Document:

exv10w3

Exhibit 10.3

EXECUTION VERSION

 

 

AMENDED AND RESTATED OMNIBUS AGREEMENT

among

HOLLY CORPORATION

NAVAJO PIPELINE CO., L.P.

HOLLY LOGISTIC SERVICES, L.L.C.

HEP LOGISTICS HOLDINGS, L.P.

HOLLY ENERGY PARTNERS, L.P.

HEP LOGISTICS GP, L.L.C.

and

HOLLY ENERGY PARTNERS — OPERATING, L.P.

 

 

 

 

TABLE OF CONTENTS

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

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AMENDED AND RESTATED

OMNIBUS AGREEMENT

     THIS AMENDED AND RESTATED OMNIBUS AGREEMENT is being entered into on June 1, 2009 (the
“Agreement”), by and among Holly Corporation, a Delaware corporation (“Holly”),
Navajo Pipeline Co., L.P., a Delaware limited partnership (“Navajo Pipeline”), Holly
Logistic Services, L.L.C., a Delaware limited liability company (“Holly GP”), HEP Logistics
Holdings, L.P., a Delaware limited partnership (the “General Partner”), Holly Energy
Partners, L.P., a Delaware limited partnership (the “Partnership”), HEP Logistics GP,
L.L.C., a Delaware limited liability company (the “OLP GP”), and Holly Energy Partners —
Operating, L.P., a Delaware limited partnership (the “Operating Partnership”), and amends
and restates in its entirety the Omnibus Agreement entered into on July 13, 2004 (as amended, the
“Original Omnibus Agreement”) among such parties. The above-named entities are sometimes
referred to in this Agreement each as a “Party” and collectively as the “Parties.”

RECITALS:

          WHEREAS, the Parties entered into the Original Omnibus Agreement to evidence their agreement,
as more fully set forth in Article II, with respect to those business opportunities that the Holly
Entities (as defined herein) and Holly GP would not engage in during the term of the Original
Omnibus Agreement unless the Partnership declined to engage in any such business opportunity for
its own account;

          WHEREAS, the Parties entered into the Original Omnibus Agreement to evidence their agreement,
as more fully set forth in Article III, with respect to certain indemnification obligations of the
Parties to each other;

          WHEREAS, the Parties entered into the Original Omnibus Agreement to evidence their agreement,
as more fully set forth in Article IV, with respect to the amount to be paid by the Partnership for
the general and administrative services to be performed by Holly and its Affiliates (as defined
herein) for and on behalf of the Partnership Group (as defined herein);

          WHEREAS, the Parties entered into the Original Omnibus Agreement to evidence their agreement,
as more fully set forth in Article V, with respect to Holly’s right of first refusal relating to
the Assets (as defined herein);

          WHEREAS, in connection with that certain LLC Interest Purchase Agreement dated as of June 1,
2009, by and among Holly, Navajo Pipeline and the Operating Partnership, pursuant to which Navajo
Pipeline has agreed to transfer and convey to the Operating Partnership, and the Operating
Partnership has agreed to acquire, all of the limited liability company interests of
Lovington-Artesia, L.L.C., the entity that owns the 16” Lovington/Artesia Intermediate Pipeline (as
defined herein), the Parties desire to amend and restate the Original Omnibus Agreement in its
entirety as follows:

     In consideration of the premises and the covenants, conditions, and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto hereby agree as follows:

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ARTICLE I

Definitions

     1.1 Definitions.

     As used in this Agreement, the following terms shall have the respective meanings set forth
below:

     “8” and 10” Lovington/Artesia Intermediate Pipelines” means the 8-inch pipeline
running from Lovington, New Mexico to Artesia, New Mexico and the 10-inch pipeline running from
Lovington, New Mexico to Artesia, New Mexico, each owned by Navajo Pipeline.

     “16” Lovington/Artesia Intermediate Pipeline” means the 16-inch pipeline running from
Lovington, New Mexico to Artesia, New Mexico, owned by Lovington-Artesia, L.L.C.

     “2004 Product Pipelines, Terminal and Related Assets” means the assets transferred
under the July 13, 2004 Contribution, Conveyance and Assumption Agreement at the time of the
Partnership’s initial public offering.

     “2008 Crude Pipelines, Tanks and Related Assets” has the meaning given to such term in
the Purchase and Sale Agreement, dated February 25, 2008, by and among Holly, Navajo Pipeline,
Woods Cross Refining Company, L.L.C., a Delaware limited liability company, and Navajo Refining
Company, L.L.C., a Delaware limited liability company, as the seller parties, and the Partnership,
the Operating Partnership, HEP Woods Cross, L.L.C., a Delaware limited liability company, and HEP
Pipeline, L.L.C., a Delaware limited liability company, as the buyer parties.

     “Acquisition Proposal” is defined in Section 5.2(a).

     “Administrative Fee” is defined in Section 4.1(a).

     “Affiliate” is defined in the Partnership Agreement.

     “Agreement” is defined in the introduction to this Agreement.

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

     “Arbitrable Dispute” means any and all disputes, Claims, controversies and other
matters in question between any of the Partnership Entities, on the one hand, and any of the Holly
Entities, on the other hand, arising out of or relating to this Agreement or the alleged breach

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hereof, or in any way relating to the subject matter of this Agreement regardless of whether
(a) allegedly extra-contractual in nature, (b) sounding in contract, tort or otherwise, (c)
provided for by Applicable Law or otherwise or (d) seeking damages or any other relief, whether at
law, in equity or otherwise.

     “Assets” means all of the following assets conveyed, contributed, or otherwise
transferred by the Holly Entities to the Partnership Group: (i) the 2004 Product Pipelines,
Terminal and Related Assets, (ii) the 8” and 10” Lovington/Artesia Intermediate Pipelines, (iii)
the 2008 Crude Pipelines, Tanks and Related Assets, and (iv) the 16” Lovington/Artesia Intermediate
Pipeline.

     “Change of Control” means, with respect to any Person (the “Applicable
Person”), any of the following events: (a) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or substantially all of the Applicable
Person’s assets to any other Person unless immediately following such sale, lease, exchange, or
other transfer such assets are owned, directly or indirectly, by the Applicable Person; (b) the
consolidation or merger of the Applicable Person with or into another Person pursuant to a
transaction in which the outstanding Voting Securities of the Applicable Person are changed into or
exchanged for cash, securities, or other property, other than any such transaction where (i) the
outstanding Voting Securities of the Applicable Person are changed into or exchanged for Voting
Securities of the surviving Person or its parent and (ii) the holders of the Voting Securities of
the Applicable Person immediately prior to such transaction own, directly or indirectly, not less
than a majority of the Voting Securities of the surviving Person or its parent immediately after
such transaction; and (c) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2)
of the Exchange Act) (in the case of Holly, other than a group consisting of some of all of the
current control persons of Holly), being or becoming the “beneficial owner” (as defined in Rules
13d-3 and 13d-5 under the Exchange Act) of more than 50% of all of the then outstanding Voting
Securities of the Applicable Person, except in a merger or consolidation that would not constitute
a Change of Control under clause (b) above.

     “Claim” means any existing or threatened future claim, demand, suit, action,
investigation, proceeding, governmental action or cause of action of any kind or character (in each
case, whether civil, criminal, investigative or administrative), known or unknown, under any
theory, including those based on theories of contract, tort, statutory liability, strict liability,
employer liability, premises liability, products liability, breach of warranty or malpractice.

     “Claimant” is defined in Section 6.2.

     “Closing Date” means the date of the closing of the Partnership’s initial public
offering of Common Units. For purposes of Article III, Closing Date shall mean (i) with respect to
the 8” and 10” Lovington/Artesia Intermediate Pipelines, the closing date of the purchase of the 8”
and 10” Lovington/Artesia Intermediate Pipelines by a Partnership Group Member, (ii) with respect
to the 2008 Crude Pipelines, Tanks and Related Assets, the effective date of the purchase of the
2008 Crude Pipelines, Tanks and Related Assets by a Partnership Group Member, and (iii) with
respect to the 16” Lovington/Artesia Intermediate Pipeline, the effective date of the purchase of
all of the limited liability company interests of Lovington-Artesia, L.L.C., a Delaware limited
liability company, by a Partnership Group Member.

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     “Common Units” is defined in the Partnership Agreement.

     “Conflicts Committee” is defined in the Partnership Agreement.

     “Contribution Agreement” means that certain Contribution, Conveyance and Assumption
Agreement, dated as of July 13, 2004, among Holly, Navajo Pipeline, Holly GP, the General Partner,
the Partnership, the OLP GP, the Operating Partnership and certain other parties, together with the
additional conveyance documents and instruments contemplated or referenced thereunder.

     “control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through ownership of voting
securities, by contract, or otherwise.

     “Covered Environmental Losses” is defined in Section 3.1.

     “Disposition Notice” is defined in Section 5.2(a).

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

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “First ROFR Acceptance Deadline” is defined in Section 5.2(a).

     “General Partner” is defined in the introduction to this Agreement.

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

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

     “Holly” is defined in the introduction to this Agreement.

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     “Holly Entities” means Holly and any Person controlled, directly or indirectly, by
Holly other than the Partnership Entities; and “Holly Entity” means any of the Holly
Entities.

     “Indemnified Party” means the Partnership Group or Holly, as the case may be, in their
capacity as the parties entitled to indemnification in accordance with Article III.

     “Indemnifying Party” means either the Partnership Group or Holly, as the case may be,
in their capacity as the parties from whom indemnification may be required in accordance with
Article III.

     “Initial Tank Inspection” is defined in Section 3.1(c).

     “Initial Tank Inspection Period” is defined in Section 3.1(c).

     “Limited Partner” is defined in the Partnership Agreement.

     “Navajo Pipeline” is defined in the introduction to this Agreement.

     “Offer” is defined in Section 2.3(b)(i).

     “Offer Price” is defined in Section 5.2(a).

     “OLP GP” is defined in the introduction to this Agreement.

     “Operating Partnership” is defined in the introduction to this Agreement.

     “Original Omnibus Agreement” is defined in the introduction to this Agreement.

     “Partnership” is defined in the introduction to this Agreement.

     “Partnership Agreement” means the First Amended and Restated Agreement of Limited
Partnership of Holly Energy Partners, L.P., dated July 13, 2004, as amended by Amendment No. 1 to
the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P.,
dated February 28, 2005, as amended by Amendment No. 2 to the First Amended and Restated Agreement
of Limited Partnership of Holly Energy Partners, L.P., dated July 6, 2005, as amended by Amendment
No. 3 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners,
L.P., dated April 11, 2008, as such agreement is in effect on the date of this Agreement. No
amendment or modification to the Partnership Agreement subsequent to the date of this Agreement
shall be given effect for the purposes of this Agreement unless consented to by each of the
Parties.

     “Partnership Entities” means Holly GP, the General Partner and each member of the
Partnership Group.

     “Partnership Entity” means any of the Partnership Entities.

     “Partnership Group” means the Partnership, the OLP GP, the Operating Partnership and
any Subsidiary of any such Person, treated as a single consolidated entity.

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     “Partnership Group Member” means any member of the Partnership Group.

     “Party” and “Parties” are defined in the introduction to this Agreement.

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

     “Proposed Transferee” is defined in Section 5.2(a).

     “Prudent Industry Practice” means such practices, methods, acts, techniques, and
standards as are in effect at the time in question that are consistent with (a) the standards
generally followed by the United States pipeline and terminalling industries or (b) such higher
standards as may be applied or followed by the Holly Entities in the performance of similar tasks
or projects, or by the Partnership Entities in the performance of similar tasks or projects.

     “Respondent” is defined in Section 6.2.

     “Restricted Businesses” is defined in Section 2.1.

     “Retained Assets” means the pipelines, terminals and other assets and investments
owned by any of the Holly Entities on the date of the Contribution Agreement that were not
conveyed, contributed or otherwise transferred to the Partnership Group pursuant to the
Contribution Agreement or otherwise.

     “ROFR Acceptance Deadline” means the First ROFR Acceptance Deadline or the Second ROFR
Acceptance Deadline, as applicable.

     “Sale Assets” is defined in Section 5.2(a).

     “Second ROFR Acceptance Deadline” is defined in Section 5.2(a).

     “Subject Assets” is defined in Section 2.2(c).

     “Subsidiary” means, with respect to any Person, (a) a corporation of which more than
50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to
vote in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a
corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.

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     “Toxic Tort” means a claim or cause of action arising from personal injury or property
damage incurred by the plaintiff that is alleged to have been caused by exposure to, or
contamination by, Hazardous Substances that have been released into the environment by or as a
result of the actions or omissions of the defendant.

     “Transfer” including the correlative terms “Transferring” or
“Transferred” means any direct or indirect transfer, assignment, sale, gift, pledge,
hypothecation or other encumbrance, or any other disposition (whether voluntary, involuntary or by
operation of law) of the Assets.

     “Transferred Tanks” is defined in Section 3.1(a)(iii).

     “Units” is defined in the Partnership Agreement.

     “Voting Securities” means securities of any class of a Person entitling the holders
thereof to vote on a regular basis in the election of members of the board of directors or other
governing body of such Person.

ARTICLE II

Business Opportunities

     2.1 Restricted Businesses. For so long as a Holly Entity controls the Partnership, and except
as permitted by Section 2.2, Holly GP and each of the Holly Entities shall be prohibited from
engaging in or acquiring or investing in any business having assets engaged in the following
businesses (the “Restricted Businesses”): the ownership and/or operation of crude oil
pipelines or terminals, intermediate product pipelines or terminals, refined products pipelines or
terminals, truck racks or crude oil gathering systems in the continental United States.

     2.2 Permitted Exceptions. Notwithstanding any provision of Section 2.1 to the contrary,
Holly GP and the Holly Entities may engage in the following activities under the following
circumstances:

          (a) the ownership and/or operation of any of the Retained Assets (including replacements of
the Retained Assets);

          (b) any Restricted Business conducted by a Holly Entity or Holly GP with the approval of the
Conflicts Committee;

          (c) the ownership and/or operation of any asset or group of related assets used in the
activities described in Section 2.1 that are acquired or constructed by a Holly Entity or
Holly GP after the Closing Date (the “Subject Assets”) if, in the case of an acquisition,
the fair market value of the Subject Assets (as determined in good faith by the Board of Directors
of Holly), or, in the case of construction, the estimated construction cost of the Subject Assets
(as determined in good faith by the Board of Directors of Holly), is less than $5 million at the
time of such acquisition or completion of construction, as the case may be;

          (d) the ownership and/or operation of any Subject Assets acquired by a Holly Entity or Holly
GP after the Closing Date with a fair market value (as determined in good faith by the Board of
Directors of Holly) equal to or greater than $5 million at the time of the

7

 

acquisition; provided, the Partnership has been offered the opportunity to purchase
the Subject Assets in accordance with Section 2.3 and the Partnership (with the concurrence
of the Conflicts Committee) has elected not to purchase the Subject Assets; and

          (e) the ownership and/or operation of any Subject Assets constructed by a Holly Entity or
Holly GP after the Closing Date with a construction cost (as determined in good faith by the Board
of Directors of Holly) equal to or greater than $5 million at the time of completion of
construction that the Partnership has been offered the opportunity to purchase in accordance with
Section 2.3 and the Partnership (with the concurrence of the Conflicts Committee) has elected
not to purchase.

     2.3 Procedures.

          (a) In the event that Holly GP or a Holly Entity becomes aware of an opportunity to acquire
Subject Assets with a fair market value (as determined in good faith by the Board of Directors of
Holly) equal to or greater than $5 million, then subject to Section 2.3(b), then as soon as
practicable, Holly GP or such Holly Entity shall notify the General Partner of such opportunity and
deliver to the General Partner, or provide the General Partner access to, all information prepared
by or on behalf of, or material information submitted or delivered to, Holly GP or such Holly
Entity relating to such potential transaction. As soon as practicable, but in any event within 30
days after receipt of such notification and information, the General Partner, on behalf of the
Partnership, shall notify Holly GP or the Holly Entity that either (i) the General Partner, on
behalf of the Partnership, has elected, with the concurrence of the Conflicts Committee, not to
cause a Partnership Group Member to pursue the opportunity to purchase the Subject Assets, or (ii)
the General Partner, on behalf of the Partnership, has elected (with the concurrence of the
Conflicts Committee) to cause a Partnership Group Member to pursue the opportunity to purchase the
Subject Assets. If, at any time, the General Partner abandons such opportunity with the approval
of the Conflicts Committee (as evidenced in writing by the General Partner following the request of
Holly GP or the Holly Entity), Holly GP or the Holly Entity under this Section 2.3(a) may
pursue such opportunity. Any Subject Assets which are permitted to be acquired by Holly GP or a
Holly Entity must be so acquired (i) within 12 months of the later to occur of (A) the date that
Holly GP or the Holly Entity becomes able to pursue such acquisition in accordance with the
provisions of this Section 2.3(a), and (B) the date upon which all required governmental
approvals to consummate such acquisition have been obtained, and (ii) on terms not materially more
favorable to Holly GP or the Holly Entity than were offered to the Partnership. If either of these
conditions are not satisfied, the opportunity must be reoffered to the Partnership in accordance
with this Section 2.3(a).

          (b) Notwithstanding Section 2.3(a), in the event that (i) Holly GP or a Holly Entity
becomes aware of an opportunity to make an acquisition that includes both Subject Assets and assets
that are not Subject Assets and the Subject Assets have a fair market value (as determined in good
faith by the Board of Directors of Holly) equal to or greater than $5 million but comprise less
than half of the fair market value (as determined in good faith by the Board of Directors of Holly)
of the total assets being considered for acquisition or (ii) Holly GP or a Holly Entity desires to
construct Subject Assets with an estimated construction cost (as determined in good faith by the
Board of Directors of Holly) equal to or greater than $5 million, then Holly GP or the
Holly Entity may make such acquisition without first offering the opportunity to the

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Partnership or may construct such Subject Assets as long as it complies with the following
procedures:

               (i) Within 90 days after the consummation of the acquisition or the completion of construction
by Holly GP or a Holly Entity of the Subject Assets, as the case may be, Holly GP or the Holly
Entity shall notify the General Partner in writing of such acquisition or construction and offer
the Partnership Group the opportunity to purchase such Subject Assets in accordance with this
Section 2.3(b) (the “Offer”). The Offer shall set forth the terms relating to the
purchase of the Subject Assets and, if Holly GP or any Holly Entity desires to utilize the Subject
Assets, the Offer will also include the commercially reasonable terms on which the Partnership
Group will provide services to Holly GP or the Holly Entity to enable Holly GP or the Holly Entity
to utilize the Subject Assets. As soon as practicable, but in any event within 30 days after
receipt of such written notification, the General Partner shall notify Holly GP or the Holly Entity
in writing that either (x) the General Partner has elected, with the concurrence of the Conflicts
Committee, not to cause a Partnership Group Member to purchase the Subject Assets, in which event
Holly GP or the Holly Entity shall be forever free to continue to own or operate such Subject
Assets, or (y) the General Partner has elected (with the concurrence of the Conflicts Committee) to
cause a Partnership Group Member to purchase the Subject Assets, in which event the following
procedures shall apply.

               (ii) If Holly GP or the Holly Entity and the General Partner (with the concurrence of the
Conflicts Committee) within 60 days after receipt by the General Partner of the Offer are able to
agree on the fair market value of the Subject Assets that are subject to the Offer and the other
terms of the Offer including, without limitation, the terms, if any, on which the Partnership Group
will provide services to Holly GP or the Holly Entity to enable it to utilize the Subject Assets, a
Partnership Group Member shall purchase the Subject Assets for the agreed upon fair market value as
soon as commercially practicable after such agreement has been reached and, if applicable, enter
into an agreement with Holly GP or the Holly Entity to provide services in a manner consistent with
the Offer.

               (iii) If Holly GP or the Holly Entity and the General Partner are unable to agree within 60
days after receipt by the General Partner of the Offer on the fair market value of the Subject
Assets that are subject to the Offer or the other terms of the Offer including, if applicable, the
terms on which the Partnership Group will provide services to Holly GP or the Holly Entity to
enable it to utilize the Subject Assets, Holly GP or the Holly Entity and the General Partner will
engage a mutually agreed upon investment banking firm to determine the fair market value of the
Subject Assets and/or the other terms on which the Partnership Group and Holly GP or the Holly
Entity are unable to agree. Such investment banking firm will determine the fair market value of
the Subject Assets and/or the other terms on which the Partnership Group and Holly GP or the Holly
Entity are unable to agree within 30 days of its engagement and furnish Holly GP or the Holly
Entity and the General Partner its determination. The fees of the investment banking firm will be
split equally between Holly GP or the Holly Entity and the Partnership Group. Once the investment
banking firm has submitted its determination of the fair market value of the Subject Assets and/or
the other terms on which the Partnership Group and Holly GP or the Holly Entity are unable to
agree, the General Partner will have the right, but not the obligation, subject to the approval of
the Conflicts Committee, to cause a Partnership Group Member to purchase the Subject Assets
pursuant to the Offer as

9

 

modified by the determination of the investment banking firm. The Partnership Group will
provide written notice of its decision to Holly GP or the Holly Entity within 30 days after the
investment banking firm has submitted its determination. Failure to provide such notice within
such 30-day period shall be deemed to constitute a decision not to purchase the Subject Assets. If
the General Partner elects to cause a Partnership Group Member to purchase the Subject Assets, then
the Partnership Group Member shall purchase the Subject Assets pursuant to the Offer as modified by
the determination of the investment banking firm as soon as commercially practicable after such
determination and, if applicable, enter into an agreement with Holly GP or the Holly Entity to
provide services in a manner consistent with the Offer, as modified by the determination of the
investment banking firm, if applicable.

     2.4 Scope of Prohibition. Except as provided in this Article II and the Partnership Agreement,
Holly GP and each Holly Entity shall be free to engage in any business activity, including those
that may be in direct competition with any Partnership Group Member.

     2.5 Enforcement. Holly GP and the Holly Entities agree and acknowledge that the Partnership
Group does not have an adequate remedy at law for the breach by Holly GP and the Holly Entities of
the covenants and agreements set forth in this Article II, and that any breach by Holly GP or the
Holly Entities of the covenants and agreements set forth in this Article II would result in
irreparable injury to the Partnership Group. Holly GP and the Holly Entities further agree and
acknowledge that any Partnership Group Member may, in addition to the other remedies which may be
available to the Partnership Group, file a suit in equity to enjoin Holly GP and the Holly Entities
from such breach, and consent to the issuance of injunctive relief under this Agreement.

ARTICLE III

Indemnification

     3.1 Environmental Indemnification.

          (a) Subject to Section 3.2, Holly shall indemnify, defend and hold harmless the
Partnership Group for a period of 10 years after the Closing Date or, solely with respect to the
2008 Crude Pipelines, Tanks and Related Assets, 15 years after the Closing Date, as applicable,
from and against environmental and Toxic Tort losses (including, without limitation, economic
losses, diminution in value suffered by third parties, and lost profits), damages, injuries
(including, without limitation, personal injury and death), liabilities, claims, demands, causes of
action, judgments, settlements, fines, penalties, costs, and expenses (including, without
limitation, court costs and reasonable attorney’s and expert’s fees) of any and every kind or
character, known or unknown, fixed or contingent, suffered or incurred by the Partnership Group or
any third party by reason of or arising out of:

               (i) any violation or correction of violation of Environmental Laws associated with the
ownership or operation of the Assets, or

               (ii) any event or condition associated with ownership or operation of the Assets (including,
without limitation, the presence of Hazardous Substances on, under, about or migrating to or from
the Assets or the disposal or release of Hazardous Substances generated

10

 

by operation of the Assets
at non-Asset locations) including, without limitation, (A) the cost and
expense of any investigation, assessment, evaluation, monitoring, containment, cleanup,
repair, restoration, remediation, or other corrective action required or necessary under
Environmental Laws, (B) the cost or expense of the preparation and implementation of any closure,
remedial, corrective action, or other plans required or necessary under Environmental Laws, and (C)
the cost and expense for any environmental or Toxic Tort pre-trial, trial, or appellate legal or
litigation support work;

but only to the extent that such violation complained of under Section 3.1(a)(i) or such events
or conditions included under Section 3.1(a)(ii) occurred before the Closing Date (collectively,
“Covered Environmental Losses”); or

               (iii) the operation or ownership of any assets not transferred under this Agreement, including
but not limited to underground pipelines retained by the Seller Parties which serve the refineries
in Lovington, New Mexico, Artesia, New Mexico and Woods Cross, Utah or the tanks that are part of
the 2008 Crude Pipelines, Tanks and Related Assets (the “Transferred Tanks”).

          (b) To the extent that a good faith claim by the Partnership Group for indemnification under
Section 3.1(a)(ii) or Section 3.1(a)(iii) arises from events or conditions at the Transferred Tanks
or the soil immediately underneath the Transferred Tanks or the Transferred Tanks’ secondary
containment, and the Holly Entities refuse to provide such indemnification, then the burden of
proof shall be on the Holly Entities to demonstrate that the events or conditions giving rise to
the claim arose after the Closing Date.

          (c) The Holly Entities shall, during the period that commences on the Closing Date and ends
five (5) years thereafter (the “Initial Tank Inspection Period”), reimburse the Partnership
Group for the actual costs associated with the first regularly scheduled API 653 inspection (the
“Initial Tank Inspections”) and the costs associated with the replacement of the tank
mixers on each of the Transferred Tanks after the Closing Date and any repairs required to be made
to the Transferred Tanks as a result of any discovery made during the Initial Tank Inspections;
provided, however, that (i) the Holly Entities shall not reimburse the Partnership
Group with respect to the relocated crude oil Tank 437 in the Artesia refinery complex and the new
crude oil tank to replace crude oil Tank 439 in the Artesia refinery complex more particularly
described in the definition of 2008 Crude Pipelines, Tanks and Related Assets, and (ii) upon
expiration of the Initial Tank Inspection Period, all of the obligations of the Holly Entities
pursuant to this Section 3.1(c) shall terminate, except that the Initial Tank Inspection Period
shall be extended if, and only to the extent that (A) inaccessibility of the Transferred Tanks
during the Initial Tank Inspection Period caused the delay of an Initial Tank Inspection originally
scheduled to be preformed during the Initial Tank Inspection Period, and (B) the Holly Entities
received notice from the Partnership Group regarding such delay at the time it occurred.

          (d) The Partnership Group shall indemnify, defend and hold harmless the Holly Entities from
and against environmental and Toxic Tort losses (including, without limitation, economic losses,
diminution in value suffered by third parties, and lost profits), damages, injuries (including,
without limitation, personal injury and death), liabilities, claims, demands, causes of action,
judgments, settlements, fines, penalties, costs, and expenses

11

 

(including, without limitation, court
costs and reasonable attorney’s and expert’s fees) of any and
every kind or character, known or unknown, fixed or contingent, suffered or incurred by the
Holly Entities or any third party by reason of or arising out of:

               (i) any violation or correction of violation of Environmental Laws associated with the
ownership or operation of the Assets, or

               (ii) any event or condition associated with ownership or operation of the Assets (including,
but not limited to, the presence of Hazardous Substances on, under, about or migrating to or from
the Assets or the disposal or release of Hazardous Substances generated by operation of the Assets
at non-Asset locations) including, without limitation, (A) the cost and expense of any
investigation, assessment, evaluation, monitoring, containment, cleanup, repair, restoration,
remediation, or other corrective action required or necessary under Environmental Laws, (B) the
cost or expense of the preparation and implementation of any closure, remedial, corrective action,
or other plans required or necessary under Environmental Laws, and (C) the cost and expense for any
environmental or Toxic Tort pre-trial, trial, or appellate legal or litigation support work;

and regardless of whether such violation complained of under Section 3.1(d)(i) or such events or
conditions included under Section 3.1(d)(ii) occurred before or after the Closing Date, except to
the extent that any of the foregoing are Covered Environmental Losses for which the Partnership
Group is entitled to indemnification from Holly under this Article III; provided, however, that
nothing stated above shall make the Partnership Group responsible for any post-Closing Date actions
or omissions by the Holly Entities.

          (e) Notwithstanding anything in this Agreement to the contrary, as used in Section 3.1(a)
the definition of Assets shall not include the 16” Lovington/Artesia Intermediate Pipeline.

     3.2 Limitations Regarding Environmental Indemnification. The aggregate liability of Holly in
respect of all Covered Environmental Losses under Section 3.1(a) shall not exceed (1) with
respect to Assets other than the 2008 Crude Pipelines, Tanks and Related Assets, $15.0 million plus
an additional $2.5 million in the case of Covered Environmental Losses related to the 8” and 10”
Lovington/Artesia Intermediate Pipelines (for clarity, the first $15,000,000 million limit would
apply to Covered Environmental Losses associated with the 8” and 10” Lovington/Artesia Intermediate
Pipelines and the 2004 Product Pipelines, Terminal and Related Assets, while the limit between
$15,000,000 and $17,500,00 would apply only to Covered Environmental Losses associated with the 8”
and 10” Lovington/Artesia Intermediate Pipelines) and (2) $7.5 million in the case of Covered
Environmental Losses related to the 2008 Crude Pipelines, Tanks and Related Assets. Holly will not
have any obligation under Section 3.1 with respect to any Assets until the Covered
Environmental Losses of the Partnership Group exceed $200,000.

     3.3 Right of Way Indemnification. Holly shall indemnify, defend and hold harmless the
Partnership Group from and against any losses, damages, liabilities, claims, demands, causes of
action, judgments, settlements, fines, penalties, costs, and expenses (including, without
limitation, court costs and reasonable attorney’s and expert’s fees) of any and every kind or

12

 

character, known or unknown, fixed or contingent, suffered or incurred by the Partnership Group
by reason of or arising out of (a) the failure of the applicable Partnership Group Member to
be the owner of such valid and indefeasible easement rights or fee ownership interests in and to
the lands on which any pipeline or related pump station, tank farm or equipment conveyed or
contributed or otherwise Transferred (including by way of a Transfer of the ownership interest of a
Person or by operation of law) to the applicable Partnership Group Member on the Closing Date is
located as of the Closing Date; (b) the failure of the applicable Partnership Group Member to have
the consents, licenses and permits necessary to allow any such pipeline referred to in clause (a)
of this Section 3.3 to cross the roads, waterways, railroads and other areas upon which any
such pipeline is located as of the Closing Date; and (c) the cost of curing any condition set forth
in clause (a) or (b) above that does not allow any Asset to be operated in accordance with Prudent
Industry Practice, to the extent that Holly is notified in writing of any of the foregoing within
10 years after the Closing Date or, solely with respect to the 2008 Crude Pipelines, Tanks and
Related Assets, 15 years after the Closing Date, as applicable.

     3.4 Additional Indemnification.

          (a) In addition to and not in limitation of the indemnification provided under Section
3.1(a) and Section 3.3, Holly shall indemnify, defend, and hold harmless the Partnership Group
from and against any losses, damages, liabilities, claims, demands, causes of action, judgments,
settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and
reasonable attorney’s and expert’s fees) of any and every kind or character, known or unknown,
fixed or contingent, suffered or incurred by the Partnership Group by reason of or arising out of
(i) events and conditions associated with the operation of the Assets and occurring before the
Closing Date (other than Covered Environmental Losses which are provided for under Section
3.1 and Section 3.2) to the extent that Holly is notified in writing of any of the
foregoing within five years after the Closing Date, (ii) all legal actions pending against the
Holly Entities on July 13, 2004, (iii) the completion of remediation projects at the Partnership’s
El Paso, Albuquerque and Mountain Home terminals that were ongoing or scheduled as of July 13,
2004, (iv) events and conditions associated with the Retained Assets and whether occurring before
or after the Closing Date, and (iv) all federal, state and local tax liabilities attributable to
the operation or ownership of the Assets prior to the Closing Date, including any such tax
liabilities of the Holly Entities that may result from the consummation of the formation
transactions for the Partnership Group and the General Partner.

          (b) In addition to and not in limitation of the indemnification provided under Section
3.1(b) or the Partnership Agreement, the Partnership Group shall indemnify, defend, and hold
harmless the Holly Entities from and against any losses, damages, liabilities, claims, demands,
causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without
limitation, court costs and reasonable attorney’s and expert’s fees) of any and every kind or
character, known or unknown, fixed or contingent, suffered or incurred by the Holly Entities by
reason of or arising out of events and conditions associated with the operation of the Assets and
occurring on or after the Closing Date (other than Covered Environmental Losses which are provided
for under Section 3.1), unless such indemnification would not be permitted under the
Partnership Agreement by reason of one of the provisos contained in Section 7.7(a) of the
Partnership Agreement.

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     3.5 Indemnification Procedures.

          (a) The Indemnified Party agrees that promptly after it becomes aware of facts giving rise to
a claim for indemnification under this Article III, it will provide notice thereof in writing to the
Indemnifying Party, specifying the nature of and specific basis for such claim.

          (b) The Indemnifying Party shall have the right to control all aspects of the defense of (and
any counterclaims with respect to) any claims brought against the Indemnified Party that are
covered by the indemnification under this Article III, including, without limitation, the selection
of counsel, determination of whether to appeal any decision of any court and the settling of any
such matter or any issues relating thereto; provided, however, that no such
settlement shall be entered into without the consent of the Indemnified Party (with the concurrence
of the Conflicts Committee in the case of the Partnership Group) unless it includes a full release
of the Indemnified Party from such matter or issues, as the case may be.

          (c) The Indemnified Party agrees to cooperate fully with the Indemnifying Party, with respect
to all aspects of the defense of any claims covered by the indemnification under this Article III,
including, without limitation, the prompt furnishing to the Indemnifying Party of any
correspondence or other notice relating thereto that the Indemnified Party may receive, permitting
the name of the Indemnified Party to be utilized in connection with such defense, the making
available to the Indemnifying Party of any files, records or other information of the Indemnified
Party that the Indemnifying Party considers relevant to such defense and the making available to
the Indemnifying Party of any employees of the Indemnified Party; provided,
however, that in connection therewith the Indemnifying Party agrees to use reasonable
efforts to minimize the impact thereof on the operations of the Indemnified Party and further
agrees to maintain the confidentiality of all files, records, and other information furnished by
the Indemnified Party pursuant to this Section 3.5. In no event shall the obligation of the
Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately
preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire and
pay for counsel in connection with the defense of any claims covered by the indemnification set
forth in this Article III; provided, however, that the Indemnified Party may, at its
own option, cost and expense, hire and pay for counsel in connection with any such defense. The
Indemnifying Party agrees to keep any such counsel hired by the Indemnified Party informed as to
the status of any such defense, but the Indemnifying Party shall have the right to retain sole
control over such defense.

          (d) In determining the amount of any loss, cost, damage or expense for which the Indemnified
Party is entitled to indemnification under this Agreement, the gross amount of the indemnification
will be reduced by (i) any insurance proceeds realized by the Indemnified Party, and such
correlative insurance benefit shall be net of any incremental insurance premiums that become due
and payable by the Indemnified Party as a result of such claim and (ii) all amounts recovered by
the Indemnified Party under contractual indemnities from third Persons.

          (e) The date on which notification of a claim for indemnification is received by the
Indemnifying Party shall determine whether such claim is timely made.

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ARTICLE IV

General and Administrative Expenses

     4.1 General

          (a) The Partnership will pay Holly an administrative fee (the “Administrative Fee”) in
the amount set forth on Schedule I to this Agreement, payable in equal quarterly
installments, for the provision by Holly and its Affiliates for the Partnership Group’s benefit of
all the general and administrative services that Holly and its Affiliates have traditionally
provided in connection with the Assets including, without limitation, the general and
administrative services listed on Schedule I to this Agreement. The General Partner, with
the approval and consent of the Conflicts Committee, may agree on behalf of the Partnership to
increases in the Administrative Fee in connection with expansions of the operations of the
Partnership Group through the acquisition or construction of new assets or businesses.

          (b) At the end of each year, the Partnership will have the right to submit to Holly a proposal
to reduce the amount of the Administrative Fee for that year if the Partnership believes, in good
faith, that the general and administrative services performed by Holly and its Affiliates for the
benefit of the Partnership Group for the year in question do not justify payment of the full
Administrative Fee for that year. If the Partnership submits such a proposal to Holly, Holly
agrees that it will negotiate in good faith with the Partnership to determine if the Administrative
Fee for that year should be reduced and, if so, by how much.

          (c) The Administrative Fee shall not include and the Partnership Group shall reimburse Holly
and its Affiliates for:

               (i) salaries of employees of Holly GP, to the extent, but only to the extent, such employees
perform services for the Partnership Group;

               (ii) the cost of employee benefits relating to employees of Holly GP, such as 401(k), pension,
and health insurance benefits, to the extent, but only to the extent, such employees perform
services for the Partnership Group; and

               (iii) all sales, use, excise, value added or similar taxes, if any, that may be applicable
from time to time in respect of the services provided by the Holly and its Affiliates to the
Partnership pursuant to Section 4.1(a).

          (d) Either Holly, on the one hand, or the Partnership, on the other hand, may terminate this
Article IV, by providing the other with written notice of its election to do so at least one
calendar year prior to the proposed date of termination.

ARTICLE V

Right of First Refusal

     5.1 Holly Right of First Refusal.

          (a) The Partnership Group hereby grants to Holly a right of first refusal on any proposed
Transfer (other than a grant of a security interest to a bona fide third-party lender

15

 

or a Transfer
to another Partnership Group Member) of the Assets that serve the Holly Entities’ refineries.

          (b) The Parties acknowledge that all potential Transfers of Sale Assets pursuant to this
Article V are subject to obtaining any and all required written consents of governmental
authorities and other third parties and to the terms of all existing agreements in respect of
the Sale Assets.

     5.2 Procedures.

          (a) If a Partnership Group Member proposes to Transfer any of the Assets that serve the Holly
Entities’ refineries to any Person pursuant to a bona fide third-party offer (an “Acquisition
Proposal”), then the Partnership shall promptly give written notice (a “Disposition
Notice”) thereof to Holly. The Disposition Notice shall set forth the following information in
respect of the proposed Transfer: the name and address of the prospective acquiror (the
“Proposed Transferee”), the Assets subject to the Acquisition Proposal (the “Sale
Assets”), the purchase price offered by such Proposed Transferee (the “Offer Price”),
reasonable detail concerning any non-cash portion of the proposed consideration, if any, to allow
Holly to reasonably determine the fair market value of such non-cash consideration, the Partnership
Group’s estimate of the fair market value of any non-cash consideration and all other material
terms and conditions of the Acquisition Proposal that are then known to the Partnership Group. To
the extent the Proposed Transferee’s offer consists of consideration other than cash (or in
addition to cash) the Offer Price shall be deemed equal to the amount of any such cash plus the
fair market value of such non-cash consideration. In the event Holly and the Partnership Group
agree as to the fair market value of any non-cash consideration, Holly will provide written notice
of its decision regarding the exercise of its right of first refusal to purchase the Sale Assets
within 30 days of its receipt of the Disposition Notice (the “First ROFR Acceptance
Deadline”). Failure to provide such notice within such 30-day period shall be deemed to
constitute a decision not to purchase the Sale Assets. In the event (i) Holly’s determination of
the fair market value of any non-cash consideration described in the Disposition Notice (to be
determined by Holly within 30 days of receipt of such Disposition Notice) is less than the fair
market value of such consideration as determined by the Partnership Group in the Disposition Notice
and (ii) Holly and the Partnership Group are unable to mutually agree upon the fair market value of
such non-cash consideration within 30 days after Holly notifies the Partnership Group of its
determination thereof, the Partnership Group and Holly shall engage a mutually-agreed-upon
investment banking firm to determine the fair market value of the non-cash consideration. Such
investment banking firm shall be instructed to return its decision within 30 days after all
material information is submitted thereto, which decision shall be final. The fees of the
investment banking firm will be split equally between Holly and the Partnership Group. Holly will
provide written notice of its decision regarding the exercise of its right of first refusal to
purchase the Sale Assets to the Partnership Group within 30 days after the investment banking firm
has submitted its determination (the “Second ROFR Acceptance Deadline”). Failure to provide
such notice within such 30-day period shall be deemed to constitute a decision by Holly not to
purchase the Sale Assets. If Holly fails to exercise a right during any applicable period set forth
in this Section 5.2(a), Holly shall be deemed to have waived its rights with respect to such
proposed disposition of the Sale Assets, but not with respect to any future offer of Assets.

16

 

          (b) If Holly chooses to exercise its right of first refusal to purchase the Sale Assets under
Section 5.2(a), Holly and the Partnership Group shall enter into a purchase and sale agreement
for the Sale Assets which shall include the following terms:

               (i) Holly will agree to deliver cash for the Offer Price (unless Holly and the Partnership
Group agree that consideration will be paid by means of an interest-bearing promissory note or
equity securities of Holly);

               (ii) the Partnership Group will represent that it has good and indefeasible title to the Sale
Assets, subject to all recorded and unrecorded matters and all physical conditions and other
matters in existence on the closing date for the purchase of the Sale Assets, plus any other such
matters as Holly may approve, which approval will not be unreasonably withheld. If Holly desires to
obtain any title insurance with respect to the Sale Assets, the full cost and expense of obtaining
the same (including but not limited to the cost of title examination, document duplication and
policy premium) shall be borne by Holly;

               (iii) the Partnership Group will grant to Holly the right, exercisable at Holly’s risk and
expense, to make such surveys, tests and inspections of the Sale Assets as Holly may deem
desirable, so long as such surveys, tests or inspections do not damage the Sale Assets or interfere
with the activities of the Partnership Group thereon and so long as Holly has furnished the
Partnership Group with evidence that adequate liability insurance is in full force and effect;

               (iv) Holly will have the right to terminate its obligation to purchase the Sale Assets under
this Article V if the results of any searches, surveys, tests or inspections conducted pursuant to
Section 5.2(b)(ii) or Section 5.2(b)(iii) above are, in the reasonable opinion of Holly,
unsatisfactory;

               (v) the closing date for the purchase of the Sale Assets shall, unless otherwise agreed to by
Holly and the Partnership Group, occur no later than 90 days following receipt by the Partnership
Group of written notice by Holly of its intention to exercise its option to purchase the Sale
Assets pursuant to Section 5.2(a);

               (vi) the Partnership Group shall execute, have acknowledged and deliver to Holly a special
warranty deed, assignment of easement, or comparable document, as appropriate, in the applicable
jurisdiction, on the closing date for the purchase of the Sale Assets constituting real property
interests conveying the Sale Assets unto Holly free and clear of all encumbrances created by the
Partnership Group other than those set forth in Section 5.2(b)(ii) above;

               (vii) the sale of any Sale Assets shall be made on an “as is,” “where is” and “with all
faults” basis, and the instruments conveying such Sale Assets shall contain appropriate
disclaimers; and

               (viii) neither the Partnership Group nor Holly shall have any obligation to sell or buy the
Sale Assets if any of the material consents referred to in Section 5.1(b) have not been
obtained.

17

 

          (c) Holly and the Partnership Group shall cooperate in good faith in obtaining all necessary
governmental and other third Person approvals, waivers and consents required for the closing. Any
such closing shall be delayed, to the extent required, until the third Business Day following the
expiration of any required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended; provided, however, that such delay shall not
exceed 60 days and, if governmental approvals and waiting periods shall not have been obtained
or expired, as the case may be, by such 60th day, then Holly shall be deemed to have waived its
right of first refusal with respect to the Sale Assets described in the Disposition Notice and
thereafter neither Holly nor the Partnership shall have any further
obligation under this Article V with respect to such Sale Assets unless such Sale Assets again become subject to this Article V
pursuant to Section 5.2(d).

          (d) If the Transfer to the Proposed Transferee is not consummated in accordance with the terms
of the Acquisition Proposal within the later of (A) 180 days after the later of the applicable ROFR
Acceptance Deadline, and (B) 10 days after the satisfaction of all governmental approval or filing
requirements, if any, the Acquisition Proposal shall be deemed to lapse, and the Partnership or
member of the Partnership Group may not Transfer any of the Sale Assets described in the
Disposition Notice without complying again with the provisions of this Article V if and to the
extent then applicable.

ARTICLE VI

Miscellaneous

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

     6.2 Arbitration Provision. Any and all Arbitrable Disputes must be resolved through the use
of binding arbitration using three arbitrators, in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, as supplemented to the extent necessary to determine any
procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code). If
there is any inconsistency between this Section and the Commercial Arbitration Rules or the Federal
Arbitration Act, the terms of this Section will control the rights and obligations of the parties.
Arbitration must be initiated within the time limits set forth in this Agreement, or if no such
limits apply, then within a reasonable time or the time period allowed by the applicable statute of
limitations. Arbitration may be initiated by a party (“Claimant”) serving written notice
on the other party (“Respondent”) that the Claimant elects to refer the Arbitrable Dispute
to binding arbitration. Claimant’s notice initiating binding arbitration must identify the
arbitrator Claimant has appointed. The Respondent shall respond to Claimant within 30 days after
receipt of Claimant’s notice, identifying the arbitrator Respondent has appointed. If the
Respondent fails for any reason to name an arbitrator within the 30 day period, Claimant shall
petition the American Arbitration Association for appointment of an arbitrator for Respondent’s
account. The two arbitrators so chosen shall select a third arbitrator within 30 days after the
second arbitrator has been appointed. The Claimant will pay the compensation and expenses of the
arbitrator named by it, and the Respondent will pay the compensation and expenses of the arbitrator
named by or for it. The costs of petitioning for the appointment of an arbitrator, if any, shall
be paid by Respondent. The Claimant and Respondent will each pay one-

18

 

half of the compensation and
expenses of the third arbitrator. All arbitrators must (i) be neutral parties who have never been
officers, directors or employees of any of the Holly Entities, the Partnership Entities or any of
their affiliates and (ii) have not less than seven years experience in the energy industry. The
hearing will be conducted in Dallas, Texas and commence within 30 days after the selection of the
third arbitrator. The Holly Entities, the Partnership Entities and the
arbitrators shall proceed diligently and in good faith in order that the award may be made as
promptly as possible. Except as provided in the Federal Arbitration Act, the decision of the
arbitrators will be binding on and non-appealable by the parties hereto. The arbitrators shall
have no right to grant or award indirect, consequential, punitive or exemplary damages of any kind.

     6.3 Notice. All notices or requests or consents provided for by, or permitted to be given
pursuant to, this Agreement must be in writing and must be given by depositing same in the United
States mail, addressed to the Person to be notified, postpaid, and registered or certified with
return receipt requested or by delivering such notice in person or by telecopier or telegram to
such Party. Notice given by personal delivery or mail shall be effective upon actual receipt.
Notice given by telegram or telecopier shall be effective upon actual receipt if received during
the recipient’s normal business hours or at the beginning of the recipient’s next business day
after receipt if not received during the recipient’s normal business hours. All notices to be sent
to a Party pursuant to this Agreement shall be sent to or made at the address set forth below or at
such other address as such Party may stipulate to the other Parties in the manner provided in this
Section 6.3.

          if to the Holly Entities:

Holly Corporation

100 Crescent Court

Suite 1600

Dallas, Texas 75201

Attention: President

Fax: 214-615-9379

with a copy to (which shall not constitute notice):

Denise McWatters

General Counsel

Holly Corporation

100 Crescent Court

Suite 1600

Dallas, Texas 75201

Fax: 214-242-5063

          if to the Partnership Entities:

Holly Energy Partners, L.P.

c/o Holly Logistic Services, L.L.C.,

100 Crescent Court

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Suite 1600

Dallas, Texas 75201

Attention: Vice President and Chief Financial Officer

Fax: (214) 615-9371

     6.4 Entire Agreement. This Agreement constitutes the entire agreement of the Parties relating
to the matters contained herein, superseding all prior contracts or agreements, whether oral or
written, relating to the matters contained herein.

     6.5 Termination of Article II. The provisions of Article II of this Agreement may be
terminated by Holly upon a Change of Control of Holly.

     6.6 Amendment or Modification. No amendment or modification of this Agreement shall be valid
unless it is in writing and signed by the parties hereto and, in the case of any amendment or
modification adverse to the Partnership Group, approved by the Conflicts Committee of Holly GP. No
waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the
party against whom the waiver is sought to be enforced, and, in the case of any waiver by the
Partnership Entities, approved by the Conflicts Committee of Holly GP. Except to the extent
adverse to the Partnership Group (in which case the approval of the Conflicts Committee of Holly GP
shall also be required), any of the exhibits or schedules to this Agreement may be amended,
modified, revised or updated by the parties hereto if each of Holly (on behalf of the Holly
Entities) and Holly GP (on behalf of the Partnership Entities) execute an amended, modified,
revised or updated exhibit or schedule, as applicable, and attach it to this Agreement. Such
amended, modified, revised or updated exhibits or schedules shall be sequentially numbered (e.g.
Exhibit A-1, Exhibit A-2, etc.), dated and appended as an additional exhibit or schedule to this
Agreement and shall replace the prior exhibit or schedule, as applicable, in its entirety, except
as specified therein. No failure or delay in exercising any right hereunder, and no course of
conduct, shall operate as a waiver of any provision of this Agreement. No single or partial
exercise of a right hereunder shall preclude further or complete exercise of that right or any
other right hereunder.

     6.7 Assignment. No Party shall have the right to assign any of its rights or obligations
under this Agreement without the consent of the other Parties hereto.

     6.8 Counterparts. This Agreement may be executed in any number of counterparts with the same
effect as if all signatory parties had signed the same document. All counterparts shall be
construed together and shall constitute one and the same instrument.

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

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

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

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

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

[Remainder of Page Intentionally Left Blank]

21

 

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

	 	 	 	 	 
	 	HOLLY CORPORATION

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

By:  Navajo Pipeline GP, L.L.C.,

        its General Partner

 	 
	 	By:  	/s/ Bruce R. Shaw
 	 
	 	 	Bruce R. Shaw 	 
	 	 	Vice President and Chief Financial
Officer 	 
	 
	 	HOLLY LOGISTIC SERVICES, L.L.C.

 	 
	 	By:  	/s/ Bruce R. Shaw
 	 
	 	 	Bruce R. Shaw 	 
	 	 	Senior Vice President and Chief
Financial Officer 	 
	 
	 	HEP LOGISTICS HOLDINGS, L.P.

By:  Holly Logistic Services, L.L.C.,

        its General Partner

 	 
	 	By:  	/s/ Bruce R. Shaw
 	 
	 	 	Bruce R. Shaw 	 
	 	 	Senior Vice President and Chief
Financial Officer 	 
	 

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

 

 

	 	 	 	 	 
	 	HOLLY ENERGY PARTNERS, L.P.

By:  HEP Logistics Holdings, L.P.,

        its General Partner

By:  Holly Logistic Services, L.L.C.,

        its General Partner

 	 
	 	By:  	/s/ David G. Blair
 	 
	 	 	David G. Blair 	 
	 	 	Senior Vice President 	 
	 
	 	HEP LOGISTICS GP, L.L.C.

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

By:  HEP Logistics GP, L.L.C.,

        its General Partner

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

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

 

 

SCHEDULE I

Administrative Fee

	 	 	 	 	 
	 	 	Amount of Annual Administrative Fee
	Years beginning July 13, 2004 through
June 30, 2007
	 	$	2,000,000	 
	Years beginning July 1, 2007 through
February 29, 2008
	 	$	2,100,000	 
	Years beginning March 1, 2008
	 	$	2,300,000	 

General and Administrative Services

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

Schedule I-1exv10w4

Exhibit 10.4

PREPARED BY AND WHEN

RECORDED RETURN TO:

Holly Corporation

100 Crescent Court, Suite 1600

Dallas, Texas 75201-6927

Attn: General Counsel

MORTGAGE, LINE OF CREDIT MORTGAGE AND DEED OF TRUST

(WITH SECURITY AGREEMENT AND FINANCING STATEMENT)

BY

LOVINGTON-ARTESIA, L.L.C.,

A DELAWARE LIMITED LIABILITY COMPANY,

AS GRANTOR

TO

JOHN N. PATTERSON,

AS TRUSTEE

FOR THE BENEFIT OF

HOLLY CORPORATION,

A DELAWARE CORPORATION

AS BENEFICIARY

DATED EFFECTIVE AS OF JUNE 1, 2009

THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A TRANSMITTING UTILITY.

THIS INSTRUMENT COVERS GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED
HEREIN AND IS TO BE FILED FOR RECORD IN THE RECORDS WHERE MORTGAGES ON REAL ESTATE ARE RECORDED.
ADDITIONALLY, THIS INSTRUMENT SHOULD BE APPROPRIATELY INDEXED, NOT ONLY AS A MORTGAGE, BUT ALSO AS
A FINANCING STATEMENT COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY
DESCRIBED HEREIN. THE MAILING ADDRESSES OF THE GRANTOR (DEBTOR) AND BENEFICIARY (BENEFICIARY) ARE
SET FORTH IN THIS INSTRUMENT.

 

 

MORTGAGE, LINE OF CREDIT MORTGAGE AND DEED OF TRUST

(WITH SECURITY AGREEMENT AND FINANCING STATEMENT)

     This MORTGAGE, LINE OF CREDIT MORTGAGE AND DEED OF TRUST (WITH SECURITY AGREEMENT AND
FINANCING STATEMENT) (hereinafter referred to as this “Deed of Trust”), is entered into
effective as of the 1st day of June, 2009, by LOVINGTON-ARTESIA, L.L.C., a Delaware limited
liability company (hereinafter referred to as “Grantor”), a subsidiary of Holly Energy
Partners, L.P., a Delaware limited partnership (“HEP”), whose address for notice hereunder
is at 100 Crescent Court, Suite 1600, Dallas, Texas 75201-6927, Attention: General Counsel,
facsimile number (214) 871-3523, to John N. Patterson, Trustee (hereinafter referred to in such
capacity as “Trustee”), whose address is PO Box 9570, Santa Fe, New Mexico 87504, for the
benefit of the herein below defined Beneficiary.

WITNESSETH:

ARTICLE 1

DEFINITIONS

	1.1	 	Definitions. As used herein, the following terms shall have the following meanings:

(a) Affiliate: With 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 shares or the
equivalent and elected directors, managers or Persons performing similar functions, the
ownership of or power to vote, directly or indirectly, shares or the equivalent representing
more than 50% of the power to vote in the election of directors, managers or Persons
performing similar functions, (ii) ownership of more than 50% 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.

(b) Beneficiary: Holly Corporation, a Delaware corporation whose address for notice
hereunder is 100 Crescent Court, Suite 1600, Dallas, Texas 75201-6927, Attention: General
Counsel.

(c) Contracts: The Pipeline Contracts.

(d) Deed of Trust: Shall have the meaning set forth in the introductory paragraph
hereof.

(e) Easements: The Pipeline Easements.

(f) Event of Default: Any happening or occurrence described in Article 7 of this
Deed of Trust.

(g) Fixtures: All materials, supplies, equipment, apparatus and other items now or
hereafter acquired by Grantor and now or hereafter attached to, installed in or used in

1

 

connection with (temporarily or permanently) the Real Property or the Pipelines, together
with all accessions, replacements, betterments and substitutions for any of the foregoing
and the proceeds thereof.

(h) Governmental Entity: Any court, governmental department, commission, council,
board, bureau, agency or other judicial, administrative, regulatory, legislative or other
instrumentality of the United States of America or any foreign country, or any state,
county, municipality or local governmental body or political subdivision or any such other
foreign country.

(i) Grantor: The above defined Grantor, whether one or more, and any and all
subsequent owners of the Mortgaged Property or any part thereof.

(j) Impositions: All real estate and personal property taxes; water, gas, sewer,
electricity and other utility rates and charges; charges for any easement, license or
agreement maintained for the benefit of the Mortgaged Property; and all other taxes, charges
and assessments and any interest, costs or penalties with respect thereto, general and
special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever which at any time prior to or after the execution hereof may be assessed, levied
or imposed upon the Mortgaged Property or the ownership, use, occupancy or enjoyment
thereof.

(k) Improvements: The Pipeline Improvements.

(l) Leases: Any and all leases, subleases, licenses, concessions or other
agreements (written or verbal, now or hereafter in effect) which grant a possessory interest
in and to, or the right to use, the Mortgaged Property, and all other agreements, such as
utility contracts, maintenance agreements and service contracts, which in any way relate to
the use, occupancy, operation, maintenance, enjoyment or ownership of the Mortgaged
Property, save and except any and all leases, subleases or other agreements pursuant to
which Grantor is granted a possessory interest in the Real Property.

(m) Legal Requirements: (i) Any and all laws, statutes, codes, rules, regulations,
ordinances, judgments, orders, writs, decrees, requirements or determinations of any
Governmental Entity, and (ii) to the extent not covered by clause (i) immediately above, any
and all requirements of permits, licenses, certificates, authorizations, concessions,
franchises or other approvals granted by any Governmental Entity.

(n) Mortgaged Property: The Pipeline Assets, together with:

(i) all rights, privileges, tenements, hereditaments, rights-of-way, easements,
appendages and appurtenances in anywise appertaining thereto, and all right, title
and interest of Grantor in and to any streets, ways, alleys, strips or gores of land
adjoining the Real Property or any part thereof; and

(ii) all betterments, additions, alterations, appurtenances, substitutions,
replacements and revisions thereof and thereto and all reversions and remainders
therein; and

2

 

(iii) all other property and rights of Grantor of every kind and character to the
extent specifically relating to and used or to be used solely in connection with the
foregoing property, and all proceeds and products of any of the foregoing.

As used in this Deed of Trust, the term “Mortgaged Property” shall be expressly
defined as meaning all or, where the context permits or requires, any portion of the above,
and all or, where the context permits or requires, any interest therein. Notwithstanding
anything to the contrary herein, in no event shall the term “Mortgaged Property”
include any Product owned by third parties that may be shipped through or stored at or in
any of the Mortgaged Property.

(o) Obligations: Shall have the meaning given such term in Section 2.1.

(p) Permits: The Pipeline Permits.

(q) Permitted Encumbrances: Any of the following matters:

(i) any (A) inchoate liens, security interests or similar charges constituting or
securing the payment of expenses which were incurred incidental to the ownership and
operation of the Pipelines (collectively, the “Operations”) or the
operation, storage, transportation, shipment, handling, repair, construction,
improvement or maintenance of the Mortgaged Property, and (B) materialman’s,
mechanics’, repairman’s, employees’, contractors’, operators’, warehousemen’s, barge
or ship owner’s and carriers’ liens or other similar liens, security interests or
charges for liquidated amounts arising in the ordinary course of business incidental
to the conduct of the Operations or the ownership and operation of the Mortgaged
Property, securing amounts the payment of which is not delinquent and that will be
paid in the ordinary course of business or, if delinquent, that are being contested
in good faith with any action or proceeding to foreclose or attach any of the
Mortgaged Property on account thereof properly stayed; (ii) any liens or security
interests for Taxes not yet delinquent or, if delinquent, that are being contested
in good faith in the ordinary course of business with any action or proceeding to
foreclose or attach any of the Mortgaged Property on account thereof properly
stayed; (iii) any liens or security interests reserved in leases, rights of way or
other real property interests for rental or for compliance with the terms of such
leases, rights of way or other real property interests, provided payment of the debt
secured is not delinquent or, if delinquent, is being contested in good faith in the
ordinary course of business with any action or proceeding to foreclose or attach any
of the Mortgaged Property on account thereof properly stayed; (iv) all prior
reservations of minerals in and under or that may be produced from any of the lands
constituting part of the Mortgaged Property or on which any part of the Mortgaged
Property is located; (v) all liens (other than liens for borrowed money), security
interests, charges, easements, restrictive covenants, encumbrances, contracts,
instruments, obligations, discrepancies, conflicts, shortages in area or boundary
lines, encroachments or protrusions, or overlapping of improvements, defects,
irregularities and other matters affecting or encumbering title to the Mortgaged
Property which individually or in the

3

 

aggregate are not such as to unreasonably or materially interfere with or prevent
any material operations conducted on the Mortgaged Property; (vi) rights reserved to
or vested in any Governmental Entity to control or regulate any of the Mortgaged
Property or the Operations and all Legal Requirements of such authorities, including
any building or zoning ordinances and all environmental laws; (vii) any contract,
easement, instrument, lien, security instrument, permit, amendment, extension or
other matter entered into by a party in accordance with the terms of the Purchase
Agreement (as defined in the Pipelines Agreement) or in compliance with the
approvals or directives of the other party made pursuant to such Purchase Agreement;
(viii) all Post-Closing Consents (as defined in the Purchase Agreement); (ix)
defects in the early chain of the title consisting of the mere failure to recite
marital status in a document or omissions of successions of heirship proceedings,
unless such failure or omission results in another Person’s superior claim of title
to the Pipeline Easements or relevant portion thereof; (x) any assertion of a defect
based on a lack of a survey with respect to the Pipelines; (xi) any title defect
affecting (or the termination or expiration of) any easement, right of way,
leasehold interest or fee interest affecting property over which the Pipelines pass
which has been replaced prior to the date of this Deed of Trust by an easement,
right of way, leasehold interest or fee interest covering substantially the same
land or the portion thereof used by Beneficiary or its Affiliates; and (xii) all
Senior Liens.

(r) Person: An individual, a corporation, a partnership, a limited liability
company, an association, a trust, or any other entity or organization, including, without
limitation, any Governmental Entity.

(s) Personalty: The Pipeline Equipment, and all other personal property (other than
the Fixtures) and intangible assets of any kind or character as defined in and subject to
the provisions of the Uniform Commercial Code Article 9 — Secured Transactions, as the same
is codified and in effect in New Mexico, which are now or hereafter located or to be located
upon, within or about the Real Property, or which are or may be used in or related to the
planning, development, financing or operation of the Mortgaged Property, together with all
accessories, replacements and substitutions thereto or therefor and the proceeds thereof.

(t) Pipeline Assets: All of the following assets, properties and rights, whether
real, personal or mixed, which are owned or held for use by Grantor solely in connection
with the ownership or operation of those certain pipelines described on Exhibit G
(the “Pipelines”):

(i) All parcels of fee simple real property now or hereafter owned by Grantor on
which any part of the Pipelines are located including, without limitation, the
property held in fee by Grantor described on Exhibit A, if any
(collectively, the “Pipeline Fee Land”);

4

 

(ii) All leases of real property now or hereafter entered into or acquired by
Grantor on which all or a part of the Pipelines are located, including, without
limitation, the leases described on Exhibit B, if any (the “Pipeline
Leases”);

(iii) All easements, rights-of-way, property use agreements, line rights and real
property licenses (including right-of-way permits from railroads and road crossing
permits or other right-of-way permits from Governmental Entities) required to
operate the Pipelines now or hereafter entered into or acquired by Grantor,
including, without limitation, the easements, rights-of-way, property use
agreements, line rights and real property licenses described on Exhibit C
(the “Pipeline Easements”);

(iv) All structures, fixtures and appurtenances (A) located on the Pipeline Fee
Land, (B) located on the land subject to the Pipeline Leases, or (C) located within
the Pipeline Easements, and now or hereafter owned by Grantor, including, without
limitation, any buildings, pipelines, pumping facilities, refinery tanks, crude oil
tanks and crude oil pipeline tanks described on Exhibit D (collectively, the
“Pipeline Improvements”);

(v) To the extent same do not constitute Pipeline Improvements, any and all
fittings, cathodic protection ground beds, rectifiers, other cathodic or electric
protection devices, tanks, machinery, engines, pipes, pipelines, valves, valve
boxes, connections, gates, scraper trap extenders, telecommunication facilities and
equipment (including microwave and other transmission towers), lines, wires,
computer hardware, fixed or mobile machinery and equipment, vehicle refueling tanks,
pumps, heating and non-pipeline pumping stations, fittings, tools, furniture and
metering equipment now owned or hereafter acquired by Grantor (the “Pipeline
Equipment”);

(vi) The contracts, agreements, leases and other legally binding rights and
obligations of Grantor described on Exhibit E, if any, but excluding those
contracts and agreements constituting Pipeline Leases and Pipeline Easements (the
“Pipeline Contracts”);

(vii) Intellectual property rights and related computer software;

(viii) All permits, licenses, certificates, authorizations, registrations, orders,
waivers, variances and approvals now or hereafter granted by any Governmental Entity
to Grantor or its predecessors in interest pertaining solely to the ownership or
operation of the Pipelines, including, without limitation, those permits, licenses,
certificates, authorizations, registrations, orders, waivers, variances and
approvals described on Exhibit C, in each case to the extent the same are
assignable (the “Pipeline Permits”); and

(ix) All records and documents now or hereafter acquired by Grantor relating solely
to the ownership, condition or operation of the Pipeline Assets (the “Pipeline
Records”).

5

 

(u) Pipeline Contracts: Shall have the meaning set forth in subsection (vi) of the
definition of Pipeline Assets.

(v) Pipeline Easements: Shall have the meaning set forth in subsection (iii) of the
definition of Pipeline Assets.

(w) Pipeline Equipment: Shall have the meaning set forth in subsection (v) of the
definition of Pipeline Assets.

(x) Pipeline Fee Land: Shall have the meaning set forth in subsection (i) of the
definition of Pipeline Assets.

(y) Pipeline Improvements: Shall have the meaning set forth in subsection (iv) of
the definition of Pipeline Assets.

(z) Pipeline Leases: Shall have the meaning set forth in subsection (ii) of the
definition of Pipeline Assets.

(aa) Pipeline Permits: Shall have the meaning set forth in subsection (viii) of the
definition of Pipeline Assets.

(bb) Pipeline Real Property: Collectively, the Pipeline Fee Land, the Pipeline
Leases, the Pipeline Improvements and the Pipeline Easements.

(cc) Pipeline Records: Shall have the meaning set forth in subsection (ix) of the
definition of Pipeline Assets.

(dd) Pipelines: Shall have the meaning set forth in the first paragraph of the
definition of Pipeline Assets.

(ee) Pipelines Agreement: That certain Amended and Restated Intermediate Pipelines
Agreement dated as of June 1, 2009, by and among Beneficiary, Navajo Refining Company,
L.L.C., a Delaware limited liability company, HEP, Holly Energy Partners—Operating, L.P., a
Delaware limited partnership, HEP Pipeline, L.L.C., a Delaware limited liability company,
Grantor, HEP Logistics Holdings, L.P., a Delaware limited partnership, Holly Logistic
Services, L.L.C., a Delaware limited liability company, and HEP Logistics GP, L.L.C., a
Delaware limited liability company.

(ff) Product: Crude oil, gas oil, diesel, kerosene, casinghead, naphtha, normal
butane and isobutane transported through the Pipelines.

(gg) Purchase Agreement: That certain LLC Interest Purchase Agreement dated as of
June 1, 2009, by and between Navajo Pipeline Co., L.P., a Delaware limited partnership, and
Holly Energy Partners — Operating, L.P., a Delaware limited partnership.

(hh) Real Property: The Pipeline Real Property.

6

 

(ii) Security Documents: This Deed of Trust and any and all other documents now or
hereafter executed by Grantor or any other Person to evidence or secure the performance of
the Obligations.

(jj) Senior Bank Liens: Collectively, (i) each lien and security interest in all or
any portion of the Mortgaged Property heretofor or hereafter granted by Grantor or its
Affiliates under the Senior Credit Agreement, and (ii) each lien and security interest in
all or any portion of the Mortgaged Property hereafter granted by any Person who acquires an
interest in all or any portion of the Mortgaged Property securing senior debt of such
Person.

(kk) Senior Credit Agreement: That certain Amended and Restated Credit Agreement
dated as of August 27, 2007 (as extended, amended, supplemented, restated, replaced or
refinanced in whole or in part, from time to time) among Holly Energy Partners — Operating,
L.P., a Delaware limited partnership, the banks party thereto from time to time, and Union
Bank, N.A., in its capacity as administrative agent (or any assignee of or successor to such
administrative agent).

(ll) Senior Lien: Collectively, the Senior Bank Liens and each other lien and
security interest as to which the lien and security interest granted pursuant to this Deed
of Trust shall be subordinated thereto pursuant to the terms of a Subordination,
Non-Disturbance and Attornment Agreement in substantially the form of Attachment 1 hereto
executed by the Beneficiary and the holder of such lien and security interest and recorded
in the Official Public Records of Real Property of Lea County, New Mexico or Eddy County,
New Mexico, as applicable.

(mm) Taxes: Any and all federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
leases, service, service use, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or other taxes, fees, or
assessments.

ARTICLE 2

GRANT

	2.1	 	Grant. To secure and enforce the prompt performance and compliance by the
Partnership Entities (as defined in the Pipelines Agreement) of all obligations set forth for
such Persons in Section 2(f), Section 7, and Section 11(b) of the Pipelines Agreement, plus
all claims (as such term is defined in the Bankruptcy Code) of or damages owed to the
Beneficiary against the Partnership Entities and/or the Mortgaged Property resulting from any
rejection of the Pipelines Agreement by any such Person in any bankruptcy or insolvency
proceeding involving any Partnership Entity, and any reasonable costs and expenses (including,
but not limited to, attorneys’ and experts’ fees and court costs) incurred by Beneficiary in
enforcing and exercising its rights hereunder (collectively, the “Obligations”),
Grantor has GRANTED, BARGAINED, SOLD and CONVEYED, and by these presents does GRANT, BARGAIN,
SELL and CONVEY, unto Trustee the

7

 

	 	 	Mortgaged Property, subject, however, to the Permitted Encumbrances, TO HAVE AND TO
HOLD the Mortgaged Property unto Trustee, forever, and Grantor does hereby bind itself, its
successors and assigns to WARRANT AND FOREVER DEFEND the title to the Mortgaged Property
unto Trustee against every Person whomsoever lawfully claiming or to claim the same or any
part thereof other than against any holder of any Senior Lien; provided, however, that this
grant shall terminate upon the full performance and discharge of all of the Obligations and
in accordance with the other terms set forth herein.
	 
	2.2	 	Maximum Secured Indebtedness. THE OUTSTANDING INDEBTEDNESS SECURED BY PROPERTY
LOCATED IN NEW MEXICO SHALL NOT AT ANY ONE TIME EXCEED THE AGGREGATE MAXIMUM AMOUNT OF
$45,000,000, WHICH SHALL CONSTITUTE THE MAXIMUM AMOUNT AT ANY TIME SECURED HEREBY.

ARTICLE 3

WARRANTIES AND REPRESENTATIONS

	 	 	Grantor hereby unconditionally warrants and represents to Beneficiary as follows:
	 
	3.1	 	Organization and Power. Grantor (a) is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware, and has
complied with all conditions prerequisite to its doing business in the State of New Mexico and
(b) has all requisite power and all governmental certificates of authority, licenses, permits,
qualifications and documentation to own, lease and operate its properties and to carry on its
business as now being, and as proposed to be, conducted.
	 
	3.2	 	Validity of Security Documents. The execution, delivery and performance by Grantor
of the Security Documents (a) are within Grantor’s powers and have been duly authorized by
Grantor’s Manager or other necessary parties, and all other requisite action for such
authorization has been taken; (b) have received all (if any) requisite prior governmental
approval in order to be legally binding and enforceable in accordance with the terms thereof;
and (c) will not violate, be in conflict with, result in a breach of or constitute (with due
notice or lapse of time, or both) a default under, any Legal Requirement or result in the
creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of
Grantor’s property or assets, except as contemplated by the provisions of the Security
Documents. The Security Documents constitute the legal, valid and binding obligations of
Grantor and others obligated under the terms of the Security Documents, in accordance with
their respective terms.
	 
	3.3	 	Lien of this Instrument. Subject to the Senior Liens, this Deed of Trust constitutes
a valid and subsisting mortgage and deed of trust lien on the Real Property and the Fixtures
and a valid, subsisting security interest in and to, and a valid assignment of, the Personalty
and Leases, all in accordance with the terms hereof.

8

 

	3.4	 	Litigation. There are no actions, suits or proceedings pending, or to the knowledge
of Grantor threatened, against or affecting the Grantor as a result of or in connection with
Grantor’s entering into this Deed of Trust, or involving the validity or enforceability of
this Deed of Trust or the priority of the liens and security interests created by the Security
Documents, and no event has occurred (including specifically Grantor’s execution of the
Security Documents) which will violate, be in conflict with, result in the breach of, or
constitute (with due notice or lapse of time, or both) a default under, any Legal Requirement
or result in the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of Grantor’s property other than the liens and security interests created
by the Security Documents.

ARTICLE 4

AFFIRMATIVE COVENANTS OF GRANTOR

     Grantor hereby unconditionally covenants and agrees with Beneficiary that, except for the
Permitted Encumbrances, Grantor will protect the lien and security interest status of this Deed of
Trust and except for the Permitted Encumbrances, will not, without the prior written consent of
Beneficiary, place, or permit to be placed, or otherwise mortgage, hypothecate or encumber the
Mortgaged Property with, any other lien or security interest of any nature whatsoever (statutory,
constitutional or contractual) regardless of whether same is allegedly or expressly inferior to the
lien and security interest created by this Deed of Trust, and, if any such lien or security
interest is asserted against the Mortgaged Property, Grantor will promptly, at its own cost and
expense, (a) pay the underlying claim in full or take such other action so as to cause same to be
released and (b) within five days from the date such lien or security interest is so asserted, give
Beneficiary notice of such lien or security interest. Such notice shall specify who is asserting
such lien or security interest and shall detail the origin and nature of the underlying claim
giving rise to such asserted lien or security interest.

ARTICLE 5

NEGATIVE COVENANTS OF GRANTOR

     Grantor hereby covenants and agrees with Beneficiary that, until the full performance and
discharge of all of the Obligations, Grantor will not, without the prior written consent of
Beneficiary, create, place or permit to be created or placed, or through any act or failure to act,
acquiesce in the placing of, or allow to remain, any mortgage, pledge, lien (statutory,
constitutional or contractual), security interest, encumbrance or charge on, or conditional sale or
other title retention agreement, regardless of whether same are expressly subordinate to the liens
of the Security Documents, with respect to, the Mortgaged Property, other than the Permitted
Encumbrances.

9

 

ARTICLE 6

AFFIRMATIVE COVENANTS OF BENEFICIARY

     By its acceptance hereof, Beneficiary recognizes that (a) Grantor is obligated or may
hereafter become obligated to any of the Credit Parties (as defined in the SNDA [defined below]) in
connection with the Senior Credit Agreement, and (b) Grantor and any future owner of the Mortgaged
Property may incur additional indebtedness or become otherwise obligated to one or more banks,
insurance companies, investment banks or other financial institutions regularly engaged in
commercial lending and/or bonds, debentures, notes and similar instruments evidencing obligations
that may be secured by liens or security interests on some or all of Grantor’s property, including
the Mortgaged Property (the holder of such liens or security interests being a “Secured
Lender”). To the extent that any such Secured Lender notifies Beneficiary of Secured Lender’s
desire to subordinate the lien and security interest held by Beneficiary pursuant to this Deed of
Trust, Beneficiary, by its acceptance hereof, will agree to effect such subordination by promptly
executing, in one or more counterparts, a Subordination, Non-Disturbance and Attornment Agreement
in substantially the form of Attachment 1 hereto (the “SNDA”). The subordination of this
Deed of Trust shall (i) not be effective unless and until the SNDA has been executed by the Secured
Lender, and (ii) be subject to compliance by the Secured Lender with its obligations under Section
3 and Section 4 of the SNDA. Any Secured Lender who is a party to an SNDA and who is in compliance
with its obligations under Section 3 and Section 4 of such SNDA is hereinafter referred to as a
“Lienholder.”

ARTICLE 7

EVENTS OF DEFAULT

     The term “Event of Default”, as used in the Security Documents, shall mean the
occurrence or happening, at any time and from time to time, of any one or more of the following.

	7.1	 	Breach of Deed of Trust. (a) Grantor shall (i) fail to perform or observe, in any
material respect, any covenant, condition or agreement of this Deed of Trust to be performed
or observed by Grantor, or (ii) breach any warranty or representation made by Grantor in this
Deed of Trust, and such failure or breach shall continue unremedied for a period of thirty
(30) days after receipt of written notice thereof to the Grantor from the Beneficiary;
provided, however, that in the event such failure or breach cannot be reasonably cured within
such thirty (30) day period and Grantor has diligently proceeded (and continues to proceed) to
cure such breach, Grantor shall have an additional sixty (60) days to cure such failure or
breach, or (b) HEP shall fail to perform all of the Obligations in full and on or before the
dates same are to be performed (after giving effect to any applicable grace and cure periods).
	 
	7.2	 	Voluntary Bankruptcy. Grantor shall (a) voluntarily be adjudicated a bankrupt or
insolvent, (b) procure, permit or suffer the voluntary or involuntary appointment of a
receiver, trustee or liquidator for itself or for all or any substantial portion of its
property, (c) file any petition seeking a discharge, rearrangement, or reorganization of its
debts pursuant to the bankruptcy laws or any other debtor relief laws of the United States or

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	 	 	any state or any other competent jurisdiction, or (d) make a general assignment for the
benefit of its creditors.
	 
	7.3	 	Involuntary Bankruptcy. If (a) a petition is filed against Grantor seeking to
rearrange, reorganize or extinguish its debts under the provisions of any bankruptcy or other
debtor relief law of the United States or any state or other competent jurisdiction, and such
petition is not dismissed or withdrawn within sixty (60) days after its filing, or (b) a court
of competent jurisdiction enters an order, judgment or decree appointing, without the consent
of Grantor a receiver or trustee for it, or for all or any part of its property, and such
order, judgment, or decree is not dismissed, withdrawn or reversed within sixty (60) days
after the date of entry of such order, judgment or decree.
	 
	7.4	 	Rejection of Pipelines Agreement. A rejection, by or on behalf of Grantor or any
other Partnership Entity (as defined in the Pipelines Agreement), of the Pipelines Agreement
in bankruptcy.

ARTICLE 8

REMEDIES

	8.1	 	Remedies. Subject, in each case, to the rights of any Lienholder arising under or
pursuant to the Senior Liens, and the terms and provisions of the SNDA, and provided no
material default by the Holly Entities (as defined in the Pipelines Agreement) has occurred
and is continuing, if an Event of Default shall occur and be continuing, Beneficiary may, at
Beneficiary’s election and by or through Trustee or otherwise, exercise any or all of the
following rights, remedies and recourses:

(a) Entry Upon Mortgaged Property. Enter upon the Mortgaged Property and take
exclusive possession thereof and of all books, records and accounts relating thereto. If
Grantor remains in possession of all or any part of the Mortgaged Property after an Event of
Default and without Beneficiary’s prior written consent thereto, Beneficiary may invoke any
and all legal remedies to dispossess Grantor, including specifically one or more actions for
forcible entry and detainer, trespass to try title and writ of restitution. Nothing
contained in the foregoing sentence shall, however, be construed to impose any greater
obligation or any prerequisites to acquiring possession of the Mortgaged Property after an
Event of Default than would have existed in the absence of such sentence.

(b) Operation of Mortgaged Property. Hold, lease, manage, operate or otherwise use
or permit the use of the Mortgaged Property, either itself or by other Persons, firms or
entities, in such manner, for such time and upon such other terms as Beneficiary may deem to
be prudent and reasonable under the circumstances (making such repairs, alterations,
additions and improvements thereto and taking any and all other action with reference
thereto, from time to time, as Beneficiary shall deem necessary or desirable), and apply all
amounts collected by Trustee or Beneficiary in connection therewith in accordance with the
provisions of Section 8.8.

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(c) Trustee or Receiver. Prior to, upon or at any time after, commencement of any
legal proceedings hereunder, make application to a court of competent jurisdiction as a
matter of strict right and without notice to Grantor or regard to the adequacy of the
Mortgaged Property for the satisfaction of the Obligations for appointment of a receiver of
the Mortgaged Property, and Grantor does hereby irrevocably consent to such appointment.
Any such receiver shall have all the usual powers and duties of receivers in similar cases,
including the full power to rent, maintain and otherwise operate the Mortgaged Property upon
such terms as may be approved by the court.

(d) Other. Exercise any and all other rights, remedies and recourses granted under
this Deed of Trust.

	8.2	 	Remedies Cumulative, Concurrent and Nonexclusive. Beneficiary shall have all rights,
remedies and recourses granted in the Pipelines Agreement and, subject to the rights of any
Lienholder arising under or pursuant to the Senior Liens, and the terms and provisions of the
SNDA, the Deed of Trust and same (a) shall be cumulative and concurrent; (b) may be pursued
separately, successively or concurrently against Grantor or others obligated under this Deed
of Trust, or against the Mortgaged Property, or against any one or more of them, at the sole
discretion of Beneficiary; (c) may be exercised as often as occasion therefor shall arise, it
being agreed by Grantor that the exercise or failure to exercise any of same shall in no event
be construed as a waiver or release thereof or of any other right, remedy or recourse; and (d)
are intended to be, and shall be, nonexclusive.
	 
	8.3	 	Obligations. Neither Grantor, any other Partnership Entity (as defined in the
Pipelines Agreement) nor any other Person hereafter obligated for performance or fulfillment
of all or any of the Obligations shall be relieved of such obligation by reason of (a) the
failure of Trustee to comply with any request of Grantor or any other Person to enforce any
provisions of this Deed of Trust; (b) the release, regardless of consideration, of the
Mortgaged Property or the addition of any other property to the Mortgaged Property; (c) any
agreement or stipulation between any subsequent owner of the Mortgaged Property and
Beneficiary extending, renewing, rearranging or in any other way modifying the terms of the
Security Documents without first having obtained the consent of, given notice to or paid any
consideration to Grantor or such other Person, and in such event Grantor and all such other
Persons shall continue to be liable to make payment according to the terms of any such
extension or modification agreement unless expressly released and discharged in writing by
Beneficiary; or (d) by any other act or occurrence save and except the complete fulfillment of
all of the Obligations.
	 
	8.4	 	Release of and Resort to Collateral. Beneficiary may release, regardless of
consideration, any part of the Mortgaged Property without, as to the remainder, in any way
impairing, affecting, subordinating or releasing the lien or security interest created in or
evidenced by this Deed of Trust or their stature as a lien and security interest in and to the
Mortgaged Property.
	 
	8.5	 	Waiver of Redemption, Notice and Marshalling of Assets. To the fullest extent
permitted by law, Grantor hereby irrevocably and unconditionally waives and releases (a)

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	 	 	all benefits that might accrue to Grantor by virtue of any present or future law exempting
the Mortgaged Property from attachment, levy or sale on execution or providing for any
appraisement, valuation, stay of execution, exemption from civil process, redemption or
extension of time for payment; (b) all notices of any Event of Default or of Trustee’s
election to exercise or his actual exercise of any right, remedy or recourse provided for
under this Deed of Trust; and (c) any right to a marshalling of assets or a sale in inverse
order of alienation.

	8.6	 	Limitation on New Mexico Redemption. Pursuant to NMSA 1978, Section 39-5-19 (1965),
the redemption period after foreclosure sale for any Mortgaged Property situated in or
otherwise subject to the laws of the State of New Mexico shall be limited to one (1) month.
	 
	8.7	 	Discontinuance of Proceedings. In case Beneficiary shall have proceeded to invoke
any right, remedy or recourse permitted under this Deed of Trust and shall thereafter elect to
discontinue or abandon same for any reason, Beneficiary shall have the unqualified right so to
do and, in such an event, Grantor and Beneficiary shall be restored to their former positions
with respect to the Obligations, the Security Documents, the Mortgaged Property and otherwise,
and the rights, remedies, recourses and powers of Beneficiary shall continue as if same had
never been invoked.
	 
	8.8	 	Application of Proceeds. Subject, in each case, to applicable law and the rights of
any Lienholder arising under or pursuant to the Senior Liens, and the terms and provisions of
the SNDA (including, without limitation, the right to receive payments otherwise due to HEP
under the terms of the Pipelines Agreement), the proceeds and other amounts generated by the
holding, operating or other use of, the Mortgaged Property shall be applied by Trustee or
Beneficiary (or the receiver, if one is appointed) to the extent that funds are so available
therefrom in the following orders of priority:

(a) first, to the payment of the costs and expenses of taking possession of the Mortgaged
Property and of holding, using, leasing, repairing and improving the same, including without
limitation (i) trustees’ and receivers’ fees, (ii) court costs, (iii) attorneys’ and
accountants’ fees, and (iv) the payment of any and all Impositions, liens, security
interests or other rights, titles or interests equal or superior to the lien and security
interest of this Deed of Trust (except those to which the Mortgaged Property has been sold
subject to and without in any way implying Beneficiary’s prior consent to the creation
thereof);

(b) second, to the payment of all amounts which may be due to Beneficiary with respect to
the Obligations;

(c) third, to the extent permitted by law, funds are available therefor out of the proceeds
generated by the holding, operating or other use of the Mortgaged Property and known by
Beneficiary, to the payment of any indebtedness or obligation secured by a subordinate deed
of trust on or security interest in the Mortgaged Property; and

(d) fourth, to Grantor.

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	8.9	 	INDEMNITY. IN CONNECTION WITH ANY ACTION TAKEN BY TRUSTEE AND/OR BENEFICIARY
PURSUANT TO THIS DEED OF TRUST, TRUSTEE AND/OR BENEFICIARY AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, SHAREHOLDERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS, REPRESENTATIVES, ATTORNEYS,
ACCOUNTANTS AND EXPERTS (COLLECTIVELY THE “INDEMNIFIED PARTIES”) SHALL NOT BE LIABLE FOR ANY
LOSS SUSTAINED BY GRANTOR RESULTING FROM (i) AN ASSERTION THAT TRUSTEE, BENEFICIARY OR
INDEMNIFIED PARTY HAS RECEIVED FUNDS FROM THE OPERATIONS OF THE MORTGAGED PROPERTY CLAIMED BY
THIRD PERSONS OR (ii) ANY ACT OR OMISSION OF TRUSTEE, BENEFICIARY OR INDEMNIFIED PARTY IN
ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE MORTGAGED PROPERTY, INCLUDING IN EITHER
CASE SUCH LOSS WHICH MAY RESULT FROM THE ORDINARY NEGLIGENCE OF TRUSTEE, BENEFICIARY OR AN
INDEMNIFIED PARTY OR WHICH MAY RESULT FROM STRICT LIABILITY, WHETHER UNDER APPLICABLE LAW OR
OTHERWISE, UNLESS SUCH LOSS IS CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH
OF TRUSTEE, BENEFICIARY OR ANY INDEMNIFIED PARTY NOR SHALL TRUSTEE, BENEFICIARY AND/OR ANY
INDEMNIFIED PARTY BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY OF
GRANTOR. GRANTOR SHALL AND DOES HEREBY AGREE TO INDEMNIFY TRUSTEE, BENEFICIARY AND EACH OF
THEIR RESPECTIVE INDEMNIFIED PARTIES FOR, AND TO HOLD THEM HARMLESS FROM, ANY AND ALL LOSSES
WHICH MAY OR MIGHT BE INCURRED BY TRUSTEE, BENEFICIARY OR INDEMNIFIED PARTY BY REASON OF THIS
DEED OF TRUST OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER, INCLUDING SUCH LOSSES WHICH MAY
RESULT FROM THE ORDINARY NEGLIGENCE OF TRUSTEE, BENEFICIARY OR AN INDEMNIFIED PARTY OR WHICH
MAY RESULT FROM STRICT LIABILITY, WHETHER UNDER APPLICABLE LAW OR OTHERWISE, UNLESS SUCH LOSS
IS CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH OF TRUSTEE, BENEFICIARY OR
INDEMNIFIED PARTY. SHOULD TRUSTEE, BENEFICIARY AND/OR ANY INDEMNIFIED PARTY MAKE ANY
EXPENDITURE ON ACCOUNT OF ANY SUCH LOSSES, THE AMOUNT THEREOF, INCLUDING, WITHOUT LIMITATION,
COSTS, EXPENSES AND REASONABLE ATTORNEYS’ FEES, SHALL BE A DEMAND OBLIGATION (WHICH OBLIGATION
GRANTOR HEREBY EXPRESSLY PROMISES TO PAY) OWING BY GRANTOR TO TRUSTEE AND/OR BENEFICIARY AND
SHALL BEAR INTEREST FROM THE DATE EXPENDED UNTIL PAID AT THE HIGHEST RATE ALLOWED BY LAW,
SHALL BE A PART OF THE OBLIGATIONS AND SHALL BE SECURED BY THIS DEED OF TRUST. THE
LIABILITIES OF GRANTOR AS SET FORTH IN THIS SECTION 8.9 SHALL SURVIVE THE TERMINATION OF THIS
DEED OF TRUST.

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	8.10	 	Limitations on Indemnifications.

(a) To the extent, if at all, but only to the extent, that NMSA 1978, Section 56-7-1 (1971),
as amended from time to time, is applicable to this Deed of Trust or any indemnification
agreements herein, any agreement to indemnify any indemnitee given in this Deed of Trust,
regardless of whether such agreement to indemnify makes reference to this or any other
limitation provision, will not extend to liability, claims, damages, losses or expenses,
including attorneys’ fees, arising out of (i) the preparation or approval of maps, drawings,
opinions, reports, surveys, change orders, designs or specifications by such indemnitee, or
the agents or employees of such indemnitee, or (ii) the giving of or the failure to give
directions or instructions by such indemnitee, or the agents or employees of such
indemnitee, where such giving or failure to give directions or instructions is the primary
cause of bodily injury to persons or damage to property.

(b) To the extent, if at all, but only to the extent, that NMSA 1978, Section 56-7-2 (1999),
as amended from time to time, is applicable to this Deed of Trust or any indemnification
agreements herein, or agreement to indemnify any indemnitee given in this Deed of Trust,
regardless of whether such undertaking or agreement to indemnify makes reference to this or
any other limitation provision, this Deed of Trust does not purport to indemnify such
indemnitee against loss or liability for damages arising from: (i) the sole or concurrent
negligence of such indemnitee or the agents or employees of such indemnitee; (ii) the sole
or concurrent negligence of an independent contractor who is directly responsible to such
indemnitee; or (iii) an accident that occurs in operations carried on at the direction or
under the supervision of such indemnitee, an employee or representative of such indemnitee
or in accordance with methods and means specified by such indemnitee or the employees or
representatives of such indemnitee.

ARTICLE 9

SECURITY AGREEMENT

	9.1	 	Security Interest. This Deed of Trust shall be construed as a deed of trust on real
property and it shall (subject to the Senior Liens) also constitute and serve as a “Security
Agreement” on personal property within the meaning of, and shall constitute a security
interest under, the Uniform Commercial Code (as the same is codified and in effect in New
Mexico) with respect to the Personalty, Fixtures and Leases. To this end, Grantor has
GRANTED, BARGAINED, CONVEYED, ASSIGNED, TRANSFERRED, AND SET OVER, and by these presents does
GRANT, BARGAIN, CONVEY, ASSIGN, TRANSFER AND SET OVER, unto Trustee and unto Beneficiary, a
security interest in all of Grantor’s right, title and interest in, to and under the
Personalty, Fixtures and Leases to secure the full and timely performance and discharge of the
Obligations, subject only to the Permitted Encumbrances.
	 
	9.2	 	Financing Statements. Grantor hereby authorizes Beneficiary to file such “Financing
Statements,” and Grantor hereby agrees to execute and deliver such further assurances as
Beneficiary may, from time to time, consider reasonably necessary to create, perfect and
preserve Beneficiary’s security interest herein granted and Beneficiary may cause such

15

 

	 	 	statements and assurances to be recorded and filed, at such times and places as may be
required or permitted by law to so create, perfect and preserve such security interest.

	9.3	 	Uniform Commercial Code Remedies. Subject, in each case, to the rights of any
Lienholder under or pursuant to the Senior Liens, and the terms and provisions of the SNDA and
this Deed of Trust, Beneficiary and/or Trustee shall have all the rights, remedies and
recourses (other than auction and sale rights) with respect to the Personalty, Fixtures and
Leases afforded to it by the aforesaid Uniform Commercial Code (as the same is codified and in
effect in New Mexico) in addition to, and not in limitation of, the other rights, remedies and
recourses afforded by this Deed of Trust.
	 
	9.4	 	No Obligation of Trustee or Beneficiary. The assignment and security interest herein
granted shall not be deemed or construed to constitute Trustee or Beneficiary as a trustee in
possession of the Mortgaged Property, to obligate Trustee or Beneficiary to lease the
Mortgaged Property or attempt to do same, or to take any action, incur any expense or perform
or discharge any obligation, duty or liability whatsoever.
	 
	9.5	 	Fixture Filing. This Deed of Trust shall constitute a “fixture filing” for all
purposes of Article 9 of the Uniform Commercial Code, as codified and in effect in New Mexico.
All or part of the Mortgaged Property are or are to become fixtures; information concerning
the security interest herein granted may be obtained at the addresses set forth on the first
page hereof. The address of the Secured Party (Beneficiary) is the address set forth in
Section 1.1(b) and the address of the Debtor (Grantor) is the address set forth in the opening
paragraph of this Deed of Trust.
	 
	9.6	 	Satisfaction and Release. If (a) all Obligations secured hereby shall be paid,
performed and satisfied in full, (b) the Mortgaged Property (or any portion thereof, in which
case the provisions of clauses (i) through (iv) below shall be applicable only to such
portion) shall be sold, consigned, conveyed or transferred in accordance with the provisions
of the Pipelines Agreement, and/or (c) the Pipelines Agreement shall be terminated, cancelled
or otherwise expire, and the Obligations of the Partnership Entities (as defined in the
Pipelines Agreement) set forth in Section 2(f) of the Pipelines Agreement shall no longer be
applicable, and/or (d) at any time Grantor’s or HEP’s (in the event Grantor does not have a
stand-alone credit rating) senior unsecured debt has an Investment Grade Rating (as
hereinafter defined) from both Moody’s Investors Service, Inc. (“Moody’s”) and
Standard & Poor’s Ratings Group (“S&P”) (or any successor to the rating business of
either thereof), then (i) this Deed of Trust shall be null and void, (ii) the liens and
security interests created by this Deed of Trust shall be released as promptly as practicable,
(iii) the Mortgaged Property shall revert to Grantor (or the transferee in the case of clause
(b) above) free and clear of the liens and security interests created by this Deed of Trust,
and (iv) Beneficiary and Trustee (as applicable) shall execute and deliver, or cause to be
executed and delivered, instruments of satisfaction and release that are reasonably requested
by Grantor. Otherwise, this Deed of Trust shall remain and continue in full force and effect.
As used in this Section 9.6, the term “Investment Grade Rating” shall mean a rating equal to
or higher than Baa3 (or the equivalent) by Moody’s, or BBB- (or the equivalent) by S&P.

16

 

ARTICLE 10

CONCERNING THE TRUSTEE

	10.1	 	No Required Action. Trustee shall not be required to take any action toward the
execution and enforcement of the trust hereby created or to institute, appear in or defend any
action, suit or other proceeding in connection therewith where in his opinion such action will
be likely to involve him in expense or liability, unless requested so to do by a written
instrument signed by Beneficiary and, if Trustee so requests, unless Trustee is tendered
security and indemnity satisfactory to him against any and all costs, expense and liabilities
arising therefrom. Trustee shall not be responsible for the execution, acknowledgment or
validity of the Security Documents, or for the proper authorization thereof, or for the
sufficiency of the lien and security interest purported to be created hereby, and makes no
representation in respect thereof or in respect of the rights, remedies and recourses of
Beneficiary.
	 
	10.2	 	Certain Rights. With the approval of Beneficiary, Trustee shall have the right to
take any and all of the following actions: (a) to select, employ and advise with counsel (who
may be, but need not be, counsel for Beneficiary) upon any matters arising hereunder,
including the preparation, execution and interpretation of the Security Documents, and shall
be fully protected in relying as to legal matters on the advice of counsel; (b) to execute any
of the trusts and powers hereof and to perform any duty hereunder either directly or through
his agents or attorneys; (c) to select and employ, in and about the execution of his duties
hereunder, suitable accountants, engineers and other experts, agents and attorneys-in-fact,
either corporate or individual, not regularly in the employ of Trustee, and Trustee shall not
be answerable for any act, default or misconduct of any such accountant, engineer or other
expert, agent or attorney-in-fact, if selected with reasonable care, or for any error of
judgment or act done by Trustee in good faith, or be otherwise responsible or accountable
under any circumstances whatsoever, except for Trustee’s gross negligence or bad faith; and
(d) to take any and all other lawful action as Beneficiary may instruct Trustee to take to
protect or enforce Beneficiary’s rights hereunder. Trustee shall not be personally liable in
case of entry by him, or anyone entering by virtue of the powers herein granted him, upon the
Mortgaged Property for debts contracted or liability or damages incurred in the management or
operation of the Mortgaged Property. Trustee shall have the right to rely on any instrument,
document or signature authorizing or supporting any action taken or proposed to be taken by
him hereunder, believed by him in good faith to be genuine. Trustee shall be entitled to
reimbursement for expenses incurred by him in the performance of his duties hereunder and to
reasonable compensation for such of his services hereunder as shall be rendered. Grantor
will, from time to time, pay the compensation due to Trustee hereunder and reimburse Trustee
for, and save him harmless against, any and all liability and expenses which may be incurred
by him in the performance of his duties.
	 
	10.3	 	Retention of Moneys. All moneys received by Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received, but need not
be segregated in any manner from any other moneys (except to the extent required by

17

 

	 	 	law) and Trustee shall be under no liability for interest on any moneys received by him
hereunder.

	10.4	 	Successor Trustees. Trustee may resign by the giving of notice of such resignation
in writing to Beneficiary. If Trustee shall die, resign or become disqualified from acting in
the execution of this trust, or shall fail or refuse to execute the same when requested by
Beneficiary so to do, or if, for any reason, Beneficiary shall prefer to appoint a substitute
trustee to act instead of the aforenamed Trustee, Beneficiary shall have full power to appoint
a substitute trustee and, if preferred, several substitute trustees in succession who shall
succeed to all the estates, properties, rights, powers and duties of the aforenamed Trustee.
Such appointment may be executed by any authorized agent of Beneficiary, and if such
Beneficiary be a corporation and such appointment be executed in its behalf by any officer of
such corporation, such appointment shall be conclusively presumed to be executed with
authority and shall be valid and sufficient without proof of any action by the Board of
Directors or any superior officer of the corporation. Grantor hereby ratifies and confirms
any and all acts which the aforenamed Trustee, or his successor or successors in this trust,
shall do lawfully by virtue hereof.
	 
	10.5	 	Perfection of Appointment. Should any deed, conveyance or instrument of any nature
be required from Grantor by any successor Trustee to more fully and certainly vest in and
confirm to such new Trustee such estates, rights, powers and duties, then, upon request by
such Trustee, any and all such deeds, conveyances and instruments shall be made, executed,
acknowledged and delivered and shall be caused to be recorded and/or filed by Grantor.
	 
	10.6	 	Succession Instruments. Any new Trustee appointed pursuant to any of the provisions
hereof shall, without any further act, deed or conveyance, become vested with all the estates,
properties, rights, powers and trusts of its or his predecessor in the rights hereunder with
like effect as if originally named as Trustee herein; but nevertheless, upon the written
request of Beneficiary or of the successor Trustee, the Trustee ceasing to act shall execute
and deliver an instrument transferring to such successor Trustee, upon the trusts herein
expressed, all the estates, properties, rights, powers and trusts of the Trustee so ceasing to
act, and shall duly assign, transfer and deliver any of the property and moneys held by such
Trustee to the successor Trustee so appointed in its or his place.
	 
	10.7	 	No Representation by Trustee. By accepting or approving anything required to be
observed, performed or fulfilled or to be given to Trustee or Beneficiary pursuant to the
Security Documents, including but not limited to, any officer’s certificate, balance sheet,
statement of profit and loss or other financial statement, survey, appraisal or insurance
policy, neither Trustee nor Beneficiary shall be deemed to have warranted, consented to, or
affirmed the sufficiency, legality, effectiveness or legal effect of the same, or of any term,
provision or condition thereof, and such acceptance or approval thereof shall not be or
constitute any warranty, consent or affirmation with respect thereto by Trustee or
Beneficiary.

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ARTICLE 11

MISCELLANEOUS

	11.1	 	Performance at Grantor’s Expense. The cost and expense of performing or complying
with any and all of the Obligations shall be borne solely by Grantor and/or the other
Partnership Entities to the extent provided in the Pipelines Agreement.
	 
	11.2	 	Survival of Obligations. Each and all of the Obligations shall survive the execution
and delivery of the Security Documents and shall continue in full force and effect until the
Obligations have been performed and discharged in full.
	 
	11.3	 	Further Assurances. Grantor, upon the request of Trustee or Beneficiary, will
execute, acknowledge, deliver and record and/or file such further instruments and do such
further acts as may be necessary, desirable or proper to carry out more effectively the
purpose of the Security Documents and to subject to the liens and security interests thereof
any property intended by the terms thereof to be covered thereby, including specifically but
without limitation, any renewals, additions, substitutions, replacements, betterments or
appurtenances to the then Mortgaged Property.
	 
	11.4	 	Recording and Filing. Grantor will cause the Security Documents and all amendments
and supplements thereto and substitutions therefor to be recorded, filed, re-recorded and
refiled in such manner and in such places as Trustee or Beneficiary shall reasonably request,
and will pay all such recording, filing, re-recording and refiling taxes, fees and other
charges.
	 
	11.5	 	Notices. All notices or other communications required or permitted to be given
pursuant to this Deed of Trust shall be in writing and shall be considered as properly given
if mailed by first-class United States mail, postage prepaid, registered or certified with
return receipt requested, or by delivering same in person to the intended addressee or by
prepaid telegram. Notice so mailed shall be effective two days following its deposit. Notice
given in any other manner shall be effective only if and when received by the addressee. For
purposes of notice, the addresses of Beneficiary and Grantor shall be as set forth in Section
1.1(b) and the opening paragraph hereinabove, respectively; provided, however, that either
party shall have the right to change its address for notice hereunder to any other location
within the continental United States by the giving of thirty (30) days’ notice to the other
party in the manner set forth hereinabove.
	 
	11.6	 	No Waiver. Any failure by Trustee or Beneficiary to insist, or any election by
Trustee or Beneficiary not to insist, upon strict performance by Grantor of any of the terms,
provisions or conditions of the Security Documents shall not be deemed to be a waiver of same
or of any other terms, provision or condition thereof and Trustee or Beneficiary shall have
the right at any time or times thereafter to insist upon strict performance by Grantor of any
and all of such terms, provisions and conditions.
	 
	11.7	 	Beneficiary’s Right to Perform the Obligations. If Grantor shall fail, refuse or
neglect to make any payment or perform any act required by the Security Documents (after

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	 	 	giving effect to any applicable notice and cure period), then at any time thereafter, and
without further notice to or demand upon Grantor and without waiving or releasing any other
right, remedy or recourse Beneficiary may have because of same, Beneficiary may (but shall
not be obligated to) make such payment or perform such act for the account of and at the
expense of Grantor, and shall have the right to enter upon or in the Real Property for such
purpose and to take all such action thereon and with respect to the Mortgaged Property as it
may deem necessary or appropriate but in any case subject to the rights of any Lienholder
arising under or pursuant to the Senior Liens and the terms and provisions of the SNDA. If
Beneficiary shall elect to pay any Imposition or other sums due with reference to the
Mortgaged Property, Beneficiary may do so in reliance on any bill, statement or assessment
procured from the appropriate Governmental Entity or other issuer thereof without inquiring
into the accuracy or validity thereof. Similarly, in making any payments to protect the
security intended to be created by the Security Documents, Beneficiary shall not be bound to
inquire into the validity of any apparent or threatened adverse title, lien, encumbrance,
claim or charge before making an advance for the purpose of preventing or removing the same.
Grantor shall indemnify Beneficiary for all losses, expenses, damage, claims and causes of
action, including reasonable attorneys’ fees, incurred or accruing by reason of any acts
performed by Beneficiary pursuant to the provisions of this Section 11.7 or by reason of any
other provision in the Security Documents. All sums paid by Beneficiary pursuant to this
Section 11.7 and all other sums expended by Beneficiary to which it shall be entitled to be
indemnified, together with interest thereon at the maximum rate allowed by law from the date
of such payment or expenditure, shall be secured by the Security Documents and shall be paid
by Grantor to Beneficiary upon demand.

	11.8	 	Covenants Running with the Land. All Obligations contained in the Security Documents
are intended by the parties to be, and shall be construed as, covenants running with the
Mortgaged Property.
	 
	11.9	 	Successors and Assigns. All of the terms of the Security Documents shall apply to,
be binding upon and inure to the benefit of the parties thereto, their successors and assigns,
and all other Persons claiming by, through or under them.
	 
	11.10	 	Severability. The Security Documents are intended to be performed in accordance
with, and only to the extent permitted by, all applicable Legal Requirements. If any
provision of any of the Security Documents or the application thereof to any Person or
circumstance shall, for any reason and to any extent, be invalid or unenforceable neither the
remainder of the instrument in which such provision is contained nor the application of such
provision to other Persons or circumstances nor the other instruments referred to hereinabove
shall be affected thereby, but rather shall be enforced to the greatest extent permitted by
law.
	 
	11.11	 	Entire Agreement and Modification. The Security Documents contain the entire
agreements between the parties relating to the subject matter hereof and thereof and all prior
agreements relative thereto which are not contained herein or therein are terminated.
Notwithstanding anything herein to the contrary, Grantor and, by its acceptance hereof,
Beneficiary hereby acknowledge and agree that in the event that any of the terms or

20

 

	 	 	provisions of this Deed of Trust conflict with any terms or provisions of the Pipelines
Agreement, the terms or provisions of the Pipelines Agreement shall govern and control for
all purposes. The Security Documents may not be amended, revised, waived, discharged,
released or terminated orally but only by a written instrument or instruments (a) executed
by the party against which enforcement of the amendment, revision, waiver, discharge,
release or termination is asserted, and (b) consented to by the Lienholders to the extent
any such amendment, revision, waiver, discharge, release or termination would be materially
adverse to the rights of any such Lienholder. Any alleged amendment, revision, waiver,
discharge, release or termination which is not so documented shall not be effective as to
any party.

	11.12	 	Counterparts. This Deed of Trust may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute but one
instrument.
	 
	11.13	 	Applicable Law. This Deed of Trust shall be construed and enforced in accordance
with and governed by the laws of the State of Texas and the laws of the United States of
America, except that to the extent that the law of the state in which a portion of the
Mortgaged Property is located (or which is otherwise applicable to a portion of the Mortgaged
Property) necessarily or appropriately governs with respect to procedural and substantive
matters relating to the creation, perfection and enforcement of the liens, security interests
and other rights and remedies of Trustee on behalf of Beneficiary or Beneficiary granted
herein, the laws of such state shall apply as to that portion of the Mortgaged Property
located in (or otherwise subject to the laws of) such state.
	 
	11.14	 	No Partnership. Nothing contained in the Security Documents is intended to, or
shall be construed as, creating to any extent and in any manner whatsoever, any partnership,
joint venture, or association between Grantor, Trustee and Beneficiary, or in any way make
Beneficiary or Trustee coprincipals with Grantor with reference to the Mortgaged Property, and
any inferences to the contrary are hereby expressly negated.
	 
	11.15	 	Headings. The Article, Section and Subsection entitlements hereof are inserted for
convenience of reference only and shall in no way alter, modify or define, or be used in
construing, the text of such Articles, Sections or Subsections.
	 
	11.16	 	Waiver of Stay, Moratorium, and Similar Rights. Grantor agrees, to the full extent
that it may lawfully do so, that it will not at any time insist upon or plead or in any way
take advantage of any appraisement, valuation, stay, marshalling of assets, extension,
redemption or moratorium law now or hereafter in force and effect so as to prevent or hinder
the enforcement of the provisions of this Deed of Trust or the indebtedness secured hereby, or
any agreement between Grantor and Beneficiary or any rights or remedies Beneficiary may have
thereunder, hereunder or by law.
	 
	11.17	 	Transfer of Mortgaged Property. No sale, lease, exchange, assignment, conveyance or
other transfer (each, a “Transfer”) of the Mortgaged Property will extinguish the lien
or security interest created by this Deed of Trust, except to the extent provided in Section
9.6 of this Deed of Trust or in the Pipelines Agreement. As a condition to any Transfer,
Beneficiary may (a) require the express assumption of the Obligations by the transferee

21

 

	 	 	(with or without the release of Grantor from liability in respect thereof), and (b) require
the execution of an assumption agreement, modification agreements, supplemental security
documents and financing statements satisfactory in form and substance to Beneficiary.

	11.18	 	Estoppel Certificates. Grantor and Beneficiary agree to execute and deliver from
time to time, upon the request of the other party, a certificate regarding the status of the
Pipelines Agreement, consisting of statements, if true (or if not, specifying why not), (a)
that the Pipelines Agreement is in full force and effect, (b) the date through which payments
have been paid, (c) the date of the commencement of the term of the Pipelines Agreement, (d)
the nature of any amendments or modifications of the Pipelines Agreement, (e) to such party’s
actual knowledge without investigation, no default, or state of facts which with the passage
of time or notice (or both) would constitute a default, exists under the Pipelines Agreement,
(f) to such party’s actual knowledge without investigation, no setoffs, recoupments,
estoppels, claims or counterclaims exist against the other party under the Pipelines
Agreement, and (g) such other factual matters as may be reasonably requested.
	 
	11.19	 	Final Agreement. Grantor acknowledges receipt of a copy of this instrument at the
time of execution hereof. Grantor acknowledges that, except as incorporated in writing in
this Deed of Trust, there are not, and were not, and no persons are or were authorized to make
any representations, understandings, stipulations, agreements or promises, oral or written,
with respect to the matters addressed in this Deed of Trust. THE WRITTEN AGREEMENTS HEREIN
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
	 
	11.20	 	Other New Mexico Provisions.

(a) In addition to the requirements for giving notice set forth elsewhere in this
instrument, all notices shall be sent by regular, first-class United States mail, postage
prepaid.

(b) Notwithstanding anything to the contrary contained in this instrument, the appointment
of a receiver for the Mortgaged Property shall be in accordance with the New Mexico
Receivership Act, §44-8-1, et seq., NMSA 1978.

(c) To the extent this instrument constitutes a deed of trust, it is subject to the New
Mexico Deed of Trust Act, §48-10-1, et seq., NMSA 1978.

(d) To the extent this instrument constitutes a mortgage, the grant of the mortgage is made
with mortgage covenants and upon the statutory mortgage condition, for the breach of which,
except as otherwise provided herein, this instrument is subject to foreclosure as provided
by law.

22

 

(e) For Security Agreement and Fixture Filing purposes, (i) the Debtor’s name is
Lovington-Artesia, L.L.C., whose address is shown on the first page of this instrument; (ii)
the Secured Party’s name is Holly Corporation, whose address is shown in Section 1.1(b) of
this instrument; (iii) this instrument covers materials, supplies, equipment, apparatus and
other items that are, or are to become, fixtures; and (iv) the real property to which such
fixtures are related is attached to this instrument as Exhibit A.

[SIGNATURE PAGE TO FOLLOW]

23

 

     WITNESS THE EXECUTION HEREOF as of the date first above written.

	 	 	 	 	 	 	 
	 	 	LOVINGTON-ARTESIA, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	HOLLY ENERGY PARTNERS — OPERATING, L.P., its
sole member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	HEP LOGISTICS GP, L.L.C., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	HOLLY ENERGY PARTNERS, L.P., its sole member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	HEP LOGISTICS HOLDINGS, L.P., its general
partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	HOLLY LOGISTIC SERVICES, L.L.C., its general
partner	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David G. Blair	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	David G. Blair,	 	 
	 

	 	 	 	Senior Vice President	 	 

			
	 	 	 
	EMPLOYER IDENTIFICATION NUMBER OF GRANTOR:
	 	26-1583770
	 	 	 
	ORGANIZATIONAL NUMBER OF GRANTOR:
	 	4469488

Signature Page — Subordinated Mortgage

 

 

	 	 	 
	THE STATE OF TEXAS

	 	§
	 

	 	§
	COUNTY OF DALLAS

	 	§

     This instrument was acknowledged before me on May 28, 2009, by David G. Blair, Senior
Vice President of Holly Logistic Services, L.L.C., a Delaware limited liability company, general
partner of HEP Logistics Holdings, L.P., a Delaware limited partnership, general partner of Holly
Energy Partners, L.P., a Delaware limited partnership, sole member o HEP Logistics GP, L.L.C., a
Delaware limited liability company, general partner of Holly Energy Partners — Operating, L.P., a
Delaware limited partnership, sole member of Lovington-Artesia, L.L.C., a Delaware limited
liability company, on behalf of said limited liability companies and limited partnership.

	 	 	 	 	 
	 	 	 
	 	                                              /s/ Deborah G. Arthur
 	 
	 	Notary Public, State of Texas 	 
	 	 	 
	 

My Commission Expires:

4.4.2010 

Acknowledgment Page — Subordinated Mortgage

 

 

EXHIBIT A

PIPELINE FEE LAND

None.

A-1

 

EXHIBIT B

PIPELINE LEASES

None

B-1

 

EXHIBIT C

PIPELINE EASEMENTS AND GRANTS

16” LAC CRUDE PIPELINE — NEW MEXICO

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Original	 	Original	 	Document	 	Document	 	Recording	 	 	 	 
	Grantor	 	Grantee	 	Type	 	Date	 	Date	 	County	 	Book/ Page
	 
	Norris Land & Cattle Co, LLC

	 	Lovington-Artesia, L.L.C.
	 	Pipeline Right of
Way & Easement
	 	9/15/2008
	 	12/5/2008
	 	Lea
	 	1611/276
	Eidson Ranch, Inc.

	 	Lovington-Artesia, L.L.C.
	 	Pipeline Right of
Way & Easement
	 	9/29/2008
	 	12/5/2008
	 	Lea
	 	1611/262
	City of Lovlngton

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	2/2/2009
	 	2/10/2009
	 	Lea
	 	1618/802
	W.A. Hudson II, et a!.

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	7/10/2008
	 	9/5/2008
	 	Lea
	 	1599/754
	H.B. Potash, LLC

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	7/28/2008
	 	9/5/2008
	 	Lea
	 	1599/750
	State of New Mexico

	 	Lovington-Artesia, L.L.C.
	 	Grant of Right of
Way
	 	9/22/2008
	 	N/R
	 	Lea/Eddy
	 	N/R
	U.S.A./B.LM.

	 	Holly Energy Partners,
L.P.
	 	Right of Way 
Grant
	 	9/3/2008
	 	N/R
	 	Lea/Eddy
	 	N/R
	Olane & Ladoyce Caswell

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	7/10/2008
	 	9/5/2008
	 	Lea

Eddy
	 	1599/742

749/0574
	John R. Gray, LLC

	 	Lovington-Artesia, L.L.C.
	 	Right of Way 
Grant
	 	6/25/2008
	 	N/R
	 	Eddy
	 	N/R
	Bogle Ltd. Co.

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/25/2008
	 	8/19/2008
	 	Eddy
	 	749/0584
	Albert Bach et al.

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/24/2008
	 	8/28/2008
	 	Eddy
	 	750/0869
	Navajo Refining Co. LLC

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	8/19/2008
	 	8/28/2008
	 	Eddy
	 	750/0855
	Navajo Refining Co. LLC

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	8/19/2008
	 	8/28/2008
	 	Eddy
	 	750/0852
	Sybil A. Smith et al.

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/13/2008
	 	8/28/2008
	 	Eddy
	 	750/0849
	Vernon Haldeman et ux

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/18/2008
	 	8/28/2008
	 	Eddy
	 	750/0863
	Victor Haldeman et ux

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/26/2008
	 	8/28/2008
	 	Eddy
	 	750/0866
	Chase Farms, LLC

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/17/2008
	 	8/19/2008
	 	Eddy
	 	749/0581
	Montana Refining Company

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	7/2/2008
	 	8/28/2008
	 	Eddy
	 	750/0860

C-1

 

EXHIBIT D

PIPELINE IMPROVEMENTS

	•	 	Lovington Station, including all mainline pump equipment, metering
equipment, suction manifold, and other associated equipment.
	 
	•	 	Receipt manifold and meter equipment at the Navajo Refinery in Eddy
County, New Mexico.
	 
	•	 	A sixteen-inch pipeline, approximately sixty-five miles in length.
Running from Lovington Station in Lea County, New Mexico to the Navajo
Refinery in Eddy County, New Mexico.

D-1

 

EXHIBIT E

PIPELINE CONTRACTS

None.

E-1

 

EXHIBIT F

PERMITS AND LICENSES

16” LAC CRUDE PIPELINE — NEW MEXICO

	 	 	 	 	 	 	 	 	 	 	 
	Agency	 	Location	 	Permit Type	 	Permit Date	 	Permit #	 	Term
	 
	Lea County Road Department

	 	CR 122 — Hummingbird Rd. 

CR 126 — Maljamar Rd.
	 	Permit for 

Installation of 

Utility Facilities
	 	6/24/2008
	 	RX080663

RX080662
	 	10 Yrs
	 
	 	 	 	 	 	 	 	 	 	 
	 
	Eddy County Road Department

	 	CR 59 — Bolton Road 

CR 211 — Old Loco Road 

CR 214 — Barnaval Drive 

CR 217 — Hagerman Cutoff 

CR 219 — Goat Ropers Road 

CR 220 — Square Lake Road 

CR 208 — Red Lake Road 

CR 200 — Karr Ranch Road 

CR 209 — Turkey Tract Road 

CR 215 — Kewanee Road 

CR 202 — Southern Union
	 	Permit for 

Installation of 

Utility Facilities
	 	6/11/2008
	 	RP-08-077

RP-08-078

RP-08-079

RP-08-080

RP-08-081

RP-08-082

RP-08-083

RP-08-084

RP-08-085

RP-08-086

RP-08-087
	 	10 Yrs
	 
	New Mexico Department of
Transportation

	 	NM State Highway 229

US Highway 82

NM State Highway 238

NM State Highway 483
	 	Permit for
Installation of
Utility Facilities
	 	4/25/2008
	 	2-15124

2-15125

2-15238

2-15239
	 	25 Yrs

F-1

 

EXHIBIT G

PIPELINES

	•	 	A sixteen-inch pipeline, approximately sixty-five miles in length. Running from Lovington
Station in Lea County, New Mexico to the Navajo Refinery in Eddy County, New Mexico

G-1

 

ATTACHMENT 1

FORM OF SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

After recording, return to:

Vinson & Elkins L.L.P.

2001 Ross Avenue, Suite 3700

Dallas, Texas 75201

Attention: Jason B. Myers

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

     This Subordination, Non-Disturbance and Attornment Agreement (this “Agreement”) is
executed effective as of June 1, 2009, among Union Bank, N.A., in its capacity as
administrative agent (or any assignee of or successor to such administrative agent) under the
Credit Agreement (as defined below) and on behalf of the Credit Parties (as defined below)
(“Administrative Agent”), and Holly Corporation, a Delaware corporation (“Holly”).

RECITALS:

     A. Holly Energy Partners — Operating, L.P., a Delaware limited partnership
(“Operating”), the financial institutions party thereto from time to time (individually, a
“Financial Institution” and collectively, the “Financial Institutions”), the
Financial Institutions issuing letters of credit thereunder from time to time, if any
(individually, an “Issuing Bank” and collectively, the “Issuing Banks”), the
Financial Institutions or any affiliate thereof that have entered into hedging arrangements with
Operating or any subsidiary thereof from time to time (individually, a “Swap Counterparty”
and collectively, the “Swap Counterparties” and, together with Administrative Agent, the
Financial Institutions and the Issuing Banks, being collectively referred to herein as the
“Credit Parties”) are parties to that certain Amended and Restated Credit Agreement dated
as of August 27, 2007 (as heretofore and hereafter renewed, extended, amended, supplemented,
replaced, modified and/or restated from time to time, the “Credit Agreement”).

     B. The Financial Institutions are the present owners and holders of certain promissory notes
dated February 25, 2008, executed by Operating and payable to the order of each such Financial
Institution (as heretofore and hereafter renewed, extended, amended, supplemented, replaced,
modified, and/or restated from time to time and together with any additional notes issued under or
pursuant to the Credit Agreement, the “Notes”). Administrative Agent, for the ratable
benefit of the Credit Parties, is the beneficiary of that certain Line of Credit Mortgage, Security
Agreement, Assignment of Rents and Leases, Fixture Filing and Financing Statement dated effective
as of June 1, 2009 (as heretofore and hereafter renewed,

Attachment 1-1

 

extended, amended, supplemented, replaced, modified, and/or restated from time to time,
collectively, the “Senior Mortgages”), and the secured party under certain other security
agreements and documents entered into in connection with the Credit Agreement (as heretofore and
hereafter renewed, extended, amended, supplemented, replaced, modified, and/or restated from time
to time, the “Security Instruments” and, together with the Credit Agreement, the Notes, the
Senior Mortgages and any other documents, instruments and agreements executed and/or delivered in
connection with the Credit Agreement, collectively, the “Senior Loan Documents”).

     C. Pursuant to the Senior Loan Documents and to secure the Notes and the other Secured
Obligations (as defined in the Senior Mortgages), Lovington-Artesia, L.L.C., a Delaware limited
liability company (“Grantor”) and a subsidiary of Holly Energy Partners, L.P., a Delaware
limited partnership (“HEP”) granted a security interest and mortgage lien to or for the
benefit of Administrative Agent, covering the right, title and interest of Grantor in certain
property described in Exhibits A through G attached hereto (the “Property”).

     D. Holly is the current owner of certain rights and interests under and pursuant to the
provisions of that certain Amended and Restated Intermediate Pipelines Agreement dated as of June 1,
2009, by and among Holly, Navajo Refining Company, L.L.C., a Delaware limited
liability company, HEP, Holly Energy Partners—Operating, L.P., a Delaware limited partnership
(“Operating”), HEP Pipeline, L.L.C., a Delaware limited liability company, Grantor, HEP
Logistics Holdings, L.P., a Delaware limited partnership, Holly Logistic Services, L.L.C., a
Delaware limited liability company, and HEP Logistics GP, L.L.C., a Delaware limited liability
company (together with any amendments, restatements or modifications from time to time made
thereto, the “Pipelines Agreement”).

     E. Holly is the current beneficiary of certain liens and security interests in a portion of
the Property (the “Subordinated Liens”) under and pursuant to the provisions of that
certain Mortgage, Line of Credit Mortgage and Deed of Trust (with Security Agreement and Financing
Statement) (the “Holly Mortgage”) dated effective as of June 1, 2009 executed by
Grantor to John N. Patterson, Trustee, for the benefit of Holly, securing the Obligations (as
defined in the Holly Mortgage and referred to herein as the “HEP Obligations”), such Holly
Mortgage being recorded (or to be recorded) in various counties in the State of New Mexico.

     F. Holly has agreed to subordinate its Subordinated Lien under the Holly Mortgage (but not,
pursuant to this Agreement, any of its rights and interests under the Pipelines Agreement) to (i)
the Senior Mortgages and the other Senior Loan Documents, and (ii) any other mortgage, deed of
trust or security instrument granted by a Purchaser (as defined in Section 3 below) or any
subsequent purchaser of any portion of the Mortgaged Property (as heretofore and hereafter renewed,
extended, amended, supplemented, replaced, modified, and/or restated from time to time, a
“Future Senior Mortgage”) that secures debt and obligations of, and other extensions of
credit to, such Purchaser or purchaser (together with the Secured Obligations (as defined in the
Senior Mortgages), referred to herein as the “Senior Secured Obligations”) and
Administrative Agent has agreed that it and any such Purchaser at foreclosure of a Senior Mortgage
shall recognize and not disturb or extinguish the Holly Mortgage, all on the terms and conditions
hereinafter set forth.

Attachment 1-2

 

AGREEMENTS:

     NOW, THEREFORE, in consideration of Ten Dollars ($10) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Administrative Agent
and Holly hereby covenant and agree as follows:

     1. Subordination of Holly Mortgage.

          (a) Subject to the provisions of Section 3 and Section 4 hereof, the Subordinated Liens of
Holly under the Holly Mortgage and all of the terms, covenants and provisions of the Holly
Mortgage, and all rights, remedies and options of Holly thereunder, are and shall at all times
continue to be subject, subordinate and inferior in all respects to the Senior Loan Documents and
any Future Senior Mortgage and to the liens and security interests thereof and to all amendments,
modifications, and replacements thereof, with the same force and effect as if the Senior Loan
Documents, or if applicable, the Future Senior Mortgage, had been executed, delivered and recorded
prior to the execution, delivery and recordation of the Holly Mortgage. This Agreement is not
intended, and shall not be construed, to (i) subordinate the rights and interests of Holly under
the Pipelines Agreement (including Holly’s right to quiet enjoyment under the Pipelines Agreement
or any claims, remedies or damages that may be due or available to, or become due or available to,
Holly under the Pipelines Agreement), or (ii) subordinate the Holly Mortgage to any mortgage, deed
of trust, assignment, security agreement, financing statement or other security document, other
than, with respect to clause (ii), the Senior Loan Documents and the Future Senior Mortgage.
Nothing in this Agreement shall impair, as between HEP, Operating, Grantor or any other Partnership
Entity (as defined in the Pipelines Agreement), on the one hand, and Holly, on the other hand, the
obligations of HEP, Operating, Grantor and any such other Partnership Entity, which are absolute
and unconditional, to perform the HEP Obligations in accordance with their terms.

          (b) Notwithstanding anything herein or in the Holly Mortgage to the contrary, Holly hereby
acknowledges and agrees, and Grantor by its consent to this Agreement acknowledges and agrees, that
(i) in the event that any of the terms or provisions of this Agreement conflict with any terms or
provisions of the Holly Mortgage, the terms or provisions of this Agreement shall govern and
control for all purposes; and (ii) without the written prior consent of the Administrative Agent or
the beneficiary of any Future Senior Mortgage (together with the Credit Parties, the “Senior
Beneficiaries”), neither Holly nor Grantor (nor any future owner of the Mortgaged Property)
will amend, revise, supplement, replace, restate, or otherwise modify the Holly Mortgage if such
amendment, revision, supplement, replacement, restatement or other modification would be materially
adverse to the rights of any Senior Beneficiary.

     2. Relative Rights and Priorities. Subject to the provisions of Section 1, Section 3
and Section 4 hereof:

          (a) Until the Senior Secured Obligations have been indefeasibly paid in full, all commitments
to extend credit under the Credit Agreement (or if applicable, any agreement governing obligations
secured by a Future Senior Mortgage) have terminated, and all letters of credit issued thereunder
have been terminated and returned (the “Senior Obligations Payment Date”), Holly will not
(i) commence any foreclosure (whether a judicial foreclosure or non-

Attachment 1-3

 

judicial foreclosure) of the Holly Mortgage, (ii) accept a deed or assignment in lieu of
foreclosure, (iii) otherwise exercise any of its rights or remedies under the Holly Mortgage, or
(iv) take any Enforcement Action.

          (b) Holly agrees that, until the Senior Obligations Payment Date has occurred:

               (i) it will not take or cause to be taken any action, the purpose or effect of which is to
make any Subordinated Lien pari passu with or senior to, or to give Holly any preference or
priority relative to, the liens and security interests with respect to the Senior Secured
Obligations;

               (ii) it will not oppose, object to, interfere with, hinder or delay, in any manner, whether by
judicial proceedings (including without limitation the filing of an Insolvency Proceeding (as
herein defined)) or otherwise, any foreclosure, sale, lease, exchange, transfer or other
disposition of the Mortgaged Property (as defined in the Holly Mortgage and with the same meaning
herein as therein defined) by any of the Senior Beneficiaries or any other Enforcement Action taken
by or on behalf of any of the Senior Beneficiaries;

               (iii) it has
no right to ¡ direct any of the Senior Beneficiaries to exercise any right,
remedy or power with respect to the Mortgaged Property or pursuant to the Senior Loan Documents or
any Future Senior Mortgage or ¡ consent or object to the exercise by any of the Senior
Beneficiaries of any right, remedy or power with respect to the Mortgaged Property or pursuant to
the Senior Loan Documents or any Future Senior Mortgage or to the timing or manner in which any
such right is exercised or not exercised (or, to the extent they may have any such right described
in this clause (iii), whether as a junior lien creditor or otherwise, they hereby irrevocably waive
such right);

               (iv) it will not institute any suit or other proceeding or assert in any suit, Insolvency
Proceeding or other proceeding any claim against any of the Senior Beneficiaries seeking damages
from or other relief by way of specific performance, instructions or otherwise, with respect to,
and none of the Senior Beneficiaries shall be liable for any action taken or omitted to be taken by
any of the Senior Beneficiaries with respect to the Mortgaged Property or pursuant to the Senior
Loan Documents or any Future Senior Mortgage; and

               (v) the Senior Beneficiaries shall have the prior right to collect and receive any and all
proceeds which may be paid or distributed in respect of the Mortgaged Property in any Insolvency
Proceeding or otherwise arising from any sale or other disposition of the Mortgaged Property.

          (c) Until the Senior Obligations Payment Date has occurred, Holly agrees that it shall not,
in, or in connection with, any Insolvency Proceeding, file any pleadings or motions, take any
position at any hearing or proceeding of any nature, or otherwise take any action whatsoever, in
each case, that is inconsistent with the terms or spirit of, or intent of the parties with respect
to, this Agreement, including, without limitation, with respect to the determination of any liens
or claims held by any of the Senior Beneficiaries (including the validity and enforceability
thereof) or the value of any claims of such parties under the United States Bankruptcy Code or
otherwise; provided that Holly may file a proof of claim in an Insolvency

Attachment 1-4

 

Proceeding, subject to the limitations contained in this Agreement and only if consistent with
the terms and the limitations imposed hereby; provided further, that if no proof of
claim is filed in any Insolvency Proceeding with respect to the HEP Obligations by the 10th day
prior to the bar date for such proof of claim, the Senior Beneficiaries may (but shall have no duty
or obligation to), after notice to Holly, file such proof of claim, provided that the foregoing
shall not confer to any Senior Beneficiary the right to vote on behalf of Holly in any insolvency
proceeding.

          (d) Until the Senior Obligations Payment Date has occurred, whether or not an Insolvency
Proceeding has been commenced by or against the owner of the Mortgaged Property, any of the Senior
Beneficiaries shall have the exclusive right to take and continue any Enforcement Action with
respect to the Mortgaged Property, without any consultation with or consent of Holly. Upon the
occurrence and during the continuance of a default or an event of default under the Senior Loan
Documents or any Future Senior Mortgage, any of the Senior Beneficiaries may take and continue any
Enforcement Action with respect to the Senior Secured Obligations and the Mortgaged Property in
such order and manner as they may determine in their sole discretion.

          (e) To the extent required, Holly hereby consents to the liens and security interests created
by the Senior Mortgages and any Future Senior Mortgage, and Holly shall not object to or contest,
or support any other person or entity in contesting or objecting to, in any proceeding (including
without limitation, any Insolvency Proceeding), the validity, extent, perfection, priority or
enforceability of any lien or security interest in the Mortgaged Property granted in favor of any
of the Senior Beneficiaries. Notwithstanding any failure by any of the Senior Beneficiaries or
Holly or their respective representatives to perfect their liens in the Mortgaged Property or any
avoidance, invalidation or subordination by any third party or court of competent jurisdiction of
the liens in the Mortgaged Property granted in favor of any of the Senior Beneficiaries or Holly,
the priority and rights as between any of the Senior Beneficiaries and Holly and its
representatives with respect to the Mortgaged Property shall be as set forth herein.

     As used in this Section 2, the following terms shall have the following meanings:

     “Enforcement Action” means any demand for payment or acceleration thereof, the
bringing of any lawsuit or other proceeding, the exercise of any rights and remedies, directly or
indirectly, with respect to any Mortgaged Property, any enforcement or foreclosure of any lien or
security interest, any sale in lieu of foreclosure, the taking of possession, exercise of any
offset, repossession, garnishment, sequestration or execution, any collection of any Mortgaged
Property, any notice to account debtors on any Mortgaged Property or the commencement or
prosecution of enforcement of any of the rights and remedies under the Senior Loan Documents or
applicable law, including without limitation the exercise of any rights of set-off or recoupment,
and the exercise of any rights or remedies of a secured creditor under the uniform commercial code
of any applicable jurisdiction, under the United States Bankruptcy Code, as amended from time to
time or otherwise; provided, that, neither the exercise or enforcement by Holly of its rights under
the Pipelines Agreement, nor the filing of a proof of claim in an Insolvency Proceeding, shall
constitute an Enforcement Action.

Attachment 1-5

 

     “Insolvency Proceeding” means any proceeding in respect of bankruptcy, insolvency,
winding up, receivership, dissolution or assignment for the benefit of creditors, in each of the
foregoing events whether under the United States Bankruptcy Code, as amended from time to time or
any similar federal, state or foreign bankruptcy, insolvency, reorganization, receivership or
similar law.

     3. Recognition and Non-Disturbance of Holly Mortgage. If Administrative Agent, any
other Credit Party or any other person (Administrative Agent, any other Credit Party or such other
person being herein called a “Purchaser”) shall become the owner of any part of the
Property by reason of the foreclosure (whether a judicial foreclosure or non-judicial foreclosure)
of a Senior Mortgage or the acceptance of a deed or assignment in lieu of foreclosure or otherwise
(any of such being herein called a “Foreclosure Event”), then for so long as the Pipelines
Agreement is in effect, the Purchaser shall (i) recognize the Holly Mortgage, and the Holly
Mortgage shall not be terminated or affected thereby, but shall continue in full force and effect
upon all of the terms, covenants and conditions set forth in the Holly Mortgage, and (ii) be bound
by and subject to all of the terms, provisions, covenants and conditions of the Holly Mortgage;
provided, that, the Holly Mortgage shall be subordinated to any Future Senior Mortgage, regardless
of whether such Future Senior Mortgage is a direct replacement of an existing Senior Mortgage or
Security Instrument, and any such Future Senior Mortgage shall be considered a “Senior Mortgage”
for purposes of this Agreement and the Holly Mortgage. Administrative Agent shall not claim, or
seek adjudication, that the Holly Mortgage has been terminated or otherwise adversely affected by
any Foreclosure Event.

     4. Pipelines Agreement. Administrative Agent recognizes and confirms that the
Pipelines Agreement, and the rights and interests of Holly thereunder, shall in no way be
restricted, limited or otherwise affected by this Agreement, the Holly Mortgage, the Senior
Mortgages, any Future Senior Mortgage, the Security Instruments or any liens or security interests
thereof; provided, however, that, Holly agrees that nothing in the Pipelines Agreement shall (a)
prevent any Purchaser or subsequent purchaser from owning or operating the Mortgaged Property, so
long as such Purchaser or subsequent purchaser shall have assumed, and be in compliance with, the
Partnership Entities’ (as defined in the Pipelines Agreement) obligations under the Pipelines
Agreement and shall have executed an “SNDA” as defined in, and in accordance with, Article 6 of the
Holly Mortgage, or (b) be deemed to invalidate or require the release of any Senior Beneficiary’s
liens in the Mortgaged Property in connection with the exercise by Holly of a purchase option under
the Pipelines Agreement or otherwise. Holly shall not amend, modify or supplement the Pipelines
Agreement without the prior written consent of the Majority Banks (as defined in the Credit
Agreement); provided, that, such amendments, modifications or supplements may be made without the
consent of the Majority Banks if such amendments, modifications or supplements (i) individually or
in the aggregate, are not materially adverse to the rights of the Administrative Agent or the
Financial Institutions, and (ii) individually or in the aggregate, do not materially decrease the
economic benefit that Operating would have otherwise received pursuant to such agreement.
Administrative Agent, both for itself and for any Purchaser, further agrees that upon any
Foreclosure Event, the Pipelines Agreement shall not be terminated or affected thereby, nor shall
Holly’s right to ship or store petroleum products through the pipelines or in the terminals,
respectively, constituting a portion of the Property in accordance with the provisions of the
Pipelines Agreement (or any other rights of Holly under the Pipelines Agreement) be affected or
disturbed because of the Foreclosure

Attachment 1-6

 

Event, but rather the Pipelines Agreement shall continue in full force and effect as direct
obligations between the Purchaser and Holly, upon all of the terms, covenants and conditions set
forth in the Pipelines Agreement. Neither Administrative Agent nor any Purchaser shall claim, or
seek adjudication, that the Pipelines Agreement has been terminated or otherwise adversely affected
by any Foreclosure Event. Notwithstanding the foregoing, in the event that the Pipelines Agreement
is rejected in bankruptcy or is otherwise terminated, the Purchaser shall, promptly upon request by
Holly, enter into a Pipelines Agreement with Holly on substantially the same terms (and with
tariffs and minimum volumes commensurate with those then applicable under the Pipelines Agreement)
and conditions as the rejected or terminated Pipelines Agreement, but having a term commencing on
the date on which Purchaser acquired title to any portion of the Property. The immediately
preceding sentence shall be deemed to be a covenant running with the land and shall be binding on
any person or entity that acquires title to all or party of the Property by, through or under a
Senior Mortgage.

     5. Attornment With Respect to the Pipelines Agreement. Upon the occurrence of any
Foreclosure Event, Holly shall attorn to the Purchaser, the Purchaser shall accept such attornment,
and the Purchaser and Holly shall be bound to each other under all of the terms, provisions,
covenants and conditions of the Pipelines Agreement; provided, that, except for
Holly’s express rights and remedies under the Pipelines Agreement, in no event shall the Purchaser
be liable for any act, omission, default, misrepresentation, or breach of warranty of HEP, Grantor
or any other Partnership Entity (as defined in the Pipelines Agreement) (or any owner of the
Mortgaged Property prior to such Purchaser) or obligations accruing prior to Purchaser’s actual
ownership of the Property. The provisions of this Agreement regarding attornment by Holly shall be
self-operative and effective without the necessity of execution of any new document on the part of
any party hereto or the respective heirs, legal representatives, successors or assigns of any such
party. Holly agrees, however, to execute and deliver upon the request of Purchaser, any instrument
or certificate which in the reasonable judgment of Purchaser may be necessary or appropriate to
evidence such attornment.

     6. Estoppel Certificate. Holly agrees to execute and deliver from time to time, upon
the request of any of the Senior Beneficiaries, a certificate regarding the status of the Pipelines
Agreement, consisting of statements, if true (or if not, specifying why not), (a) that the
Pipelines Agreement is in full force and effect, (b) the date through which payments have been
paid, (c) the date of the commencement of the term of the Pipelines Agreement, (d) the nature of
any amendments or modifications of the Pipelines Agreement, (e) to Holly’s actual knowledge without
investigation, no default, or state of facts which with the passage of time or notice (or both)
would constitute a default, exists under the Pipelines Agreement, (f) to Holly’s actual knowledge
without investigation, no setoffs, recoupments, estoppels, claims or counterclaims exist against
HEP or any other Partnership Entity (as defined in the Pipelines Agreement) under the Pipelines
Agreement, and (g) such other factual matters as may be reasonably requested.

     7. [Intentionally Omitted].

     8. Reliance on Notices. Grantor agrees that Holly may rely upon any and all notices
from Administrative Agent or any Purchaser, even if such conflict with notices from Grantor.

Attachment 1-7

 

     9. Notices. All notices, consents and other communications pursuant to the provisions
of this Agreement shall be in writing and shall be sent by (a) registered or certified mail,
postage prepaid, return receipt requested, (b) nationally recognized overnight delivery service, or
(c) telecopier, addressed as follows:

	 	 	 
	If to Administrative Agent:

	 	Union Bank, N.A.
	 

	 	445 South Figueroa Street, 15th Floor
	 

	 	Los Angeles, California 90071
	 

	 	Attention: Sean Murphy
	 

	 	Telecopy:  (213) 236-6823
	 
	 	 
	If to Holly:

	 	Holly Corporation
	 

	 	100 Crescent Court, Suite 1600
	 

	 	Dallas, Texas 75201-6927
	 

	 	Attention: General Counsel
	 

	 	Telecopy:  (214) 871-3523

Notice sent by registered or certified mail, postage prepaid, return receipt requested, shall be
deemed given and received on the third Business Day (hereinafter defined) after being deposited in
the United States mail, notice sent by nationally recognized overnight delivery service shall be
deemed given in conformity with this paragraph and received on the first Business Day after being
deposited with such delivery service, and notice given by telecopier shall be deemed given and
received upon actual receipt if received during the recipient’s normal business hours or at the
beginning of the recipient’s next Business Day after receipt if not received during the recipient’s
normal business hours. Each party may designate a change of address by notice to the other party.
“Business Day” means a day upon which commercial banks are not authorized or required by
law to close in Dallas, Texas.

     10. Binding Effect. This Agreement shall be binding upon Administrative Agent, Holly
and any Purchaser and inure to the benefit of the Senior Beneficiaries and Holly and their
respective successors and assigns. Grantor has assigned to Administrative Agent its rights
hereunder, and the Partnership Entities (as defined in the Pipelines Agreement) have assigned to
Administrative Agent their rights under the Pipelines Agreement by way of a collateral assignment.
The parties agree that any person that shall become the owner of any of the rights of Grantor
hereunder, or any of the rights of such Partnership Entities under the Pipelines Agreement by
reason of foreclosure (whether a judicial foreclosure or non-judicial foreclosure and including,
without limitation, Administrative Agent) or the acceptance of a deed or assignment in lieu of
foreclosure or otherwise shall (a) have the same rights as Grantor hereunder, and such Partnership
Entities under the Pipelines Agreement, including, without limitation, under this Section 10, and
(b) be bound by and subject to all of the terms, provisions, covenants and conditions of this
Agreement.

     11. General Definitions. The term “Administrative Agent” as used herein shall
include the successors and assigns of Administrative Agent. The term “HEP” as used herein shall
include the successors and assigns of HEP under the Pipelines Agreement, but shall not mean or
include Administrative Agent. The term “Property” as used herein shall mean the Property,
the improvements now or hereafter located thereon and the estates therein encumbered

Attachment 1-8

 

by the Senior Mortgages. The term “Holly” as used herein shall include the successors
and assigns of Holly hereunder and under the Pipelines Agreement including, without limitation, any
Holly Successor.

     12. Modifications. This Agreement may not be modified in any manner or terminated
except by an instrument in writing executed by the parties hereto.

     13. Governing Law. This Agreement shall be governed by and construed under the laws
of the State in which the Property is located.

     14. Duplicate Originals; Counterparts. This Agreement may be executed in any number
of duplicate originals and each duplicate original shall be deemed to be an original. This
Agreement may be executed in several counterparts, each of which counterparts shall be deemed an
original instrument and all of such together shall constitute a single Agreement.

     15. Further Assurances. Without unreasonable delay and to the extent requested by
HEP, subject to Section 4 hereof and Article 6 of the Holly Mortgage, Holly will enter into new
Subordination, Non-Disturbance and Attornment Agreements, if necessary or advisable, to facilitate
the extension, amendment, supplement, restatement, replacement or refinancing of the indebtedness
under the Credit Agreement.

[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

Attachment 1-9

 

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first
above written.

	 	 	 	 	 
	ADMINISTRATIVE AGENT:	UNION BANK, N.A., as Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	HOLLY:	HOLLY CORPORATION

 	 
	 	By:  	 	 
	 	 	Bruce R. Shaw 	 
	 	 	Senior Vice President
and Chief Financial Officer 	 

Attachment 1-10

 

	 	 	 	 	 

GRANTOR’S CONSENT

     The undersigned hereby consents to the foregoing Subordination, Non-Disturbance and Attornment
Agreement and, without limitation, agrees to the provisions of Section 1 thereof.

	 	 	 	 	 
	 	LOVINGTON-ARTESIA, L.L.C.

By: HOLLY ENERGY PARTNERS —
       OPERATING,
L.P., its sole member

By: HEP LOGISTICS GP, L.L.C., its general partner

By: HOLLY ENERGY PARTNERS, L.P.,

       its sole member

By: HEP LOGISTICS HOLDINGS, L.P.,

       its general partner

By: HOLLY LOGISTIC SERVICES, L.L.C.,

       its general partner
 	 
	 	 	 
	 	By:  	
 	 
	 	 	David G. Blair,  	 
	 	 	Senior Vice President 	 
	 

Attachment 1-11

 

	 	 	 
	THE STATE OF TEXAS

	 	§

§
	COUNTY OF DALLAS

	 	§

     THIS INSTRUMENT was acknowledged
before me on                  
   , 2009, by              
                  
                  
     ,
                  
                  
          of Union Bank, N.A.,
a national banking association, as Administrative Agent,
on behalf of such banking association.

 
My Commission Expires

 
Notary Public in and for the State of Texas

 
Printed Name of Notary

Attachment 1-12

 

	 	 	 
	THE STATE OF TEXAS

	 	§
	 

	 	§
	COUNTY OF DALLAS

	 	§

     THIS INSTRUMENT was acknowledged before me on                     , 2009, by Bruce R. Shaw, Senior
Vice President and Chief Financial Officer of Holly Corporation, a Delaware corporation, on behalf
of such corporation.

 
My Commission Expires

 
Notary Public in and for the State of Texas

 
Printed Name of Notary

Attachment 1-13

 

	 	 	 
	THE STATE OF TEXAS

	 	§
	 

	 	§
	COUNTY OF DALLAS

	 	§

     This instrument was acknowledged before me on                     , 2009, by David G. Blair, Senior
Vice President of Holly Logistic Services, L.L.C., a Delaware limited liability company, general
partner of HEP Logistics Holdings, L.P., a Delaware limited partnership, general partner of Holly
Energy Partners, L.P., a Delaware limited partnership, sole member of HEP Logistics GP, L.L.C., a
Delaware limited liability company, general partner of Holly Energy Partners — Operating, L.P., a
Delaware limited partnership, sole member of Lovington-Artesia, L.L.C., a Delaware limited
liability company, on behalf of said limited liability companies and limited partnership.

 
My Commission Expires

 
Notary Public in and for the State of Texas

 
Printed Name of Notary

Attachment 1-14

 

EXHIBIT A

PIPELINE FEE LAND

None.

Attachment 1-15

 

EXHIBIT B

PIPELINE LEASES

None

Attachment 1-16

 

EXHIBIT C

PIPELINE EASEMENTS AND GRANTS

16” LAC CRUDE PIPELINE — NEW MEXICO

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Original	 	Original	 	Document	 	Document	 	Recording	 	 	 	 
	Grantor	 	Grantee	 	Type	 	Date	 	Date	 	County	 	Book/ Page
	 
	Norris Land & Cattle Co, LLC

	 	Lovington-Artesia, L.L.C.
	 	Pipeline Right of
Way & Easement
	 	9/15/2008
	 	12/5/2008
	 	Lea
	 	1611/276
	Eidson Ranch, Inc.

	 	Lovington-Artesia, L.L.C.
	 	Pipeline Right of
Way & Easement
	 	9/29/2008
	 	12/5/2008
	 	Lea
	 	1611/262
	City of Lovlngton

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	2/2/2009
	 	2/10/2009
	 	Lea
	 	1618/802
	W.A. Hudson II, et a!.

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	7/10/2008
	 	9/5/2008
	 	Lea
	 	1599/754
	H.B. Potash, LLC

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	7/28/2008
	 	9/5/2008
	 	Lea
	 	1599/750
	State of New Mexico

	 	Lovington-Artesia, L.L.C.
	 	Grant of Right of
Way
	 	9/22/2008
	 	N/R
	 	Lea/Eddy
	 	N/R
	U.S.A./B.LM.

	 	Holly Energy Partners,

L.P.
	 	Right of Way
Grant
	 	9/3/2008
	 	N/R
	 	Lea/Eddy
	 	N/R
	Olane & Ladoyce Caswell

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	7/10/2008
	 	9/5/2008
	 	Lea

Eddy
	 	1599/742

749/0574
	John R. Gray, LLC

	 	Lovington-Artesia, L.L.C.
	 	Right of Way
Grant
	 	6/25/2008
	 	N/R
	 	Eddy
	 	N/R
	Bogle Ltd. Co.

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/25/2008
	 	8/19/2008
	 	Eddy
	 	749/0584
	Albert Bach et al.

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/24/2008
	 	8/28/2008
	 	Eddy
	 	750/0869
	Navajo Refining Co. LLC

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	8/19/2008
	 	8/28/2008
	 	Eddy
	 	750/0855
	Navajo Refining Co. LLC

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	8/19/2008
	 	8/28/2008
	 	Eddy
	 	750/0852
	Sybil A. Smith et al.

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/13/2008
	 	8/28/2008
	 	Eddy
	 	750/0849
	Vernon Haldeman et ux

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/18/2008
	 	8/28/2008
	 	Eddy
	 	750/0863
	Victor Haldeman et ux

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/26/2008
	 	8/28/2008
	 	Eddy
	 	750/0866
	Chase Farms, LLC

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	6/17/2008
	 	8/19/2008
	 	Eddy
	 	749/0581
	Montana Refining Company

	 	Lovington-Artesia, L.L.C.
	 	Right of Way &
Easement
	 	7/2/2008
	 	8/28/2008
	 	Eddy
	 	750/0860

Attachment 1-17

 

EXHIBIT D

PIPELINE IMPROVEMENTS

	•	 	Lovington Station, including all mainline pump equipment, metering
equipment, suction manifold, and other associated equipment.
	 
	•	 	Receipt manifold and meter equipment at the Navajo Refinery in Eddy
County, New Mexico.
	 
	•	 	A sixteen-inch pipeline, approximately sixty-five miles in length.
Running from Lovington Station in Lea County, New Mexico to the Navajo
Refinery in Eddy County, New Mexico.

Attachment 1-18

 

EXHIBIT E

PIPELINE CONTRACTS

None.

Attachment 1-19

 

EXHIBIT F

PERMITS AND LICENSES

16” LAC CRUDE PIPELINE — NEW MEXICO

	 	 	 	 	 	 	 	 	 	 	 
	Agency	 	Location	 	Permit Type	 	Permit Date	 	Permit #	 	Term
	 
	Lea County Road Department

	 	CR 122 — Hummingbird Rd. 

CR 126 — Maljamar Rd.
	 	Permit for 

Installation of 

Utility Facilities
	 	6/24/2008
	 	RX080663

RX080662
	 	10 Yrs
	 
	 	 	 	 	 	 	 	 	 	 
	 
	Eddy County Road Department

	 	CR 59 — Bolton Road 

CR 211 — Old Loco Road 

CR 214 — Barnaval Drive 

CR 217 — Hagerman Cutoff 

CR 219 — Goat Ropers Road 

CR 220 — Square Lake Road 

CR 208 — Red Lake Road 

CR 200 — Karr Ranch Road 

CR 209 — Turkey Tract Road 

CR 215 — Kewanee Road 

CR 202 — Southern Union
	 	Permit for
Installation of
Utility Facilities
	 	6/11/2008
	 	RP-08-077

RP-08-078

RP-08-079

RP-08-080

RP-08-081

RP-08-082

RP-08-083

RP-08-084

RP-08-085

RP-08-086

RP-08-087
	 	10 Yrs
	 
	New Mexico Department of
Transportation

	 	NM State Highway 229

US Highway 82

NM State Highway 238

NM State Highway 483
	 	Permit for
Installation of
Utility Facilities
	 	4/25/2008
	 	2-15124

2-15125

2-15238

2-15239
	 	25 Yrs

Attachment 1-20

 

EXHIBIT G

PIPELINES

	•	 	A sixteen-inch pipeline, approximately sixty-five miles in length. Running from Lovington
Station in Lea County, New Mexico to the Navajo Refinery in Eddy County, New Mexico

Attachment 1-21

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