Document:

Exhibit103-EleventhAROmnibusAgreement-ExecutionVersion

EXECUTION VERSION

	
	
	

ELEVENTH AMENDED AND RESTATED OMNIBUS AGREEMENT
among
HOLLYFRONTIER CORPORATION
HOLLY ENERGY PARTNERS, L.P.
and
CERTAIN OF THEIR RESPECTIVE SUBSIDIARIES

1

TABLE OF CONTENTS
	
					
	 
	 
	 
	 
	Page

	Article I
	 
	Definitions
	 
	4

	1.1
	 
	Definitions
	 
	4

	Article II
	 
	Business Opportunities
	 
	11

	2.1
	 
	Restricted Businesses
	 
	11

	2.2
	 
	Permitted Exceptions
	 
	11

	2.3
	 
	Procedures
	 
	12

	2.4
	 
	Scope of Prohibition
	 
	14

	2.5
	 
	Enforcement
	 
	14

	2.6
	 
	Limitation on Acquisitions of Subject Assets by Partnership  
	 
	14

	Article III
	 
	Indemnification
	 
	14

	3.1
	 
	Environmental Indemnification
	 
	14

	3.2
	 
	Limitations Regarding Environmental Indemnification
	 
	17

	3.3
	 
	Right of Way Indemnification
	 
	17

	3.4
	 
	Additional Indemnification
	 
	17

	3.5
	 
	Indemnification Procedures
	 
	18

	3.6
	 
	Limitation on Indemnification Obligations
	 
	19

	3.7
	 
	Exclusion from Indemnification
	 
	20

	Article IV
	 
	General and Administrative Expenses
	 
	20

	4.1
	 
	General
	 
	20

	Article V
	 
	Right of First Refusal
	 
	21

	5.1
	 
	Holly Right of First Refusal: Prohibition on Transfer of Refinery Related Assets
	 
	21

	5.2
	 
	Procedures
	 
	22

	Article VI
	 
	Holly Purchase Option
	 
	24

	6.1
	 
	Option to Purchase Tulsa Transferred Assets
	 
	24

	Article VII
	 
	Miscellaneous
	 
	24

	7.1
	 
	Choice of Law
	 
	24

	7.2
	 
	Arbitration Provision
	 
	24

	7.3
	 
	Notice
	 
	25

	7.4
	 
	Entire Agreement
	 
	26

	7.5
	 
	Termination of Article II
	 
	26

	7.6
	 
	Amendment or Modification
	 
	26

	7.7
	 
	Assignment
	 
	26

	7.8
	 
	Additional Partnership Entities
	 
	27

	7.9
	 
	Counterparts
	 
	27

	7.10
	 
	Severability
	 
	27

	7.11
	 
	Further Assurances
	 
	27

	7.12
	 
	Rights of Limited Partners
	 
	27

	7.13
	 
	Headings
	 
	27

	7.14
	 
	[Intentionally omitted]
	 
	27

	7.15
	 
	Limitation of Damages
	 
	27

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ELEVENTH AMENDED AND RESTATED OMNIBUS AGREEMENT
THIS ELEVENTH AMENDED AND RESTATED OMNIBUS AGREEMENT (the “Agreement”) is being entered into on March 12, 2015, to be effective as of January 1, 2015, by and among HollyFrontier 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 Tenth Amended and Restated Omnibus Agreement entered into on September 26, 2014 (as amended, the “Tenth 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 entered into the First Amended and Restated Omnibus Agreement (the “First Amended Omnibus Agreement”);

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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 and Restated Omnibus Agreement (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 acquired 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. (“HEP Pipeline”), pursuant to which Navajo Pipeline agreed to transfer and convey to HEP Pipeline, and HEP Pipeline 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 agreed to transfer and convey to the Operating Partnership, and the Operating Partnership 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 amended and restated the Second Amended Omnibus Agreement and entered into the Third Amended and Restated Omnibus Agreement (the “Third Amended Omnibus Agreement”); 
WHEREAS, in connection with that certain LLC Interest Purchase Agreement dated as of March 31, 2010, by and among Holly, Lea Refining Company, Holly Tulsa, HEP Refining, L.L.C. (“HEP Refining”) and HEP Tulsa (the “March 2010 Drop Down LLC Interest Purchase Agreement”), pursuant to which  Holly, Lea Refining Company and Holly Tulsa agreed to transfer and convey to HEP Refining and HEP Tulsa the Additional Tulsa East Assets (as defined herein) and the Additional Lovington Assets (as defined herein), the Parties amended and restated the Third Amended Omnibus Agreement and entered into the Fourth Amended and Restated Omnibus Agreement (the “Fourth Amended Omnibus Agreement”);
WHEREAS, in connection with the construction of the Tulsa Interconnecting Pipelines (as defined herein), Holly Tulsa, HEP Tulsa and Holly Energy Storage – Tulsa LLC entered into that certain Second Amended and Restated Pipelines, Tankage and Loading Rack Throughput Agreement (Tulsa East), dated as of August 31, 2011, pursuant to which HEP Tulsa agreed to provide transportation services to Holly Tulsa with respect to the Tulsa Interconnecting Pipelines (the “Tulsa Throughput Agreement”), the Parties amended and restated the Fourth Amended Omnibus Agreement and entered into the Fifth Amended and Restated Omnibus Agreement (the “Fifth Amended Omnibus Agreement”); 
WHEREAS, in connection with that certain LLC Interest Purchase Agreement effective as of November 1, 2011, by and among Holly, Frontier Refining LLC (“Frontier Cheyenne”), Frontier El Dorado Refining LLC (“Frontier El Dorado”), the Operating Partnership and the Partnership, (the “November 2011 Frontier Drop Down LLC Interest Purchase Agreement”), pursuant to which Frontier Cheyenne and Frontier El Dorado agreed sell to the Operating Partnership the entities that own the Cheyenne Assets (as defined herein) and the El Dorado Assets (as defined 

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herein), the Parties amended and restated the Fifth Amended Omnibus Agreement and entered into the Sixth Amended and Restated Omnibus Agreement (the “Sixth Amended Omnibus Agreement”);
WHEREAS, in connection with that certain LLC Interest Purchase Agreement dated as of July 12, 2012, by and among Holly, HEP UNEV Holdings LLC (“HEP UNEV”) and the Partnership (the “UNEV LLC Interest Purchase Agreement”), pursuant to which Holly agreed to sell to HEP UNEV the entity that owns 75% of all of the issued and outstanding membership interests of UNEV Pipeline, LLC, the entity that owns the UNEV Pipeline (as defined herein), the Parties amended and restated the Sixth Amended Omnibus Agreement and entered into the Seventh Amended and Restated Omnibus Agreement (the “Seventh Amended Omnibus Agreement”); 
WHEREAS, in connection with that certain Transportation Services Agreement (Malaga) dated as of July 16, 2013, to be effective as of 12:01 a.m., Dallas, Texas time, on June 1, 2013, by and between HollyFrontier Refining & Marketing LLC (“HFRM”) and Operating Partnership, pursuant to which Operating Partnership will provide certain transportation services for HFRM on the Malaga Pipeline System (as defined herein), the Parties amended and restated the Seventh Amended Omnibus Agreement and entered into the Eighth Amended and Restated Omnibus Agreement (the “Eighth Amended Omnibus Agreement”); 
WHEREAS, in connection with that certain Second Amended and Restated Pipeline Delivery, Tankage and Loading Rack Throughput Agreement (El Dorado), dated as of January 7, 2014, and effective as of November 1, 2011, by and between Frontier El Dorado and El Dorado Logistics LLC (the “El Dorado Throughput Agreement”), pursuant to which El Dorado Logistics LLC will construct new storage tank assets, the Parties amended and restated the Eighth Amended Omnibus Agreement and entered into the Ninth Amended and Restated Omnibus Agreement (the “Ninth Amended Omnibus Agreement”); 
WHEREAS, in connection with that certain Amended and Restated Transportation Services Agreement (Malaga), dated as of September 26, 2014, by and between HFRM and Operating Partnership (the “Malaga TSA”), pursuant to which Operating Partnership will provide certain transportation services for HFRM on the Malaga Pipeline System (as defined herein), the Parties amended and restated the Ninth Amended Omnibus Agreement and entered into the Tenth Amended Omnibus Agreement; and
WHEREAS, in connection with that certain Unloading and Blending Services Agreement (Artesia), dated as of March 12, 2015, by and among HFRM, Operating Partnership and HEP Refining, pursuant to which HEP Refining will construct two tanks and related equipment for the unloading and blending of ethanol and biodiesel at the refined product truck rack located at the refinery owned by Navajo Refining Company, L.L.C. (“Navajo Refining”)  in Artesia, New Mexico (collectively, the “Artesia Blending Facility”), and in connection with that certain Third Amended and Restated Crude Pipelines and Tankage Agreement, dated as of March 12, 2015, by and among Navajo Refining, Holly Refining & Marketing Company – Woods Cross LLC, HFRM, Operating Partnership, HEP Pipeline, and HEP Woods Cross, L.L.C., pursuant to which HEP Pipeline will complete the following expansion projects: the installation of a larger pump at the Beeson station and the replacement of 5 miles of existing 8-inch pipeline with 10-inch pipeline beginning at the Beeson station end of the Beeson Pipeline (the “Beeson to Lovington System 

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Expansion”), the Parties desire to amend and restate the Tenth 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.
“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., 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).
“Additional Tulsa East Assets” means the Transferred Tulsa East Assets as defined in the March 2010 Drop Down LLC Interest Purchase Agreement.
“Additional Lovington Assets” means the Transferred Lovington Assets as defined in the March 2010 Drop Down LLC Interest Purchase Agreement.
“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.

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“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.
“Artesia Blending Facility” is defined in the recitals to this Agreement.
“Assets” means all of the following assets conveyed, contributed, or otherwise transferred, directly or indirectly (including by transfer or sale of the entity that owns such assets or the entity that owns the interests in the entity that owns such assets), 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, (vii) the Roadrunner Pipeline, (viii) the Additional Lovington Assets, (ix) the Additional Tulsa East Assets, (x) the Sinclair Assets, (xi) the Tulsa Interconnecting Pipelines, (xii) the Cheyenne Assets, (xiii) the El Dorado Assets, (xiv) the UNEV Pipeline, (xv) the Malaga Pipeline System, (xvi) the El Dorado New Tank, (xvii) the Artesia Blending Facility, and (xviii) the Beeson to Lovington System Expansion.
“Beeson Pipeline” means the 8” crude oil pipeline extending from Beeson station to Lovington, New Mexico, owned by HEP Pipeline, L.L.C.
“Beeson to Lovington System Expansion” is defined in the recitals of this Agreement.
“Change of Control” means, with respect to any Person (the “Applicable Person”), any of the following events: (a) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the Applicable Person’s assets to any other Person unless immediately following such sale, lease, exchange, or other transfer such assets are owned, directly or indirectly, by the Applicable Person; (b) the consolidation or merger of the Applicable Person with or into another Person pursuant to a transaction in which the outstanding Voting Securities of the Applicable Person are changed into or exchanged for cash, securities, or other property, other than any such transaction where (i) the outstanding Voting Securities of the Applicable Person are changed into or exchanged for Voting Securities of the surviving Person or its parent and (ii) the holders of the Voting Securities of the Applicable Person immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Securities of 

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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.
“Cheyenne Assets” is defined in the November 2011 Frontier Drop Down LLC Interest Purchase Agreement.
“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, with respect to a group of Assets (e.g. the 8” and 10” Lovington/Artesia Intermediate Pipelines), the effective date of the purchase of such Assets or the stock, partnership interests or membership interests of the entity that directly or indirectly owned such 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.
“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).
“Eighth Amended Omnibus Agreement” is defined in the recitals to this Agreement.
“El Dorado Assets” is defined in the November 2011 Frontier Drop Down LLC Interest Purchase Agreement.
“El Dorado New Tank” means that certain petroleum products storage tank, which tank is being constructed in accordance with the specifications set forth in the El Dorado Throughput Agreement.

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“El Dorado Throughput Agreement” is defined in the recitals to this Agreement
“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.
“Fifth Amended Omnibus Agreement” is defined in the recitals to this Agreement.
“First Amended Omnibus Agreement” is defined in the recitals to this Agreement.
“First ROFR Acceptance Deadline” is defined in Section 5.2(a). 
“Fourth Amended Omnibus Agreement” is defined in the recitals to this Agreement.
“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.
“HFRM” is defined in the recitals to this Agreement.
“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.
“Malaga Pipeline System” means the Pipeline System, as such term is defined in the Malaga TSA.
“Malaga TSA” is defined in the recitals to this Agreement.
“March 2010 Drop Down LLC Interest Purchase Agreement” is defined in the recitals to this Agreement.
“Navajo Pipeline” is defined in the introduction to this Agreement.
“Navajo Refining” is defined in the recitals to this Agreement.
“Ninth Amended Omnibus Agreement” is defined in the recitals to this Agreement.
“November 2011 Frontier Drop Down LLC Interest Purchase Agreement” is defined in the recitals 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 

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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 amended pursuant to that certain Limited Partial Waiver of Incentive Distribution Rights, dated July 12, 2012, and as amended by that certain Amendment No. 4 to the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated January 16, 2013, 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.
“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 

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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 Amended Omnibus Agreement” is defined in the recitals to this Agreement.
“Second ROFR Acceptance Deadline” is defined in Section 5.2(a).
“Seventh Amended Omnibus Agreement” is defined in the recitals to this Agreement.
“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.
“Sixth Amended Omnibus Agreement” is defined in the recitals to this Agreement.
“Subject Assets” is defined in Section 2.2(c).
“Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.
“Tenth Amended Omnibus Agreement” is defined in the introduction to this Agreement.
“Third Amended Omnibus Agreement” is defined in the recitals to this Agreement.
“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.

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“Tulsa Interconnecting Pipelines” means the Interconnecting Pipelines as defined in the Tulsa Throughput Agreement.
“Tulsa Throughput Agreement” is defined in the recitals to this Agreement.
“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).
“UNEV LLC Interest Purchase Agreement” is defined in the recitals to this Agreement.
“UNEV Pipeline” means, collectively, an approximately 400 mile, 12-inch refined products pipeline currently running from Woods Cross, Utah to Las Vegas, Nevada, related products terminals in or near Cedar City, Utah to Las Vegas, Nevada and other related assets owned by UNEV Pipeline, LLC.  
“UNEV Profits Interest” means the membership interest in HEP UNEV held directly or indirectly by Holly.
“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:

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(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;
(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; and
(f)    the ownership of the UNEV Profits Interest.
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 

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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 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 

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agreement with Holly GP or the Holly Group Member to provide services in a manner consistent with the Offer.
(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.

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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 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

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(iii)    the operation or ownership by Holly and its Affiliates of any assets not constituting part of the Assets, including but not limited to underground pipelines retained by the Holly Entities 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 to the extent not transferred to the Partnership Entities (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 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 performed 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

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(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;
but 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, the Roadrunner Pipeline, the Tulsa Interconnecting Pipelines, the UNEV Pipeline, the Malaga Pipeline System (other than that certain 8” pipeline extending 50 miles from the White City Station that was formerly used as a refined products pipeline and that was conveyed to the Partnership Entities as part of the 2004 Product Pipelines, Terminal and Related Assets), the El Dorado New Tank, the Artesia Blending Facility, or the Beeson to Lovington System Expansion.
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 $17,500,000 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 

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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 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.

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3.5    Indemnification Procedures.
(a)    The Indemnified Party agrees that promptly after it becomes aware of facts giving rise to a claim for indemnification under this Article III, it will provide notice thereof in writing to the Indemnifying Party, specifying the nature of and specific basis for such claim.
(b)    The Indemnifying Party shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any claims brought against the Indemnified Party that are covered by the indemnification under this Article III, including, without limitation, the selection of counsel, determination of whether to appeal any decision of any court and the settling of any such matter or any issues relating thereto; provided, however, that no such settlement shall be entered into without the consent of the Indemnified Party unless it includes a full release of the Indemnified Party from such matter or issues, as the case may be.
(c)    The Indemnified Party agrees to cooperate fully with the Indemnifying Party, with respect to all aspects of the defense of any claims covered by the indemnification under this Article III, including, without limitation, the prompt furnishing to the Indemnifying Party of any correspondence or other notice relating thereto that the Indemnified Party may receive, permitting the name of the Indemnified Party to be utilized in connection with such defense, the making available to the Indemnifying Party of any files, records or other information of the Indemnified Party that the Indemnifying Party considers relevant to such defense and the making available to the Indemnifying Party of any employees of the Indemnified Party; provided, however, that in connection therewith the Indemnifying Party agrees to use reasonable efforts to minimize the impact thereof on the operations of the Indemnified Party and further agrees to maintain the confidentiality of all files, records, and other information furnished by the Indemnified Party pursuant to this Section 3.5.  In no event shall the obligation of the Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in connection with the defense of any claims covered by the indemnification set forth in this Article III; provided, however, that the Indemnified Party may, at its own option, cost and expense, hire and pay for counsel in connection with any such defense.  The Indemnifying Party agrees to keep any such counsel hired by the Indemnified Party informed as to the status of any such defense, but the Indemnifying Party shall have the right to retain sole control over such defense.
(d)    In determining the amount of any loss, cost, damage or expense for which the Indemnified Party is entitled to indemnification under this Agreement, the gross amount of the indemnification will be reduced by 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 

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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 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.
(c)    For the avoidance of doubt, any indemnification obligations of the Holly Entities in Article III with respect to any indemnifiable losses incurred by or attributable to the UNEV Pipeline shall be (i) limited to an amount that is the product of (x) the amount of such losses, multiplied by (y) HEP UNEV’s direct or indirect percentage ownership interest in the UNEV Pipeline at the time such losses were incurred and (ii) payable to, for the benefit of and recoverable solely by HEP UNEV or any Partnership Entity designated by HEP UNEV (and not by UNEV Pipeline, LLC).
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, the Sinclair Transferred Assets or the Additional Tulsa East Assets, though the parties hereto acknowledge the environmental indemnity provided among certain of the Holly Entities and HEP 

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Entities with respect to the Sinclair Transferred Assets and the Additional Tulsa East Assets contained in the Tulsa Throughput Agreement.
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; 
(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.

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(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 or the UNEV Pipeline, but shall expressly include the equity interests of UNEV Pipeline, LLC then owned directly or indirectly by the Partnership Entities. 
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 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 

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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 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, 

23

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
(xiii)    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 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.  

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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 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.

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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:
HollyFrontier Corporation 
2828 N. Harwood, Suite 1300 
Dallas, Texas 75201 
Attention: President  
Email address:  president@hollyfrontier.com
with a copy, which shall not constitute notice, but is required in order to give proper notice, to:
HollyFrontier Corporation 
2828 N. Harwood, Suite 1300 
Dallas, Texas 75201 
Attention:  General Counsel 
Email address: generalcounsel@hollyfrontier.com
Notices to the Partnership Entities:
Holly Energy Partners, L.P. 
c/o Holly Logistic Services, L.L.C. 
2828 N. Harwood, Suite 1300 
Dallas, Texas 75201 
Attention: President 
Email address:  president-HEP@hollyenergy.com
with a copy, which shall not constitute notice, but is required in order to give proper notice, to:
Holly Energy Partners, L.P. 
c/o Holly Logistic Services, L.L.C.  
2828 N. Harwood, Suite 1300 
Dallas, Texas 75201 
Attention:  General Counsel  
Email address: general.counsel@hollyenergy.com

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(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, together with the other agreements and instruments referred to herein, 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).
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.

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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    [Intentionally omitted]
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, 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 

28

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.]

29

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set forth above.
	
					
	 
	 
	 
	HOLLY ENTITIES:

	 
	 
	 
	 
	 

	 
	 
	 
	HOLLYFRONTIER CORPORATION

	 
	 
	 
	HOLLY REFINING & MARKETING COMPANY -WOODS CROSS LLC

	 
	 
	 
	NAVAJO REFINING COMPANY, L.L.C.

	 
	 
	 
	NAVAJO PIPELINE CO., L.P.

	 
	 
	 
	HOLLY REFINING & MARKETING - TULSA LLC

	 
	 
	 
	FRONTIER REFINING LLC

	 
	 
	 
	FRONTIER EL DORADO REFINING LLC

	
						
	 
	 
	 
	 
	By:
	/s/ Michael C. Jennings

	 
	 
	 
	 
	Name:
	Michael C. Jennings

	 
	 
	 
	 
	Title:
	Chief Executive Officer and President

[Signature Page 1 of 3 to Eleventh Amended and Restated Omnibus Agreement]

	
									
	 
	 
	 
	 
	PARTNERSHIP ENTITIES:

	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	HOLLY ENERGY PARTNERS, L.P.

	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	By:
	HEP Logistics Holdings, L.P.
its General Partner

	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	By:
	Holly Logistics Holdings, L.L.C.
its General Partner

	
						
	 
	 
	 
	 
	By:
	/s/ Bruce R. Shaw

	 
	 
	 
	 
	Name:
	Bruce R. Shaw

	 
	 
	 
	 
	Title:
	President

	
					
	 
	 
	 
	HOLLY ENERGY PARTNERS - OPERATING, L.P.

	 
	 
	 
	HOLLY LOGISTIC SERVICES, L.L.C.

	 
	 
	 
	HEP LOGISTICS GP, L.L.C.

	 
	 
	 
	HEP TULSA LLC

	 
	 
	 
	ROADRUNNER PIPELINE, L.L.C.

	 
	 
	 
	 
	 

	 
	 
	 
	HOLLY ENERGY STORAGE - LOVINGTON LLC

	 
	 
	 
	CHEYENNE LOGISTICS LLC

	 
	 
	 
	EL DORADO LOGISTICS LLC

	 
	 
	 
	HEP UNEV HOLDINGS LLC

	 
	 
	 
	HEP UNEV PIPELINE LLC

	
						
	 
	 
	 
	 
	By:
	/s/ Bruce R. Shaw

	 
	 
	 
	 
	Name:
	Bruce R. Shaw

	 
	 
	 
	 
	Title:
	President

	
									
	 
	 
	 
	 
	HOLLY LOGISTICS HOLDINGS, L.P.

	 
	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	By:
	Holly Logistic Services, L.L.C.,
its General Partner

	
						
	 
	 
	 
	 
	By:
	/s/ Bruce R. Shaw

	 
	 
	 
	 
	Name:
	Bruce R. Shaw

	 
	 
	 
	 
	Title:
	President

[Signature Page 2 of 3 to Eleventh Amended and Restated Omnibus Agreement]

    
	
					
	 
	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/ Bruce R. Shaw

	 
	 
	 
	 
	Name:
	Bruce R. Shaw

	 
	 
	 
	 
	Title:
	President

 
	
					
	 
	HEP NAVAJO SOUTHERN, L.P.

	 
	HEP PIPELINE ASSETS, LIMITED PARTNERSHIP

	 
	 
	 
	 
	 

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

	 
	 
	General Partner

	
						
	 
	 
	 
	 
	By:
	/s/ Bruce R. Shaw

	 
	 
	 
	 
	Name:
	Bruce R. Shaw

	 
	 
	 
	 
	Title:
	President

	
					
	 
	HEP REFINING ASSETS, L.P.

	 
	 
	 
	 
	 

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

	 
	 
	Its General Partner

	
						
	 
	 
	 
	 
	By:
	/s/ Bruce R. Shaw

	 
	 
	 
	 
	Name:
	Bruce R. Shaw

	 
	 
	 
	 
	Title:
	President

[Signature Page 3 of 3 to Eleventh 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 through December 31, 2014
	$2,300,000

	Years beginning January 1, 2015
	$2,380,500

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 IEX-10.32

 Exhibit 10.32 

EMPLOYMENT AGREEMENT 

THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of August 27, 2014, is made and entered into by and between
Peoples Security Bank and Trust Company, a Pennsylvania state chartered bank (the “Bank”) and Neal D. Koplin (the “Executive”). 

ARTICLE I 
 RECITALS

 WHEREAS, the Bank desires to employ the Executive pursuant to the terms and conditions set forth in this Agreement; and 

WHEREAS, the Executive desires to be so employed by the Bank. 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows: 

ARTICLE II 
 DEFINITIONS

 Section 2.1. “Accrued Obligations” means, as of the Date of Termination, to the extent not theretofore paid,
the sum of (i) Executive’s Base Salary through the Date of Termination, (ii) the amount of any bonus or other incentive compensation for any completed bonus period and other vested cash compensation earned by Executive as of the Date of
Termination under the terms of any compensation, benefit plans, and deferred compensation plans, policies or arrangements maintained in force by the Company, and (iii) any vacation pay, expense reimbursements and other cash entitlements accrued by
the Executive, in accordance with Company policy as of the Date of Termination. 
 Section 2.2. “Bank Board” means the
board of directors of the Bank. 
 Section 2.3. “Cause” means: (i) conviction of, or the entry of a plea of guilty or
no contest to a felony or any other crime of moral turpitude that causes the Bank or any of its subsidiaries or affiliates public disgrace or disrepute, or adversely affects the Bank’s operations, financial performance, or relationship with its
customers; (ii) fraud, embezzlement or other misappropriation of funds; (iii) habitual insobriety or illegal use of controlled drugs; (iv) material breach of this Agreement, if not cured within thirty (30) days following Executive’s receipt
from the Bank of written notice thereof specifying in reasonable detail the alleged breach; or (v) refusal to perform the lawful and reasonable directives of the Chief Executive Officer of the Bank or the Bank Board, unless such refusal is cured
within thirty (30) days following Executive’s receipt from the Bank of written notice thereof, specifying the directives Executive allegedly refused to perform. 

Section 2.4. “Change in Control” means the occurrence of any one of the following events: (i) any
“person” or “group” (as such terms are used in Sections 13(d) and 

 
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than any Company employee stock ownership plan or an equivalent retirement plan, becomes
the beneficial owner (as such term is used in Section 13(d) of the Exchange Act), directly or indirectly, of securities of Parent representing 50% or more of the combined voting power of Parent’s then outstanding voting securities,
(ii) the Parent Board ceases to consist of a majority of Continuing Directors (as defined below), (iii) the consummation of a sale of all or substantially all of the Company’s assets (as measured by the fair value of the assets being
sold compared to the fair value of all of the Company’s assets), or (iv) a merger or other combination occurs such that a majority of the equity securities of the resultant entity after the merger or other combination are not owned by
those who owned a majority of the equity securities of the Parent prior to the merger or other combination. A “Continuing Director” shall mean a member of the Parent Board who either (i) is a member of the Parent Board as of
the date of this Agreement or (ii) is nominated or appointed to serve as a member of the Parent Board by a majority of the then Continuing Directors. 

Section 2.5. “Change in Control Termination” means the termination of Executive’s employment under this Agreement
by the Bank or its successor or assignee without Cause or by Executive for Good Reason, which occurs within 24 months following a Change in Control. 

Section 2.6. “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended. 

Section 2.7. “Code” means the Internal Revenue Code of 1986, as amended. 

Section 2.8. “Company” means the Parent and its direct and indirect subsidiaries, including, without limitation, the
Bank. 
 Section 2.9. “Date of Termination” has the meaning given to that term in Section 3.6. 

Section 2.10. “Disability” means a condition entitling Executive to benefits under the long term disability plan, policy
or arrangement maintained for employees of the Bank. Termination as a result of a Disability will not be construed as a termination by the Bank “without Cause.” 

Section 2.11. “Good Reason” means either of the following, without Executive’s prior consent: (i) a reduction
in Base Salary of 15% or more; or (ii) Executive being required to relocate to a principal place of employment more than 50 miles from Bethlehem, Pennsylvania. The events or conditions described in this Section 2.11 will not constitute
Good Reason unless: (a) the Executive provides the Company with written objection to the event or condition within 30 days of the first occurrence of such event or condition, (b) the Company does not reverse or otherwise cure the event or
condition within 30 days of receiving that written objection and (c) the Executive resigns his employment within 30 days following the expiration of such cure period. 

Section 2.12. “Parent” means Peoples Financial Services Corp., a Pennsylvania corporation. 

  
 -2- 

 Section 2.13. “Parent Board” means the board of directors of Parent. 

Section 2.14. “Restricted Period” means the period commencing on the Date of Termination and ending either (i) on
date that is 36 months after the Date of Termination, in the event of a Change in Control Termination, or (ii) on date that is 12 months after the Date of Termination, in any other event. 

ARTICLE III 
 EMPLOYMENT
AND COMPENSATION 
 Section 3.1. Employment Term. 

(a) The Bank shall employ Executive, and Executive hereby accepts employment with the Bank, upon the terms and conditions set forth in this
Agreement, effective August 11, 2014 (the “Effective Date”) and continuing through August 11, 2017 (the “Initial Term”) and thereafter for successive one year periods (each, a “Renewal
Term”), unless sooner terminated in accordance with this Agreement or written notice is given by one party to the other at least thirty (30) days prior to the expiration of the Initial Term or any Renewal Term, as applicable. The
Initial Term and any Renewal Term are herein collectively referred to as the “Term.” 
 (b) If Executive dies while
employed by the Bank, this Agreement and Executive’s employment by the Bank shall automatically terminate on the date of Executive’s death. The Bank may terminate Executive’s employment and all other positions with the Company upon
written notice to Executive at any time (i) due to the Disability of Executive, (ii) for Cause, or (iii) without Cause, for any or no reason. Executive may terminate his employment with the Bank and all other positions with the
Company at any time for any or no reason. Notwithstanding the generality of the preceding sentence, in the event that Executive resigns from his employment, Executive shall give thirty (30) days written notice to the Bank prior to the proposed
effective date of such resignation, and such resignation shall not be effective until the expiration of such notice period, unless such notice is waived by the Bank (in which case such resignation shall be effective as of the date of or indicated in
such waiver). 
 Section 3.2. Positions and Duties. Executive will serve as Executive Vice President of the Bank,
reporting directly to the Chief Executive Officer (“CEO”) of the Bank. Executive will be responsible for the supervision, directly or indirectly, of the Bank’s employees in the Lehigh Valley market; be a member of the
Bank’s senior loan committee; and will have all duties customarily associated with the position of an Executive Vice President, any duties as are set forth in the Bank’s bylaws for such position and all duties as are delegated to Executive
from time to time by the CEO or the Bank Board. Executive will be a regular invitee to meetings of the Bank’s senior staff, pricing committee and asset and liability committee (ALCO). Executive shall devote his best efforts and substantially
all of his business time and services to the Company. 
 Section 3.3. Other Activities. Executive may be involved in
various leadership and non-leadership capacities on a volunteer basis for not-for-profit organizations as a representative of the Company. In addition, nothing contained herein shall preclude the 

  
 -3- 

 
Executive from (i) engaging in charitable and community activities; (ii) participating in industry and trade organization activities; (iii) managing his and his family’s
personal investments and affairs; and (iv) delivering lectures, fulfilling speaking engagements or teaching at educational institutions; provided that such activities do not interfere with the regular performance of his duties and
responsibilities under this Agreement and do not violate his obligations under Article IV of this Agreement, and provided further that except as disclosed to the Bank prior to the date hereof or with consent of the Bank Board, the Executive
shall not serve as a paid director of any organization. 
 Section 3.4. Compensation. The Bank shall pay or cause to be
paid or provided to Executive the following compensation and benefits: 
 (a) Base Salary. Effective as of the Effective Date, the
Executive will receive an initial base salary of $175,000 per annum, paid in accordance with the Bank’s payroll practices. On the first anniversary of the Effective Date, the Executive’s base salary shall increase to $195,000 per annum.
Thereafter, the base salary shall be reviewed on an annual basis by the Bank (or, if appropriate, the Compensation and Benefits Committee of the Parent Board (the “Compensation Committee”)) on the Bank’s regular schedule, and
may be increased (but not decreased, except in connection with an across-the-board salary reduction applicable to all of the Bank’s management employees) from time to time at the discretion of the Bank (or, if appropriate, the Compensation
Committee). The initial base salary as adjusted from time to time is hereinafter referred to as Executive’s “Base Salary.” 

(b) Annual Bonus. 
 (i)
For each fiscal year ending during the Term, beginning with the 2014 fiscal year, the Executive will be eligible to earn a cash incentive payment. The target amount of that cash incentive payment will be twenty-five percent (25%) of the
Executive’s Base Salary at the commencement of the applicable fiscal year (the “Target Bonus”). The actual cash incentive payment payable with respect to a particular fiscal year (the “Annual Bonus”) will be
determined by the Bank (or, if appropriate, the Compensation Committee) based upon the degree of achievement of corporate and/or individual performance objectives established by the Bank (or, if appropriate, the Compensation Committee) in its sole
discretion. The foregoing notwithstanding, with respect to the 2014 fiscal year, the Executive’s Annual Bonus will be no less than $25,000. 

(ii) For purposes of determining any Annual Bonus payable to Executive, the measurement of corporate and individual performance will be
performed by the Bank (or, if appropriate, the Compensation Committee) in good faith. From time to time, the Bank (or, if appropriate, the Compensation Committee) may, in its sole discretion, make adjustments to corporate or individual performance
goals, so that required departures from the Company’s operating budget, changes in accounting principles, acquisitions, dispositions, mergers, consolidations and other corporate transactions, and other factors influencing the achievement or
calculation of such goals do not affect the operation of this Section 3.4(b) in a manner inconsistent with its intended purposes. 

(iii) Any Annual Bonus payable under this Section 3.4(b) will be paid in the year following the applicable fiscal year in which
such bonus is attributable within thirty (30) days following the recommendation of the audit committee of the Parent Board to include the audited financial statements for the applicable fiscal year in Parent’s annual report on Form 10-K,
provided that the Executive has not been terminated for Cause before such payment date. No Annual Bonus shall be paid to the Executive if he has been terminated for Cause before any such Annual Bonus would otherwise be paid. 

  
 -4- 

 (c) Signing Bonus. The Bank shall pay Executive a one-time signing bonus of $25,000
payable no later than the 30th day after the Effective Date. 
 (d) Contingent
Bonuses. The Bank shall pay Executive the following amounts (each a “Contingent Bonus”), at the following times, provided that the Executive remains continuously employed by the Bank through the specified date: 

 

					
	 Vesting Date
	  	Bonus	 
	 April 15, 2015
	  	$	39,500	  
	 April 15, 2016
	  	$	34,000	  
	 April 15, 2017
	  	$	20,000	  
	 April 15, 2018
	  	$	10,000	  

 Notwithstanding the foregoing, if Executive dies or is terminated due to the Disability of Executive before all of the
Contingent Bonuses have been earned and paid, any and all unpaid Contingent Bonuses shall be deemed earned and payable. Each Contingent Bonus that is earned shall be paid to the Executive within 30 days following the date such amount becomes earned
and payable, including the date of Executive’s death or termination due to Disability. Any amounts payable pursuant to this Section 3.4(d) shall not be deemed salary or other compensation for the purposes of computing benefits to
which the Executive may be entitled under any other arrangement established by the Bank for the benefit of its employees. 
 (e) General
Employee Benefits. The Executive will be eligible to participate in the employee benefit plans, policies or arrangements maintained by the Company for employees of the Bank generally, subject to the terms and conditions of such plans, policies
or arrangements; provided, however, that this Agreement will not limit the Company’s ability to amend, modify or terminate such plans, policies or arrangements at any time for any reason. 

(f) Paid Time Off (PTO). In addition to holidays observed by the Bank, Executive shall be entitled to twenty-five (25) working days
paid time off (“PTO”) during each year of employment without reduction in salary or other benefits. PTO days that remain unused at the end of any year will accrue or expire to the extent provided by the Bank’s PTO policy, as in effect
from time to time. 
 (g) Long-Term Equity Incentives. Subject to the approval of the Compensation Committee, the Executive will be
eligible to receive equity incentive awards pursuant to the terms and conditions of any equity incentive plan maintained by the Parent and any award agreement. 

  
 -5- 

 (h) Automobile Allowance. The Executive shall receive a monthly automobile allowance in
the amount of $750.00 for the duration of this Agreement. 
 (i) Country Club. The Bank will reimburse Executive for the membership
costs at a country club acceptable to the Bank, in accordance with Bank policy. 
 Section 3.5. Reimbursement of
Expenses. Executive will be reimbursed by the Bank for all reasonable business expenses incurred by him in accordance with the Bank’s customary expense reimbursement policies as in effect from time to time. 

Section 3.6. Severance; Severance Payments. Upon a termination of his employment with the Bank (the effective date of such
termination is herein referred to as the “Date of Termination”), Executive will be entitled only to such compensation, benefits and rights as described in this Section 3.6 and in any other agreement between Executive and
the Bank. 
 (a) Termination without Cause. Except as otherwise provided in this Section 3.6, if Executive’s
employment by the Bank is terminated by the Bank without Cause, Executive will be entitled to: 
 (i) Payment of all Accrued Obligations,
including but not limited to those earned by Executive under Sections 3.4 and 3.5 above; and 
 (ii) Cash severance payments equal
to one-twelfth of Executive’s Base Salary as of the Date of such Termination payable for a period of 12 months from and after the Date of Termination and in accordance with the Bank’s payroll practices. 

(b) Change in Control Termination. In lieu of any compensation and benefits payable under Section 3.6(a), in the event that
Executive’s employment by the Bank ceases due to a Change in Control Termination, Executive will be entitled to: 
 (i) Payment of all
Accrued Obligations, including but not limited to those earned by Executive under Sections 3.4 and 3.5 above; and 
 (ii) Cash
severance payments equal to one-twelfth of Executive’s Base Salary as of the Date of such Termination payable for a period of 36 months from and after the Date of Termination and in accordance with the Bank’s payroll practices. 

(c) Termination Following Expiration of a Term. In the event of a termination by the Bank of Executive’s employment following the
expiration of any Initial Term or Renewal Term due to the Bank’s decision not to renew the applicable Term, the Bank shall pay or provide to Executive the amounts, benefits and rights described in Section 3.6(a). 

(d) Mitigation of Separation Pay. Notwithstanding anything herein to the contrary, the severance amounts payable under
Section 3.6(a)(ii), Section 3.6(b)(ii) and Section 3.6(c) shall be reduced or eliminated on a dollar-for-dollar basis by the amount the Executive receives during the Restricted Period in connection with his
engagement or participation in any business activity substantially similar to an activity from which the Company derives revenue within 50 miles of Bethlehem, Pennsylvania (a “Competing Business), or in

  
 -6- 

 
connection with his interests (as owner, stockholder, lender, partner, co-venturer, director, officer, employee, agent or consultant) in any person, firm, corporation, association or other entity
engaged in any Competing Business. The Executive hereby agrees to notify the Company of his receipt of such amounts within 10 days following the commencement of any such payments. The Executive agrees that the operation of this provision may give
rise to an obligation to repay to the Company amounts received hereunder. 
 (e) Except as provided in this Section 3.6, all
compensation and participation in all benefit plans, policies and arrangements will cease at the Date of Termination, subject to the terms of any benefit plans, policies and arrangements then in force and applicable to Executive, and the Company
shall have no further liability or obligation by reason of such termination, provided, however, that nothing in this paragraph shall affect or be deemed to affect Executive’s rights to accrued or vested benefits under any benefit plan,
policy or arrangement. The payments and benefits described in this Section 3.6 are in lieu of, and not in addition to, any other severance arrangement maintained for the employees of the Bank generally. 

Notwithstanding any provision of this Agreement, the payments and benefits described in this Section 3.6 are conditioned on: (a) the
Executive’s execution and delivery to the Bank and the expiration of all applicable statutory revocation periods, by the 60th day following the Date of Termination, of a general release of claims against the Company in a form reasonably
prescribed by the Bank (the “Release”); and (b) the Executive’s continued compliance with the provisions of Article IV of this Agreement. Subject to Section 3.6(g), below, the benefits described in this
Section 3.6 will be paid or provided (or begin to be paid or provided as applicable) as soon as administratively practicable after the Release becomes irrevocable, provided that if the 60-day period described above begins in one taxable
year and ends in a second taxable year such payments or benefits shall not commence until the second taxable year. Any payments to be made to Executive and any benefits to be provided to Executive pursuant to this Section 3.6 shall be
paid or provided, as applicable, to Executive’s beneficiaries, heirs or estate in the event of Executive’s death. 
 (f) Other
Terminations. If Executive’s employment with the Bank ceases for any reason other than as described in Sections 3.6(a), 3.6(b) and 3.6(c) above (including but not limited to termination (a) by the Bank for Cause,
(b) as a result of Executive’s death, (c) as a result of Executive’s Disability, or (d) by Executive), then the Bank’s obligation to Executive will be limited solely to the payment of Accrued Obligations. All
compensation and participation in benefits will cease at the time of such termination and, except as otherwise provided by COBRA or the terms of such plans, the Company will have no further liability or obligation by reason of such termination. The
foregoing will not be construed to limit Executive’s right to payment or reimbursement for claims incurred prior to the Date of Termination under any insurance contract funding an employee benefit plan, policy or arrangement of the Company in
accordance with the terms of such insurance contract or Executive’s right to accrued or vested benefits under the terms of any employee benefit plan, policy or arrangement. 

  
 -7- 

 (g) Application of Section 409A of the Code. 

(i) Notwithstanding anything to the contrary in this Agreement, no portion of the benefits or payments to be made under
Section 3.6 hereof will be payable until the Executive has a “separation from service” from the Company within the meaning of Section 409A of the Code. In addition, to the extent compliance with the requirements of Treas.
Reg. § 1.409A-3(i)(2) (or any successor provision) is necessary to avoid the application of an additional tax under Section 409A of the Code to payments due to the Executive upon or following his “separation from service,” then
notwithstanding any other provision of this Agreement (or any applicable plan, policy, program, agreement or arrangement), any such payments that are otherwise due within six months following the Executive’s “separation from service”
(taking into account the preceding sentence of this paragraph) will be deferred without interest and paid to the Executive in a lump sum immediately following that six month period. This paragraph should not be construed to prevent the application
of Treas. Reg. § 1.409A-1(b)(9)(iii) (or any successor provision) to amounts payable hereunder. For purposes of the application of Section 409A of the Code, each payment in a series of payments will be deemed a separate payment. 

(ii) Any reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of
Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement shall be for expenses incurred during the period of time specified in this Agreement, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be
made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. 

(h) Limitation on Payments. If any payment or benefit due under this Agreement, together with all other payments and benefits that
Executive receives or is entitled to receive from the Bank, the Parent or any of their subsidiaries, affiliates or related entities, would (if paid or provided) constitute an Excess Parachute Payment (as defined below), the amounts otherwise payable
and benefits otherwise due under this Agreement will be limited to the minimum extent necessary to ensure that no portion thereof will fail to be tax-deductible to the Company by reason of Section 280G of the Code or result in an excise tax
payable pursuant to Section 4999 of the Code. The determination of whether any payment or benefit would (if paid or provided) constitute an Excess Parachute Payment will be made by the Parent Board, in its good faith discretion. If a reduction
to Executive’s payments and benefits is required pursuant to this Section 3.6(h), such reduction shall occur to the payments and benefits in the order that results in the greatest economic present value of all payments actually made
to Executive. 
 (i) Adjustments Necessary to Comply with Maximum Payment Limit. If, notwithstanding the initial application of
Section 3.6(h), the Internal Revenue Service determines that any amount paid or benefit provided to Executive would constitute an Excess Parachute Payment, Section 3.6(h) will be reapplied based on the Internal Revenue
Service’s determination and Executive will be required to repay to the Bank any Overpayment (as defined below) immediately upon receipt of written notice of the applicability of this section. 

  
 -8- 

 (j) Recoupment of Certain Incentive-Based Compensation. 

(i) Breach of Restrictive Covenants. If the Executive breaches, in any respect, any of the covenants to be performed by the Executive
pursuant to Article IV below (regarding non-solicitation, confidentiality, or non-disparagement), whether during the Term or the Restricted Period, then the Executive shall repay or return to the Bank the entire amount of any incentive-based
compensation received by the Executive during the 12-month period preceding such breach. 
 (ii) Obligations Not Exclusive. The
rights of the Bank and the obligations of the Executive set forth in this Section 3.6(j) are in addition to any other rights and obligations under applicable laws and regulations, the terms and conditions of any plan and award agreement
pursuant to which incentive-based compensation is awarded to the Executive, and the terms and conditions of any claw back, recoupment or similar policy applicable to the executive officers of the Bank, which the Bank or the Company may adopt and
maintain from time to time. 
 (k) Definitions. For purposes of this Agreement: 

(i) “Excess Parachute Payment” has the same meaning as used in Section 280G(b)(1) of the Code. 

(ii) “Overpayment” means any amount paid to Executive in excess of the maximum payment limit of Section 3.6(h)
of this Agreement. 
 ARTICLE IV 

RESTRICTIVE COVENANTS AND REMEDIES 

Section 4.1. Confidential Information. In consideration of the employment by the Bank of Executive and the consideration
outlined in Article III of this Agreement, and as an inducement to the Company to continue to entrust Executive with its Trade Secrets (as hereinafter defined), Executive agrees that Executive will not use for himself or disclose to any
person any Trade Secret of the Company obtained by Executive as a result of his employment by the Bank unless authorized in writing by the Bank to do so. For purposes of this Agreement, “Trade Secrets” means any trade secrets and is
deemed to include, but not be limited to, all confidential information, including price lists, patents, designs, inventions, copyrighted materials, product lists, marketing strategies, personnel files, customer lists, and all other information or
material received by Executive in connection with his employment by the Bank which is not otherwise available to the general public; provided, that the term Trade Secrets shall exclude (i) information that is or subsequently becomes publicly
available other than as a result of Executive’s breach of this Agreement; (ii) is acquired from another source not under a duty of confidentiality to the Company and not as a result of a breach of this Agreement; (iii) is
independently developed by Executive without use of the Trade Secrets; (iv) is approved for public release by the Company; or (v) is required to be disclosed by court order, subpoena, in connection with a civil or criminal investigative
demand, the discovery rules of any court or 

  
 -9- 

 
otherwise by law or legal process. Upon cessation of Executive’s service to the Bank for any reason, all written or electronic materials evidencing Trade Secrets, and all copies thereof, in
the possession or control of Executive shall be delivered to the Bank. 
 Section 4.2. Ownership of Inventions and Ideas.
Executive acknowledges that the Bank shall be the sole owner of all the results and proceeds of his service to the Company, including but not limited to, all patents, patent applications, patent rights, formulas, copyrights, inventions,
developments, discoveries, other improvements, data, documentation, drawings, charts, and other written, audio and/or visual materials relating to equipment, methods, products, processes or programs in connection with or useful to the business of
the Company (collectively, the “Developments”) which Executive, by himself or in conjunction with any other person, may conceive, make, acquire, acquire knowledge of, develop or create during Executive’s employment by the Bank,
free and clear of any claims by Executive (or any successor or assignee of Executive) of any kind or character whatsoever. Executive acknowledges that all copyrightable Developments shall be considered works made for hire under the Federal Copyright
Act. Executive hereby assigns and transfers his right, title and interest in and to all such Developments and agrees that he shall, at the request of the Bank, execute or cooperate with the Company in any patent applications, execute such
assignments, certificates or other instruments, and do any and all other acts, as the Bank from time to time reasonably deems necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend the Company’s right,
title and interest in or to any such Developments. 
 Section 4.3. Restrictive Covenants. In consideration of the
employment by the Bank of Executive and the consideration outlined in Article III of this Agreement, Executive agrees to be bound by this Section 4.3. Executive will not, directly or indirectly, do any of the following during the
Term and the Restricted Period: 
 (a) solicit or call on, either directly or indirectly, for purposes of selling goods or services
competitive with goods or services sold by the Company, any customer with whom the Company shall have dealt or any prospective customer that the Company has identified and solicited at any time during Executive’s employment by the Bank;
provided, however, that in the event that the Executive has voluntarily terminated his employment without Good Reason, then, commencing ninety (90) after the Date of Termination, the Executive may solicit only those customers of
the Company that became customers of the Company during the Term substantially as a result of the efforts of Executive as an employee of the Company; 

(b) adversely influence or attempt to adversely influence any supplier, customer (except as permitted pursuant to the proviso in the preceding
paragraph (a)) or potential customer of the Company to terminate or modify any written or oral agreement or course of dealing with the Company; 

(c) adversely influence or attempt to adversely influence any person to terminate or modify any employment, consulting, agency,
distributorship or other arrangement with the Company; or 
 (d) employ or retain, or arrange to have any other person or entity employ or
retain, any employee, consultant, agent or distributor of the Company (or with respect 

  
 -10- 

 
to the application of this provision during the Restricted Period, any person or entity who, within the 12 months preceding the Date of Termination, was employed or engaged by the Company as an
employee, consultant, agent or distributor). 
 Executive acknowledges that the restrictions contained in Sections 4.1, 4.2
and 4.3 are reasonable and necessary to protect the legitimate interests of the Bank and the Parent and that the duration of the Restricted Period, and the provisions of Sections 4.1, 4.2 and 4.3, are reasonable given
Executive’s position within the Bank and the substantial consideration payable under this Agreement. Executive further acknowledges that Sections 4.1, 4.2 and 4.3 are included herein in order to induce the Bank and the
Parent to enter into this Agreement and that the Bank and the Parent would not have entered into this Agreement in the absence of these provisions. 

Section 4.4. Enforcement. 

(a) Specific Enforcement. Executive acknowledges that any material breach by him, willfully or otherwise, of this Article IV
will cause continuing and irreparable injury to the Bank and the Parent for which monetary damages would not be an adequate remedy. Executive will not, in any action or proceeding to enforce any of the provisions of this Agreement, assert the claim
or defense that such an adequate remedy at law exists. In the event of any such material breach by Executive, the Bank and/or the Parent will have the right to enforce this Agreement by seeking injunctive or other relief in any court and this
Agreement will not in any way limit remedies of law or in equity otherwise available to the Bank and the Parent. 
 (b) Restitution.
If Executive materially breaches any part of Section 4.1, 4.2 or 4.3 (as determined by a court or arbitrator), Executive shall account for and pay over to the Bank and the Parent all compensation, profits, monies, accruals,
increments or other benefits derived or received by Executive as the result of such breach. This right and remedy will be in addition to, and not in lieu of, any other rights and remedies available to the Bank and the Parent under law or in equity.

 (c) Extension of Restricted Period. If Executive breaches Section 4.1, 4.2 or 4.3, the Restricted Period
will be extended by an amount of time equal to the period that Executive was in breach. 
 (d) Judicial Modification. If any court
determines that Section 4.1, 4.2 or 4.3, or this Section 4.4 (or any part thereof) is unenforceable because of its duration or geographic scope, that court will have the power to modify that section and, in its
modified form, that section will then be enforceable. 
 (e) Restrictions Enforceable in All Jurisdictions. If any court holds that
Section 4.1, 4.2 or 4.3, or this Section 4.4 (or any part thereof) is unenforceable by reason of its breadth or scope or otherwise, it is the intention of the parties hereto that such determination not bar or in
any way affect the right of the Bank and the Parent to the relief provided above in the courts of any other jurisdiction within the geographic scope of this section. 

(f) Disclosure of Protective Provisions. Executive agrees to disclose the existence and terms of Sections 4.1, 4.2 and
4.3 to any employer for whom Executive seeks 

  
 -11- 

 
to work during the Restricted Period. Executive also agrees that during the Restricted Period the Executive will provide and the Company may similarly provide a copy of this Section 4
to any business or enterprise (i) which Executive may directly or indirectly own, manage, operate, finance, join, control or of which he may participate in the ownership, management, operation, financing, or control, or (ii) with which
Executive may be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise, or in connection with which Executive may use or permit to be used Executive’s name. 

ARTICLE V 
 MISCELLANEOUS

 Section 5.1. No Liability of Officers and Directors for Severance Upon Insolvency. Notwithstanding any other
provision of the Agreement and intending to be bound by this provision, Executive hereby (a) waives any right to claim payment of amounts owed to him, now or in the future, pursuant to this Agreement from directors or officers of the Company if
the Company becomes insolvent, except through their individual or collective acts of malfeasance or misfeasance, and (b) fully and forever releases and discharges the Company’s officers and directors from any and all claims, demands,
liens, actions, suits, causes of action or judgments arising out of any present or future claim for such amounts except if such claims, demands, liens, actions, suits, causes of action or judgments are based on their individual or collective acts of
malfeasance or misfeasance. 
 Section 5.2. Ability to Perform. Executive represents and warrants to the Company that
there are no restrictions, agreements or understandings whatsoever to which he is a party that would prevent or make unlawful his execution of this Agreement, that would be inconsistent or in conflict with this Agreement or Executive’s
obligations hereunder, or that would otherwise prevent, limit or impair the performance by Executive of his duties under this Agreement on and after the Effective Date. 

Section 5.3. Payments Subject to Tax Withholding. All payments and transfers of property described in this Agreement will
be made net of any applicable tax withholding. 
 Section 5.4. Dispute Resolution. Except for disputes arising under
Article IV hereof, all disputes involving the interpretation, construction, application or alleged breach of this Agreement and all disputes relating to the termination of Executive’s employment with the Bank shall be submitted to final
and binding arbitration in Scranton, Pennsylvania. The arbitrator shall be selected and the arbitration shall be conducted pursuant to the then most recent Employment Dispute Resolution Rules of the American Arbitration Association in Philadelphia,
Pennsylvania. The arbitrator shall have authority to rule on any dispositive motions filed by the parties. The decision of the arbitrator shall be final and binding, and any court of competent jurisdiction may enter judgment upon the award. The
arbitrator shall have jurisdiction and authority to interpret and apply the provisions of this Agreement and relevant federal, state and local laws, rules and regulations insofar as necessary to the determination of the dispute and to remedy any
breaches of the Agreement and/or violations of applicable laws, but shall not have jurisdiction or authority to alter in any way the provisions of this Agreement. The arbitrator shall have the authority to award attorneys’ fees and costs to the
prevailing party. The parties hereby agree that this arbitration provision shall be in lieu of any requirement that either party exhaust such party’s administrative remedies under federal, state or local law. 

  
 -12- 

 Section 5.5. Successors and Assigns; Third Party Beneficiary. Each of the Bank
and the Parent may assign this Agreement to any affiliate or to any successor to its assets or business by means of liquidation, dissolution, merger, consolidation, sale of assets or otherwise. For avoidance of doubt, a termination of the
Executive’s employment by the Bank in connection with a permitted assignment of the Bank’s rights and obligations under this Agreement is not a termination “without Cause” so long as the successor or assignee offers employment to
the Executive on the terms herein specified (without regard to whether the Executive accepts employment with the successor or assignee). The duties of the Executive hereunder are personal to Executive and may not be assigned by him. The Parent and
each of its direct and indirect subsidiaries (excluding the Bank) is designated as a third party beneficiary of this Agreement and shall be entitled to enforce the terms hereof as if it were a party hereto. 

Section 5.6. Non-Disparagement. Executive agrees that he shall not in any way, orally or in writing, disparage or defame
the Company or any of its board members, officers or employees to any third party or commit any libelous or slanderous act against the Company or any of its board members, officers or employees whether in the capacity as his former employer or
otherwise. 
 Section 5.7. Severability. Whenever possible, each provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law. However, if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other
provision, and this Agreement will be reformed, construed and enforced as though the invalid, illegal or unenforceable provision had never been herein contained. 

Section 5.8. Survival. This Agreement, including, without limitation, the recoupment provisions set forth in
Section 3.6(i) and the restrictive covenants set forth in Article IV, will survive the cessation of the Executive’s employment to the extent necessary to fulfill the purposes and intent of this Agreement. 

Section 5.9. Entire Agreement; Amendments. Except as otherwise provided herein, this Agreement contains the entire
agreement and understanding of the parties hereto relating to the subject matter hereof. Therefore, this Agreement merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature relating to
Executive’s employment, compensation, severance, termination or any related matter. This Agreement may not be changed or modified, except by an Agreement in writing signed by the Executive, the Bank and the Parent. 

Section 5.10. Notice. Any notice or communication required or permitted under this Agreement will be made in writing and
(a) sent by overnight courier, (b) mailed by certified or registered mail, return receipt requested or (c) sent by telecopier, addressed as follows: 

If to Executive, to the address on file with the Bank. 

  
 -13- 

 If to the Bank or the Parent: 

Peoples Security Bank and Trust Company 

150 North Washington Avenue 

Scranton, PA 18503 
 Attn: Chief
Executive Officer 
 Section 5.11. Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania, without regard to the principles of conflicts of laws rules of any state. Any legal proceeding arising out of or relating to this Agreement will be instituted in a state or federal court in the
Commonwealth of Pennsylvania, and each of the Executive, the Bank and the Parent hereby consent to the personal and exclusive jurisdiction of such court(s) and hereby waive any objection(s) that they may have to personal jurisdiction, the laying of
venue of any such proceeding and any claim or defense of inconvenient forum. 
 Section 5.12. Counterparts and
Facsimiles. This Agreement may be executed, including execution by facsimile signature, in one or more counterparts, each of which will be deemed an original, and all of which together will be deemed to be one and the same instrument. 

Section 5.13. Remedies. In the event of any breach of this Agreement by either party, the party injured by such breach
shall be entitled to attorneys’ fees, costs and expenses incurred by reason of such breach, if any, together with interest at the maximum rate permitted by law. This paragraph shall not be considered a waiver of or a limitation on the remedies
available under this Agreement or at law or in equity for breach of this Agreement. 
 [signature page follows] 

  
 -14- 

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

					
	PEOPLES SECURITY BANK AND TRUST COMPANY
			
	By:		Craig W. Best		8/27/2014
	Name:		Craig W. Best		Date
	Title:		President CEO		
	
	EXECUTIVE
		
	Neal D. Koplin		8/27/14
	Neal D. Koplin		Date

  
 -15-

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