Document:

exv10w3

Exhibit 10.3

Execution Version

 

THIRD AMENDED AND RESTATED OMNIBUS AGREEMENT

among

HOLLY CORPORATION

HOLLY ENERGY PARTNERS, L.P.

and

CERTAIN OF THEIR RESPECTIVE SUBSIDIARIES

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	Article I Definitions
	 	 	2	 
	1.1 Definitions
	 	 	2	 
	 
	 	 	 	 
	Article II Business Opportunities
	 	 	8	 
	2.1 Restricted Businesses
	 	 	8	 
	2.2 Permitted Exceptions
	 	 	8	 
	2.3 Procedures
	 	 	9	 
	2.4 Scope of Prohibition
	 	 	11	 
	2.5 Enforcement
	 	 	11	 
	2.6 Limitation on Acquisitions of Subject Assets by
Partnership Group Members
	 	 	11	 
	 
	 	 	 	 
	Article III Indemnification
	 	 	12	 
	3.1 Environmental Indemnification
	 	 	12	 
	3.2 Limitations Regarding Environmental Indemnification

	 	 	14	 
	3.3 Right of Way Indemnification
	 	 	14	 
	3.4 Additional Indemnification
	 	 	14	 
	3.5 Indemnification Procedures
	 	 	15	 
	3.6 Limitation on Indemnification Obligations
	 	 	16	 
	3.7 Exclusion from Indemnification
	 	 	17	 
	 
	 	 	 	 
	Article IV General and Administrative Expenses
	 	 	17	 
	4.1 General
	 	 	17	 
	 
	 	 	 	 
	Article V Right of First Refusal
	 	 	18	 
	5.1 Holly Right of First Refusal: Prohibition on Transfer of
Refinery Related Assets
	 	 	18	 
	5.2 Procedures
	 	 	18	 
	 
	 	 	 	 
	Article VI Holly Purchase Option
	 	 	21	 
	6.1 Option to Purchase Tulsa Transferred Assets
	 	 	21	 
	 
	 	 	 	 
	Article VII Miscellaneous
	 	 	21	 
	7.1 Choice of Law
	 	 	21	 
	7.2 Arbitration Provision
	 	 	21	 
	7.3 Notice
	 	 	22	 
	7.4 Entire Agreement
	 	 	23	 
	7.5 Termination of Article II
	 	 	23	 
	7.6 Amendment or Modification
	 	 	23	 
	7.7 Assignment
	 	 	23	 
	7.8 Additional Partnership Entities
	 	 	23	 
	7.9 Counterparts
	 	 	24	 
	7.10 Severability
	 	 	24	 
	7.11 Further Assurances
	 	 	24	 
	7.12 Rights of Limited Partners
	 	 	24	 
	7.13 Headings
	 	 	24	 
	7.14 UNEV Option Agreement
	 	 	24	 
	7.15 Limitation of Damages
	 	 	24	 

i

 

THIRD AMENDED AND RESTATED

OMNIBUS AGREEMENT

     THIS THIRD AMENDED AND RESTATED OMNIBUS AGREEMENT is being entered into on December 1, 2009
(the “Agreement”), by and among Holly Corporation, a Delaware corporation
(“Holly”), the other Holly Entities (as defined herein) listed on the signature pages
hereto, Holly Energy Partners, L.P., a Delaware limited partnership (the “Partnership”),
and the other Partnership Entities (as defined herein) listed on the signature pages hereto, and
amends and restates in its entirety the Second Amended and Restated Omnibus Agreement entered into
on August 1, 2009 (as amended, the “Second Amended Omnibus Agreement”) among 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”), 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 the other Holly Entities and Partnership Entities signatory thereto.

R E C I T A L S:

          WHEREAS, the Parties entered into an Omnibus Agreement on July 13, 2004 (as amended, 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 and Holly
GP would not engage in, directly or indirectly, 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 Entities and their Subsidiaries;

          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 transferred and conveyed to the Operating Partnership, and the Operating Partnership has
acquired, 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 amended
and restated the Original Omnibus Agreement and

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entered into the First Amended and Restated Omnibus Agreement (the “First Amended Omnibus
Agreement”);

          WHEREAS, in connection with that certain Asset Purchase Agreement dated as of August 1, 2009,
by and between Holly Refining & Marketing – Tulsa LLC (“Holly Tulsa”) and HEP Tulsa LLC
(“HEP Tulsa”), pursuant to which Holly Tulsa transferred and conveyed to HEP Tulsa, and HEP
Tulsa acquired, the Tulsa Transferred Assets (as defined herein), the Parties amended and restated
the First Amended Omnibus Agreement and entered into the Second Amended Omnibus Agreement;

          WHEREAS, in connection with (i) that certain Asset Sale and Purchase Agreement dated as of
October 19, 2009, by and among Holly Tulsa, HEP Tulsa and Sinclair Tulsa Refining Company
(“Sinclair”), pursuant to which HEP Tulsa has agreed to acquire the Sinclair Transferred
Assets (as defined herein), (ii) that certain Asset Purchase Agreement dated as of December 1,
2009, by and among Holly, Navajo Pipeline and HEP Pipeline L.L.C., pursuant to which Navajo
Pipeline has agreed to transfer and convey to HEP Pipeline L.L.C., and HEP Pipeline L.L.C. agreed
to acquire, the Beeson Pipeline (as defined herein), and (iii) that certain LLC Interest Purchase
Agreement 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 Roadrunner
Pipeline, L.L.C., the entity that owns the Roadrunner Pipeline (as defined herein), the Parties
desire to amend and restate the Second Amended Omnibus Agreement as provided herein;

     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:

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.

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     “2008 Crude Pipelines, Tanks and Related Assets” means the Drop-Down Assets as defined
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
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 the Sinclair Transferred Assets and all of the following assets
conveyed, contributed, or otherwise transferred by the Holly Entities to the Partnership Entities:
(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, (iv) the 16”
Lovington/Artesia Intermediate Pipeline, (v) the Tulsa Transferred Assets, (vi) the Beeson
Pipeline, and (vii) the Roadrunner Pipeline.

     “Beeson Pipeline” means the 8” crude oil pipeline extending from Beeson station to
Lovington, New Mexico, owned by HEP Pipeline, L.L.C.

     “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

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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 7.2.

     “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 Entity, (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 Entity, (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 Entity, (iv) with respect to the Tulsa Transferred Assets, the
effective date of the purchase of the Tulsa Transferred Assets by a Partnership Entity, (v) with
respect to the Roadrunner Pipeline, the effective date of the purchase of all the limited liability
company interests of Roadrunner Pipeline, L.L.C. by a Partnership Entity, (vi) with respect to the
Beeson Pipeline, the effective date of the purchase of the Beeson Pipeline by a Partnership Entity,
and (vii) with respect to the Sinclair Transferred Assets, the effective date of the purchase of
the Sinclair Transferred Assets by a Partnership Entity.

     “Common Units” 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.

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

     “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.

     “Holly Entities” means Holly and each other entity listed on the signature pages
hereto as Holly Entity.

     “Holly Entity” means any of the Holly Entities.

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

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

     “Indemnified Party” means the Partnership Entities or the Holly Entities, 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 Entities or the Holly Entities, as
the case may be, in their capacity as the parties from whom indemnification may be required in
accordance with Article III, including Section 3.6.

     “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 recitals 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 the Partnership and each other entity listed on the
signature pages hereto as a Partnership Entity.

     “Partnership Entity” means any of the Partnership Entities.

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

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

6

 

     “Party” means each of the entities listed on the signature page to this Agreement,
collectively the “Parties”.

     “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.

     “Purchase Option Agreement” has the meaning set forth in the Asset Purchase Agreement,
dated August 1, 2009, between Holly Refining & Marketing – Tulsa LLC, a Delaware limited liability
company, as the seller, and HEP Tulsa LLC, a Delaware limited liability company, as the buyer.

     “Respondent” is defined in Section 7.2.

     “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 Group Members on the date of the Contribution Agreement that were not
conveyed, contributed or otherwise transferred to the Partnership Entities pursuant to the
Contribution Agreement or otherwise.

     “Roadrunner Pipeline” means 16” crude oil pipeline extending from Slaughter station in
Texas to Lovington, New Mexico owned by Roadrunner Pipeline, L.L.C.

     “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).

     “Sinclair Transferred Assets” means the HEP Tulsa Assets as defined in the Asset Sale
and Purchase Agreement dated October 19, 2009 by and among Holly Tulsa, HEP Tulsa and Sinclair.

     “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

7

 

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.

     “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.

     “Tulsa Transferred Assets” means the Transferred Assets as defined in the Asset
Purchase Agreement, dated August 1, 2009, between Holly Refining & Marketing – Tulsa LLC, a
Delaware limited liability company, as the seller, and HEP Tulsa LLC, a Delaware limited liability
company, as the buyer.

     “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 Group Member controls the Partnership, and
except as permitted by Section 2.2, Holly GP and each of the Holly Group Members 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 Group Members may engage in the following activities under the
following circumstances:

8

 

          (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 Group Member or Holly GP with the approval of
the General Partner;

          (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 Group
Member 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 Group Member 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 acquisition;
provided, the Partnership has been offered the opportunity to purchase the Subject Assets
in accordance with Section 2.3 and the Partnership has elected not to purchase the Subject
Assets; and

          (e) the ownership and/or operation of any Subject Assets constructed by a Holly Group Member
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 has elected not to purchase.

     2.3 Procedures.

          (a) In the event that Holly GP or a Holly Group Member 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 Group Member 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 Group Member 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 Group Member that either
(i) the General Partner, on behalf of the Partnership, has elected 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 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 (as evidenced in writing by the General Partner following the request of Holly GP or
the Holly Group Member), Holly GP or the Holly Group Member 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 Group Member must be so acquired (i) within 12 months of the later to occur of (A) the date
that Holly GP or the Holly Group

9

 

Member 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 Group Member 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 Group
Member 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 Group
Member 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 Group Member may make such acquisition without first offering the opportunity to the
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 Group Member of the Subject Assets, as the case may be, Holly GP or the
Holly Group Member 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 Group Member 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 Group Member to enable Holly GP or
the Holly Group Member 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 Group Member in writing that either (x) the General Partner has elected not to
cause a Partnership Group Member to purchase the Subject Assets, in which event Holly GP or the
Holly Group Member shall be forever free to continue to own or operate such Subject Assets, or (y)
the General Partner has elected 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 Group Member and the General Partner 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 Group Member 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 Group Member to provide services in a manner consistent with the Offer.

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               (iii) If Holly GP or the Holly Group Member 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 Group Member 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
Group Member 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 Group Member are unable to agree within 30 days of its engagement and furnish Holly GP or the
Holly Group Member and the General Partner its determination. The fees of the investment banking
firm will be split equally between Holly GP or the Holly Group Member 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
Group Member are unable to agree, the General Partner will have the right, but not the obligation,
to cause a Partnership Group Member to purchase the Subject Assets pursuant to the Offer as
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 Group Member 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 Group Member
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 Group Member 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 Group Members agree and acknowledge that the
Partnership Group does not have an adequate remedy at law for the breach by Holly GP and the Holly
Group of the covenants and agreements set forth in this Article II, and that any breach by
Holly GP or the Holly Group 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 Group Members
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 Group from such breach, and consent to the issuance of injunctive relief under this
Agreement.

     2.6 Limitation on Acquisitions of Subject Assets by Partnership Group Members.
Notwithstanding anything in this Agreement to the contrary, a Partnership Group Member who is not a
party to this Agreement is prohibited from acquiring Subject Assets. In the event the General
Partner desires a Partnership Group Member who is not a party to this Agreement to

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acquire any Subject Assets, then the General Partner shall first cause such Partnership Group
Member to become a party to this Agreement.

ARTICLE III

Indemnification

     3.1 Environmental Indemnification.

          (a) Subject to Section 3.2, the Holly Entities shall indemnify, defend and hold
harmless the Partnership Entities 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 Entities
or any third party to the extent 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 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”) except to the
extent arising out of the negligent acts or omissions or willful misconduct of a member of the
Partnership Entities.

          (b) To the extent that a good faith claim by the Partnership Entities for indemnification
under Section 3.1(a)(i) or Section 3.1(a)(ii) 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

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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
Entities 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
Entities 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 Entities regarding such delay at the time it
occurred.

          (d) The Partnership Entities 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 and lost profits suffered by third parties), 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 Holly Entities or any third party to the
extent arising out of:

               (i) any violation or correction of violation of Environmental Laws associated with the
operation of the Assets by a Person other than a Holly Entity or ownership and operation of the
Assets by a Person other than a Holly Entity, or

               (ii) any event or condition associated with the operation of the Assets by a Person other than
a Holly Entity or ownership and operation of the Assets by a Person other than a Holly Entity
(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) except, where a Holly Entity is operating an Asset, to the
extent resulting from the negligent acts or omissions or willful misconduct of such Holly Entity
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;

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and only to the extent such violation complained of under Section 3.1(d)(i) or such events
or conditions included under Section 3.1(d)(ii) occurred after the Closing Date;
provided, however, that nothing stated above shall make the Partnership Entities
responsible for any post-Closing Date negligent actions or omissions or willful misconduct 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, the Beeson Pipeline or the Roadrunner Pipeline.

     3.2 Limitations Regarding Environmental Indemnification. The aggregate liability of the Holly
Entities 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. The Holly Entities will not have any obligation under Section
3.1 with respect to any Assets until the Covered Environmental Losses of the Partnership
Entities exceed $200,000.

     3.3 Right of Way Indemnification. The Holly Entities shall indemnify, defend and hold
harmless the Partnership 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
Partnership Entities to the extent arising out of (a) the failure of the applicable Partnership
Entity 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 Entity on the Closing Date is located
as of the Closing Date; (b) the failure of the applicable Partnership Entity 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 the Holly Entities are 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, the Holly Entities shall indemnify, defend, and hold harmless
the Partnership Entities from and against any losses, damages, liabilities, claims, demands, causes
of

14

 

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 Entities
to the extent arising out of (i) events and conditions associated with the operation of the Assets
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 the Holly Entities are
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 (v) 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 Entities 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 Entities 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 to the
extent arising out of events and conditions associated with the operation of the Assets occurring
on or after the Closing Date (other than Covered Environmental Losses which are provided for under
Section 3.1 except, where a Holly Entity is operating an Asset, to the extent resulting
from the negligent acts or omissions or willful misconduct of such Holly Entity), 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.

     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 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

15

 

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 all amounts recovered by the Indemnified Party under contractual indemnities
(other than insurance policies) from third Persons. An Indemnified Party shall be obligated to
pursue all contractual indemnities that such Indemnified Party has with third Persons outside of
this Agreement, provided, however, if the Indemnified Party’s right to such
indemnification is assignable, the Indemnified Party may, in its sole discretion and in lieu of
pursuing such claim, elect to assign such indemnification claim to the Indemnifying Party to pursue
and shall reasonably cooperate with the Indemnifying Party (including, without limitation, making
its relevant books, records, officers, information and testimony reasonably available to the
Indemnifying Party) in the Indemnifying Party’s pursuit of such claim. In the event the
Indemnified Party recovers under a contractual indemnity from a third Person outside of this
Agreement, the amount recovered, less the reasonable out-of-pocket fees and expenses incurred by
the Indemnified Party in recovering such amounts, shall reduce the amount such Indemnified Party
may recover under this Article III and if the Indemnified Party receives any such amounts
subsequent to an indemnification payment by the Indemnifying Party in respect of such losses, then
such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or
expense incurred by such Indemnifying Party in connection with providing such indemnification
payment up to the amount so received by the Indemnified Party.

          (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.

     3.6 Limitation on Indemnification Obligations.

          (a) Notwithstanding anything in this Agreement to the contrary, when referring to the
indemnification obligations of the Holly Entities in Article III, the definition of Holly
Entities shall be deemed to mean solely (i) the Holly Entity or Holly Entities that own or operate,
or owned or operated immediately prior to the transfer to the Partnership Entities, the Retained
Asset, Asset or other property in question with respect to which indemnification is

16

 

sought by
reason of such Holly Entity’s or Holly Entities’ ownership or operation of the Retained Asset,
Asset or other property in question or that is responsible for causing such loss, damage, injury,
judgment, claim, cost, expense or other liability suffered or incurred by the Partnership Entities
for which it is entitled to indemnification under Article III and (ii) Holly.

          (b) Notwithstanding anything in this Agreement to the contrary, when referring to the
indemnification obligations of the Partnership Entities in Article III, the definition of
Partnership Entities shall be deemed to mean solely (i) the Partnership Entity or Partnership
Entities that own or operate, or owned or operated, the Asset or other property in Partnership
Entity’s or Partnership Group Entities’ ownership or operation of the Asset or other property in
question or that is responsible for causing such loss, damage, injury, judgment, claim, cost,
expense or other liability suffered or incurred by the Holly Entities for which they are entitled
to indemnification under Article III, (ii) the Partnership and (iii) the Operating
Partnership.

     3.7 Exclusion from Indemnification. Notwithstanding anything in this Agreement to the
contrary, as used in Article III the definition of Assets shall not include the Tulsa
Transferred Assets or the Sinclair Transferred Assets.

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 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;

17

 

               (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
six months prior to the proposed date of termination.

ARTICLE V

Right of First Refusal

     5.1 Holly Right of First Refusal: Prohibition on Transfer of Refinery Related Assets.

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

          (b) The Partnership Entities are prohibited from Transferring any of the Assets that serve the
Holly Entities’ refineries to a Partnership Group Member that is not a party to this Agreement. In
the event the Partnership Entities wish to Transfer any of the Assets that serve the Holly
Entities’ refineries to a Partnership Group Member that is not a party to this Agreement, they
shall first cause the proposed transferee Partnership Group Member to become a party to this
Agreement.

          (c) 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.

          (d) Notwithstanding anything in this Agreement to the contrary, as used in Article V
the definition of Assets shall not include the Tulsa Transferred Assets.

     5.2 Procedures.

          (a) If a Partnership Entity 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

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reasonably determine the fair market value of such non-cash consideration,
the Partnership Entities’ 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 Entities. 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 Entities 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 Entities in the
Disposition Notice and (ii) Holly and the Partnership Entities are unable to mutually agree upon
the fair market value of such non-cash consideration within 30 days after Holly notifies the
Partnership Entities of its determination thereof, the Partnership Entities 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 Entities.
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 Entities 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.

          (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 Entities 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 (or any other consideration agreed to
by Holly and the Partnership Entities (each in their sole discretion));

               (ii) the Partnership Entities will represent that they have 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 Entities 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

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or
interfere
with the activities of the Partnership Entities thereon and so long as Holly has furnished the
Partnership Entities 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 Entities, occur no later than 90 days following receipt by the
Partnership Entities 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 Entities 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 Entities 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 Entities 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(c) have not been
obtained or such sale or purchase is prohibited by Applicable Law.

          (c) Holly and the Partnership Entities 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 120 days and, if governmental approvals and waiting periods shall not have been obtained or
expired, as the case may be, by such 120th 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
Partnership Entity may not Transfer any of the Sale Assets

20

 

described in the Disposition Notice
without complying again with the provisions of this Article V if and to the extent then
applicable.

ARTICLE VI

Holly Purchase Option

     6.1 Option to Purchase Tulsa Transferred Assets. The Parties acknowledge the purchase options
and right of first refusal granted to an Affiliate of Holly with respect to the Tulsa Transferred
Assets in the Purchase Option Agreement.

ARTICLE VII

Miscellaneous

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

     7.2 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-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 petroleum transportation
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. The Arbitrable Disputes may be arbitrated in a common proceeding
along

21

 

with disputes under other agreements between the Holly Entities, the Partnership Entities or
their Affiliates to the extent that the issues raised in such disputes are related. Without the
written consent of Holly, on behalf of the Holly Entities, and the Partnership, on behalf of the
Partnership Entities, no unrelated disputes or third party disputes may be joined to an arbitration
pursuant to this Agreement.

     7.3 Notice.

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

          Notices to the Holly Entities:

Holly Corporation

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attention: President

Email address: president@hollycorp.com

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

Holly Corporation

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attention: General Counsel

Email address: generalcounsel@hollycorp.com

          Notices to the Partnership Entities:

Holly Energy Partners, L.P.

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

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attention: Senior Vice President

Email address: SVP-HEP@hollyenergy.com

22

 

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

Holly Energy Partners, L.P.

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

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attention: General Counsel

Email address: generalcounsel@hollycorp.com

          (b) Either Party may at any time change its address for service from time to time by giving
notice to the other Party in accordance with this Section 7.3.

     7.4 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.

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

     7.6 Amendment or Modification. No amendment or modification of this Agreement shall be valid
unless it is in writing and signed by the parties hereto. No waiver of any provision of this
Agreement shall be valid unless it is in writing and signed by the party against whom the waiver is
sought to be enforced. Any of the exhibits 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 the Partnership (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.

     7.7 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.

     7.8 Additional Partnership Entities. In the event the General Partner desires a Partnership
Group Member who is not a party to this Agreement to acquire Subject Assets or a Partnership Entity
wishes to Transfer any of the Assets that serve the Holly Entities’ refineries to a Partnership
Group Member who is not a party to this Agreement, then the Partnership Group Member that is the
proposed acquiror of the Subject Assets or transferee of the Assets that serve the Holly Entities’
refineries may become a party to this Agreement by executing a joinder in a form reasonably
satisfactory to Holly (on behalf of the Holly Entities) and the Partnership (on behalf of the
Partnership Entities).

23

 

     7.9 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.

     7.10 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.

     7.11 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.

     7.12 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.

     7.13 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.

     7.14 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.

     7.15 Limitation of Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER
PROVISION OF THIS AGREEMENT AND EXCEPT FOR CLAIMS MADE BY THIRD PARTIES WHICH SHALL NOT BE LIMITED
BY THIS SECTION, THE PARTIES AGREE THAT THE RECOVERY BY ANY PARTY, INCLUDING PURSUANT TO
ARTICLE III, OF ANY LIABILITIES, DAMAGES, COSTS OR OTHER EXPENSES SUFFERED OR INCURRED BY
IT (i) AS A RESULT OF ANY BREACH OR NONFULFILLMENT BY A PARTY OF ANY OF ITS COVENANTS, AGREEMENTS
OR OTHER OBLIGATIONS UNDER THIS AGREEMENT OR (ii) BY REASON OF OR ARISING OUT OF ANY OF THE EVENTS,
CONDITIONS OR OTHER MATTERS LISTED IN SECTIONS 3.1, 3.3 OR 3.4 WHICH THE
PARTIES HAVE AGREED TO INDEMNIFY THE OTHER PARTY AGAINST, SHALL BE LIMITED TO ACTUAL DAMAGES AND
SHALL NOT INCLUDE OR APPLY TO, NOR SHALL ANY PARTY BE ENTITLED TO RECOVER, ANY INDIRECT,
CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT
OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) SUFFERED OR
INCURRED BY ANY PARTY; PROVIDED, HOWEVER, THAT SUCH RESTRICTION AND LIMITATION
SHALL NOT APPLY TO A PARTY’S OBLIGATION TO INDEMNIFY THE OTHER PARTY UNDER SECTIONS 3.1,

24

 

3.3 OR 3.4 HEREOF, AS APPLICABLE, (y) AS A RESULT OF A THIRD PARTY CLAIM FOR
SUCH INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES AGAINST SUCH INDEMNIFIED PARTY OR
(z) INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES THAT ARE A RESULT OF SUCH INDEMNIFYING
PARTY’S OR ITS AFFILIATES’ GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (INCLUDING, WITHOUT LIMITATION,
ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN
VALUE). FOR PURPOSES OF THIS SECTION 7.15, “AFFILIATES” OF THE INDEMNIFYING PARTY SHALL NOT
INCLUDE THE PARTNERSHIP GROUP MEMBERS WHEN A HOLLY ENTITY IS THE INDEMNIFYING PARTY AND SHALL NOT
INCLUDE THE HOLLY GROUP MEMBERS WHEN THE INDEMNIFYING PARTY IS A PARTNERSHIP ENTITY.

[Remainder of Page Intentionally Left Blank.]

25

 

     IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the date
first written above.

	 	 	 	 	 
	 	HOLLY ENTITIES:

HOLLY CORPORATION

 	 
	 	By:  	/s/ Matthew P. Clifton
 	 
	 	 	Matthew P. Clifton 	 
	 	 	Chief Executive Officer 	 
	 
	 	HOLLY REFINING & MARKETING
COMPANY – WOODS CROSS (formerly Holly Refining & Marketing Company)

 	 
	 	By:  	/s/ Matthew P. Clifton
 	 
	 	 	Matthew P. Clifton 	 
	 	 	Chief Executive Officer 	 
	 
	 	LOREFCO, INC.

 	 
	 	By:  	/s/ Matthew P. Clifton
 	 
	 	 	Matthew P. Clifton 	 
	 	 	President 	 
	 
	 	NAVAJO REFINING COMPANY, L.L.C.

(formerly Navajo Refining Company, L.P.)

 	 
	 	By:  	/s/ Matthew P. Clifton
 	 
	 	 	Matthew P. Clifton 	 
	 	 	President 	 
	 

[Signature Page 1 of 4 to Third Amended and Restated Omnibus Agreement]

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	NAVAJO PIPELINE CO., L.P.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Matthew P. Clifton	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Matthew P. Clifton	 	 
	 	 	 	 	President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	WOODS CROSS REFINING COMPANY, L.L.C.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David L. Lamp	 	 
	 	 	 	 	 	 	 
	 	 	 	 	David L. Lamp	 	 
	 	 	 	 	President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	HOLLY REFINING & MARKETING	 	 
	 	 	– TULSA LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David L. Lamp	 	 
	 	 	 	 	 	 	 
	 	 	 	 	David L. Lamp	 	 
	 	 	 	 	President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	PARTNERSHIP ENTITIES:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	HOLLY ENERGY PARTNERS, L.P.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	HEP Logistics Holdings,
L.P. Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ David G. Blair
 

David G. Blair
	 	 
	 

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

[Signature Page 2 of 4 to Third Amended and Restated Omnibus Agreement]

 

 

	 	 	 	 	 	 	 	 	 
	 	 	HOLLY LOGISTIC SERVICES, L.L.C.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David G. Blair
	 	 	 	 	   	 	 
	 	 	 	 	David G. Blair
	 	 	 	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	HEP LOGISTICS HOLDINGS, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David G. Blair
	 	 	 	 	 	 	 
	 	 	 	 	David G. Blair
	 	 	 	 	Senior Vice President
	 
	 	 	 	 	 	 	 	 
	 	 	HEP LOGISTICS GP, L.L.C.	 	 
	 	 	HEP MOUNTAIN HOME, L.L.C.	 	 
	 	 	HEP PIPELINE GP, L.L.C.	 	 
	 	 	HEP PIPELINE, L.L.C.	 	 
	 	 	HEP REFINING GP, L.L.C.	 	 
	 	 	HEP REFINING, L.L.C.	 	 
	 	 	HEP WOODS CROSS, L.L.C.	 	 
	 	 	LOVINGTON-ARTESIA, L.L.C.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	HOLLY ENERGY PARTNERS
– OPERATING, L.P. Sole Member
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ David G. Blair	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	David G. Blair	 	 
	 

	 	 	 	 	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	HEP NAVAJO SOUTHERN, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David G. Blair
	 	 	 	 	 	 	 
	 	 	 	 	David G. Blair
	 	 	 	 	Senior Vice President

[Signature Page 3 of 4 to Third Amended and Restated Omnibus Agreement]

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	HEP REFINING ASSETS, L.P.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 		 	By:	 	HEP Refining GP, L.L.C. Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ David G. Blair
 

David G. Blair
	 	 
	 

	 	 	 	 	 	 	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	HEP PIPELINE ASSETS, LIMITED PARTNERSHIP	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 		 	By:	 	HEP Pipeline GP, L.L.C. Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ David G. Blair	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	David G. Blair	 	 
	 

	 	 	 	 	 	 	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	HEP TULSA LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David G. Blair	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	David G. Blair	 	 
	 	 	 	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	ROADRUNNER PIPELINE, L.L.C.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David G. Blair	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	David G. Blair	 	 
	 	 	 	 	Senior Vice President	 	 

[Signature Page 4 of 4 to Third 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

Execution Version

PIPELINE THROUGHPUT AGREEMENT

(Roadrunner)

     This Pipeline Throughput Agreement (this “Agreement”) is dated as of December 1, 2009,
by and between Navajo Refining Company, L.L.C. (“Navajo Refining”) and Holly Energy
Partners-Operating, L.P. (“HEP Operating”). Each of Navajo Refining and HEP Operating are
individually referred to herein as a “Party” and collectively as the “Parties.”

RECITALS:

     WHEREAS, pursuant to that certain LLC Interest Purchase Agreement (“Roadrunner
Agreement”) dated as of December 1, 2009 by and among Navajo Pipeline Co., L.P., HEP Operating,
and Holly (as defined below), HEP Operating acquired all of the outstanding membership interests of
Roadrunner Pipeline, L.L.C. which owns all of the assets constituting that certain 16” crude oil
pipeline extending approximately 65 miles from the Slaughter station to Lovington, New Mexico (the
“Roadrunner Pipeline”); and

     WHEREAS, in connection with the closing of the transactions contemplated by the Roadrunner
Agreement, Navajo Refining and HEP Operating desire to enter into this Agreement to, among other
things, set forth the terms and conditions under which HEP Operating will provide certain
transportation services for Navajo Refining on the Roadrunner Pipeline.

     NOW, THEREFORE, in consideration of the covenants and obligations contained herein, the
Parties hereby agree as follows:

     Section 1. Definitions

     Capitalized terms used throughout this Agreement and not otherwise defined herein shall have
the meanings set forth below.

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

     “Agreement” has the meaning set forth in the preamble 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

Pipeline Throughput Agreement (Roadrunner)

 

 

any of the foregoing by, or any determination of, any Governmental Authority having or
asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect
and in each case as amended (including, without limitation, all of the terms and provisions of the
common law of such Governmental Authority), as interpreted and enforced at the time in question.

     “Arbitrable Dispute” means any and all disputes, Claims, controversies and other
matters in question between Navajo Refining and HEP Operating, arising out of or relating to this
Agreement or the alleged breach 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.

     “bpd” means barrels per day.

     “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” has the meaning set forth in Section 12(e).

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

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

     “Crude Oil” means the direct liquid product of oil wells, oil processing plants, the
indirect liquid petroleum products of oil or gas wells, oil sands or a mixture of such products,
but does not include natural gas liquids, gasoline, kerosene, ethanol, naphtha, gas oil, LEF (lube
extraction feedstocks), diesel fuel or any other refined products.

     “Damaged Party” has the meaning set forth in Section 11(b).

     “Deficiency Notice” has the meaning set forth in Section 9(a).

     “Deficiency Payment” has the meaning set forth in Section 9(a).

     “DRA” has the meaning set forth in Section 2(d).

     “Effective Time” means 12:01 a.m., Dallas, Texas time, on December 1, 2009.

     “Force Majeure” means acts of God, strikes, lockouts or other industrial disturbances,
acts of the public enemy, wars, blockades, insurrections, riots, storms, floods, washouts, arrests,

Pipeline Throughput Agreement (Roadrunner)

2

 

the order of any Governmental Authority having jurisdiction while the same is in force and
effect, civil disturbances, explosions, breakage, accident to machinery, storage tanks or lines of
pipe, inability to obtain or unavoidable delay in obtaining material or equipment, and any other
causes whether of the kind herein enumerated or otherwise not reasonably within the control of the
Party claiming suspension and which by the exercise of due diligence such Party is unable to
prevent or overcome. Notwithstanding anything in this Agreement to the contrary, inability of a
Party to make payments when due, be profitable or to secure funds, arrange bank loans or other
financing, obtain credit or have adequate capacity or production (other than for reasons of Force
Majeure) shall not be regarded as events of Force Majeure.

     “Force Majeure Notice” has the meaning set forth in Section 4.

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

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

     “HEP Operating Payment Obligations” has the meaning set forth in Section
14(a).

     “Holly” means Holly Corporation, a Delaware corporation.

     “Minimum Pipeline Revenue Commitment” has the meaning set forth in Section
2(a)(i).

     “Minimum Pipeline Throughput” means 40,000 bpd of Crude Oil, in the aggregate, on
average for each Contract Quarter.

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

     “Navajo Refining Payment Obligations” has the meaning set forth in Section
13(a).

     “Omnibus Agreement” means the Third Amended and Restated Omnibus Agreement, dated as
of December 1, 2009, by and among Holly, the Partnership and certain of their respective
subsidiaries.

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

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

     “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.

     “Pipeline Base Tariff” means the amount set forth on Schedule I attached
hereto.

     “Pipeline Incentive Tariff” means the amount set forth on Schedule I attached
hereto.

Pipeline Throughput Agreement (Roadrunner)

3

 

     “PPI” has the meaning set forth in Section 2(a)(ii).

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

     “Qualified Third-Party Throughput” has the meaning set forth in Section 2(a)(i).

     “Refund” has the meaning set forth in Section 9(c).

     “Respondent” has the meaning set forth in Section 12(e).

     “Roadrunner Agreement” has the meaning set forth in the recitals.

     “Roadrunner Pipeline” has the meaning set forth in the recitals.

     “Term” has the meaning set forth in Section 6.

     Section 2. Agreement to Use Services Relating to Roadrunner Pipeline.

     The Parties intend to be strictly bound by the terms set forth in this Agreement, which sets
forth revenues to HEP Operating to be paid by Navajo Refining and requires HEP Operating to provide
certain Crude Oil transportation services to Navajo Refining. The principal objective of HEP
Operating is for Navajo Refining to meet or exceed its obligations with respect to the Minimum
Pipeline Revenue Commitment. The principal objective of Navajo Refining is for HEP Operating to
provide services to Navajo Refining in a manner that enables Navajo Refining to transport Crude Oil
on the Roadrunner Pipeline.

     (a) Minimum Pipeline Revenue Commitment. During the Term and subject to the terms and
conditions of this Agreement, Navajo Refining agrees as follows:

     (i) Subject to Section 4, Navajo Refining shall pay HEP Operating throughput
fees associated with the Roadrunner Pipeline that will satisfy the Minimum Pipeline Revenue
Commitment in exchange for HEP Operating providing Navajo Refining a minimum of 40,000
barrels per day of aggregate capacity in the Roadrunner Pipeline. In the event that any
third party transports Crude Oil on the Roadrunner Pipeline for ultimate delivery to Holly
or any of its subsidiaries and such third party pays throughput fees equal to or greater
than the Pipeline Base Tariff for each such barrel of Crude Oil transported on the
Roadrunner Pipeline for ultimate delivery to Holly or any of its subsidiaries
(“Qualified Third-Party Throughput”), then revenues paid to HEP Operating by such
third party for such Qualified Third-Party Throughput shall be credited towards the Minimum
Pipeline Revenue Commitment hereunder. The “Minimum Pipeline Revenue Commitment”
shall be an amount of revenue to HEP Operating for each Contract Quarter determined by
multiplying the Minimum Pipeline Throughput by the Pipeline Base Tariff, as such Pipeline
Base Tariff may be revised pursuant to Section 2(a)(iii). Notwithstanding the foregoing, in
the event that the Effective Time is any date

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other than the first day of a Contract Quarter, then the Minimum Pipeline Revenue
Commitment for the initial Contract Quarter shall be prorated based upon the number of days
actually in such contract quarter and the initial Contract Quarter.

     (ii) If the average throughput for any Contract Quarter (including Qualified
Third-Party Throughput) exceeds the Minimum Pipeline Throughput attributable to such
Contract Quarter, then for each throughput barrel in excess of the Minimum Pipeline
Throughput, Navajo Refining shall pay HEP Operating throughput fees in the amount of the
Pipeline Incentive Tariff as such amount may be revised pursuant to Section 2(a)(iii).

     (iii) The Pipeline Base Tariff and Pipeline Incentive Tariff shall be adjusted on July
1 of each calendar year commencing on July 1, 2011, by an amount equal to the upper change
in the annual change rounded to four decimal places of the Producers Price
Index-Commodities-Finished Goods, (PPI), et al. (“PPI”), produced by the U.S.
Department of Labor, Bureaus of Labor Statistics. The series ID is WPUSOP3000 as of
September 7, 2009 – located at http://www.bls.gov/data/. The change factor shall be
calculated as follows: annual PPI index (most current year) less annual PPI index
(most current year minus 1) divided by annual PPI index (most current year minus 1).
An example for year 2009 change is: [PPI (2008) – PPI (2007)] / PPI (2007) or (177.1 –
166.6) / 166.6 or .063 or 6.3%. If the PPI index change is negative in a given year, then
there will be no change in the Pipeline Base Tariff or Pipeline Incentive Tariff.
Notwithstanding anything to the contrary herein, in the event that the PPI for any given
calendar year increases by more than three percent (3%), then the Pipeline Base Tariff and
Pipeline Incentive Tariff will be increased by a percentage equal to three percent (3%) plus
one-half of the PPI increase in excess of three percent (3%) for such calendar year. If the
above index is no longer published, then Navajo Refining and HEP Operating shall negotiate
in good faith to agree on a new index that gives comparable protection against inflation,
and the same method of adjustment for increases in the new index shall be used to calculate
increases in the Pipeline Base Tariff and Pipeline Incentive Tariff. If Navajo Refining and
HEP Operating are unable to agree, a new index will be determined by binding arbitration in
accordance with Section 12(e), and the same method of adjustment for increases in
the new index shall be used to calculate increases in the Pipeline Base Tariff and Pipeline
Incentive Tariff. To evidence the Parties’ agreement to each adjusted Pipeline Base Tariff
and Pipeline Incentive Tariff, the Parties shall execute an amended, modified, revised or
updated Schedule I and attach it to this Agreement. Such amended, modified, revised
or updated Schedule I shall be sequentially numbered (e.g. Schedule I-1,
Schedule I-2, etc.), dated and appended as an additional schedule to this Agreement
and shall replace the prior version of Schedule I in its entirety.

     (iv) If Navajo Refining is unable to transport on the Roadrunner Pipeline the volumes
of Crude Oil required to meet the Minimum Pipeline Revenue Commitment as a result of HEP
Operating’s operational difficulties, prorationing, or the inability to provide sufficient
capacity for the Minimum Pipeline Throughput, then the Minimum Pipeline Revenue Commitment
applicable to the Contract Quarter during which Navajo Refining is unable to transport such
volumes of Crude Oil will be reduced by an amount equal to: (A) the volume of Crude Oil that
Navajo Refining was unable to transport on the

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Roadrunner Pipeline (but not to exceed the Minimum Pipeline Throughput), as a result of
HEP Operating’s operational difficulties, prorationing or inability to provide sufficient
capacity on the Roadrunner Pipeline to achieve the Minimum Pipeline Throughput, multiplied
by (B) the Pipeline Base Tariff. This Section 2(a)(iv) shall not apply in the event
HEP Operating gives notice of a Force Majeure event in accordance with Section 4, in
which case the Minimum Pipeline Revenue Commitment shall be suspended in accordance with and
as provided in Section 4.

     (b) Volumetric Gains and Losses. Navajo Refining shall, during the Term, (i) absorb
all volumetric gains in the Roadrunner Pipeline, and (ii) be responsible for all volumetric losses
in the Roadrunner Pipeline up to a maximum of 0.5%. HEP Operating shall be responsible for all
volumetric losses in excess of 0.5% in the Roadrunner Pipeline during the Term

     (c) Obligations of HEP Operating. During the Term and subject to the terms and
conditions of this Agreement, including Section 12(b), HEP Operating agrees to: (i) own or
lease, operate and maintain (directly or through a subsidiary) the Roadrunner Pipeline and all
related assets necessary to handle the Crude Oil from Navajo Refining; (ii) provide the services
required under this Agreement and perform all operations relating to the Roadrunner Pipeline
including, but not limited to, interaction with third party pipelines; and (iii) maintain adequate
property and liability insurance covering the Roadrunner Pipeline and any related assets owned by
HEP Operating and necessary for the operation of the Roadrunner Pipeline. Notwithstanding the
preceding sentence, subject to Section 12(b) of this Agreement and Article V of the Omnibus
Agreement, HEP Operating is free to sell any of its assets, including assets that provide services
under this Agreement, and Navajo Refining is free to merge with another entity and to sell all of
its assets or equity to another entity at any time.

     (d) Drag Reducing Agents and Additives. If HEP Operating determines that adding drag
reducing agents (“DRA”) to the Crude Oil is reasonably required to move Crude Oil in the
quantities necessary to meet Navajo Refining’s schedule or as may be otherwise be required to
safely move such quantities of Crude Oil, HEP Operating shall provide Navajo Refining with an
analysis of the proposed cost and benefits thereof. In the event that Navajo Refining agrees to
use such additives as proposed by HEP Operating, Navajo Refining shall reimburse HEP Operating for
the costs of adding any DRA to the Crude Oil.

     (e) Change in Roadrunner Pipeline Direction; Product Service or Origination and
Destination. Without Navajo Refining’s prior written consent, HEP Operating shall not (i)
reverse the direction of the Roadrunner Pipeline; (ii) change, alter or modify the product service
of the Roadrunner Pipeline; or (iii) change, alter or modify the origination or destination of the
Roadrunner Pipeline; provided, however, that HEP Operating may take any necessary emergency action
to prevent or remedy a release of Crude Oil from the Roadrunner Pipeline without obtaining the
consent required by this Section 2(e). Navajo Refining shall have the right to reverse the
direction of the Roadrunner Pipeline if Navajo Refining agrees to (i) reimburse HEP Operating for
the additional costs and expenses incurred by HEP Operating as a result of such change in direction
(both to reverse and re-reverse); (ii) reimburse the HEP Operating for all costs arising out of HEP
Operating’s inability to perform under any transportation service contract due to the reversal of
the direction of the Roadrunner Pipeline; and (iii) pay the Pipeline

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Base Tariff and Pipeline Incentive Tariff set forth on Schedule I, as it may be
amended from time-to-time in accordance with this Agreement, for any such flow reversal.

     (f) Notification of Utilization. Upon request by HEP Operating, Navajo Refining will
provide to HEP Operating written notification of Navajo Refining’s reasonable good faith estimate
of their anticipated future utilization of the Roadrunner Pipeline as soon as reasonably
practicable after receiving such request.

     (g) Scheduling and Accepting Movement. HEP Operating will use its reasonable
commercial efforts to schedule movement and accept movements of Crude Oil in a manner that is
consistent with the historical dealings between the Parties, as such dealings may change from time
to time.

     (h) Taxes. Navajo Refining will pay all taxes, import duties, license fees and other
charges by any Governmental Authority levied on or with respect to the Crude Oil handled by Navajo
Refining for transportation by HEP Operating. Should any Party be required to pay or collect any
taxes, duties, charges and or assessments pursuant to any Applicable Law or authority now in effect
or hereafter to become effective which are payable by the any other Party pursuant to this
Section 2(h) the proper Party shall promptly reimburse the other Party therefor.

     (i) Timing of Payments. Navajo Refining will make payments to HEP Operating by
electronic payment with immediately available funds on a monthly basis during the Term with respect
to services rendered or reimbursable costs or expenses incurred by HEP Operating under this
Agreement in the prior month. Payments not received by HEP Operating on or prior to the applicable
payment date will accrue interest at the Prime Rate from the applicable payment date until paid.

     (j) Increases in Tariff Rates. If new Applicable Laws are enacted that require HEP
Operating to make capital expenditures with respect to the Roadrunner Pipeline, HEP Operating may
amend the Pipeline Base Tariff in order to recover HEP Operating’s cost of complying with these
Applicable Laws (as determined in good faith and including a reasonable return); provided,
however, that HEP Operating may not amend the Pipeline Base Tariff pursuant to this
Section 2(j) unless and until HEP Operating has made capital expenditures of $1,000,000.00
in the aggregate with respect to the Roadrunner Pipeline in order to comply with such new
Applicable Laws. Navajo Refining and HEP Operating shall use their reasonable commercial efforts
to comply with these Applicable Laws, and shall negotiate in good faith to mitigate the impact of
these Applicable Laws and to determine the amount of the new tariff rates. If Navajo Refining and
HEP Operating are unable to agree on the amount of the new tariff rates that HEP Operating will
charge, such tariff rates will be determined by binding arbitration in accordance with Section
12(e). Schedule I or any other applicable exhibit or schedule to this Agreement will
be updated, amended or revised, as applicable, in accordance with this Agreement to reflect any
changes in tariff rates agreed to in accordance with this Section 2(j).

     Section 3. Agreement to Remain Shipper

     With respect to any Crude Oil that is transported in the Roadrunner Pipeline, Navajo Refining
agrees that it will continue acting in the capacity of the shipper of any such Crude Oil

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for its own account at all times that such Crude Oil is being transported in the Roadrunner
Pipeline.

     Section 4. Force Majeure

     In the event that any Party is rendered unable, wholly or in part, by a Force Majeure event
from performing its obligations under this Agreement for a period of more than thirty (30)
consecutive days, then, upon the delivery of notice and full particulars of the Force Majeure event
in writing within a reasonable time after the occurrence of the Force Majeure event relied on
(“Force Majeure Notice”), the obligations of the Parties, so far as they are affected by
the Force Majeure event, shall be suspended for the duration of any inability so caused. Any
suspension of the obligations of the Parties as a result of this Section 4 shall extend the
Term (to the extent so affected) for a period equivalent to the duration of the inability set forth
in the Force Majeure Notice. Navajo Refining will be required to pay any amounts accrued and due
under this Agreement at the time of the Force Majeure event. The cause of the Force Majeure event
shall so far as possible be remedied with all reasonable dispatch, except that no Party shall be
compelled to resolve any strikes, lockouts or other industrial disputes other than as it shall
determine to be in its best interests. In the event a Force Majeure event prevents HEP Operating
or Navajo Refining from performing substantially all of their respective obligations under this
Agreement for a period of more than one (1) year, this Agreement may be terminated by HEP Operating
or Navajo Refining by providing written notice thereof to the other Party.

     Section 5. Agreement Not to Challenge Tariffs

     Navajo Refining agrees to any tariff rate changes for the Roadrunner Pipeline in accordance
with this Agreement. Navajo Refining agrees (a) not to challenge, nor to cause their Affiliates to
challenge, nor to encourage or recommend to any other Person that it challenge, or voluntarily
assist in any way any other Person in challenging, in any forum, tariffs (including joint tariffs)
of HEP Operating that HEP Operating has filed or may file containing rates, rules or regulations
that are in effect at any time during the Term and regulate the transportation of the Crude Oil,
and (b) not to protest or file a complaint, nor cause their Affiliates to protest or file a
complaint, nor encourage or recommend to any other Person that it protest or file a complaint, or
voluntarily assist in any way any other Person in protesting or filing a complaint, with respect to
regulatory filings that the HEP Operating has made or may make at any time during the Term to
change tariffs (including joint tariffs) for transportation of Crude Oil in each case so long as
such tariffs, regulatory filings or rates changed do not conflict with the terms of this Agreement.

     Section 6. Effectiveness and Term

     This Agreement shall be effective as of the Effective Time, and shall terminate at 12:01 a.m.
Dallas, Texas, time on December 1, 2024, unless extended by written mutual agreement of the Parties
or as set forth in Section 7 (the “Term). The Party(ies) desiring to extend this
Agreement pursuant to this Section 6 shall provide prior written notice to the other
Parties of its desire to so extend this Agreement; such written notice shall be provided not more
than twenty-four (24) months and not less than the later of twelve (12) months prior to the date of
termination or ten (10) days after receipt of a written request from another Party (which request
may be delivered no earlier than twelve (12) months prior to the date of termination) to provide
any such notice or lose such right.

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     Section 7. Right to Enter into a New Agreement

     (a) In the event that Navajo Refining provides prior written notice to HEP Operating of the
desire of Navajo Refining to extend this Agreement by written mutual agreement of the Parties, the
Parties shall negotiate in good faith to extend this Agreement by written mutual agreement, but, if
such negotiations fail to produce a written mutual agreement for extension by a date six months
prior to the termination date, then HEP Operating shall have the right to negotiate to enter into
one or more pipelines, tankage and loading agreements with one or more third parties to begin after
the date of termination, provided that until the end of one year following termination without
renewal of this Agreement, Navajo Refining will have the right to enter into a new pipelines
throughput agreement with HEP Operating on commercial terms that substantially match the terms upon
which HEP Operating propose to enter into an agreement with a third party for similar services with
respect to all or a material portion of the Roadrunner Pipeline. In such circumstances, HEP
Operating shall give Navajo Refining forty-five (45) days prior written notice of any proposed new
pipelines throughput agreement with a third party, and such notice shall inform Navajo Refining of
the fee schedules, tariffs, duration and any other terms of the proposed third party agreement and
Navajo Refining shall have forty-five (45) days following receipt of such notice to agree to the
terms specified in the notice or Navajo Refining shall lose the rights specified by this
Section 7(a) with respect to the assets that are the subject of such notice.

     (b) In the event that Navajo Refining fails to provide prior written notice to HEP Operating
of the desire of Navajo Refining to extend this Agreement by written mutual agreement of the
Parties pursuant to Section 6, HEP Operating shall have the right, during the period from
the date of Navajo Refining’s failure to provide written notice pursuant to Section 6 to
the date of termination of this Agreement, to negotiate to enter into a new pipelines throughput
agreement with a third party; provided, however, that at any time during the twelve (12) months
prior to the expiration of the Term, Navajo Refining will have the right to enter into a new
pipelines throughput agreement with HEP Operating on commercial terms that substantially match the
terms upon which HEP Operating propose to enter into an agreement with a third party for similar
services with respect to all or a material portion of the Roadrunner Pipeline. In such
circumstances, HEP Operating shall give Navajo Refining forty-five (45) days prior written notice
of any proposed new pipelines throughput agreement with a third party, and such notice shall inform
Navajo Refining of the fee schedules, tariffs, duration and any other terms of the proposed third
party agreement and Navajo Refining shall have forty-five (45) days following receipt of such
notice to agree to the terms specified in the notice or Navajo Refining shall lose the rights
specified by this Section 7(b) with respect to the assets that are the subject of such
notice.

     Section 8. Notices

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

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the date the recipient confirms receipt. Notices or other communications shall be directed to
the following addresses:

Notices to Navajo Refining:

c/o Holly Corporation

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attn: David L. Lamp

Email address: president@hollycorp.com

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

c/o Holly Corporation

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attn: General Counsel

Email address: generalcounsel@hollycorp.com

Notices to HEP Operating:

c/o Holly Energy Partners, L.P.

100 Crescent Court, Suite 1600

Dallas, TX 75201

Attn: David G. Blair

Email address: SVP-HEP@hollyenergy.com

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

c/o Holly Energy Partners, L.P.

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attn: General Counsel

Email address: generalcounsel@hollycorp.com

     (b) Any Party may at any time change its address for service from time to time by giving
notice to the other Parties in accordance with this Section 8.

     Section 9. Deficiency Payments

     (a) As soon as practicable following the end of each Contract Quarter under this Agreement,
HEP Operating shall deliver to Navajo Refining a written notice (the “Deficiency Notice”)
detailing any failure of Navajo Refining to meet its obligations under Section 2(a)(i);
provided, however, that Navajo Refining’s obligations pursuant to the Minimum
Pipeline Revenue Commitment (including Qualified Third-Party Throughput) shall be assessed on a

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quarterly basis for the purposes of this Section 9. The Deficiency Notice shall (i)
specify in reasonable detail the nature of any deficiency and (ii) specify the approximate dollar
amount that HEP Operating believes would have been paid by Navajo Refining to HEP Operating if
Navajo Refining had complied with its obligations pursuant to Section 2(a)(i) (the
“Deficiency Payment”). Navajo Refining shall pay the Deficiency Payment to HEP Operating
upon the later of: (A) ten (10) days after their receipt of the Deficiency Notice and (B) thirty
(30) days following the end of the related Contract Quarter.

     (b) If Navajo Refining disagrees with the Deficiency Notice, then, following the payment of
the undisputed portion of the Deficiency Payment to HEP Operating, if any, Navajo Refining shall
send written notice thereof regarding the disputed portion of the Deficiency Payment to HEP
Operating and a senior officer of Holly (on behalf of Navajo Refining) and a senior officer of the
Partnership (on behalf of HEP Operating) shall meet or communicate by telephone at a mutually
acceptable time and place, and thereafter as often as they reasonably deem necessary and shall
negotiate in good faith to attempt to resolve any differences that they may have with respect to
matters specified in the Deficiency Notice. During the 30-day period following the payment of the
Deficiency Payment, Navajo Refining shall have access to the working papers of HEP Operating
relating to the Deficiency Notice. If such differences are not resolved within thirty (30) days
following Navajo Refining’s receipt of the Deficiency Notice, Navajo Refining and HEP Operating
shall, within forty-five (45) days following Navajo Refining’s receipt of the Deficiency Notice,
submit any and all matters which remain in dispute and which were properly included in the
Deficiency Notice to arbitration in accordance with Section 12(e).

     (c) If it is finally determined pursuant to this Section 9 that Navajo Refining is
required to pay any or all of the disputed portion of the Deficiency Payment, Navajo Refining shall
promptly pay such amount to HEP Operating, together with interest thereon at the Prime Rate, in
immediately available funds.

     (d) The fact that Navajo Refining has exceeded or fallen short of the Minimum Pipeline Revenue
Commitment (after taking into account Qualified Third-Party Throughput) with respect to any
Contract Quarter shall not be considered in determining whether Navajo Refining meets, exceeds or
falls short of the Minimum Pipeline Revenue Commitment (after taking into account Qualified
Third-Party Throughput) with respect to any other Contract Quarter, and the amount of any such
excess or shortfall shall not be counted towards or against the Minimum Pipeline Revenue Commitment
with respect to any other Contract Quarter.

     Section 10. Right of First Refusal. The Parties acknowledge the right of
first refusal of Holly with respect to the Roadrunner Pipeline as provided in the Omnibus
Agreement.

     Section 11. Limitation of Damages.

     (a) NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS
AGREEMENT AND EXCEPT FOR CLAIMS MADE BY THIRD PARTIES WHICH SHALL NOT BE LIMITED BY THIS PARAGRAPH,
THE PARTIES AGREE THAT THE RECOVERY BY ANY PARTY OF ANY LIABILITIES, DAMAGES, COSTS OR OTHER
EXPENSES SUFFERED OR INCURRED BY IT AS A

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RESULT OF ANY BREACH OR NONFULFILLMENT BY A PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES,
COVENANTS, AGREEMENTS OR OTHER OBLIGATIONS UNDER THIS AGREEMENT, SHALL BE LIMITED TO ACTUAL DAMAGES
AND SHALL NOT INCLUDE OR APPLY TO, NOR SHALL ANY PARTY BE ENTITLED TO RECOVER, ANY INDIRECT,
CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT
OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION OR DIMINUTION IN VALUE) SUFFERED OR
INCURRED BY ANY PARTY; PROVIDED, HOWEVER, THAT SUCH RESTRICTION AND LIMITATION
SHALL NOT APPLY (x) AS A RESULT OF A THIRD PARTY CLAIM FOR SUCH INDIRECT, CONSEQUENTIAL, EXEMPLARY
OR PUNITIVE DAMAGES OR (y) TO INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING,
WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS
INTERRUPTION OR DIMINUTION IN VALUE) THAT ARE A RESULT OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE BREACHING OR NONFULFILLING PARTY OR ITS AFFILIATES.

     (b) Notwithstanding anything in this Agreement to the contrary and solely for the purpose of
determining which Party shall be liable in a particular circumstance, no Party shall be liable to
another Party for any loss, damage, injury, judgment, claim, cost, expense or other liability
suffered or incurred by such Party (the “Damaged Party”) except to the extent that the
Party causes such loss, damage, injury, judgment, claim, cost, expense or other liability suffered
or incurred by the Damaged Party or owns or operates the Roadrunner Pipeline or other property in
question responsible for causing such loss, damage, injury, judgment, claim, cost, expense or other
liability suffered or incurred by the Damaged Party.

     Section 12. Miscellaneous

     (a) Amendments and Waivers. No amendment or modification of this Agreement shall be
valid unless it is in writing and signed by the Parties. No waiver of any provision of this
Agreement shall be valid unless it is in writing and signed by the Party against whom the waiver is
sought to be enforced. Any of the exhibits or schedules to this Agreement may be amended,
modified, revised or updated by the Parties if each of the Parties executes an amended, modified,
revised or updated exhibit or schedule, as applicable, and attaches it to this Agreement. Such
amended, modified, revised or updated exhibits or schedules shall be sequentially numbered (e.g.
Schedule I-1, Schedule I-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.

     (b) Successors and Assigns. This Agreement shall inure to the benefit of, and shall
be binding upon, Navajo Refining, HEP Operating and their respective successors and permitted
assigns. Neither this Agreement nor any of the rights or obligations hereunder shall be assigned
without the prior written consent of Navajo Refining (in the case of any assignment by HEP
Operating) or HEP Operating (in the case of any assignment by Navajo Refining), in each case,

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such consent is not to be unreasonably withheld or delayed; provided, however, that (i) HEP
Operating may make such an assignment (including a partial pro rata assignment) to an Affiliate of
HEP Operating without Navajo Refining’s consent, (ii) Navajo Refining may make such an assignment
(including a pro rata partial assignment) to an Affiliate of Navajo Refining without HEP
Operating’s consent, (iii) Navajo Refining may make a collateral assignment of their rights and
obligations hereunder, and (iv) HEP Operating may make a collateral assignment of their rights
hereunder and/or grant a security interest in its rights and obligations hereunder to a bona fide
third party lender or debt holder, or trustee or representative for any of them, without Navajo
Refining’s consent, if such third party lender, debt holder or trustee shall have executed and
delivered to Navajo Refining a non-disturbance agreement in such form as is reasonably satisfactory
to Navajo Refining and such third party lender, debt holder or trustee. Any attempt to make an
assignment otherwise than as permitted by the foregoing shall be null and void. The Parties agree
to require their respective successors, if any, to expressly assume, in a form of agreement
reasonably acceptable to the other Parties, their obligations under this Agreement.

     (c) 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.

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

     (e) 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 12(e) and the Commercial
Arbitration Rules or the Federal Arbitration Act, the terms of this Section 12(e) 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 thirty (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 thirty (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-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 Navajo Refining, HEP Operating or any of their Affiliates and (ii) have not
less than seven (7) years experience in the petroleum transportation industry. The hearing will be

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conducted in Dallas, Texas and commence within thirty (30) days after the selection of the
third arbitrator. Navajo Refining, HEP Operating 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. The Arbitrable Disputes may be
arbitrated in a common proceeding along with disputes under other agreements between Navajo
Refining, HEP Operating or their Affiliates to the extent that the issues raised in such disputes
are related. Without the written consent of the Parties, no unrelated disputes or third party
disputes may be joined to an arbitration pursuant to this Agreement.

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

     (g) 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.

     (h) 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.

     Section 13. Guarantee by Holly

     (a) Payment and Performance Guaranty. Holly unconditionally, absolutely, continually
and irrevocably guarantees, as principal and not as surety, to HEP Operating the punctual and
complete payment in full when due of all amounts due from Navajo Refining under the Agreement
(collectively, the “Navajo Refining Payment Obligations”). Holly agrees that HEP Operating
shall be entitled to enforce directly against Holly any of the Navajo Refining Payment Obligations.

     (b) Guaranty Absolute. Holly hereby guarantees that the Navajo Refining Payment
Obligations will be paid strictly in accordance with the terms of the Agreement. The obligations
of Holly under this Agreement constitute a present and continuing guaranty of payment, and not of
collection or collectability. The liability of Holly under this Agreement shall be absolute,
unconditional, present, continuing and irrevocable irrespective of:

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

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

Pipeline Throughput Agreement (Roadrunner)

14

 

     (iii) any acceptance by HEP Operating of partial payment or performance from Navajo
Refining;

     (iv) any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment,
dissolution, liquidation or other like proceeding relating to Navajo Refining or any action
taken with respect to the Agreement by any trustee or receiver, or by any court, in any such
proceeding;

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

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

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

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

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

     (e) Reinstatement. The obligations of Holly under this Section 13 shall
continue to be effective or shall be reinstated, as the case may be, if at any time any payment of
any of the Navajo Refining Payment Obligations is rescinded or must otherwise be returned to Navajo
Refining or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation or reorganization of Navajo Refining or such other entity, or for any
other reason, all as though such payment had not been made.

     (f) Continuing Guaranty. This Section 13 is a continuing guaranty and shall
(i) remain in full force and effect until the first to occur of the indefeasible payment in full of
all of the Navajo Refining Payment Obligations, (ii) be binding upon Holly, its successors and
assigns

Pipeline Throughput Agreement (Roadrunner)

15

 

and (iii) inure to the benefit of and be enforceable by HEP Operating and its respective
successors, transferees and assigns.

     (g) No Duty to Pursue Others. It shall not be necessary for HEP Operating (and Holly
hereby waives any rights which Holly may have to require HEP Operating), in order to enforce such
payment by Holly, first to (i) institute suit or exhaust its remedies against Navajo Refining or
others liable on the Navajo Refining Payment Obligations or any other person, (ii) enforce HEP
Operating’s rights against any other guarantors of the Navajo Refining Payment Obligations, (iii)
join Navajo Refining or any others liable on the Navajo Refining Payment Obligations in any action
seeking to enforce this Section 13, (iv) exhaust any remedies available to HEP Operating
against any security which shall ever have been given to secure the Navajo Refining Payment
Obligations, or (v) resort to any other means of obtaining payment of the Navajo Refining Payment
Obligations.

     Section 14. Guarantee by the Partnership.

     (a) Payment and Performance Guaranty. The Partnership unconditionally, absolutely,
continually and irrevocably guarantees, as principal and not as surety, to Navajo Refining the
punctual and complete payment in full when due of all amounts due from HEP Operating under the
Agreement (collectively, the “HEP Operating Payment Obligations”). The Partnership agrees
that Navajo Refining shall be entitled to enforce directly against the Partnership any of the HEP
Operating Payment Obligations.

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

     (i) any assignment or other transfer of the Agreement or any of the rights thereunder
of Navajo Refining;

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

     (iii) any acceptance by Navajo Refining of partial payment or performance from HEP
Operating;

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

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

Pipeline Throughput Agreement (Roadrunner)

16

 

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

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

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

     (d) Subrogation Waiver. The Partnership agrees that for so long as there is a current
or ongoing default or breach of this Agreement by HEP Operating, the Partnership shall not have any
rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other
rights of payment or recovery from HEP Operating for any payments made by the Partnership under
this Section 14, and each of the Partnership hereby irrevocably waives and releases,
absolutely and unconditionally, any such rights of subrogation, contribution, reimbursement,
indemnification and other rights of payment or recovery it may now have or hereafter acquire
against HEP Operating during any period of default or breach of this Agreement by HEP Operating
until such time as there is no current or ongoing default or breach of this Agreement by HEP
Operating.

     (e) Reinstatement. The obligations of the Partnership under this Section 14
shall continue to be effective or shall be reinstated, as the case may be, if at any time any
payment of any of the HEP Operating Payment Obligations is rescinded or must otherwise be returned
to HEP Operating or any other entity, upon the insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation or reorganization of HEP Operating or such other entity, or for any other
reason, all as though such payment had not been made.

     (f) Continuing Guaranty. This Section 14 is a continuing guaranty and shall
(i) remain in full force and effect until the first to occur of the indefeasible payment in full of
all of the HEP Operating Payment Obligations, (ii) be binding upon the Partnership and each of its
respective successors and assigns and (iii) inure to the benefit of and be enforceable by Navajo
Refining and their respective successors, transferees and assigns.

     (g) No Duty to Pursue Others. It shall not be necessary for Navajo Refining (and the
Partnership hereby waives any rights which the Partnership may have to require Navajo Refining), in
order to enforce such payment by the Partnership, first to (i) institute suit or exhaust its
remedies against HEP Operating or others liable on the HEP Operating Payment Obligations or any
other person, (ii) enforce Navajo Refining’ rights against any other guarantors of the HEP
Operating Payment Obligations, (iii) join HEP Operating or any others liable on the HEP Operating
Payment Obligations in any action seeking to enforce this Section 14, (iv) exhaust any
remedies available to Navajo Refining against any security which shall ever have been given to

Pipeline Throughput Agreement (Roadrunner)

17

 

secure the HEP Operating Payment Obligations, or (v) resort to any other means of obtaining
payment of the HEP Operating Payment Obligations.

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

Pipeline Throughput Agreement (Roadrunner)

18

 

     IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of the date first
written above.

	 	 	 	 	 
	 	HEP OPERATING:

Holly Energy Partners-Operating, L.P.

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

Navajo Refining Company, L.L.C.

 	 
	 	By:  	/s/ David L. Lamp
 	 
	 	 	David L. Lamp 	 
	 	 	Vice President 	 
	 

[Signature Page 1 of 2 to the Pipeline Throughput Agreement (Roadrunner)]

 

ACKNOWLEDGED AND AGREED

FOR PURPOSES OF Section 9(b)

AND Section 13:

	 	 	 	 	 
	HOLLY CORPORATION	 	 
	 
	 	 	 	 
	By:

	 	/s/ David L. Lamp
 

David L. Lamp

President
	 	 

ACKNOWLEDGED AND AGREED

FOR PURPOSES OF Section 9(b)

AND Section 14:

	 	 	 	 	 
	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
	 	 

[Signature Page 2 of 2 to the Pipeline Throughput Agreement (Roadrunner)]

 

SCHEDULE I

PIPELINE TARIFF

Pipeline Base Tariff

$0.63 per barrel

Pipeline Incentive Tariff

$0.33 per barrel

Schedule I

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