Document:

HEP Ex 10.6 Seventh Amended Omnibus Agreement

	
	
	

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

TABLE OF CONTENTS
Page
		
	Article I
	Definitions    3

		
	1.1
	Definitions    3

		
	Article II
	Business Opportunities    10

		
	2.1
	Restricted Businesses    10

		
	2.2
	Permitted Exceptions    10

		
	2.3
	Procedures    11

		
	2.4
	Scope of Prohibition    13

		
	2.5
	Enforcement    13

		
	2.6
	Limitation on Acquisitions of Subject Assets by Partnership Group Members    13

		
	Article III
	Indemnification    13

		
	3.1
	Environmental Indemnification    13

		
	3.2
	Limitations Regarding Environmental Indemnification    15

		
	3.3
	Right of Way Indemnification    15

		
	3.4
	Additional Indemnification    16

		
	3.5
	Indemnification Procedures    17

		
	3.6
	Limitation on Indemnification Obligations    18

		
	3.7
	Exclusion from Indemnification    18

		
	Article IV
	General and Administrative Expenses    19

		
	4.1
	General    19

		
	Article V
	Right of First Refusal    19

		
	5.1
	Holly Right of First Refusal: Prohibition on Transfer of Refinery Related Assets    19

		
	5.2
	Procedures    20

		
	Article VI
	Holly Purchase Option    22

		
	6.1
	Option to Purchase Tulsa Transferred Assets    22

		
	Article VII
	Miscellaneous    22

		
	7.1
	Choice of Law    22

		
	7.2
	Arbitration Provision    22

		
	7.3
	Notice    23

		
	7.4
	Entire Agreement    24

		
	7.5
	Termination of Article II    24

		
	7.6
	Amendment or Modification    24

		
	7.7
	Assignment    25

		
	7.8
	Additional Partnership Entities    25

		
	7.9
	Counterparts    25

		
	7.10
	Severability    25

		
	7.11
	Further Assurances    25

		
	7.12
	Rights of Limited Partners    25

		
	7.13
	Headings    25

		
	7.14
	[Intentionally omitted]    26

		
	7.15
	Limitation of Damages    26

SEVENTH AMENDED AND RESTATED
OMNIBUS AGREEMENT
THIS SEVENTH AMENDED AND RESTATED OMNIBUS AGREEMENT (the “Agreement”) is being entered into on July 12, 2012, 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 Sixth Amended and Restated Omnibus Agreement entered into on November 9, 2011 and effective as of November 1, 2011 (as amended, the “Sixth 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”);
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., pursuant to which Navajo Pipeline agreed to transfer and convey to HEP Pipeline L.L.C., and HEP Pipeline L.L.C. agreed to acquire, the Beeson Pipeline (as defined herein), and (iii) that certain LLC Interest Purchase Agreement by and among Holly, Navajo Pipeline and the Operating Partnership, pursuant to which Navajo Pipeline 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 herein), the Parties amended and restated the Fifth Amended Omnibus Agreement and entered into the Sixth Amended Omnibus Agreement; and
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 desire to amend and restate the Sixth 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.
“Applicable Law” means any applicable statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, agreement, requirement, or other governmental restriction or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued under any of the foregoing by, or any determination by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each case as amended (including, without limitation, all of the terms and provisions of the common law of such Governmental Authority), as interpreted and enforced at the time in question.
“Arbitrable Dispute” means any and all disputes, Claims, controversies and other matters in question between any of the Partnership Entities, on the one hand, and any of the Holly Entities, on the other hand, arising out of or relating to this Agreement or the alleged breach hereof, or in any way relating to the subject matter of this Agreement regardless of whether (a) allegedly extra-contractual in nature, (b) sounding in contract, tort or otherwise, (c) provided for by Applicable Law or otherwise or (d) seeking damages or any other relief, whether at law, in equity or otherwise.
“Assets” means 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, and (xiv) the UNEV Pipeline.
“Beeson Pipeline” means the 8” crude oil pipeline extending from Beeson station to Lovington, New Mexico, owned by HEP Pipeline, L.L.C.
“Change of Control” means, with respect to any Person (the “Applicable Person”), any of the following events: (a) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the Applicable Person’s assets to any other Person unless immediately following such sale, lease, exchange, or other transfer such assets are owned, directly or indirectly, by the Applicable Person; (b) the consolidation or merger of the Applicable Person with or into another Person pursuant to a transaction in which the outstanding Voting Securities of the Applicable Person are changed into or exchanged for cash, securities, or other property, other than any such transaction where (i) the outstanding Voting Securities of the Applicable Person are changed into or exchanged for Voting Securities of the surviving Person or its parent and (ii) the holders of the Voting Securities of the Applicable Person immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Securities of the surviving Person or its parent immediately after such transaction; and (c) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act) (in the case of Holly, other than a group consisting of some of all of the current control persons of Holly), being or becoming the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all of the then outstanding Voting Securities of the Applicable Person, except in a merger or consolidation that would not constitute a Change of Control under clause (b) above.
“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).
“El Dorado Assets” is defined in the November 2011 Frontier Drop Down LLC Interest Purchase 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.
“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. 
“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.
“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.
“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 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, and as amended pursuant to that certain Limited Partial Waiver of Incentive Distribution Rights, dated July 12, 2012, 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 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).
“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 introduction 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.
“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.
“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:
(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 (1) 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 (2) the General Partner, on behalf of the Partnership, has elected to cause a Partnership Group Member to pursue the opportunity to purchase the Subject Assets.   If, at any time, the General Partner abandons such opportunity (as evidenced in writing by the General Partner following the request of Holly GP or the Holly Group Member), Holly GP or the Holly Group Member under this Section 2.3(a) may pursue such opportunity. Any Subject Assets which are permitted to be acquired by Holly GP or a Holly Group Member must be so acquired (i) within 12 months of the later to occur of (a) the date that Holly GP or the Holly Group Member becomes able to pursue such acquisition in accordance with the provisions of this Section 2.3(a), and (b) the date upon which all required governmental approvals to consummate such acquisition have been obtained, and (ii) on terms not materially more favorable to Holly GP or the Holly Group Member than were offered to the Partnership. If either of these conditions are not satisfied, the opportunity must be reoffered to the Partnership in accordance with this Section 2.3(a).
(b)    Notwithstanding Section 2.3(a), in the event that (i) Holly GP or a Holly Group Member becomes aware of an opportunity to make an acquisition that includes both Subject Assets and assets that are not Subject Assets and the Subject Assets have a fair market value (as determined in good faith by the Board of Directors of Holly) equal to or greater than $5 million but comprise less than half of the fair market value (as determined in good faith by the Board of Directors of Holly) of the total assets being considered for acquisition or (ii) Holly GP or a Holly Group Member desires to construct Subject Assets with an estimated construction cost (as determined in good faith by the Board of Directors of Holly) equal to or greater than $5 million, then Holly GP or the Holly Group Member may make such acquisition without first offering the opportunity to the Partnership or may construct such Subject Assets as long as it complies with the following procedures:
(i)    Within 90 days after the consummation of the acquisition or the completion of construction by Holly GP or a Holly Group Member of the Subject Assets, as the case may be, Holly GP or the Holly Group Member shall notify the General Partner in writing of such acquisition or construction and offer the Partnership Group the opportunity to purchase such Subject Assets in accordance with this Section 2.3(b) (the “Offer”). The Offer shall set forth the terms relating to the purchase of the Subject Assets and, if Holly GP or any Holly Group Member desires to utilize the Subject Assets, the Offer will also include the commercially reasonable terms on which the Partnership Group will provide services to Holly GP or the Holly Group Member to enable Holly GP or the Holly Group Member to utilize the Subject Assets. As soon as practicable, but in any event within 30 days after receipt of such written notification, the General Partner shall notify Holly GP or the Holly Group Member in writing that either (x) the General Partner has elected not to cause a Partnership Group Member to purchase the Subject Assets, in which event Holly GP or the Holly Group Member shall be forever free to continue to own or operate such Subject Assets, or (y) the General Partner has elected to cause a Partnership Group Member to purchase the Subject Assets, in which event the following procedures shall apply.
(ii)    If Holly GP or the Holly Group Member and the General Partner within 60 days after receipt by the General Partner of the Offer are able to agree on the fair market value of the Subject Assets that are subject to the Offer and the other terms of the Offer including, without limitation, the terms, if any, on which the Partnership Group will provide services to Holly GP or the Holly Group Member to enable it to utilize the Subject Assets, a Partnership Group Member shall purchase the Subject Assets for the agreed upon fair market value as soon as commercially practicable after such agreement has been reached and, if applicable, enter into an agreement with Holly GP or the Holly Group Member to provide services in a manner consistent with the Offer.
(iii)    If Holly GP or the Holly Group Member and the General Partner are unable to agree within 60 days after receipt by the General Partner of the Offer on the fair market value of the Subject Assets that are subject to the Offer or the other terms of the Offer including, if applicable, the terms on which the Partnership Group will provide services to Holly GP or the Holly Group Member to enable it to utilize the Subject Assets, Holly GP or the Holly Entity and the General Partner will engage a mutually agreed upon investment banking firm to determine the fair market value of the Subject Assets and/or the other terms on which the Partnership Group and Holly GP or the Holly Group Member are unable to agree. Such investment banking firm will determine the fair market value of the Subject Assets and/or the other terms on which the Partnership Group and Holly GP or the Holly Group Member are unable to agree within 30 days of its engagement and furnish Holly GP or the Holly Group Member and the General Partner its determination. The fees of the investment banking firm will be split equally between Holly GP or the Holly Group Member and the Partnership Group. Once the investment banking firm has submitted its determination of the fair market value of the Subject Assets and/or the other terms on which the Partnership Group and Holly GP or the Holly Group Member are unable to agree, the General Partner will have the right, but not the obligation, to cause a Partnership Group Member to purchase the Subject Assets pursuant to the Offer as modified by the determination of the investment banking firm. The Partnership Group will provide written notice of its decision to Holly GP or the Holly Group Member within 30 days after the investment banking firm has submitted its determination.  Failure to provide such notice within such 30-day period shall be deemed to constitute a decision not to purchase the Subject Assets. If the General Partner elects to cause a Partnership Group Member to purchase the Subject Assets, then the Partnership Group Member shall purchase the Subject Assets pursuant to the Offer as modified by the determination of the investment banking firm as soon as commercially practicable after such determination and, if applicable, enter into an agreement with Holly GP or the Holly Group Member to provide services in a manner consistent with the Offer, as modified by the determination of the investment banking firm, if applicable.
2.4    Scope of Prohibition.  Except as provided in this Article II and the Partnership Agreement, Holly GP and each Holly Group Member shall be free to engage in any business activity, including those that may be in direct competition with any Partnership Group Member.
2.5    Enforcement.  Holly GP and the Holly Group Members agree and acknowledge that the Partnership Group does not have an adequate remedy at law for the breach by Holly GP and the Holly Group of the covenants and agreements set forth in this Article II, and that any breach by Holly GP or the Holly Group of the covenants and agreements set forth in this Article II would result in irreparable injury to the Partnership Group.  Holly GP and the Holly Group Members further agree and acknowledge that any Partnership Group Member may, in addition to the other remedies which may be available to the Partnership Group, file a suit in equity to enjoin Holly GP and the Holly Group from such breach, and consent to the issuance of injunctive relief under this Agreement.
2.6    Limitation on Acquisitions of Subject Assets by Partnership Group Members.  Notwithstanding anything in this Agreement to the contrary, a Partnership Group Member who is not a party to this Agreement is prohibited from acquiring Subject Assets.  In the event the General Partner desires a Partnership Group Member who is not a party to this Agreement to 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, (c) 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, (d) 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 (e) the cost and expense for any environmental or Toxic Tort pre-trial, trial, or appellate legal or litigation support work;
but only to the extent that such violation complained of under Section 3.1(a)(i) or such events or conditions included under Section 3.1(a)(ii) occurred before the Closing Date (collectively, “Covered Environmental Losses”); or
(iii)    the operation or ownership by Holly and its Affiliates of any assets not constituting part of the Assets, including but not limited to underground pipelines retained by the Seller Parties which serve the refineries in Lovington, New Mexico, Artesia, New Mexico and Woods Cross, Utah or the tanks that are part of the 2008 Crude Pipelines, Tanks and Related Assets 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 (f) 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 (g) 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 (h) 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 (i) the Holly Entities received notice from the Partnership Entities regarding such delay at the time it occurred.
(d)    The Partnership Entities shall indemnify, defend and hold harmless the Holly Entities from and against environmental and Toxic Tort losses (including, without limitation, economic losses, diminution in value and lost profits suffered by third parties), damages, injuries (including, without limitation, personal injury and death), liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorney’s and expert’s fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by the Holly Entities or any third party to the extent arising out of:
(i)    any violation or correction of violation of Environmental Laws associated with the operation of the Assets by a Person other than a Holly Entity or ownership and operation of the Assets by a Person other than a Holly Entity, or
(ii)    any event or condition associated with the operation of the Assets by a Person other than a Holly Entity or ownership and operation of the Assets by a Person other than a Holly Entity (including, but not limited to, the presence of Hazardous Substances on, under, about or migrating to or from the Assets or the disposal or release of Hazardous Substances generated by operation of the Assets at non-Asset locations) except, where a Holly Entity is operating an Asset, to the extent resulting from the negligent acts or omissions or willful misconduct of such Holly Entity including, without limitation, (j) 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, (k) 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 (l) 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 or the UNEV Pipeline.
3.2    Limitations Regarding Environmental Indemnification.  The aggregate liability of the Holly Entities in respect of all Covered Environmental Losses under Section 3.1(a) shall not exceed  (1) with respect to Assets other than the 2008 Crude Pipelines, Tanks and Related Assets, $15.0 million plus an additional $2.5 million in the case of Covered Environmental Losses related to the 8” and 10” Lovington/Artesia Intermediate Pipelines (for clarity, the first $15,000,000 million limit would apply to Covered Environmental Losses associated with the 8” and 10” Lovington/Artesia Intermediate Pipelines and the 2004 Product Pipelines, Terminal and Related Assets, while the limit between $15,000,000 and $17,500,000 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 arising out of (m) 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; (n) 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 (o) 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 (p) 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, (q) all legal actions pending against the Holly Entities on July 13, 2004, (r) 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, (s) events and conditions associated with the Retained Assets and whether occurring before or after the Closing Date, and (t) all federal, state and local tax liabilities attributable to the operation or ownership of the Assets prior to the Closing Date, including any such tax liabilities of the Holly Entities that may result from the consummation of the formation transactions for the Partnership Entities and the General Partner.
(b)    In addition to and not in limitation of the indemnification provided under Section 3.1(b) or the Partnership Agreement, the Partnership Entities shall indemnify, defend, and hold harmless the Holly Entities from and against any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs, and expenses (including, without limitation, court costs and reasonable attorney’s and expert’s fees) of any and every kind or character, known or unknown, fixed or contingent, suffered or incurred by the Holly Entities to the extent arising out of events and conditions associated with the operation of the Assets occurring on or after the Closing Date (other than Covered Environmental Losses which are provided for under Section 3.1 except, where a Holly Entity is operating an Asset, to the extent resulting from the negligent acts or omissions or willful misconduct of such Holly Entity), unless such indemnification would not be permitted under the Partnership Agreement by reason of one of the provisos contained in Section 7.7(a) of the Partnership Agreement.
3.5    Indemnification Procedures.
(a)    The Indemnified Party agrees that promptly after it becomes aware of facts giving rise to a claim for indemnification under this Article III, it will provide notice thereof in writing to the Indemnifying Party, specifying the nature of and specific basis for such claim.
(b)    The Indemnifying Party shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any claims brought against the Indemnified Party that are covered by the indemnification under this Article III, including, without limitation, the selection of counsel, determination of whether to appeal any decision of any court and the settling of any such matter or any issues relating thereto; provided, however, that no such settlement shall be entered into without the consent of the Indemnified Party unless it includes a full release of the Indemnified Party from such matter or issues, as the case may be.
(c)    The Indemnified Party agrees to cooperate fully with the Indemnifying Party, with respect to all aspects of the defense of any claims covered by the indemnification under this Article III, including, without limitation, the prompt furnishing to the Indemnifying Party of any correspondence or other notice relating thereto that the Indemnified Party may receive, permitting the name of the Indemnified Party to be utilized in connection with such defense, the making available to the Indemnifying Party of any files, records or other information of the Indemnified Party that the Indemnifying Party considers relevant to such defense and the making available to the Indemnifying Party of any employees of the Indemnified Party; provided, however, that in connection therewith the Indemnifying Party agrees to use reasonable efforts to minimize the impact thereof on the operations of the Indemnified Party and further agrees to maintain the confidentiality of all files, records, and other information furnished by the Indemnified Party pursuant to this Section 3.5.  In no event shall the obligation of the Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in connection with the defense of any claims covered by the indemnification set forth in this Article III; provided, however, that the Indemnified Party may, at its own option, cost and expense, hire and pay for counsel in connection with any such defense.  The Indemnifying Party agrees to keep any such counsel hired by the Indemnified Party informed as to the status of any such defense, but the Indemnifying Party shall have the right to retain sole control over such defense.
(d)    In determining the amount of any loss, cost, damage or expense for which the Indemnified Party is entitled to indemnification under this Agreement, the gross amount of the indemnification will be reduced by all amounts recovered by the Indemnified Party under contractual indemnities (other than insurance policies) from third Persons.  An Indemnified Party shall be obligated to pursue all contractual indemnities that such Indemnified Party has with third Persons outside of this Agreement, provided, however, if the Indemnified Party’s right to such indemnification is assignable, the Indemnified Party may, in its sole discretion and in lieu of pursuing such claim, elect to assign such indemnification claim to the Indemnifying Party to pursue and shall reasonably cooperate with the Indemnifying Party (including, without limitation, making its relevant books, records, officers, information and testimony reasonably available to the Indemnifying Party) in the Indemnifying Party’s pursuit of such claim.  In the event the Indemnified Party recovers under a contractual indemnity from a third Person outside of this Agreement, the amount recovered, less the reasonable out-of-pocket fees and expenses incurred by the Indemnified Party in recovering such amounts, shall reduce the amount such Indemnified Party may recover under this Article III and if the Indemnified Party receives any such amounts subsequent to an indemnification payment by the Indemnifying Party in respect of such losses, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred  by such Indemnifying Party in connection with providing such indemnification payment up to the amount so received by the Indemnified Party.
(e)    The date on which notification of a claim for indemnification is received by the Indemnifying Party shall determine whether such claim is timely made. 
3.6    Limitation on Indemnification Obligations. 
(a)    Notwithstanding anything in this Agreement to the contrary, when referring to the indemnification obligations of the Holly Entities in Article III, the definition of Holly Entities shall be deemed to mean solely (u) 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 (v) 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 (w) 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, (x) the Partnership and (y) 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 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.
(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 (z) 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 (aa) Holly and the Partnership Entities are unable to mutually agree upon the fair market value of such non-cash consideration within 30 days after Holly notifies the Partnership Entities of its determination thereof, the Partnership Entities and Holly shall engage a mutually-agreed-upon investment banking firm to determine the fair market value of the non-cash consideration. Such investment banking firm shall be instructed to return its decision within 30 days after all material information is submitted thereto, which decision shall be final. The fees of the investment banking firm will be split equally between Holly and the Partnership Entities. Holly will provide written notice of its decision regarding the exercise of its right of first refusal to purchase the Sale Assets to the Partnership Entities within 30 days after the investment banking firm has submitted its determination (the “Second ROFR Acceptance Deadline”). Failure to provide such notice within such 30-day period shall be deemed to constitute a decision by Holly not to purchase the Sale Assets. If Holly fails to exercise a right during any applicable period set forth in this Section 5.2(a), Holly shall be deemed to have waived its rights with respect to such proposed disposition of the Sale Assets, but not with respect to any future offer of Assets.
(b)    If Holly chooses to exercise its right of first refusal to purchase the Sale Assets under Section 5.2(a), Holly and the Partnership Entities shall enter into a purchase and sale agreement for the Sale Assets which shall include the following terms:
(i)    Holly will agree to deliver cash for the Offer Price (or any other consideration agreed to by Holly and the Partnership Entities (each in their sole discretion));
(ii)    the Partnership Entities will represent that they have good and indefeasible title to the Sale Assets, subject to all recorded and unrecorded matters and all physical conditions and other matters in existence on the closing date for the purchase of the Sale Assets, plus any other such matters as Holly may approve, which approval will not be unreasonably withheld. If Holly desires to obtain any title insurance with respect to the Sale Assets, the full cost and expense of obtaining the same (including but not limited to the cost of title examination, document duplication and policy premium) shall be borne by Holly;
(iii)    the Partnership Entities will grant to Holly the right, exercisable at Holly’s risk and expense, to make such surveys, tests and inspections of the Sale Assets as Holly may deem desirable, so long as such surveys, tests or inspections do not damage the Sale Assets or interfere with the activities of the Partnership Entities thereon and so long as Holly has furnished the Partnership Entities with evidence that adequate liability insurance is in full force and effect;
(iv)    Holly will have the right to terminate its obligation to purchase the Sale Assets under this Article V if the results of any searches, surveys, tests or inspections conducted pursuant to Section 5.2(b)(ii) or Section 5.2(b)(iii) above are, in the reasonable opinion of Holly, unsatisfactory;
(v)    the closing date for the purchase of the Sale Assets shall, unless otherwise agreed to by Holly and the Partnership Entities, occur no later than 90 days following receipt by the Partnership Entities of written notice by Holly of its intention to exercise its option to purchase the Sale Assets pursuant to Section 5.2(a);
(vi)    the Partnership Entities shall execute, have acknowledged and deliver to Holly a special warranty deed, assignment of easement, or comparable document, as appropriate, in the applicable jurisdiction, on the closing date for the purchase of the Sale Assets constituting real property interests conveying the Sale Assets unto Holly free and clear of all encumbrances created by the Partnership Entities other than those set forth in Section 5.2(b)(ii) above;
(vii)    the sale of any Sale Assets shall be made on an “as is,” “where is” and “with all faults” basis, and the instruments conveying such Sale Assets shall contain appropriate disclaimers; and
(viii)    neither the Partnership Entities nor Holly shall have any obligation to sell or buy the Sale Assets if any of the material consents referred to in Section 5.1(c) have not been obtained or such sale or purchase is prohibited by Applicable Law.
(c)    Holly and the Partnership Entities shall cooperate in good faith in obtaining all necessary governmental and other third Person approvals, waivers and consents required for the closing.   Any such closing shall be delayed, to the extent required, until the third Business Day following the expiration of any required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; provided, however, that such delay shall not exceed 120 days and, if governmental approvals and waiting periods shall not have been obtained or expired, as the case may be, by such 120th day, then Holly shall be deemed to have waived its right of first refusal with respect to the Sale Assets described in the Disposition Notice and thereafter neither Holly nor the Partnership shall have any further obligation under this Article V with respect to such Sale Assets unless such Sale Assets again become subject to this Article V pursuant to Section 5.2(d).
(d)    If the Transfer to the Proposed Transferee is not consummated in accordance with the terms of the Acquisition Proposal within the later of (bb) 180 days after the later of the applicable ROFR Acceptance Deadline, and (cc) 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.  
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 (3) 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 (4) 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.
7.3    Notice.  
(a)    Any notice or other communication given under this Agreement shall be in writing and shall be (5) delivered personally, (6) sent by documented overnight delivery service, (7) sent by email transmission, or (8) 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@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: generalcounsel@hollyenergy.com
(b)    Either Party may at any time change its address for service from time to time by giving notice to the other Party in accordance with this Section 7.3.  
7.4    Entire Agreement.  This Agreement, 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.
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 (9) AS A RESULT OF ANY BREACH OR NONFULFILLMENT BY A PARTY OF ANY OF ITS COVENANTS, AGREEMENTS OR OTHER OBLIGATIONS UNDER THIS AGREEMENT OR (10) 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 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.]

IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of July 12, 2012.
HOLLY ENTITIES:
HOLLYFRONTIER CORPORATION

By:    /s/ Michael C. Jennings    
Name:     Michael C. Jennings
		
	Title:
	Chief Executive Officer and President

HOLLY REFINING & MARKETING COMPANY – WOODS CROSS LLC (formerly Holly Refining & Marketing Company – Woods Cross)

By:    /s/ Michael C. Jennings    
Name:     Michael C. Jennings
Title:    Chief Executive Officer and President

NAVAJO REFINING COMPANY, L.L.C.
(formerly Navajo Refining Company, L.P.)

 
By:    /s/ Michael C. Jennings    
Name:     Michael C. Jennings
Title:    Chief Executive Officer and President    
    

NAVAJO PIPELINE CO., L.P.

By:    /s/ Michael C. Jennings    
Name:     Michael C. Jennings
		
	Title:
	Chief Executive Officer and President    

HOLLY REFINING & MARKETING 
– TULSA LLC

By:    /s/ Michael C. Jennings    
Name:     Michael C. Jennings
Title:    Chief Executive Officer and President    
 

FRONTIER REFINING LLC

 
By:    /s/ Michael C. Jennings    
Name:     Michael C. Jennings
Title:    Chief Executive Officer and President    

FRONTIER EL DORADO REFINING LLC
 

By:    /s/ Michael C. Jennings    
Name:     Michael C. Jennings
Title:    Chief Executive Officer and President    
PARTNERSHIP ENTITIES:
HOLLY ENERGY PARTNERS, L.P.

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

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

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title: Chief Executive Officer and President    
    

HOLLY ENERGY PARTNERS – OPERATING, L.P.

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title:    Chief Executive Officer and President        

HOLLY LOGISTIC SERVICES, L.L.C.

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title:    Chief Executive Officer and President    

HEP LOGISTICS HOLDINGS, L.P.

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

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title: Chief Executive Officer and President   
    

HEP LOGISTICS GP, L.L.C.

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title:    Chief Executive Officer and President    

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/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title: Chief Executive Officer and President   

HEP NAVAJO SOUTHERN, L.P.

By:    HEP Pipeline GP, L.L.C.
Its General Partner

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title: Chief Executive Officer and President   

HEP REFINING ASSETS, L.P.

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

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title: Chief Executive Officer and President   

HEP PIPELINE ASSETS, LIMITED PARTNERSHIP

By:    HEP Pipeline GP, L.L.C.
Its General Partner

 By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title: Chief Executive Officer and President   

HEP TULSA LLC

    
By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title:    Chief Executive Officer and President    

ROADRUNNER PIPELINE, L.L.C.

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title:    Chief Executive Officer and President    

HOLLY ENERGY STORAGE – TULSA LLC

    
By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title:    Chief Executive Officer and President    

HOLLY ENERGY STORAGE – LOVINGTON LLC

    
By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title:    Chief Executive Officer and President    

CHEYENNE LOGISTICS LLC

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title:    Chief Executive Officer and President    

EL DORADO LOGISTICS LLC

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title:    Chief Executive Officer and President    

HEP UNEV HOLDINGS LLC

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title:    Chief Executive Officer and President    

HEP UNEV PIPELINE LLC

By:    /s/ Matthew P. Clifton    
Name: Matthew P. Clifton
Title:    Chief Executive Officer and President    

SCHEDULE I

Administrative Fee
	
		
	 
	Amount of Annual Administrative Fee

	Years beginning July 13, 2004 through June 30, 2007
	$2,000,000

	Years beginning July 1, 2007 through February 29, 2008
	$2,100,000

	Years beginning March 1, 2008
	$2,300,000

	 
	 

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

     #PageNum#HEP Ex 10.7 HEP UNEV Holdings LLC Agreement

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
 
OF
 
HEP UNEV HOLDINGS LLC
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of HEP UNEV HOLDINGS LLC, a Delaware limited liability company (the “Company”), is being entered into on July 12, 2012, by and among the Company, Holly Energy Partners, L.P., a Delaware limited partnership (“HEP”) and HollyFrontier Holdings LLC, a Delaware limited liability company (“HFC Holdings” and, together with HEP, collectively, the “Members”).
W I T N E S S E T H :
WHEREAS, this Agreement amends and restates the Limited Liability Company Agreement of the Company dated as of June 27, 2012;
WHEREAS, the Members desire to enter into this Agreement to set forth the Members’ rights and obligations and other matters with respect to the Company; 
WHEREAS, this Agreement shall become effective only upon the consummation of the transactions contemplated by that certain LLC Interest Purchase Agreement, dated as of July 12, 2012, pursuant to which the Company will purchase and acquire all of the issued and outstanding membership interests in HEP UNEV Pipeline LLC (f/k/a Holly UNEV Pipeline Company) (“HEP UNEV”) held by HollyFrontier Corporation (“HFC”); and 
WHEREAS, HEP UNEV is the owner of 75% of all of the issued and outstanding membership interests in UNEV Pipeline (as defined below).
NOW, THEREFORE, in consideration of the promises and the covenants and provisions hereinafter contained, the Members hereby adopt the following:
ARTICLE I 
DEFINITIONS
Section 1.1    Definitions.  Capitalized terms used herein and not otherwise defined shall have the meanings set forth in this Section 1.1.
“Affiliate” means, with respect to any specified person, any other person controlling, controlled by or under common control with such specified person. 
“Applicable Credit Documents” means, collectively, the Credit Agreement, the Indentures and any other indentures, credit agreements, loan agreements, promissory notes, or similar instruments or agreements (including all security agreements, pledge agreements, mortgages and other documents and instruments entered into or issued in connection with the foregoing) to which HEP or any of its subsidiaries is a party or pursuant to which any of their respective assets is pledged or encumbered, as the same may be amended or restated from time to time.
“Capital Contribution” means, for any Member, the total amount of cash and cash equivalents and the fair market value of any property contributed to the Company by such Member; provided, however, that in the case of HEP Common Units distributed to the Class B Member pursuant to Section 7.3(a), such HEP Common Units shall be deemed contributed to the Company by the Class A Members, and the fair market value of such HEP Common Units shall be as determined pursuant to Section 7.3(a).
“Class A Appraiser” has the meaning set forth in Section 12.3(c).
“Class A Common Units” means the Units having the privileges, preference, duties, liabilities, obligations and rights specified with respect to “Class A Common Units” in this Agreement.
“Class A Member” means a holder of Class A Common Units.
“Class B Appraiser” has the meaning set forth in Section 12.3(c).
“Class B Common Units” means the Units having the privileges, preference, duties, liabilities, obligations and rights specified with respect to “Class B Common Units” in this Agreement.
“Class B Member” means the holder of Class B Common Units.
“Company Minimum Gain” means “partnership minimum gain” as defined in Section 1.704-2(b)(2) of the Treasury Regulations, substituting the term “Company” for the term “partnership” as the context requires.  
“Contract Year” means a 12 consecutive calendar month period beginning on July 1st and ending on the next succeeding June 30th.
“Corresponding Percentage” means (i) in the case of a UNEV Sell-Down involving a sale by HEP UNEV of membership interests of UNEV Pipeline, a percentage equal to the portion of such seller’s total membership interest in UNEV Pipeline represented by the membership interest being sold (e.g. – For a sale of a 7.5% membership interest in UNEV Pipeline when the seller owned a 75% membership interest in UNEV Pipeline, the Corresponding Percentage would be 10% (7.5%/75% = 10%)); and (ii) in the case of a sale of membership interests in HEP UNEV by the Company or a sale of Class A Common Units by an HEP Entity, a percentage equal to the portion of such seller’s total membership interest in such entity represented by the membership interest being sold, multiplied by the ownership percentage of each entity in each other entity through which such entity indirectly holds an interest in UNEV Pipeline (e.g. – For a sale of 25% of the Class A Common Units where the Company owned 100% of HEP UNEV and HEP UNEV owned 75% of UNEV Pipeline, the Corresponding Percentage would be 18.75% (25% x 100% x 75% = 18.75%)). 
“Credit Agreement” means that certain Second Amended and Restated Credit Agreement, dated as of February 14, 2011, by and among Holly Energy Partners – Operating, L.P., Wells Fargo Bank, N.A., as administrative agent, Union Bank, N.A., as syndication agent, BBVA Compass Bank and U.S. Bank N.A., as co-documentation agents, Wells Fargo Securities, LLC and Union Bank, N.A., as joint lead arrangers and joint bookrunners, and the financial institutions party thereto, providing for revolving credit borrowings and letters of credit, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time.
“Distribution” means a distribution made by the Company to a Member, whether in cash, property or securities of the Company and whether by liquidating distribution or otherwise; provided, however, that none of the following shall be a Distribution: (a) any recapitalization or exchange of securities of the Company; or (b) any subdivision (by a split of Units or otherwise) or any combination (by a reverse split of Units or otherwise) of any outstanding Units.  “Distribute” when used in other grammatical variations shall have a correlative meaning.
“DLLCA” means the Delaware Limited Liability Company Act, Title 6, Chapter 18, §§ 18-101, et seq, and any successor statute, as it may be amended from time to time.
“EBITDA Threshold Amount” means the amount in dollars equal to (A) the HEP Ownership Percentage, multiplied by (B) $30 million, divided by (C) 75%.

“General Partner” means HEP Logistics Holdings, L.P., a Delaware limited partnership and general partner of HEP.
“Giveback Amount” means an amount equal to the sum of: (A) the aggregate Quarterly Reductions for the fourth fiscal quarter of the Contract Year beginning on July 1, 2015; plus (B) the product of (i) the aggregate Quarterly Reductions for the third fiscal quarter of the Contract Year beginning on July 1, 2015, multiplied by (ii) 1.0175; plus (C) the product of (i) the aggregate Quarterly Reductions for the second fiscal quarter of the Contract Year beginning on July 1, 2015, multiplied by (ii) 1.0353; plus (D) the product of (i) the aggregate Quarterly Reductions for the first fiscal quarter of the Contract Year beginning on July 1, 2015, multiplied by (ii) 1.0534.
“HEP” has the meaning set forth in the preamble.
“HEP Common Unit” means a “Common Unit” as such term is defined in the Partnership Agreement.
“HEP Entities” means HEP and its wholly-owned subsidiaries.
“HEP Ownership Percentage” means a percentage equal to the product of (at the time of calculation) (A) the lesser of (x) the aggregate percentage ownership interest in UNEV Pipeline directly owned by HEP UNEV and/or any other HEP Entity or (y) 75%, multiplied by (B) the aggregate percentage ownership interest in HEP UNEV directly owned by the Company and/or any other HEP Entity, multiplied by (C) the aggregate percentage of the Company’s Class A Common Units directly held by HEP and/or any other HEP Entity.

“HEP UNEV” shall have the meaning as set forth in the Recitals.
“Incentive Distribution Rights” means the “Incentive Distribution Rights” as such term is defined in the Partnership Agreement.
“Indentures” means (i) that certain Indenture, dated as of March 10, 2010 among HEP and Holly Energy Finance Corp., the guarantors party thereto, and U.S. Bank National Association, as trustee and (ii) that certain Indenture, dated as of March 12, 2012 among HEP and Holly Energy Finance Corp., the guarantors party thereto, and U.S. Bank National Association, as trustee, in each case, as amended, restated, modified, or renewed, in whole or in part from time to time.
“Independent Appraiser” has the meaning set forth in Section 12.3(c).
“Mandatory Buy-Out Date” has the meaning set forth in Section 12.3.
“Mandatory Buy-Out Price” has the meaning set forth in Section 12.3.
“Member Nonrecourse Debt Minimum Gain” means “partner nonrecourse debt minimum gain” as defined in Section 1.704-2(i) of the Treasury Regulations, substituting the term “member” for the term “partner” as the context requires.
“Membership Interest” means an interest in the Company owned by a Member, including such Member's right (based on the type and class of Unit or Units held by such Member), as applicable, (a) to a Distributive share of net income, net losses and other items of income, gain, loss and deduction of the Company; (b) to a Distributive share of the assets of the Company; (c) to vote on, consent to or otherwise participate in any decision of the Members as provided in this Agreement; and (d) to any and all other benefits to which such Member may be entitled as provided in this Agreement or the DLLCA.
“Optional Buy-Down Date” has the meaning set forth in Section 12.2.
“Optional Buy-Out Date” has the meaning set forth in Section 12.1.
“Optional Buy-Out Price” has the meaning set forth in Section 12.1.
“Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership of HEP, dated as of July 13, 2004 and as amended from time to time.
“Permitted Transfers” means transfers to an Affiliate.
“Preferred Return” shall have the meaning set forth in Section 7.3(a).
“Profits Interest Accrual Start Date” means July 1, 2015.
“Profits Interest Accrual Termination Date” means the earlier of (i) the final day of the  Contract Year with respect to which there shall have accrued a Profits Interest Amount equal to the Profits Interest Balance Amount applicable for the next Contract Year or (ii) June 30, 2032.   
“Profits Interest Amount” means, with respect to each Profits Interest Annual Period, an amount equal to 50% multiplied by the excess of the incremental UNEV EBITDA for such Profits Interest Annual Period attributable to HEP’s indirect aggregate percentage ownership interest in UNEV Pipeline (not counting, as of the time of calculation, any ownership interest in UNEV Pipeline held by the HEP Entities that was previously held by Sinclair Transportation Corporation as of the date of this Agreement), over the EBITDA Threshold Amount.  For the avoidance of doubt, the Profits Interest Amount with respect to a Profits Interest Annual Period shall equal the product of (at the time of such calculation) (A) 50% multiplied by (B) the excess (if any) of (x) the product of (i) the UNEV EBITDA for such Profits Interest Annual Period, multiplied by (ii) the HEP Ownership Percentage, over (y) the EBITDA Threshold Amount.  For the further avoidance of doubt, (i) no Profits Interest Amount will accrue with respect to any Contract Year or any other period that follows the Profits Interest Accrual Termination Date, and (ii) in no event will the Profits Interest Amount with respect to any Profits Interest Annual Period include any amounts in excess of the Profits Interest Balance Amount that will be applicable for the next Contract Year.
“Profits Interest Annual Period” means each Contract Year beginning on the Profits Interest Accrual Start Date or an anniversary of the Profits Interest Accrual Start Date, but not including any Contract Year beginning after the Profits Interest Accrual Termination Date.
“Profits Interest Balance Amount” means an amount calculated in the following manner:
(a)    For the Contract Year beginning on July 1, 2016, the Profits Interest Balance Amount is $33,820,000 (as such may be adjusted from time to time pursuant to Article XII); provided, however, that if the Woods Cross Expansion Completion Date has not occurred by July 1, 2015, then the Profits Interest Balance Amount for the Contract year beginning on July 1, 2016 shall equal the sum of (x) $33,820,000 (as such may be adjusted from time to time pursuant to Article XII) plus (y) the Giveback Amount.
(b)    For each succeeding Contract Year, the Profits Interest Balance Amount applicable to such Contract Year will be equal to the product of (i) the difference between (A) the prior Contract Year’s Profits Interest Balance Amount and (B) the Profits Interest Amounts paid during such prior Contract Year, multiplied by (ii) 1.07.  A table containing examples of the calculation of the Profits Interest Balance Amount is attached hereto as Exhibit 1.  
(c)    Solely for the purposes of calculating the Profits Interest Balance Amount, amounts that were due to be paid on a Profits Interest Payment Date but which were not paid and became part of the Unpaid Profits Interest Amount (and with respect to which Preferred Return is accruing) shall be deemed “paid” under (b)(i)(B) of this definition.
(d)    Amounts paid to the Class B Member by the Company in HEP Common Units pursuant to Section 7.3, shall be valued as determined on the date of payment in accordance with such Section 7.3, rather than by reference to the value of such HEP Common Units on any subsequent date.
(e)    Preferred Return paid to the Class B Member by the Company with respect to the Unpaid Profits Interest Amount shall not be considered in determining whether or not the Profits Interest Balance Amount has been met.
“Profits Interest Payment Date” means the date in each Contract Year following the end of a Profits Interest Annual Period that is the earlier of (i) the 30th day following the receipt by the Company of all financial statements of UNEV Pipeline with respect to such Profits Interest Annual Period, and (ii) the 60th day following the end of such Profits Interest Annual Period.  
“Profits Interest Payment Restriction” has the meaning set forth in Section 7.3(a).
“Quarterly Reductions” means, for a given fiscal quarter, the aggregate amount of the reductions, pursuant to the Waiver, in the quarterly distributions to the General Partner in its capacity as a holder of Incentive Distribution Rights paid during such fiscal quarter.
 
“Restricted Profits Interest Account” has the meaning set forth in Section 7.3(b).
“Treasury Regulations” means the final or temporary regulations issued by the United States Department of Treasury pursuant to its authority under the Code, and any successor regulations. 
“UNEV EBITDA” means earnings before interest, taxes, depreciation and amortization of UNEV Pipeline.
“UNEV Pipeline” means UNEV Pipeline, LLC a Delaware limited liability company of which HEP UNEV, a wholly owned subsidiary of the Company, owns 75% of all of the issued and outstanding membership interests and Sinclair Transportation Corporation owns 25% of all of the issued and outstanding membership interests.  UNEV Pipeline is the owner of 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 and Las Vegas, Nevada, and other related assets.
“UNEV Sale Event” means (A) any direct or indirect transfer, assignment, sale, gift, exchange, change of record holder, pledge, hypothecation or other encumbrance, or any other disposition (whether voluntary, involuntary or by operation of law, or by way of merger or consolidation that is not part of an internal restructuring involving, or transfer between, only HEP Entities) of: (i) all or any part of any membership interests of UNEV Pipeline by an HEP Entity; (ii) all or any part of any membership interests of HEP UNEV; or (iii) any material assets of UNEV Pipeline, or (B) any transfer, conveyance, assignment, sale or pledge of any Class A Common Units to any person other than a wholly-owned subsidiary of such Class A Member; provided, however, that no pledge, hypothecation or other encumbrance shall constitute a UNEV Sale Event to the extent made pursuant to the Credit Agreement or made to another bona fide third-party lender of borrowed money to UNEV Pipeline.
“UNEV Sell-Down” means a sale, transfer, assignment or conveyance (other than to an HEP Entity) of any (i) membership interests of UNEV Pipeline by HEP UNEV following which the HEP Entities collectively own more than 50% of the aggregate outstanding membership interests of UNEV Pipeline, (ii) membership interests of HEP UNEV by the Company following which the HEP Entities collectively own more than 50% of the aggregate outstanding membership interests of HEP UNEV, or (iii) Class A Common Units of the Company following which the HEP Entities collectively own more than 50% of the aggregate outstanding Class A Common Units of the Company.
“Unit” means a unit representing a fractional part of the Membership Interests of the Members and shall include all types and classes of Units, including the Class A Common Units and the Class B Common Units; provided, however, that any type or class of Unit shall have the privileges, preference, duties, liabilities, obligations and rights set forth in this Agreement and the Membership Interests represented by such type or class or series of Unit shall be determined in accordance with such privileges, preference, duties, liabilities, obligations and rights.
“Unpaid Profits Interest Amount” means, at any given time on or following the first Profits Interest Payment Date, an amount equal to the aggregate accrued and unpaid Profits Interest Amount at such time, including all Preferred Return accrued on any unpaid amounts in accordance with Section 7.3.  For the sake of clarity, the Unpaid Profits Interest Amount shall (i) increase on each Profits Interest Payment Date by the amount of any Profits Interest Amount due on such date with respect to the most recently expired Profits Interest Annual Period, (ii) increase over time with the amount of any Preferred Return that accrues under Section 7.3, and (iii) be reduced at the time of payment by the amount of any Distributions or payments made to the Class B Member with respect to the Class B Common Units.
“Waiver” means the Limited Partial Waiver of Incentive Distribution Rights Under the Partnership Agreement, effective as of July 12, 2012, by HEP Logistics Holdings, L.P.
“Woods Cross Expansion Completion Date” means the “Woods Cross Expansion Completion Date” as such term is defined in the Waiver.
ARTICLE II    
 
ORGANIZATIONAL AND OTHER MATTERS
Section 2.1    Organization; Admission.  The Company was formed as a limited liability company pursuant to the DLLCA by filing a Certificate of Formation (the “Certificate”) with the Secretary of State of the State of Delaware on June 27, 2012.
Section 2.2    Name.  The name of the Company is HEP UNEV Holdings LLC, and the business of the Company is conducted under such name.  The Board may, in its sole discretion, change the name of the Company from time to time.  In any such event, the Secretary shall promptly file or cause to be filed in the office of the Secretary of State of the State of Delaware an amendment to the Certificate reflecting such change of name.  The Company may also conduct business under one or more fictitious names if the Board determines that such is in the best interests of the Company.
Section 2.3    Limited Liability.  Except as otherwise provided by the DLLCA, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and the Members shall not be obligated personally for any of such debts, obligations or liabilities solely by reason of being a member.
Section 2.4    Registered Office and Agent.  The address of the Company’s registered office (required by Section 18-104 of the DLLCA to be maintained in the State of Delaware) shall be Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 and the name of the Company’s registered agent at such address is The Corporation Trust Company.  The Company’s principal place of business shall be 2828 N. Harwood, Suite 1300, Dallas, Texas 75201.  The Board may change such registered office, registered agent or principal place of business from time to time.  The Company may from time to time have such other place or places of business within or without the State of Delaware as may be determined by the Board.
Section 2.5    Fiscal Year.  The fiscal year of the Company shall end on December 31 of each calendar year unless, for United States federal income tax purposes, another fiscal year is required.  The Company shall have the same fiscal year for United States federal income tax purposes and for accounting purposes.
Section 2.6    No State-Law Partnership.  The Company shall not be a partnership or a joint venture for any reason other than for United States federal income and state tax purposes, and no provision of this Agreement shall be construed otherwise.  The Company shall be operated in a manner consistent with its classification as a disregarded entity for United States federal and state tax purposes.
Section 2.7    Seal.  The Company may maintain a seal containing the name of the Company.  Any officer of the Company shall have the authority to affix the seal of the Company in the name of the Company to any document duly authorized pursuant to this Agreement or resolutions of the Board and to attest the affixation of the seal of the Company thereto, as such affixation may be required for the conduct of the Company’s business.
ARTICLE III    
 
PURPOSE AND POWERS
Section 3.1    Purpose of the Company.  The purpose of the Company shall be to engage or participate in any lawful business activities in which a limited liability company formed in the State of Delaware may engage or participate.
Section 3.2    Powers of the Company.  The Company shall have the power to do any and all acts reasonably necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose and business described herein and for the protection and benefit of the Company.
ARTICLE IV    
 
UNITS
Section 4.1    Units Generally.  The Membership Interests of the Members shall be represented by issued and outstanding Units, which may be divided into one or more types, classes or series. Each type, class or series of Units shall have the privileges, preference, duties, liabilities, obligations and rights, including voting rights, if any, set forth in this Agreement with respect to such type, class or series.  Subject to the rights of the Class B Member under the final sentence in Section 4.3, the Company may, in the sole discretion of the Board, create, authorize and issue additional Membership Interests (which may or may not be denominated in Units and which may include additional Class A Common Units) with such rights and privileges as are determined by the Board, in its sole discretion.
Section 4.2    Class A Common Units.  Other than the Class B Member’s right to the Profits Interest Amount (and any Preferred Return), holders of Class A Common Units shall have the rights to all Distributions of the Company.  Each Class A Member shall be entitled to one vote per Class A Common Unit on all matters upon which the Class A Members have the right to vote under this Agreement, or otherwise submitted to a vote of the Class A Members.
Section 4.3    Class B Common Units.  The Class B Member shall have the right to the Profits Interest Amount (and any Preferred Return) as provided in Article VII .  Following the payment in full of all Profits Interest Amounts accruing (or to accrue) prior to the Profits Interest Accrual Termination Date (as well as any Preferred Return), the Class B Common Units shall automatically cease to be outstanding and the Class B Member shall no longer have any rights or privileges under this Agreement.  Unless specifically set forth in this Agreement, the Class B Common Member shall have no other rights of the Members under this Agreement.  Unless specifically set forth in this Agreement, the Class B Common Units shall not entitle the holder thereof to vote on any matters required or permitted to be voted on by the Members.  Notwithstanding the foregoing, following the date of this Agreement and prior to the payment in full of all Profits Interest Amounts accruing (or to accrue) prior to the Profits Interest Accrual Termination Date (as well as any Preferred Return), the Company may not issue any Membership Interest that would entitle the holder thereof to receive Distributions prior to, in preference to, or pari passu with, the Class B Common Units.
Section 4.4    Members Schedule.  The Company shall maintain a schedule of all Members, their respective mailing addresses and the amount and series of Units held by them (the “Members Schedule”), and shall update the Members Schedule upon the issuance or transfer of any Units to any new or existing Member. A copy of the Members Schedule as of the execution of this Agreement is attached hereto as Schedule A.
ARTICLE V    
 
CONTRIBUTIONS AND ALLOCATIONS
Section 5.1    Contributions.  
(a)    Contemporaneously with the execution of this Agreement, each Member owning Class A Common Units and Class B Common Units has made the Capital Contribution giving rise to such Member’s initial Capital Account and is deemed to own the number, type, series and class of Units, in each case, in the amounts set forth opposite such Member’s name on the Members Schedule as in effect on the date hereof.
(b)    If, at any time, the revenues and other funds available to the Company are not adequate to meet its obligations, the Members may, in their sole and absolute discretion, make additional capital contributions in such amounts as they deem necessary.  The Members will not at any time have any liability to the Company for any negative balance in their capital accounts except to the extent that such negative balance arose as the result of distributions in violation of this Agreement or applicable law.  No Member shall be required to make any additional Capital Contributions to the Company. Any future Capital Contributions made by any Member may only be made with the consent of the Board.  No Member shall be required to lend any funds to the Company and no Member shall have any personal liability for the payment or repayment of any Capital Contribution by or to any other Member.
Section 5.2    Capital Accounts.  The Company shall establish and maintain for each Member a separate capital account (a “Capital Account”) on its books and records in accordance with this Section 5.2. Each Capital Account shall be established and maintained in accordance with the following provisions:
(a)    Each Member’s Capital Account shall be increased by the amount of:
(i)    such Member’s Capital Contributions, including such Member’s initial Capital Contribution and any HEP Common Units deemed contributed to the Company by the Class A Members pursuant to Section 7.3(a);
(ii)    any net income or other item of income or gain allocated to such Member pursuant to Sections 6.1(a) and (b); and
(iii)    any liabilities of the Company that are assumed by such Member or secured by any property Distributed to such Member.
(b)    Each Member’s Capital Account shall be decreased by:
(i)    the cash amount or fair market value of any property Distributed to such Member pursuant to Article VII, including any HEP Common Units distributed to the Class B Member pursuant to Section 7.3(a), the fair market value of which shall be determined in accordance with Section 7.3(a);
(ii)    the amount of any net loss or other item of loss or deduction allocated to such Member pursuant to Sections 6.1(a) and (b); and
(iii)    the amount of any liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company.
ARTICLE VI    
 
ALLOCATIONS
Section 6.1    Allocations.  
(a)    For each fiscal year (or portion thereof), except as otherwise provided in this Agreement, net income and net loss (and, to the extent necessary, individual items of income, gain, loss or deduction) of the Company shall be allocated among the Members in a manner such that, the Capital Account balance of each Member, immediately after making such allocations, is, as nearly as possible, equal to (i) the Distributions that would be made to such Member pursuant to Article XII if the Company were dissolved, its affairs wound up and its assets sold for cash equal to their fair market value, all Company liabilities were satisfied, and the net assets of the Company were Distributed, in accordance with Article XII, to the Members immediately after making such allocations, minus (ii) such Member's share of Company Minimum Gain and Member Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets.
(b)    Notwithstanding any other provision of this Agreement, “partner nonrecourse deductions” (as defined in Treasury Regulation Section 1.704-2(i)), if any, of the Company shall be allocated for each period to the Member that bears the economic risk of loss within the meaning of Treasury Regulation Section 1.704-2(i), and “nonrecourse deductions” (as defined in Treasury Regulation Section 1.704-2(b)) and “excess nonrecourse liabilities” (as defined in Treasury Regulations Section 1.752-3(a), if any, of the Company shall be allocated to the Members as reasonably determined by the tax matters members in accordance with applicable Treasury Regulations.  This Agreement shall be deemed to include “qualified income offset,” minimum gain chargeback” and “partner nonrecourse debt minimum gain chargeback” provisions within the meaning of the Treasury Regulations under Section 704(b) of the Code.
(c)    Except as otherwise required by Section 704(c) of the Code, for federal income tax purposes, each item of income, gain, loss and deduction of the Company for each taxable period shall be allocated in the manner as such items are allocated under Sections 6.1(a) and (b).
ARTICLE VII    
 
DISTRIBUTIONS
Section 7.1    Distributions Prior to the First Profits Interest Payment Date and After Payment of All Profits Interest Amounts and Unpaid Profits Interest Amounts.  Subject to Section 7.3, prior to the first Profits Interest Payment Date and after payment in full of all Profits Interest Amounts accrued (or to accrue) and all Unpaid Profits Interest Amounts:
(a)    the Board, in its sole discretion, shall decide whether, when and in what amounts Distributions shall be made to the Members; and
(b)    any amounts so Distributed shall be distributed to the Class A Members pro rata in proportion to their holdings of Class A Common Units.
Section 7.2    Distributions On and After the First Profits Interest Payment Date Until Payment of All Profits Interest Amounts and Unpaid Profits Interest Amounts.  Subject to Section 7.3, from and after the first Profits Interest Payment Date until payment in full of all Profits Interest Amounts accrued (or to accrue) and all Unpaid Profits Interest Amounts, Distributions shall be made as follows:
(a)    first, 100% to the Class B Member until the Unpaid Profits Interest Amount is reduced to zero; and
(b)    thereafter, 100% to the Class A Members pro rata in proportion to their holdings of Class A Common Units.
Section 7.3    Restrictions on Dividends; Interest and Class B Member’s Election.  
(a)    Notwithstanding Section 7.1 or Section 7.2, no Distribution shall be made to any Member if, at the time of such Distribution, payment of such Distribution would (i) violate, breach or result in a default (or give any party thereto the right to declare any event of default) under any Applicable Credit Document then in effect, or (ii) violate or breach any law, regulation or court order applicable to the Class A Members, any of their direct and indirect subsidiaries, or the Company, including §18-607 of the DLLCA (a “Profits Interest Payment Restriction”).  In the event the Company is unable to make any payment to the Class B Member of any Profits Interest Amount due on any Profits Interest Payment Date as a result of a Profits Interest Payment Restriction, then, at the election of the Class B Member, either (1) such Unpaid Profits Interest Amount will accrue a preferred return at a rate of 10% per annum (the “Preferred Return”), or (2) the Class B Member may receive payment of such Profits Interest Amount in the form of HEP Common Units, rather than cash, which HEP Common Units shall be valued at market prices without discount, calculated using the volume weighted average price of HEP’s Common Units, as quoted on the New York Stock Exchange for the 10 trading days immediately preceding such Profits Interest Payment Date.  If the Class B Member elects to receive payment of any Profits Interest Amount in the form of HEP Common Units, such payment shall only be made if such issuance is permitted pursuant to applicable laws, regulations, court orders and the Partnership Agreement.  
(b)    Notwithstanding the provisions of Section 7.3(a) or the priority of Distributions provided for in Section 7.2, in the event the Company is unable to make payment of any Profits Interest Amount as a result of a Profits Interest Payment Restriction and such payment is not made in HEP Common Units as provided in Section 7.3(a), then the Company may, nevertheless, make Distributions to the Class A Members in accordance with Section 7.2(b) so long as (i) the Company deposits the Unpaid Profits Interest Amount in a segregated account (the “Restricted Profits Interest Account”) (including, at least quarterly, amounts for Preferred Return accrued under Section 7.3(a)), and (ii) promptly distributes to the Class B Member the amounts in the Restricted Profits Interest Account as soon as and to the extent payment of such amounts is no longer subject to such Profits Interest Payment Restrictions.
(c)    Following the receipt of annual financial statements of UNEV Pipeline for any fiscal year that contains any portion of a completed Profits Interest Annual Period, the Company shall recalculate the UNEV EBITDA for such completed Profits Interest Annual Period based upon such annual financial statements for all purposes hereunder.  If such recalculation results in an increase in the Profits Interest Amount for a completed Profits Interest Annual Period, then the Company shall Distribute such increased amount to the Class B Member.  If such recalculation results in a decrease in the Profits Interest Amount for a completed Profits Interest Annual Period, then the Class B Member shall repay the amount of such Decrease to the Company.
ARTICLE VIII    
 
MANAGEMENT OF THE COMPANY
Section 8.1    Board of Managers; Power and Authority.  The business and affairs of the Company shall be managed by or under the direction of a Board of one or more Managers (the “Board”; individual members of the Board shall be referred to as “Managers”), which shall have the power to do any and all acts necessary, convenient or incidental to or for the furtherance of the purposes of the Company described in this Agreement, including all powers, statutory or otherwise, possessed by managers of a limited liability company under the DLLCA and the power and authority to amend the Certificate, adopt an agreement of merger or consolidation, approve a conversion of the Company and approve any dissolution or winding up of the Company or a revocation of a dissolution of the Company.  Each Manager is hereby designated a “manager” of the Company within the meaning of the DLLCA.  Except as otherwise required by law, approval of any action by the Board in accordance with this Agreement shall constitute approval of such action by the Company.
(a)    Number of Managers.  The number of Managers constituting the entire Board shall be three individuals or such other number as may be fixed from time to time by the Class A Members or by the vote of a majority of the entire Board.  
(b)    Appointment and Removal of Managers.  All Managers shall be appointed by the Class A Members.  Any Manager so appointed by the Members shall serve in the capacity so appointed until (i) removed with or without cause by the Class A Members, (ii) such Manager’s successor shall be duly elected and appointed by the Class A Members or (iii) such Manager’s death, disability or resignation.  The Class A Member hereby appoints Matthew P. Clifton, Bruce R. Shaw and Denise C. McWatters as the Managers.
(c)    Vacancies; Increases in the Number of Managers.  Vacancies and newly created Board positions resulting from any increase in the authorized number of Managers constituting the entire Board may be filled by the Class A Members.
(d)    Quorum.  A majority of the total number of Managers shall constitute a quorum for the transaction of business of the Board.  Any meeting may be adjourned from time to time by a majority of the Managers present at the meeting, whether or not a quorum is present, and the meeting may be adjourned without further notice.
(e)    Action by Vote.  Except as may otherwise be provided by law or this Agreement, when a quorum is present at any meeting, the vote of a majority of the Managers present shall be the act of the Board.
(f)    Offices; Location of Books and Records; Place of Meetings; Order of Business.  The Company’s office shall be at, and the books and records of the Company will be kept at, the Company’s principal place of business.  The Board may have offices and keep the books and records of the Company, except as otherwise provided by law, in such other place or places, within or without the State of Delaware, as the Board may from time to time determine by resolution.  The Board may hold meetings at the Company’s principal place of business or at any place determined by a majority of the Managers.  At all meetings of the Board business shall be transacted in such order as shall from time to time be determined by the Chairman of the Board (if any), or in his absence by the President, or by resolution of the Board.
(g)    Meetings.  Meetings of the Board may be called by any Manager, the President or any Vice President.
(h)    Notice.  Meetings of the Board may be held upon at least twenty-four hours oral or written notice to the Managers or upon such shorter notice as may be approved by the Managers.  All written notices and other communications to be given to Managers shall be sufficiently given for all purposes hereunder if in writing and delivered by hand, courier or overnight delivery service or three days after being mailed by certified or registered mail, return receipt requested, with appropriate postage prepaid, or when received in the form of a telegram, facsimile or other electronic transmission (including electronic mail), and shall be directed to the address, facsimile number or electronic mail address as such Manager shall designate by notice to the Company.  Neither the business to be transacted at, nor the purpose of, any meeting of the Board need be specified in the notice of such meeting.  Any Manager may waive the requirement of such notice as to such Manager.  Attendance by a Manager at any meeting shall constitute waiver by such Manager of the requirement of notice of such meeting unless such Manager specifically objects at such meeting on the basis of improper notice.
(i)    Participation in Meetings by Conference Telephone.  Managers may participate in a meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other or by any other means permitted by law.  Such participation shall constitute presence in person at such meeting.
(j)    Action without a Meeting.  Any action required or permitted to be taken at any meeting of the Board may be taken without a meeting if a majority of the Managers consent thereto in writing; provided, however, that if such action is taken by less than unanimous written consent, notice of the taking of such action must be given to those Managers who have not consented in writing within two days of the taking of such action.  Such consent shall be treated for all purposes as the act of the Board.
(k)    Compensation.  The Managers shall not receive any compensation except as may be fixed from time to time in writing by the Board.
(l)    Manager Standard of Care; Liability.  A Manager shall perform his duties in good faith and in a manner such Manager reasonably believes to be in the best interests of the Company.  A Manager shall not have any liability by reason of being or having been a Manager.
(m)    Interested Managers.  No contract or transaction between the Company and one or more of its Managers or the Members, or between the Company and any other corporation, partnership, association, or other organization in which one or more of the Company’s Managers or the Members are managers or members or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the Manager or Member is present at or participates in the meeting of the Board which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if:
(i)    the material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the Board, and the Board in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested Managers, even though the disinterested Managers be less than a quorum;
(ii)    the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Members entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the Members; or
(iii)    the contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified, by the Board or the Members.
Section 8.2    Officers.
(a)    Authority to Appoint.  The Board may appoint, and remove with or without cause, such officers of the Company as the Board from time to time may determine, in its sole and absolute discretion to manage and control the business and affairs of the Company.  Such officers need not be a Member or Manager, and shall have such duties, powers, responsibilities and authority as set forth below and as otherwise may be authorized by the Board from time to time.
(b)    Term.  Subject to any express term of any written agreement between the Company and any officer approved by the Board in writing, any officer so appointed by the Board shall serve in the capacity so appointed until (i) removed with or without cause by the Board, (ii) such officer’s successor shall be duly elected and appointed by the Board or (iii) such officer’s death, disability or resignation.
(c)    Titles.  To the extent appointed by the Board, the officers of the Company may be a Chairman of the Board, a Chief Executive Officer, President, a Secretary, one or more Vice Presidents (any one or more of whom may be designated Executive Vice President or Senior Vice President), a Treasurer and such other officers as the Board may from time to time elect or appoint by resolution.  Any number of offices may be held by the same person.
(d)    Salaries.  The officers and agents of the Company shall not receive any salaries or other compensation except as may be fixed from time to time in writing by the Board.
(e)    Vacancies.  Any vacancy occurring in any office of the Company may be filled by the Board.
(f)    Powers and Duties of the Chairman of the Board.  The Chairman of the Board shall be an existing Manager and shall preside at all meetings of the Board.
(g)    Powers and Duties of the Chief Executive Officer.  The President shall be the Chief Executive Officer of the Company unless the Board designates the Chairman of the Board as Chief Executive Officer.  The Chief Executive Officer shall have, subject to the control of the Board, general executive charge, management and control of the properties, business and operations of the Company with all such powers as may be reasonably incident to such responsibilities; he may agree upon and execute leases, contracts, evidences of indebtedness and other obligations in the name of the Company; and he may sign certificates for membership interests of the Company.
(h)    Powers and Duties of the President.  The President shall have the authority to agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Company; and, unless the Board otherwise determines, he shall, in the absence of the Chairman of the Board or if there be no Chairman of the Board, preside at all meetings of the Board.
(i)    Vice Presidents.  In the absence of the President, or in the event of his inability or refusal to act, a Vice President designated by the Board shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President.  In the absence of a designation by the Board of a Vice President to perform the duties of the President, or in the event of his absence or inability or refusal to act, the Vice President who is present and who is senior in terms of time as a Vice President of the Company shall so act.
(j)    Powers and Duties of the Chief Financial Officer.  The Chief Financial Officer, if any, shall have responsibility for the general executive charge, management and control of the financial affairs and business of the Company and, jointly with the Treasurer (if one shall be appointed), shall have custody and control of all the funds and securities of the Company.  He shall perform all acts incident to the position of Chief Financial Officer, subject to the control of the Chief Executive Officer.
(k)    Treasurer.  The Treasurer, if any, jointly with the Chief Financial Officer (if one shall be appointed), shall have responsibility for the custody and control of all the funds and securities of the Company.  He shall perform all acts incident to the position of Treasurer, subject to the control of the Chief Executive Officer.
(l)    Secretary.  The Secretary shall keep the minutes of all actions or consents by the Board and the Member, in books provided for that purpose; he shall attend to the giving and serving of all notices; he may sign with the other appointed officers all certificates for membership interests of the Company; he shall have charge of the certificate books, transfer books and membership interest ledgers, and such other books and records as the Board may direct, all of which shall at all reasonable times be open to inspection of any Manager or the Member upon application at the office of the Company during reasonable hours; and he shall in general perform all acts incident to the office of Secretary, subject to the control of the Chief Executive Officer.
(m)    Assistant Secretaries.  Each Assistant Secretary, if any, shall have the usual powers and duties pertaining to his office, together with such other powers and duties as from time to time may be designated in this Agreement or assigned to him by the Chief Executive Officer or the Board.  The Assistant Secretaries shall exercise the powers of the Secretary under the Secretary’s direction or during that officer’s absence or inability or refusal to act.
(n)    Action with Respect to Securities and membership interests of Other Entities.  Unless otherwise directed by the Board, the Chief Executive Officer, the President and each Vice President shall have power to vote and otherwise act on behalf of the Company, in person or by proxy, at any meeting of holders of voting securities or interests held by the Company of or with respect to any action of holders of voting securities or interests of any other corporation or other entity in which the Company may hold securities and otherwise to exercise any and all rights and powers which this Company may possess by reason of its ownership of or voting securities or interest in such other corporation or other entity.
Section 8.3    Other Activities.  Neither this Agreement nor any principle of law or equity shall preclude or limit, in any respect, the right of the Members to engage in or derive profit or compensation from any other activities or investments.
ARTICLE IX    
 
INDEMNIFICATION
Section 9.1    Indemnification by the Company.  The Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (each a “Proceeding”), by reason of the fact that he (i) is or was a member, manager, officer, employee or agent of the Company or an officer, director, manager, stockholder, member or partner of the Members or, (ii) is or was serving at the request of the Company as a director, officer, employee or agent of another foreign or domestic limited liability company, corporation, partnership, joint venture, trust or other enterprise (a “Subject Enterprise”) (each person that may be indemnified under clause (i) or (ii), an “Indemnified Person”), in accordance with and to the fullest extent permitted under the laws of the State of Delaware as the same may be amended from time to time, including the advancement of expenses incurred by the Indemnified Person in defending any such threatened, pending or completed Proceeding.  To the extent the present or former spouse(s) of any Indemnified Person is made a party or is threatened to be made a party to any Proceeding solely by virtue of his or her marital relationship to such Indemnified Person, such spouse shall be indemnified hereunder to the fullest extent permitted by the laws of the State of Delaware as the same may be amended from time to time.  Except as the Board in its discretion (but subject to applicable law) may otherwise determine, such indemnification shall be afforded only if such person within 5 business days after his becoming aware of the institution of such Proceeding, shall have notified in writing by registered or certified mail, the Chief Executive Officer, President or Secretary of the Company of the institution of such Proceeding, and shall have furnished such Chief Executive Officer, President or Secretary with true copies of all papers served upon or otherwise received by such person relating to such Proceeding, and shall make available to officers or counsel of the Company all information necessary to keep the Company currently advised as to the status of such Proceeding, and permit the Company, at its option and expense, at any time during the course of such Proceeding, through counsel of the Company’s choosing, to participate in or direct the defense thereof in good faith, and in case of any proposed settlement of any Proceeding the defense of which is not directed by the Company, to submit the proposed terms and conditions thereof to the Board for its approval, failing which no indemnification hereunder shall be afforded for any such settlement.  Such indemnification shall be a contract right and as such shall run to the benefit of any Indemnified Person while this Article VI is in effect.  Any repeal or amendment of this Article VI shall be prospective only and shall not limit the rights of any such Indemnified Person, or the obligations of the Company with respect to any claim arising from or related to the services of such person in any of the foregoing capacities prior to any such repeal or amendment to this Article VI.  The rights of indemnification under the foregoing provisions shall inure to the benefit of the successors, assigns, heirs, executors, administrators and personal representatives of any Indemnified Person.  Such indemnification as hereinabove provided shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any statute, agreement, resolution of the Member, the Board or officers, or otherwise.
Section 9.2    Subrogation.  In the event the Company shall be obligated to indemnify any Indemnified Person pursuant to clause (ii) of the first sentence of Section 6.1, the Company shall be subrogated to all rights of such Indemnified Person against, or otherwise to receive indemnification from, each Subject Enterprise with respect to or on account of the Proceeding giving rise to the Company’s obligation to indemnify such Indemnified Person pursuant to clause (ii) of the first sentence of Section 6.1, including without limitation any and all rights of such Indemnified Person to indemnification from such Subject Enterprise under the articles or certificate of incorporation, bylaws, regulations, limited liability company agreement, partnership agreement or other organizational documents of such Subject Enterprise or any agreement between such Indemnified Person and such Subject Enterprise.
ARTICLE X    
 
ASSIGNMENT OF MEMBERSHIP INTERESTS
The Class A Members may transfer, convey, assign or pledge all or any portion of such Class A Member’s Membership Interest in the Company at any time, subject to Section 12.3.  No portion of the Membership Interest of the Class B Member may be transferred, conveyed, assigned or pledged at any time without the prior approval of Class A Members holding at least a majority of the then outstanding Class A Common Units, except for Permitted Transfers.  Upon any assignment, conveyance or transfer permitted hereunder, the assignee shall succeed to the rights and obligations of the assigning Member in respect of its interests in the Company so transferred and such assignee shall become a member in the Company; provided, however, that such assignee must agree to be bound by the terms of this Agreement, and evidence such agreement by executing a copy of this Agreement or a joinder thereto simultaneously with receiving such assignment of Membership Interests and as a condition to being admitted as a Member in the Company.  Notwithstanding anything to the contrary contained herein, no such transfer of a Member’s interest in the Company shall operate to dissolve the Company. 
ARTICLE XI    
 
RESIGNATION
No Member may resign from the Company except upon an assignment by such Member of 100% of such Member’s interests in the Company in accordance with Article X, in which case such Member may resign at any time upon or after the effectiveness of such assignment.
ARTICLE XII    
 
BUY-OUT AND BUY-DOWN OF THE PROFITS INTEREST
Section 12.1    Optional Buy-Out of the Profits Interest in Full.  At any time, the Class A Members or the Company may elect to purchase all of the Class B Common Units from the Class B Member by (i) providing written notice of such election to the Class B Member specifying a date for such purchase (the “Optional Buy-Out Date”), which date may not be more than 20 nor less than 10 days from the date of such notice, and (ii) paying to the Class B Member on the Optional Buy-Out Date an amount equal to the sum of (A) the Profits Interest Balance Amount, and (B) the Unpaid Profits Interest Amount, each as of such Optional Buy-Out Date (the “Optional Buy-Out Price”).
Section 12.2    Optional Buy-Down of the Profits Interest.  At any time, and from time-to-time, the Class A Members or the Company may elect to buy-down the Profits Interest Balance Amount by providing written notice of such election to the Class B Member specifying the amount it intends to pay toward such buy-down and specifying a date for such buy-down (the “Optional Buy-Down Date”), which date may not be more than 20 nor less than 10 days from the date of such notice.  Payment of such amount will be made on the Optional Buy-Down Date, and the Profits Interest Balance Amount will be reduced on such date by the amount of such payment.
Section 12.3    Mandatory Buy-Out of the Profits Interest upon a UNEV Sale Event.  
(a)    Upon a UNEV Sale Event, the Class A Members or the Company will (i) promptly (and in any event within 10 business days) notify the Class B Member in writing of such UNEV Sale Event, specifying in reasonable detail the nature of such UNEV Sale Event and the proceeds received by it or any of its Affiliates in connection with such UNEV Sale Event, and (ii) within 30 days of such UNEV Sale Event (or, if the fair market value of the Class B Common Units is being determined under Section 12.3(c), within 30 days after such determination becomes final as provided in such Section 12.3(c)) (the “Mandatory Buy-Out Date”), purchase all, but not less than all, of the Class B Member’s Class B Common Units for a price equal to the Mandatory Buy-Out Price; provided, however, that if the UNEV Sale Event relates to a transaction by the Class A Member within the meaning of clause (B) of the definition of UNEV Sale Event, then such transaction may not occur prior to the payment of the Mandatory Buy-Out Price;  provided further, however, that if the UNEV Sale Event is a UNEV Sell-Down, then, instead of purchasing all of the Class B Common Units, the Class A Member or the Company will buy-down the Profits Interest Balance Amount by an amount equal to the Corresponding Percentage of the Profits Interest Balance Amount (a “Mandatory Buy-Down”).  Payment for a Mandatory Buy-Down will be made within 30 days of the UNEV Sell-Down (except as provided in the first proviso above), and on such date the Profits Interest Balance Amount will be reduced by the amount of such payment.
(b)    The term “Mandatory Buy-Out Price” means:
(i)    if the UNEV Sale Event occurs before July 1, 2016, an amount equal to the Profits Interest Balance Amount as of such Mandatory Buy-Out Date (as indicated for such date in the table attached as Exhibit 2, using the table labeled “3-year Giveback Scenario” if the Wood Cross Expansion Completion Date has occurred by July 1, 2015, and the table labeled “4-year Giveback Scenario” if the Woods Cross Expansion Completion Date has not occurred by July 1, 2015);
(ii)    if the UNEV Sale Event occurs on or after July 1, 2016, at the option of the Class A Member or the Company (as applicable), either:
(A)    the sum of (1) the Profits Interest Balance Amount, and (2) the Unpaid Profits Interest Amount, each as of such Mandatory Buy-Out Date; or
(B)    the fair market value of the Class B Common Units as of such Mandatory Buy-Out Date, as determined in accordance with Section 12.3(c).
(c)    The fair market value of the Class B Common Units shall initially be determined by an independent appraiser or investment banker of national prominence selected by the Class A Members or the Company (as applicable) (the “Class A Appraiser”).  The Class A Members or Company (as applicable) shall provide the Class B Member with written notice and a copy of the determination of the Class A Appraiser promptly following its receipt thereof.  If the Class B Member does not object to such valuation within 30 days following its receipt of such notice and determination, such determination shall be final and binding on the parties.  If the Class B Member does object to such valuation within such 30 day period, then the Class B Member shall promptly retain a different, independent appraiser or investment banker of national prominence (the “Class B Appraiser”), which shall make its own determination of the fair market value of the Class B Common Units. The Class B Member shall provide the Class A Members or the Company (as applicable) with a copy of the determination of the Class B Appraiser promptly following its receipt thereof.  If the Class A Members or the Company (as applicable) do not object to such valuation within 30 days following its receipt of such determination, such determination shall be final and binding on the parties.  If the Class A Members or Company (as applicable) do object to such valuation within such 30 day period, then the Class A Appraiser and the Class B Appraiser shall select a third appraiser or investment banker of national prominence (the “Independent Appraiser”), which shall make its own determination of the fair market value of the Class B Common Units, which determination shall be final and binding on the parties.  The fees and expenses of the Class A Appraiser will be borne entirely by the Class A Members or the Company (as applicable).  The fees and expenses of the Class B Appraiser will be borne by entirely by the Class B Member.  The fees and expenses of the Independent Appraiser will be paid proportionately by the Class A Members (or the Company, as applicable) and the Class B Member based upon the proximity of the determination made by the appraiser’s selected by them to the Independent Appraiser’s determination.  For example, if the Class A Appraiser’s determination was $100, the Class B Appraiser’s determination was $200, and the Independent Appraiser’s determination was $120, then the Class A Members (or the Company, as applicable) would pay 20% of the Independent Appraiser’s fees and expenses, and the Class B Member would pay 80% of such fees and expenses.
Section 12.4    Further Assurances; Documents.  On any Optional Buy-Out Date or Mandatory Buyout Date, the Company, the Class A Members and the Class B Member shall (x) execute and deliver such documents, agreements, assignments and instruments, and take such further actions, as are necessary or reasonably requested by the Class A Members (or the Company, as applicable) to transfer and assign such Class B Common Units to the Class A Members (or the Company, as applicable), and (y) if, as of such date, the General Partner has not yet forgone all of the Incentive Distribution Rights that it is required to forego pursuant to the Waiver, take such action as is necessary to cause the General Partner to terminate the Waiver effective as of such date.
ARTICLE XIII    
 
DISSOLUTION AND LIQUIDATION
Section 13.1    Dissolution.  The Company shall be dissolved upon the occurrence of any dissolution event specified in the DLLCA; provided, however, that notwithstanding the foregoing, the Company shall not dissolve upon the occurrence of any of the events described in Section 18‐801(a)(4) of the DLLCA (including, without limitation, the death or bankruptcy of the Members).
Section 13.2    Effect of Dissolution.  Upon dissolution, the Company shall cease carrying on its business but shall not terminate until the winding up of the affairs of the Company is completed, the assets of the Company shall have been distributed as provided below and a Certificate of Cancellation of the Company under the DLLCA has been filed in the office of the Secretary of State of the State of Delaware.
Section 13.3    Liquidation Upon Dissolution.  Upon the dissolution of the Company, sole and plenary authority to effectuate the liquidation of the assets of the Company shall be vested in the Board, which shall have full power and authority to sell, assign and encumber any and all of the Company’s assets and to wind up and liquidate the affairs of the Company in an orderly and business-like manner.  The proceeds of liquidation of the assets of the Company distributable upon a dissolution and winding up of the Company shall be applied in the following order of priority:
(a)    first, to the creditors of the Company, including creditors who are members, in the order of priority provided by law, in satisfaction of all liabilities and obligations of the Company (of any nature whatsoever, including, without limitation, fixed or contingent, matured or unmatured, legal or equitable, secured or unsecured), whether by payment or the making of reasonable provision for payment thereof; and
(b)    thereafter, to the Members in accordance with the amounts such Members would receive if the remaining proceeds of liquidation were Distributed in accordance with Section 12.3, in which case the Class B Member shall receive only the Mandatory Buy-Out Price as determined in accordance with Section 12.3, and the Class A Members shall receive all remaining amounts. 
Section 13.4    Winding Up and Certificate of Cancellation.  The winding up of the Company shall be completed when all of its debts, liabilities and obligations have been paid and discharged or reasonably adequate provision therefor has been made, and all of the remaining property and assets of the Company have been distributed to the Members.  Upon the completion of the winding up of the Company, a Certificate of Cancellation of the Company shall be filed in the office of the Secretary of State of the State of Delaware.
ARTICLE XIV    
 
AMENDMENT
This Agreement may be amended or modified only by a written instrument executed by the Class A Members; provided, however, that, while any Class B Common Units remain outstanding, the Class B Member must consent to any amendment that would adversely affect the rights and privileges of the holder of Class B Common Units, increase the liability or duties of the holder of Class B Common Units or require additional contributions by the holder of Class B Common Units.  In addition, the terms or conditions hereof may be waived by a written instrument executed by the party waiving compliance.
[Signatures appear on the following page.]
 IN WITNESS WHEREOF, the undersigned have entered into this Agreement as of the date first written above.
COMPANY:

HEP UNEV HOLDINGS LLC

By:     /s/ Matthew P. Clifton                
Name:    Matthew P. Clifton
Title:   Chief Executive Officer and President

MEMBERS:

HOLLY ENERGY PARTNERS, L.P.

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

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

By:  /s/ Matthew P. Clifton        
Name: Matthew P. Clifton
Title:   Chief Executive Officer and     President

HOLLYFRONTIER HOLDINGS LLC

By:         /s/ Michael C. Jennings        
Name:    Michael C. Jennings
Title:   Chief Executive Officer and President

EXHIBIT 1

EXAMPLE PROFITS INTEREST BALANCE AMOUNT CALCULATION

[See Attached.]
	
																	
	 	Exhibit 1

	 	Example Profits Interest Balance Amount Calculations

	 	 
	 
	 
	 
	 
	 

	 	Example Profits Interest Balance Amount Calculations (all amounts are in millions; assumes WX expansion completed by end of year 3; assumes 1x annual payment in subsequent year)

	 
	 	Contract Year
	Profits Interest Balance Amount applciable for this Contract Year*
	Hypothetical Profits Interest payment made in this Contract Year (with respect to prior Contract Year EBITDA)*
	Total of all Profits Interest payments (after payment in this Contract Year)
	Profits Interest Balance Amount after payment in this Contract Year (and before accrual of 7% applicable rate)
	Profits Interest Balance Amount for next Contract Year (including accrual of 7% applicable rate)

	 	4*
	N/A*
	

	$
	—
	

	$
	—
	

	N/A
	

	$
	33.82
	

	 	5
	$
	33.82
	

	$
	5
	

	$
	5
	

	$
	28.82
	

	$
	30.84
	

	 	6
	$
	30.84
	

	$
	5
	

	$
	10
	

	$
	25.84
	

	$
	27.65
	

	 	7
	$
	27.65
	

	$
	5
	

	$
	15
	

	$
	22.65
	

	$
	24.23
	

	 	8
	$
	24.23
	

	$
	5
	

	$
	20
	

	$
	19.23
	

	$
	20.58
	

	 	9
	$
	20.58
	

	$
	5
	

	$
	25
	

	$
	15.58
	

	$
	16.67
	

	 	10
	$
	16.67
	

	$
	5
	

	$
	30
	

	$
	11.67
	

	$
	12.48
	

	 	11
	$
	12.48
	

	$
	5
	

	$
	35
	

	$
	7.48
	

	$
	8.01
	

	 	12
	$
	8.01
	

	$
	5
	

	$
	40
	

	$
	3.01
	

	$
	3.22
	

	 	13
	$
	3.22
	

	$
	3.22
	

	$
	43.22
	

	$
	—
	

	$
	—
	

	 	14
	$
	—
	

	$
	—
	

	$
	43.22
	

	$
	—
	

	$
	—
	

	 	15
	$
	—
	

	$
	—
	

	$
	43.22
	

	$
	—
	

	$
	—
	

	 	16
	$
	—
	

	$
	—
	

	$
	43.22
	

	$
	—
	

	$
	—
	

	 	17
	$
	—
	

	$
	—
	

	$
	43.22
	

	$
	—
	

	$
	—
	

	 	18
	$
	—
	

	$
	—
	

	$
	43.22
	

	$
	—
	

	$
	—
	

	 	19
	$
	—
	

	$
	—
	

	$
	43.22
	

	$
	—
	

	$
	—
	

	 	20
	$
	—
	

	$
	—
	

	$
	43.22
	

	$
	—
	

	$
	—
	

	 	 
	 
	 
	 
	 
	 

	 	 
	       * * * Profits Interest Amount fully paid in Year 13.
	 

	 	 
	 
	 
	 
	 
	 

	 	Formula for Determining Profits Interest Balance Amount for Contract Year n+1:

	 	 
	 
	 
	 
	 
	 

	 	Variables:
	 
	 
	 
	 
	 

	 	PI(n)
	>> Profits Interest payments made in Contract Year n (with respect to

	 	 
	prior Contract Year EBITDA)
	 
	 
	 

	 	BA(n)
	>> Profits Interest Balance Amount applciable for Contract Year n

	 	 
	 
	 
	 
	 
	 

	 	Formula:
	 
	 
	 
	 
	 

	 	BA(n+1)  =
	[ BA(n) - PI(n) ]  +   (  [ BA(n)  - PI(n) ] * .07 )
	 
	 

	 	 
	 
	 
	 
	 
	 

	 	BA(n+1)  =
	[ BA(n)  - PI(n) ] * 1 .07
	>>> Column G in above spreadsheet uses

	 	 
	 
	 
	this reduced formula.
	 

	 	 
	 
	 
	 
	 
	 

	 	Notes and Data Inputs:
	 
	 
	 
	 

	 	* Profits Interest amounts begin to accrue during Contract Year 4;  Payment of

	 	Profits Interest amount for Contract Year 4 occurs in Contract Year 5.
	 

	 	 
	 
	 
	 
	 
	 

	 	Assumed hypothetical Profits Interest payment amount:
	$5

	 	Initial Profits Interest Balance Amount (for Contract Year 5):
	$33.82

	 	 
	 
	 
	 
	 
	 

EXHIBIT 2

UNEV PROFITS INTEREST BALANCE AMOUNT CALCULATION (DURING WAIVER PERIOD)
$millions

3-year GP Giveback Scenario
Interest Rate    7.0%
	
						
	 
	 
	 
	GP giveback
	Purchase price gap
	Profits Interest  
Balance Amount

	 
	 
	6/30/2012
	 
	12.2
	12.2

	Year 1
	Q1
	9/30/2012
	1.25
	 
	13.66

	 
	Q2
	12/31/2012
	1.25
	 
	15.15

	 
	Q3
	3/31/2013
	1.25
	 
	16.67

	 
	Q4
	6/30/2013
	1.25
	 
	18.21

	Year 2
	Q1
	9/30/2013
	1.25
	 
	19.78

	 
	Q2
	12/31/2013
	1.25
	 
	21.37

	 
	Q3
	3/31/2014
	1.25
	 
	23

	 
	Q4
	6/30/2014
	1.25
	 
	24.65

	Year 3
	Q1
	9/30/2014
	1.25
	 
	26.33

	 
	Q2
	12/31/2014
	1.25
	 
	28.04

	 
	Q3
	3/31/2015
	1.25
	 
	29.78

	 
	Q4
	6/30/2015
	1.25
	 
	31.55

	Year 4
	Q1
	9/30/2015
	-
	 
	32.11

	 
	Q2
	12/31/2015
	-
	 
	32.67

	 
	Q3
	3/31/2016
	-
	 
	33.24

	 
	Q4
	6/30/2016
	-
	 
	33.82

4-year GP Giveback Scenario
Interest Rate    7.0%
	
						
	 
	 
	 
	GP giveback
	Purchase price gap
	Profits Interest  
Balance Amount

	 
	 
	6/30/2012
	 
	12.2
	12.2

	Year 1
	Q1
	9/30/2012
	1.25
	 
	13.66

	 
	Q2
	12/31/2012
	1.25
	 
	15.15

	 
	Q3
	3/31/2013
	1.25
	 
	16.67

	 
	Q4
	6/30/2013
	1.25
	 
	18.21

	Year 2
	Q1
	9/30/2013
	1.25
	 
	19.78

	 
	Q2
	12/31/2013
	1.25
	 
	21.37

	 
	Q3
	3/31/2014
	1.25
	 
	23

	 
	Q4
	6/30/2014
	1.25
	 
	24.65

	Year 3
	Q1
	9/30/2014
	1.25
	 
	26.33

	 
	Q2
	12/31/2014
	1.25
	 
	28.04

	 
	Q3
	3/31/2015
	1.25
	 
	29.78

	 
	Q4
	6/30/2015
	1.25
	 
	31.55

	Year 4
	Q1
	9/30/2015
	1.25
	 
	33.36

	 
	Q2
	12/31/2015
	1.25
	 
	35.19

	 
	Q3
	3/31/2016
	1.25
	 
	37.06

	 
	Q4
	6/30/2016
	1.25
	 
	38.96

 
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
HEP UNEV HOLDINGS LLC
JULY 12, 2012

#PageNum#

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