.4 Survival
	 	 	14	 
	10.5 Ancillary Agreements
	 	 	14	 
	ARTICLE XI	 	 	 	 
	GENERAL PROVISIONS	 	 	 	 
	11.1 Estoppel Certificates 
	 	 	14	 
	11.2 Severability 
	 	 	14	 
	11.3 Time of Essence 
	 	 	14	 
	11.4 Captions 
	 	 	14	 
	11.5 Entire Agreement; Amendment 
	 	 	14	 
	11.6 Schedules and Exhibits 
	 	 	14	 
	11.7 Notices 
	 	 	14	 
	11.8 Waivers 
	 	 	15	 
	11.9 No Partnership 
	 	 	16	 
	11.10 No Third Party Beneficiaries 
	 	 	16	 
	11.11 Waiver of Landlord’s Lien 
	 	 	16	 
	11.12 Mutual Cooperation; Further Assurances 
	 	 	16	 
	11.13 Recording 
	 	 	16	 
	11.14 Binding Effect 
	 	 	16	 
	11.15 Choice of Law 
	 	 	16	 
	11.16 Warranty of Peaceful Possession 
	 	 	16	 






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	 	 	Page No.	 
	11.17 Force Majeure 
	 	 	17	 
	11.18 Survival 
	 	 	17	 
	11.19 AS IS, WHERE IS 
	 	 	17	 
	11.20 Relocation of Pipelines; Amendment 
	 	 	17	 
	11.21 Option 
	 	 	18	 






iii









 






EXHIBITS AND SCHEDULES




	 	 	 	 	 
	Exhibits	 	 	 	 
	Exhibit A

	 	—
	 	Description of Premises
	Exhibit B

	 	—
	 	Memorandum of Lease






	 	 	 	 	 
	Schedules	 	 	 	 
	Schedule 1.1(b)

	 	—
	 	Matters which are not part of the Premises
	Schedule 7.4

	 	—
	 	Insurance Requirements







iv











 





LEASE AND ACCESS AGREEMENT

(East Tulsa Refinery)




     THIS LEASE AND ACCESS AGREEMENT (TULSA) (this “Lease”) is made and entered into to be
effective as of the 1st day of December, 2009, between HOLLY REFINING & MARKETING-TULSA LLC, a
limited liability company organized and existing under the laws of Delaware (herein called
“Lessor”), and HEP TULSA LLC, a limited liability company organized and existing under the
laws of Delaware (herein called “Lessee”). Lessor and Lessee are referred to individually
as a “Party” and collectively as the “Parties.”



W I T N E S S E T H:




     WHEREAS, pursuant to the terms of that certain Asset Sale and Purchase Agreement (the
“Purchase Agreement”), dated October 19, 2009, among Lessor and Lessee, as Buyers, and
Sinclair Tulsa Refining Company, as Seller, Lessor is acquiring certain refining and other related
assets, and Lessee is acquiring the Relevant Assets (defined below);



     WHEREAS, the Relevant Assets (defined below) are located on land within the Refinery Site
(defined below), which land Lessor has agreed to lease to Lessee and Lessee desires to lease from
Lessor; and



     WHEREAS, Lessor owns and operates certain facilities and other improvements at the Refinery
Site that are necessary or desirable for Lessee to utilize in Lessee’s operations of the Relevant
Assets but that may also be utilized by Lessor; and



     WHEREAS, Lessor has agreed to provide Lessee with access to such facilities and other
improvements in accordance with this Lease and the Site Services Agreement (defined below).



     NOW, THEREFORE, for and in consideration of the premises, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and of the mutual
agreements hereinafter set forth, Lessor and Lessee covenant and agree as follows:



ARTICLE I

DEFINITIONS AND CONSTRUCTION




     1.1 Certain Defined Terms. Unless the context otherwise requires, the following terms
shall have the respective meanings set forth in this Section 1.1:



     “Additional Improvements” shall have the meaning ascribed to such term in Article
IV.



     “Affiliates” shall have the meaning ascribed to such term in the Site Services
Agreement.



     “Ancillary Agreements” means collectively, the Purchase Agreement, the Site Services
Agreement, the Pipelines Agreement, and any other agreement executed by any of the parties hereto
in connection with the Lessee’s acquisition of the Relevant Assets.



     “Bankruptcy Event” shall have the meaning ascribed to such term in the Site Services
Agreement.



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     “Casualty
Event” shall have the meaning ascribed to such term in Section 7.3.



     “Claims” shall have the meaning ascribed to such term in Section 10.1.



     “Commencement Date” shall have the meaning ascribed to such term in Section
2.1.



     “Connection Facilities” shall have the meaning ascribed to such term in the Site
Services Agreement.



     “Environmental Law” or “Environmental Laws” means all federal, state, and
local laws, statutes, rules, regulations, orders, and ordinances, now or hereafter in effect,
relating to protection of the environment including, without limitation, the federal Comprehensive
Environmental Response, Compensation, and Liability Act, the Superfund Amendments Reauthorization
Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution
Control Act, the Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water Act,
the Hazardous Materials Transportation Act, and other environmental conservation and protection
laws, each as amended from time to time.



     “Force Majeure” means acts of God, strikes, lockouts or other industrial disturbances,
acts of the public enemy, wars, blockades, insurrections, riots, storms, floods, washouts, arrests,
the order of any Governmental Authority having jurisdiction while the same is in force and effect,
civil disturbances, explosions, breakage, accident to machinery, storage tanks or lines of pipe,
inability to obtain or unavoidable delay in obtaining material or equipment, and any other causes
whether of the kind herein enumerated or otherwise not reasonably within the control of the Party
claiming suspension and which by the exercise of due diligence such Party is unable to prevent or
overcome.



     “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.



     “Indemnified Party” means the Party seeking indemnification under Section 10.1
or Section 10.2.



     “Hazardous Substances” means (a) any substance that is designated, defined, or
classified as a hazardous waste, hazardous material, pollutant, contaminant, or toxic or hazardous
substance, or that is otherwise regulated under any Environmental Law, including, without
limitation, any hazardous substance as defined under the Comprehensive Environmental Response,
Compensation, and Liability Act, and (b) petroleum, crude oil, gasoline, natural gas, fuel oil,
motor oil, waste oil, diesel fuel, jet fuel, and other refined petroleum hydrocarbons.



     “Indemnifying Party” means the Party required to provide indemnification under
Section 10.1 or Section 10.2.



     “Laws” means any applicable statute, law, regulation, ordinance, rule, judgment, rule
of law, order, decree, permit, approval, concession, grant, franchise, license, agreement,



2









 







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.



     “Lease” shall have the meaning ascribed to such term in the preface to this Lease.



     “Lessee” shall have the meaning ascribed to such term in the preface to this Lease.



     “Lessee Indemnified Parties” shall have the meaning ascribed to such term in
Section 10.1.



     “Lessee Release” shall have the meaning ascribed to such term in Section
11.13.



     “Lessee’s Parties” shall have the meaning ascribed to such term in Section
2.2(a).



     “Lessor” shall have the meaning ascribed to such term in the preface to this Lease.



     “Lessor Indemnified Parties” shall have the meaning ascribed to such term in
Section 10.2.



     “Lessor’s Parties” shall have the meaning ascribed to such term in Section
2.2(b).



     “Party”
and “Parties” shall have the meanings ascribed to such term in the preface to
this Lease.



     “Permits” means all permits, licenses, franchises, authorities, consents, and
approvals, as necessary under applicable Laws, including Environmental Laws, for operating the
Relevant Assets and/or the Premises.



     “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).



     “Pipelines Agreement” means the Pipelines, Tankage and Loading Rack Throughput
Agreement dated as of the date hereof by and between Lessor and Lessee.



     “Post-Maturity Rate” shall have the meaning ascribed to such term in Section
9.2.



     “Premises” means those certain tracts or parcels of land on which the Relevant Assets
are situated, such land being located in the City of Tulsa, Tulsa County, Oklahoma, more
particularly described or identified on Exhibit A attached hereto and made a part hereof
for all purposes together with all right, title and interest, if any, of Lessor in and to all
accretion attaching to the land and any rights to submerged lands or interests in riparian rights
or riparian grants owned by Lessor and adjoining the land shown on said Exhibit A, but
excluding (i) the



3









 







Relevant Assets, (ii) the Additional Improvements, and (iii) those matters set forth on
Schedule 1.1(b).



     “Purchase Agreement” has the meaning set forth in the Recitals.



     “Refinery” means Lessor’s refinery located at the Refinery Site.



     “Refinery Site” means that certain tract(s) or parcel(s) of land located in the City
of Tulsa, Tulsa County, Oklahoma, on which the Premises are located.



     “Relevant Assets” shall mean the HEP Tulsa Assets, as such term is defined in the
Purchase Agreement.



     “Rent” shall have the meaning ascribed to such term in Section 2.3.



     “Shared Access Facilities” shall have the meaning ascribed to such term in Section
2.2(a).



     “Site Services Agreement” means that certain Site Services Agreement dated of even
date herewith by and between Lessor and Lessee.



     “SUMF Assets” shall have the meaning ascribed to such term in the Site Services
Agreement.



     “Taxes” shall have the meaning ascribed to such term in Section 6.1.



     “Term” shall have the meaning ascribed to such term in Section 2.1.



     “Third Party” shall mean a Person which is not (a) Lessor or an Affiliate of Lessor,
(b) Lessee or an Affiliate of Lessee or (c) a Person that, after the signing of this Lease becomes
a successor entity of Lessor, Lessee or any of their respective Affiliates. An employee of Lessor
or Lessee shall not be deemed an Affiliate.



     “Third-Party Claim” shall have the meaning ascribed to such term in Section
10.3.



     1.2 References. As used in this Lease, 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 Lease, and reference to a Person in a particular capacity excludes such
Person in any other capacity; (c) reference to any gender includes each other gender; (d) reference
to any agreement (including this Lease), 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 Lease; (e) reference to any Section means such
Section of this Lease, and references in any Section or definition to any clause means such clause
of such Section or definition; (f) “hereunder”, “hereof”, “hereto” and words of similar import will
be deemed references to this Lease as a whole and not to any particular Section or other provision
hereof or thereof; (g) “including” (and with correlative meaning “include”) means including without
limiting the generality of any description preceding such term; and (h) relative to the



4









 







determination of any period of time, “from” means “from and including,” “to” means “to but
excluding” and ‘through” means “through and including.”



     1.3 Headings. The headings of the Sections of this Lease and of the Schedules and
Exhibits are included for convenience only and shall not be deemed to constitute part of this Lease
or to affect the construction or interpretation hereof or thereof.



ARTICLE II

DEMISE OF PREMISES AND TERM




     2.1 Demise of Premises and Term.



          (a) In consideration of the rents, covenants, and agreements set forth herein and subject to
the terms and conditions hereof, Lessor hereby leases to Lessee and Lessee hereby leases from
Lessor, the Premises for a term commencing on the effective date hereof (the “Commencement
Date”) and ending at midnight on the date which is fifty (50) years after the date hereof, and
after such date the term of this Lease shall be automatically renewed for a maximum of four (4)
successive ten-year periods thereafter (the “Term”); provided, however, Lessee may
terminate this Lease at the end of such initial period or any subsequent ten-year period by
delivering written notice to Lessor, on or before 180 days prior to the end of any such period,
that Lessee has elected to terminate this Lease.



          (b) At Lessee’s option, Lessee may terminate this Lease, by providing written notice to Lessor
on or before 180 days prior to the desired termination date if Lessee ceases to operate the
Relevant Assets and Additional Improvements or ceases its business operations. In the event of
such termination pursuant to this Section 2.1(b), Lessor shall retain one half of the
remaining Rent (as defined below) for the then current 12-month rental period as set forth in
Section 2.3 below as its sole and exclusive remedy for such early termination and shall
refund to Lessee the remaining Rent.



     2.2 Access.



          (a) Lessor hereby grants to Lessee and its Affiliates, agents, employees and contractors
(collectively, “Lessee’s Parties”) free of charge, an irrevocable, non-exclusive right of
access to and use of those portions of the Refinery Site that are reasonably necessary for access
to and/or the operation of the Relevant Assets and Additional Improvements by Lessee as a
stand-alone enterprise, all so long as such access and use by any of Lessee’s Parties does not
unreasonably interfere in any material respect with Lessor’s operations at the Refinery Site and
complies with Lessor’s rules, norms and procedures governing safety and security at the Refinery
Site. The facilities on the Refinery Site that are subject to the access and use rights provided
under this Section, are referred to herein as the “Shared Access Facilities”.
Notwithstanding the foregoing, the provisions of this Section 2.2(a) shall relate only to
access and use of the Shared Access Facilities, and the Site Services Agreement shall cover all
services that are to be provided by Lessor under the terms of the Site Services Agreement.



          (b) Lessor hereby retains for itself and its Affiliates, agents, employees and contractors
(collectively, “Lessor’s Parties”), the right of access to all of the Premises and the
Relevant Assets (i) to determine whether the conditions and covenants contained in this Lease



5









 







are being kept and performed, (ii) to comply with Environmental Laws, and (iii) to inspect,
maintain, repair, improve and operate the SUMF Assets and the Shared Access Facilities and any
assets of Lessor located on the Premises or to install or construct any structures or equipment
necessary for the maintenance, operation or improvement of any such assets or the installation,
construction or maintenance of any Connection Facilities, all so long as such access by Lessor’s
Parties does not unreasonably interfere in any material respect with Lessee’s operations on the
Premises and complies with Lessee’s rules, norms and procedures governing safety and security at
the Premises.



     2.3 Rent. As rental for the Premises during the Term, Lessee agrees to pay to Lessor
for each 12-month period of the Term One Hundred and 00/100 ($100.00) (the “Rent”) on or
before the 1st day of each 12-month period, the first such payment being due within 30 days of the
Commencement Date of the Term.



     2.4 Place of Payment. All Rent shall be payable in lawful money of the United States
of America at Lessor’s address set forth in Section 11.7.



     2.5 Net Lease. Except as herein otherwise expressly provided in this Lease and in the
Ancillary Agreements, this is a net lease and Lessor shall not at any time be required to pay any
utility charges or any costs associated with the maintenance, repair, alteration or improvement of
the Premises or to provide any services or do any act or thing with respect to the Premises or any
part thereof or any appurtenances thereto, and the Rent reserved herein shall be paid without any
claim on the part of Lessee for diminution, setoff or abatement and nothing shall suspend, abate or
reduce any Rent to be paid hereunder, except as expressly provided herein.



ARTICLE III

CONDUCT OF BUSINESS




     3.1 Use of Premises. Lessee shall have the right to use the Premises for the purpose
of owning, operating, maintaining, repairing, replacing, improving, and expanding the Relevant
Assets and the Additional Improvements and for any other lawful purpose associated with the
operation and ownership of the Relevant Assets and the Additional Improvements.



     3.2 Waste. Subject to the obligations of Lessor under the Ancillary Agreements,
Lessee shall not commit, or suffer to be committed, any waste to the Premises, ordinary wear and
tear or casualty excepted.



     3.3 Governmental Regulations. Subject to the obligations of Lessor to Lessee under
this Lease and the Ancillary Agreements including the indemnity provisions contained in the
Ancillary Agreements, Lessee shall, at Lessee’s sole cost and expense, at all times comply with all
applicable requirements (including requirements under Environmental Laws) of all Governmental
Authorities now in force, or which may hereafter be in force, pertaining to the Premises, and shall
faithfully observe all Laws now in force or which may hereafter be in force pertaining to the
Premises or the use, maintenance or operation thereof. Lessee shall give prompt written notice to
Lessor of Lessee’s receipt from time to time of any notice of non-compliance, order or other
directive from any court or other Governmental Authority under Environmental
Laws relating to the Premises. If Lessor reasonably believes at any time that Lessee is not



6









 







complying with all applicable legal requirements (including requirements under Environmental Laws)
with respect to the Relevant Assets and Additional Improvements, it will provide reasonable notice
to Lessee of such condition. If Lessee fails to take appropriate action to cause such assets to
comply with applicable Laws or take other actions required under applicable Laws within 30 days of
Lessor’s reasonable notice, Lessor may, without further notice to Lessee, take such actions for
Lessee’s account. Within 30 days following the date Lessor delivers to Lessee evidence of payment
for those actions by Lessor reasonably necessary to cause the Relevant Assets and Additional
Improvements to achieve compliance with applicable Laws because of Lessee’s failure to do so,
Lessee shall reimburse Lessor all amounts paid by Lessor on Lessee’s behalf.



     3.4
Environmental Permits. Notwithstanding Lessee’s
obligation to maintain and operate the Relevant Assets and Additional Improvements and comply with applicable Laws,
Lessor and Lessee acknowledge that Lessor may maintain in its name any air quality permits required by any
applicable Governmental Authorities. Consequently and also for the ease of administration, Lessor may
maintain in its name the air quality permits and other authorizations applicable to all, or part of, the
Relevant Assets and Additional Improvements and may make any reports, notifications or other submissions
to Governmental Authorities pursuant to such permits or Laws; provided that upon Lessor’s
written request Lessee shall apply for, obtain and maintain in Lessee’s name any such permits
and authorizations, and make any submissions, required by Law for the operation of the Relevant Assets
and Additional Improvements, which submissions, permits and authorizations
shall be independent of Lessor’s submissions, permits and authorizations.
Lessee shall (a) within 30 days after the date hereof submit a notice of intent
apply for a storm water discharge permit for the Relevant Assets and Additional Improvements, and
(b) within 180 days of the date hereof prepare a Spill Prevention
Countermeasures and Controls plan as required by EPA regulations (40 CFR Part 112).
Lessor and Lessee shall cooperate and work in good faith with the applicable Governmental
Authorities to obtain any modification or refinement of the air quality permit(s) necessary to
satisfy the requirements of Environmental Law. Except as provided in this paragraph, nothing in this
Lease shall reduce Lessee’s obligations under Laws with respect to the Relevant Assets and Additional Improvements.



     3.5 Utilities. Lessor shall provide all utilities (electricity, natural gas, water,
steam, etc.) necessary for Lessee’s operation of the Relevant Assets and the Additional
Improvements in accordance with the provisions of the Site Services Agreement.



ARTICLE IV

ALTERATIONS, ADDITIONS AND IMPROVEMENTS




     Subject to the provisions of this Article IV, Lessee may make any alterations,
additions, improvements or other changes to the Premises and the Relevant Assets as may be
necessary or useful in connection with the operation of the Relevant Assets (collectively, the
“Additional Improvements”). If such Additional Improvements require alterations, additions
or improvements to the Premises or any of the Shared Access Facilities, Lessee shall notify Lessor
in writing in advance and the parties shall negotiate in good faith any increase to the fees paid
by Lessee under the Site Services Agreement by Lessee or otherwise provide for reimbursement of any
material increase in cost (if any) to Lessor under the Site Services Agreement that results from
any modifications to the Premises or the Shared Access Facilities necessary to accommodate the
Additional Improvements, or as otherwise mutually agreed by the parties. Any alteration, addition,
improvement or other change to the Premises, Relevant Assets or Additional Improvements (and, if
agreed by Lessee and Lessor, to the Shared Access Facilities) by Lessee shall be made in a good and
workmanlike manner and in accordance with all applicable Laws. The Relevant Assets and all
Additional Improvements shall remain the property of Lessee and shall be removed by Lessee within
one (1) year after termination of this Lease (provided that such can be removed by Lessee without
unreasonable damage or harm to the Premises) or, at Lessee’s option exercisable by notice to
Lessor, surrendered to Lessor upon the termination of
this Lease. Lessee shall not have the right or power to create or permit any lien of any kind
or



7









 







character on the Premises by reason of repair or construction or other work. In the event any
such lien is filed against the Premises, Lessee shall cause such lien to be discharged or bonded
within thirty (30) days of the date of filing thereof.



ARTICLE V

MAINTENANCE OF PREMISES




     5.1 Maintenance by Lessee.
Except as otherwise expressly provided in this Article V and
in Article VII or elsewhere in this Lease and subject to the
obligations of Lessor and Lessee under the Ancillary Agreements,
including any indemnity provisions contained in the Ancillary Agreements,
Lessee shall at its sole cost, risk and expense at all times maintain the Premises, the
Relevant Assets and Additional Improvements (to the extent such Additional Improvements are located
on the Shared Access Facilities) in compliance with all applicable Laws. When used
in this Section 5.1, the term “repairs” shall include all necessary replacements,
renewal, alterations and additions. All repairs made by Lessee shall be made in accordance with
normal and customary practices in the industry, in a good and workmanlike manner, and in
accordance with all applicable Laws. Lessee shall be responsible at its sole cost and expense for
the proper handling, removal and disposal of all materials, debris, waste and Hazardous Substances generated or
resulting from such repair and maintenance activities, all in accordance with applicable Laws.



     5.2 Operation of Premises. Subject to the obligations of Lessor and Lessee in this
Lease and under the Ancillary Agreements, including any indemnity provisions contained in the
Ancillary Agreements, Lessee covenants and agrees to operate the Relevant Assets and Additional
Improvements located on the Premises in accordance with normal and customary practices in the
industry and all applicable Laws and other requirements of applicable Governmental Authorities now
in force, or which may hereafter be in force, pertaining to the Premises or the use or operation
thereof.



     5.3 Surrender of Premises. Lessee shall at the expiration of the Term or at any
earlier termination of this Lease, surrender the Premises to Lessor in as good condition as it
received the same, ordinary wear and tear, and limitations permitted by Article VII
excepted and in accordance with the provisions of Article IV.



     5.4 Release of Hazardous Substances. Lessee shall give prompt notice to Lessor of any
release of any Hazardous Substances on or at the Premises that occur during the Term. Lessor shall immediately take all steps necessary to contain or
remediate (or both) any such release and provide any governmental notifications required by Law.
If Lessor believes at any time that Lessee is failing to contain or remediate in compliance with
all applicable Laws (including Environmental Laws) any release arising from Lessee’s operation of
the Relevant Assets or Additional Improvements or Lessee’s failure to comply with its obligations
pursuant to this Lease, Lessor will provide reasonable notice to Lessee of such failure. If Lessee
fails to take appropriate action to contain or remediate such a release or take other actions
required under applicable Laws or this Lease within 30 days of Lessor’s reasonable notice, Lessor
may, without further notice to Lessee, take such actions for Lessee’s account. Within 30 days
following the date Lessor delivers to Lessee evidence of payment for those actions by Lessor
reasonably necessary to contain or remediate a release or
otherwise achieve compliance with applicable Laws or this Lease because of Lessee’s failure to do so, Lessee shall reimburse Lessor all amounts paid by Lessor on Lessee’s behalf.




8












 





ARTICLE VI

TAXES, ASSESSMENTS




     6.1 Lessee’s Obligation to Pay. Lessee shall pay during the Term, all federal, state
and local real and personal property ad valorem taxes, assessments, and other governmental charges,
general and special, ordinary and extraordinary, including assessments for public improvements or
benefits assessed against the Premises, or improvements situated thereon, including the Relevant
Assets and all Additional Improvements (but excluding any Shared Access Facilities and any SUMF
Assets) for the period after the Commencement Date, that are payable to any lawful authority
assessed against or with respect to the Premises or the use or operation thereof during the Term,
including any federal, state or local income, gross receipts, withholding, franchise, excise,
sales, use, value added, recording, transfer or stamp tax, levy, duty, charge or withholding of any
kind imposed or assessed by any federal, state or local government, agency or authority, together
with any addition to tax, penalty, fine or interest thereon, other than state or U.S. federal
income tax imposed upon the taxable income of Lessor and any franchise taxes imposed upon Lessor
(such taxes and assessments being hereinafter called “Taxes”). In the event that Lessee
fails to pay its share of such Taxes in accordance with the provisions of this Section 6.1
prior to the time the same become delinquent, Lessor may pay the same and Lessee shall reimburse
Lessor all amounts paid by Lessor on Lessee’s behalf within 30 days following the date Lessor
delivers to Lessee evidence of such payment.



     6.2 Manner of Payment. Upon notice by Lessee to Lessor, Lessor and Lessee shall use
commercially reasonable efforts to cause the Premises and the Relevant Assets (including all
Additional Improvements but excluding Shared Access Facilities and any SUMF Assets) to be
separately assessed for purposes of Taxes as soon as reasonably practicable following the
Commencement Date (to the extent allowed by applicable Law). During the Term but subject to the
provisions of Section 6.1, Lessee shall pay all Taxes assessed directly against the
Premises, the Relevant Assets and the Additional Improvements (but excluding the Shared Access
Facilities and any SUMF Assets) directly to the applicable taxing authority prior to delinquency
and shall promptly thereafter provide Lessor with evidence of such payment. Until such time as
Lessor and Lessee can cause the Premises, the Relevant Assets and the Additional Improvements (but
excluding the Shared Access Facilities and any SUMF Assets) to be separately assessed as provided
above, Lessee shall reimburse Lessor, upon request, for any such Taxes paid by Lessor to the
applicable taxing authorities (such reimbursement to be based upon the mutual agreement of the
Lessor and Lessee as to the portion of such Taxes attributable to the Premises, the Relevant Assets
and the Additional Improvements), subject to the terms of Section 6.1. The certificate
issued or given by the appropriate officials authorized or designated by law to issue or give the
same or to receive payment of such Taxes shall be prima facie evidence of the existence, payment,
nonpayment and amount of such Taxes. Lessee may contest the validity or amount of any such Taxes
or the valuation of the Premises and/or the Relevant Assets and the Additional Improvements (to the
extent any of the foregoing may be separately issued), at Lessee’s sole cost and expense, by
appropriate proceedings, diligently conducted in good faith in accordance with applicable Law. If
Lessee contests such items then Lessor shall cooperate with Lessee in any such contesting of the
validity or amount of any such Taxes or the valuation of the Premises and/or the Relevant Assets and the Additional Improvements. Taxes for the first and last
years of the Term shall be prorated between the Parties based on the portions of such years that
are coincident with the applicable tax years and for which each applicable Party is responsible.



9









 





ARTICLE VII

EMINENT DOMAIN; CASUALTY; INSURANCE




     7.1 Total Condemnation of Premises. If the whole of the Premises are acquired or
condemned by eminent domain for any public or quasi-public use or purpose, then this Lease shall
terminate as of the date title vests in any public agency. All rentals and other charges owing
hereunder shall be prorated as of such date.



     7.2 Partial Condemnation. If any part of the Premises is acquired or condemned as set
forth in Section 7.1, and if in Lessee’s reasonable opinion such partial taking or
condemnation renders the Premises unsuitable for the business of Lessee, then this Lease shall
terminate at Lessee’s election as of the date title vests in any public agency, provided Lessee
delivers to Lessor written notice of such election to terminate within 60 days following the date
title vests in such public agency. In the event of such termination, all rentals and other charges
owing hereunder shall be prorated as of such effective date of termination.



     7.3 Damages and Right to Additional Property. Lessor shall be entitled to any award
and all damages payable as a result of any condemnation or taking of the fee title of the Premises,
provided that the net amount which may be awarded or tendered to Lessor in such condemnation
proceedings (less all legal and other expenses incurred by Lessor in connection with such taking)
shall (as long as Lessee is not then in default hereunder) be used to pay for any restoration by
Lessee of the Relevant Assets, the Additional Improvements and/or the remainder of the Premises
hereof to the extent Lessee desires any of the same to be restored. Lessee shall have the right to
claim and recover from the condemning authority, but not from Lessor, such compensation as may be
separately awarded or recoverable by Lessee in Lessee’s own right on account of any and all damage
to the Relevant Assets, the Additional Improvements and/or Lessee’s business by reason of the
condemnation, including loss of value of any unexpired portion of the Term, and for or on account
of any cost or loss to which Lessee might be put in removing Lessee’s personal property, fixtures,
leasehold improvements and equipment, including the Relevant Assets and the Additional
Improvements, from the Premises.



          During any periods of time during which the Relevant Assets and/or Additional Improvements are
destroyed, damaged, or are being restored or reconstructed (each a “Casualty Event”) under the
terms of this Section, Rent hereunder shall be abated in the proportion that Lessee’s use thereof
is impacted by such Casualty Event, on the condition that Lessee takes commercially reasonable
efforts to mitigate the disruption to its business caused by such Casualty Event.



     7.4 Insurance. Except as otherwise agreed by Lessor and Lessee, Lessee shall, at all
times, maintain or cause to be maintained insurance with respect to the Premises, the Relevant
Assets and the Additional Improvements in accordance with the requirements identified on
Schedule 7.4 hereto.



10









 





ARTICLE VIII

ASSIGNMENT AND SUBLETTING




     8.1 Assignment and Subletting. This Agreement may be assigned in connection with, and
subject to the terms and conditions set forth in Section 13(b) of, the Pipelines Agreement, which
such terms and conditions are incorporated herein by reference.



     8.2 Release of Lessor. Any assignment of this Lease by Lessor in accordance with
Section 8.1 shall operate to terminate the liability of Lessor for all obligations under
this Lease accruing after the date of any such assignment.



     8.3 Release of Lessee. Any assignment of this Lease by Lessee in accordance with
Section 8.1 shall operate to terminate the liability of Lessee for all obligations under
this Lease accruing after the date of any such assignment.



ARTICLE IX

DEFAULTS; REMEDIES; TERMINATION




     9.1 Default by Lessee. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee:



          (a) The failure by Lessee to make when due any payment of Rent or any other payment required
to be made by Lessee hereunder, if such failure continues for a period of 90 days following written
notice from Lessor;



          (b) The failure by Lessee to observe or perform any of the other covenants, conditions or
provisions of this Lease to be observed or performed by Lessee, if such failure continues for a
period of 90 days following written notice from Lessor; provided, however, if a reasonable time to
cure such default would exceed 90 days, Lessee shall not be in default so long as Lessee begins to
cure such default within 90 days of receiving written notice from Lessor and thereafter completes
the curing of such default within reasonable period of time (under the circumstances) following the
receipt of such written notice from Lessor; or



          (c) The occurrence of any Bankruptcy Event.



     9.2 Lessor’s Remedies.



          (a) In the event of any such material default under or material breach of the terms of this
Lease by Lessee, Lessor may, at Lessor’s option, at any time thereafter that such default or breach
remains uncured, without further notice or demand, terminate this Lease and Lessee’s right to
possession of the Premises and forthwith repossess the Premises by any lawful means in which event
Lessee shall immediately surrender possession of the Premises to Lessor; and any such action on the
part of Lessor shall be in addition to any other remedy that may be available to Lessor for arrears
of Rent or breach of contract, or otherwise, including the right of setoff.



          (b) If, by the terms of this Lease, Lessee is required to do or perform any act or to pay any
sum to a third party, and fails or refuses to do so, Lessor, after 30 days written



11









 




notice to Lessee, without waiving any other right or remedy hereunder for such default, may do
or perform such act, at Lessee’s expense, or pay such sum for and on behalf of Lessee, and the
amounts so expended by Lessor shall be repayable on demand, and bear interest from the date
expended by Lessor until paid at a rate equal to the lesser of (i) 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%) or (ii) the maximum non-usurious rate of interest permitted to be
charged Lessee under applicable Law (the “Post-Maturity Rate”). Past due Rent and any
other past due payments required hereunder shall bear interest from maturity until paid at the
Post-Maturity Rate.




     9.3 Default by Lessor. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessor:



          (a) The failure by Lessor to observe or perform any of the other covenants, conditions or
provisions of this Lease to be observed or performed by Lessor, if such failure continues for a
period of 30 days following written notice from Lessee; provided, however, if a reasonable time to
cure such default would exceed 30 days, Lessor shall not be in default so long as Lessor begins to
cure such default within 30 days of receiving written notice from Lessee and thereafter completes
the curing of such default within a reasonable period of time following the receipt of such written
notice from Lessee; or



          (b) The occurrence of a Bankruptcy Event.



     9.4
Lessee’s Remedies. In the event of any such
material default under or material breach of the terms
of this Lease by Lessor, Lessee may, at Lessee’s option, at any time thereafter that such default
or breach remains uncured, after ten days prior written notice to Lessee, perform any act that
Lessor is required to do or perform any act or to pay any sum to a Third Party, at Lessor’s expense
(to the extent the terms of this Lease require such performance at Lessor’s expense) or pay such
sum for and on behalf of Lessor, and the amounts so expended by Lessee shall be repayable on
demand, and bear interest from the date expended by Lessee until paid at the Post-Maturity Rate.
Lessee may, at Lessee’s option, deduct any such amounts so expended by Lessee from the Rent and any
other amounts owed hereunder or under any Ancillary Agreement and any such action on the part of
Lessee shall be in addition to any other remedy that may be available to Lessee for default or
breach of contract, or otherwise, including the right of setoff.



ARTICLE X

INDEMNITY




     10.1 Indemnification by Lessor. Lessor agrees to indemnify, defend, protect, save and
keep harmless Lessee and its Affiliates and their respective officers, directors, shareholders,
unitholders, members, partners, managers, agents, employees, representatives, successors and
assigns (collectively, the “Lessee Indemnified Parties”) from and against any and all
liabilities, obligations, losses, damages, penalties, demands, claims (including claims involving
strict or absolute liability in tort), actions, suits, costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever (collectively, the
“Claims”) which may be imposed on, incurred by or asserted against any of the Lessee
Indemnified Parties, in any way relating to or arising out of (a) any failure to perform any
covenant or agreement made or



12









 




undertaken by Lessor in this Lease, or (b) the exercise of Lessor’s rights and obligations
under Section 2.2(b); provided, however, Lessor shall not have any obligation to indemnify
the Lessee Indemnified Parties for any such Claim under clauses (a) or (b) to the extent resulting
from or arising out of the willful misconduct or negligence (standard negligence or gross
negligence) of any of the Lessee Indemnified Parties. To the extent that the Lessee Indemnified
Parties in fact receive full indemnification payments from Lessor under the indemnification
provisions of this Section 10.1, Lessor shall be subrogated to the Lessee Indemnified
Parties’ rights with respect to the transaction or event requiring or giving rise to such
indemnity. NOTWITHSTANDING ANYTHING CONTAINED IN THIS LEASE TO THE CONTRARY, IN NO EVENT SHALL
LESSOR BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES,
LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES IN TORT, CONTRACT OR OTHERWISE UNDER OR ON
ACCOUNT OF THIS LEASE, EXCEPT THOSE PAYABLE TO THIRD PARTIES FOR WHICH LESSOR WOULD BE LIABLE UNDER
THIS SECTION.




     10.2 Indemnification by Lessee. Lessee agrees to indemnify, defend, protect, save and
keep harmless Lessor and its Affiliates, and their respective officers, directors, shareholders,
unitholders, members, partners, managers, agents, employees, representatives, successors and
assigns (collectively, the “Lessor Indemnified Parties”) from and against any and all
Claims which may be imposed on, incurred by or asserted against the Lessor Indemnified Parties, in
any way and to the extent relating to or arising out of (a) any failure to perform any covenant or
agreement made or undertaken by Lessee in this Lease, but expressly excluding any Claims arising
pursuant to Lessee’s non-compliance with any Environmental Law or the release of any Hazardous
Substance (such Claims to be addressed pursuant to the indemnification obligations of the Pipelines
Agreement), or (b) the exercise of Lessee’s rights under Section 2.2(a); provided, however,
Lessee shall not have any obligation to indemnify the Lessor Indemnified Parties for any such Claim
under clauses (a) or (b) to the extent resulting from or arising out of the willful misconduct or
negligence (standard negligence or gross negligence) of any of the Lessor Indemnified Parties. To
the extent that the Lessor Indemnified Parties in fact receive full indemnification payments from
Lessee under the indemnification provisions of this Section 10.2, Lessee shall be
subrogated to the Lessor Indemnified Parties’ rights with respect to the transaction or event
requiring or giving rise to such indemnity. NOTWITHSTANDING ANYTHING CONTAINED IN THIS LEASE TO
THE CONTRARY, IN NO EVENT SHALL LESSEE BE LIABLE FOR INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES IN TORT,
CONTRACT OR OTHERWISE UNDER OR ON ACCOUNT OF THIS LEASE, EXCEPT THOSE PAYABLE TO THIRD PARTIES FOR
WHICH LESSEE WOULD BE LIABLE UNDER THIS SECTION.



     10.3 Matters Involving a Third Party. If any Third Party shall notify either Lessor
or Lessee with respect to any action or claim by a Third Party (a “Third-Party Claim”) that
may give rise to a right to claim for indemnification against the other Party under Section
10.1 or Section 10.2, then the Indemnified Party shall promptly notify the Indemnifying
Party thereof in writing; provided, however, that failure to give timely notice shall not affect
the right to indemnification to the extent such failure to give timely notice is not prejudicial to
the Indemnifying Party.



13









 





     10.4 Survival. Notwithstanding anything contained in this Lease to the contrary, the
provisions of this Article X shall survive the expiration or earlier termination of this
Lease.



     10.5 Ancillary Agreements. The Ancillary Agreements contain additional indemnity
provisions. The indemnities contained in this Article X are in addition to and not in lieu
of the indemnity provisions contained in the Ancillary Agreements.



ARTICLE XI

GENERAL PROVISIONS




     11.1 Estoppel Certificates. Lessee and Lessor shall, at any time and from time to
time upon not less than 20 days prior written request from the other party, execute, acknowledge
and deliver to the other a statement in writing (a) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such modification and certifying that
this Lease, as so modified, is in full force and effect) and the date to which Rent and other
charges are paid, and (b) acknowledging that there are not, to the executing party’s knowledge, any
uncured defaults on the part of the other party hereunder (or specifying such defaults, if any are
claimed). Any such statement may be conclusively relied upon by any prospective purchaser of the
Premises or the leasehold evidenced by this Lease or any lender with respect to the Premises or the
leasehold evidenced by this Lease. Nothing in this Section 11.1 shall be construed to
waive the conditions elsewhere contained in this Lease applicable to assignment or subletting of
the Premises by Lessee.



     11.2 Severability. The invalidity or unenforceability of any provision of this Lease,
as determined by a court of competent jurisdiction, shall in no way affect the validity or
enforceability of any other provision hereof.



     11.3 Time of Essence. Time is of the essence in the performance of all obligations
falling due hereunder.



     11.4 Captions. The headings to Articles, Sections and other subdivisions of this
Lease are inserted for convenience of reference only and will not affect the meaning or
interpretation of this Lease.



     11.5 Entire Agreement; Amendment. This Lease, including the exhibits and schedules
attached hereto, constitutes the entire agreement and understanding between the parties hereto with
respect to the lease of the Premises, and supersedes all prior and contemporaneous agreements and
undertakings of the parties, in connection herewith. This Lease may be modified in writing only,
signed by the parties in interest at the time of modification.



     11.6 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.



     11.7 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




14












 




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 Lessor:



c/o Holly Corporation

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attn: President

Email address: president@hollycorp.com



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



c/o Holly Corporation

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attn: General Counsel

Email address: generalcounsel@hollycorp.com



Notices to Lessee:



c/o Holly Energy Partners, L.P.

100 Crescent Court, Suite 1600

Dallas, TX 75201

Attn: David Blair

Email address: SVP-HEP@hollyenergy.com



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



c/o Holly Energy Partners, L.P.

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attn: General Counsel

Email address: generalcounsel@hollycorp.com




          Any Party may at any time change its address for service from time to time by giving notice to
the other Parties in accordance with this Section 11.7.




     11.8 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 Rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of
any provision hereof, other than the failure of Lessee to pay the particular Rent so



15









 




accepted, regardless of Lessor’s knowledge of such preceding breach at the time of acceptance
of such Rent.




     11.9 No Partnership. The relationship between Lessor and Lessee at all times shall
remain solely that of landlord and tenant and shall not be deemed a partnership or joint venture.



     11.10 No Third Party Beneficiaries. Subject to the provisions of Article X
and Section 11.14 hereof, this Lease inures to the sole and exclusive benefit of Lessor and
Lessee, their respective Affiliates, successors, legal representatives, sublessees and assigns, and
confers no benefit on any third party.



     11.11 Waiver of Landlord’s Lien. To the extent permitted by Law, Lessor hereby
expressly waives any and all liens (constitutional, statutory, contractual or otherwise) upon
Lessee’s personal property now or hereafter installed or placed in or on the Premises, which
otherwise might exist to secure payment of the sums herein provided to be paid by Lessee to Lessor.



     11.12 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 Lease and to more fully assure the Parties’
rights and interests provided for hereunder. Lessor and Lessee each agree to reasonably cooperate
with the other on all matters relating to required Permits and regulatory compliance by either
Lessee or Lessor in respect of the Premises so as to ensure continued full operation of the
Premises by Lessee pursuant to the terms of this Lease.



     11.13 Recording. Upon the request of Lessor or Lessee, Lessor and Lessee shall
execute, acknowledge, deliver and record a “short form” memorandum of this Lease in the form of
Exhibit B attached hereto and made a part hereof for all purposes. Promptly upon request
by Lessor at any time following the expiration or earlier termination of this Lease, however such
termination may be brought about, Lessee shall execute and deliver to Lessor an instrument, in
recordable form, evidencing the termination of this Lease and the release by Lessee of all of
Lessee’s right, title and interest in and to the Premises existing under and by virtue of this
Lease (the “Lessee Release”) and Lessee grants Lessor an irrevocable power of attorney
coupled with an interest for the purpose of executing the Lessee Release in the name of the Lessee.
This Section 11.13 shall survive the termination of this Lease.



     11.14 Binding Effect. Except as herein otherwise expressly provided, this Lease shall
be binding upon and inure to the benefit of the Parties and their respective successors, sublessees
and assigns. Nothing in this Section shall be construed to waive the conditions elsewhere
contained in this Lease applicable to assignment or subletting of the Premises by the Parties.



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



     11.16 Warranty of Peaceful Possession. Lessor covenants and warrants that Lessee,
upon paying the Rent reserved hereunder and observing and performing all of the covenants,



16









 




conditions and provisions on Lessee’s part to be observed and performed hereunder, may
peaceably and quietly have, hold, occupy, use and enjoy, and, subject to the terms of this Lease,
shall have the full, exclusive, and unrestricted use and enjoyment of, all the Premises during the
Term for the purposes permitted herein, and Lessor agrees to warrant and forever defend title to
the Premises against the claims of any and all persons whomsoever lawfully claiming or to claim the
same or any part thereof.




     11.17 Force Majeure. In the event of Lessor or Lessee being rendered unable, wholly
or in part, by Force Majeure to carry out its obligations under this Lease, other than to make
payments due hereunder and the obligations under Section 11.16, it is agreed that on such
Party’s giving notice and full particulars of such Force Majeure to the other Party as soon as
practicable after the occurrence of the cause relied on, then the obligations of the Parties, so
far as they are affected by such Force Majeure, shall be suspended during the continuance of any
inability so caused but for no longer period, and such cause shall, as far as possible, be remedied
with all reasonable dispatch. It is understood and agreed that the settlement of strikes or
lockouts shall be entirely within the discretion of the Party having the difficulty, and that the
above requirements that any Force Majeure shall be remedied with all reasonable dispatch shall not
require the settlement of strikes or lockouts by acceding to the demands of the opposing party when
such course is inadvisable in the discretion of the Party having the difficulty. Notwithstanding
anything in this Agreement to the contrary, inability of a Party to make payments when due, be
profitable or to secure funds, arrange bank loans or other financing, obtain credit or have
adequate capacity or production (other than for reasons of Force Majeure) shall not be regarded as
events of Force Majeure.



     11.18 Survival. All obligations of Lessor and Lessee that shall have accrued under
this Lease 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 Lease. Lessor and Lessee further expressly agree that all provisions of this Lease which
contemplate performance after the expiration or earlier termination hereof shall survive such
expiration or earlier termination of this Lease.



     11.19 AS IS, WHERE IS. SUBJECT TO ALL OF THE OBLIGATIONS OF LESSOR UNDER THIS LEASE
INCLUDING THOSE SET FORTH IN ARTICLE V, ARTICLE X AND SECTION 11.16, LESSEE
HEREBY ACCEPTS THE PREMISES “AS IS”, “WHERE IS”, AND “WITH ALL FAULTS”, AND LESSOR MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, UNDER THIS LEASE AS TO THE PHYSICAL
CONDITION OF THE PREMISES, INCLUDING THE PREMISES’ MERCHANTABILITY, HABITABILITY, CONDITION,
FITNESS, OR SUITABILITY FOR ANY PARTICULAR USE OR PURPOSE.



     11.20 Relocation of Pipelines; Amendment. If Lessor elects to move certain pipelines
within the Refinery Site, and such relocation of the pipelines requires relocation of any of the
Relevant Assets, then this Agreement shall continue in full force and effect; provided, however,
the Parties shall execute an amendment hereto reflecting the new location(s) of the Relevant
Assets.



17









 





     11.21 Option. Following the termination or expiration of the Pipelines Agreement,
including any renewal, extension, or replacement agreement thereof subject to Section 7 of the
Pipelines Agreement, Lessor shall have an option, and Lessee hereby grants such option, to purchase
the Relevant Assets at a cost equal to the fair market value thereof, as reasonably determined by
Lessor and Lessee. In the event that Lessor and Lessee cannot agree as to the fair market value of
the Relevant Assets, each party shall select a qualified appraiser. The two appraisers shall give
their opinion of the fair market value of the Relevant Assets within 20 days after their retention.
In the event the opinions of the two appraisers differ and, after good faith efforts over the
succeeding 20-day period, they cannot mutually agree, the appraisers shall immediately and jointly
appoint a third qualified appraiser. The third appraiser shall immediately (within five days)
choose either the determination of Lessor’s appraiser or Lessee’s appraiser and such choice of this
third appraiser shall be final and binding on Lessor and Lessee. Each party shall pay its own costs
for its appraiser. Following the determination of the fair market value of the Relevant Assets by
the appraisers, the parties shall equally share the costs of any third appraiser. Upon Lessor’s
exercise of the option granted pursuant to this Section, Lessor and Lessee shall cooperate to
convey the Relevant Assets from Lessee to Lessor. The terms and conditions of this Section 11.21
shall survive the termination or expiration of this Agreement or the
Pipelines Agreement.
If Lessor chooses to exercise its option granted pursuant to this Section, the sale
of the Relevant Assets shall be subject to the receipt of any consents or waivers required pursuant to
the Amended and Restated Credit Agreement, dated as of August 27, 2007, among Holly Energy
Partners-Operating, L.P., the bank party thereto, and Union Bank, N.A., as Administrative Agent, as such agreement
may be amended, restated, otherwise modified or refinanced from time to time.



[Remainder of Page Intentionally Left Blank]




18









 








     The parties hereto have executed this Lease to be effective as of the Commencement Date.



	 	 	 	 	 
	 	LESSOR:





HOLLY REFINING & MARKETING-TULSA LLC,

a Delaware limited liability company

 	 
	 	By:  	Holly Refining & Marketing Company, Member
 	 
	 	 	 	 
	 	 	 
	 	By:  	/s/
George J. Damiris 	 
	 	 	Name:  	George J. Damiris	 
	 	 	Title:  	Vice President, Supply and Marketing	 



	 	 	 	 	 
	 	LESSEE:




HEP TULSA LLC,

a Delaware limited liability company

 	 
	 	 	 	 
	 	By:  	/s/ David G. Blair 	 
	 	 	Name:  	David G. Blair	 
	 	 	Title:  	Senior Vice President	 



 









 






	 	 	 	 	 



EXHIBIT A




DESCRIPTION OF PREMISES





A-1











 





EXHIBIT B




MEMORANDUM OF LEASE




     THIS MEMORANDUM OF LEASE is made and entered into to be effective as of December 1, 2009 to
reflect the existence of a Lease and Access Agreement dated of even date herewith, by and between
HOLLY REFINING & MARKETING-TULSA LLC, a limited liability company organized and existing under the
laws of Delaware, having an office address at 100 Crescent Court, Suite 1600, Dallas, Texas 75201
(“Lessor”), and HEP TULSA LLC, a limited liability company organized and existing under the
laws of Delaware, , having an office address at 100 Crescent Court, Suite 1600, Dallas, Texas 75201
(“Lessee”). Such Lease and Access Agreement is herein referred to as the “Ground
Lease”. Lessor and Lessee are collectively referred to as the “Parties” and
individually as a “Party”.



RECITALS




     A. Lessor is the owner of those certain tracts or parcels of land and appurtenant rights on
which the Relevant Assets (as defined below) are situated (“Lessor’s Property”).



     B. Pursuant to the terms of that certain Asset Sale and Purchase Agreement (the “Purchase
Agreement”), dated October 19, 2009, among Lessor and Lessee, as Buyers, and Sinclair Tulsa
Refining Company, as Seller (“Sinclair”), Lessor acquired certain refining and other
related assets and the real property more particularly described on Exhibit A annexed
hereto and made a part hereof (the “Premises”), and Lessee acquired the Relevant Assets (as
such term defined in the Ground Lease) all of which are located on the Premises.



     C. Lessor has leased the Premises to Lessee pursuant to the terms of the Ground Lease.



     D. Lessor has granted to Lessee certain rights of access and use to those portions of Lessor’s
Property that are not part of the Premises (the “Refinery and Terminal Site”).



     E. Lessor and Lessee have entered into the Ground Lease and desire to give public notice of
the existence of certain of their rights and agreements thereunder. Capitalized terms which are
used but not defined herein shall have the meanings given to them in the full text of the Ground
Lease.



     NOW, THEREFORE, the Parties do hereby give public notice as follows:



     1. Term of Ground Lease. The initial Term of the Ground Lease commences on December
1, 2009, and terminates on December 1, 2059, and after such date the Term of the Ground Lease shall
be automatically renewed for a maximum of four (4) successive ten-year periods thereafter unless
the Term of the Ground Lease is sooner terminated pursuant to the provisions thereof.



B-1









 





     2. Relevant Assets. Pursuant to those certain Bills of Sale of even date herewith,
Sinclair has granted, sold, conveyed, assigned, transferred, set over, and vested in Lessee the
Relevant Assets.



     3. Early Termination Rights. Lessee has the right, in Lessee’s sole and absolute
discretion, to terminate the Ground Lease, without penalty or premium, if Lessee ceases to operate
the Relevant and Additional Improvements, each as defined in the Ground Lease, or ceases its
business.



     4. Access Rights of Lessee to the Refinery and Terminal Site. Pursuant to the terms
and provisions of the Ground Lease, Lessee has been granted certain non-exclusive access rights to
use various portions of the Refinery and Terminal Site.



     5. Reservation of Rights of Lessor of Access to the Premises. Pursuant to the terms
of the Ground Lease, Lessor has retained certain rights of access to the Premises for the purposes
set forth in the Ground Lease.



     6. Option Rights. Pursuant to the terms of the Ground Lease, Lessor has an option to
purchase the Relevant Assets under certain terms and conditions.



     7. Ground Lease Governs. This Memorandum of Lease has been executed and recorded as
notice of the Ground Lease in lieu of recording the Ground Lease itself. Lessor and Lessee intend
that this instrument be only a memorandum of the Ground Lease, and reference is hereby made to the
Ground Lease itself for all of the terms, covenants and conditions thereof. Lessor and Lessee
hereby covenant and agree that this Memorandum of Lease is and shall be subject to the terms and
conditions more particularly set forth in the Ground Lease. This Memorandum of Lease is not
intended to modify, limit or otherwise alter the terms, conditions and provisions of the Ground
Lease. In the event of any conflict, ambiguity or inconsistency between the terms and provisions
of this Memorandum of Lease and the terms and provisions of the Ground Lease, the terms and
provisions of the Ground Lease shall govern, control and prevail.



B-2









 





     IN WITNESS WHEREOF, the undersigned have caused this Memorandum of Lease to be executed as of
the date first set forth above.



	 	 	 	 	 	 	 
	ATTEST:

	 	 	 	LESSOR: 
	 
	 	 	 	 	HOLLY REFINING & MARKETING-
	 	 	 	 	TULSA LLC, a Delaware limited liability
	 

	 	 	 	company
	 	 	 	 	 
	 Name:   
	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 
	 	 	 	 	By: Holly Refining & Marketing Company,
	 	 	 	 	Member
	 
	 	 	 	 	 	 
	 

	 	 	 	 	By:	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 Name:   	 
	 

	 	 	 	 	 Title: 	 
	 
	 ATTEST: 	 	 	LESSEE:
	 
	 	 	 	 	 	 
	 	 	 	 	HEP TULSA LLC,
	 	 	 	 	a Delaware limited liability company
	 	 	 	 	 
	 Name: 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 Title: 

	 
	 	 
	 	By:	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 Name: 	 
	 

	 	 	 	 	 Title: 	 






[Signature Page to Memorandum of Lease]







 









 








	 	 	 	 	 	 	 
	 STATE OF TEXAS 

	 	 
	 	§
	 	 
	 

	 	 	 	§	 	 
	 COUNTY OF DALLAS 

	 	 	 	§	 	 






     This instrument was acknowledged before me on
               
              
           , 2009, by  
             
              
           ,
            
            
                                     of HOLLY REFINING & MARKETING-TULSA LLC, a Delaware limited liability
company, on behalf of said limited liability company.



	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Notary Public, State of Texas 	 
	 	 	 



 









 






	 	 	 	 	 



	 	 	 	 	 	 	 
	 STATE OF TEXAS 

	 	 
	 	§
	 	 
	 

	 	 	 	§	 	 
	 COUNTY OF DALLAS 

	 	 	 	§	 	 






     This instrument was acknowledged before me
on               
              
            , 2009, by 
                
              
         ,
               
              
              
               
   of HEP TULSA LLC, a Delaware limited liability company, on behalf of said
limited liability company.



	 	 	 	 	 
	 	 	 
	 	  	
 	 
	 	 	Notary Public, State of Texas 	 
	 	 	 	 



 









 






	 	 	 	 	 



Exhibit A




Description of Premises





A-1











 





 

 












MEMORANDUM OF LEASE




 





Dated:                     , 2009




 





MEMORANDUM OF LEASE




Between




BETWEEN




HOLLY REFINING & MARKETING-TULSA LLC,




AS LESSOR




AND




HEP TULSA LLC,




AS LESSEE



Record and return to:





Holly Corporation

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attention: Denise C. McWatters

Telecopy: 214.871.3523



 

 










 









 












SCHEDULE 1.1(b)




MATTERS WHICH ARE NOT PART OF THE PREMISES





	1.	 	Relevant Assets.
	 
	2.	 	Additional Improvements.




Schedule  1.1(b)









 











SCHEDULE 7.4




INSURANCE REQUIREMENTS




     Lessee agrees that during the terms of this Lease it shall maintain property and casualty
insurance (including pollution insurance coverage) on the Premises, the Relevant Assets and the
Additional Improvements in accordance with customary industry practices and with a licensed,
reputable carrier.



Schedule  7.4