Document:

exv4w4

 

Exhibit 4.4

EXECUTION COPY

 

 

REGISTRATION RIGHTS AGREEMENT

Dated as of February 28, 2005

by and among

HOLLY ENERGY PARTNERS, L.P.

and

HOLLY ENERGY FINANCE CORP.

as Issuers,

and

UBS SECURITIES LLC,

GOLDMAN, SACHS & CO.

and

BANC OF AMERICA SECURITIES LLC

as Initial Purchasers

61/4% Senior Notes due 2015

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	 	Page	 
	Section 1.
	 	Definitions	 	 	1	 
	 
	 	 	 	 	 	 
	Section 2.
	 	Exchange Offer	 	 	4	 
	 
	 	 	 	 	 	 
	Section 3.
	 	Shelf Registration	 	 	6	 
	 
	 	 	 	 	 	 
	Section 4.
	 	Liquidated Damages	 	 	7	 
	 
	 	 	 	 	 	 
	Section 5.
	 	Registration Procedures	 	 	8	 
	 
	 	 	 	 	 	 
	Section 6.
	 	Registration Expenses	 	 	15	 
	 
	 	 	 	 	 	 
	Section 7.
	 	Indemnification	 	 	15	 
	 
	 	 	 	 	 	 
	Section 8.
	 	Rule 144A	 	 	18	 
	 
	 	 	 	 	 	 
	Section 9.
	 	Underwritten Registrations	 	 	18	 
	 
	 	 	 	 	 	 
	Section 10.
	 	Miscellaneous	 	 	18	 

	 	 	 	 	 	 	 	 	 
	 
	 	(a)	 	No Inconsistent Agreements	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(b)	 	Adjustments Affecting Registrable Notes	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(c)	 	Amendments and Waivers	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(d)	 	Notices	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(e)	 	Successors and Assigns	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(f)	 	Counterparts	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(g)	 	Headings	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(h)	 	Governing Law	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(i)	 	Severability	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(j)	 	Securities Held by the Issuer or Its Affiliates	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(k)	 	Third-Party Beneficiaries	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	 
	 	(l)	 	Entire Agreement	 	 	21	 

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REGISTRATION RIGHTS AGREEMENT

                    This Registration Rights Agreement (this “Agreement”) is dated as of February 28,
2005, by and between Holly Energy Partners, L.P., a Delaware limited partnership (“Holly Energy
Partners”), and Holly Energy Finance Corp., a Delaware corporation (“Finance Corp.”
and, together with Holly Energy Partners, the “Issuers”), and the guarantors listed on
Schedule I hereto (each, a “Guarantor” and collectively, the “Guarantors”), on the
one hand, and UBS Securities LLC, Goldman, Sachs & Co. and UBS Securities LLC (the “Initial
Purchasers”), on the other hand.

                    This Agreement is entered into in connection with the Purchase Agreement, dated as of February
11, 2005, by and among the Issuers, the Guarantors and the Initial Purchasers (the “Purchase
Agreement”), relating to the offering of $150,000,000 aggregate principal amount of the
Issuers’ 61/4% Senior Notes due 2015 (the “Notes”). The execution and delivery of this
Agreement is a condition to the Initial Purchasers’ obligation to purchase the Notes under the
Purchase Agreement.

                    The parties hereby agree as follows:

          Section 1. Definitions

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

                    “action” shall have the meaning set forth in Section 7(c) hereof.

                    “Advice” shall have the meaning set forth in Section 5 hereof.

                    “Agreement” shall have the meaning set forth in the first introductory paragraph hereto.

                    “Applicable Period” shall have the meaning set forth in Section 2(b) hereof.

                    “Board of Directors” shall have the meaning set forth in Section 5 hereof.

                    “Business Day” shall mean a day that is not a Legal Holiday.

                    “Commission” shall mean the Securities and Exchange Commission.

                    “Day” shall mean a calendar day.

                    “Damages Payment Date” shall have the meaning set forth in Section 4(b) hereof.

                    “Delay Period” shall have the meaning set forth in Section 5 hereof.

                    “Effectiveness Period” shall have the meaning set forth in Section 3(b) hereof.

                    “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder.

                    “Exchange Notes” shall have the meaning set forth in Section 2(a) hereof.

                    “Exchange Offer” shall have the meaning set forth in Section 2(a) hereof.

 

 

                    “Exchange Offer Registration Statement” shall have the meaning set forth in Section 2(a)
hereof.

                    “Holder” shall mean any holder of a Registrable Note or Registrable Notes.

                    “Indenture” shall mean the Indenture, dated as of February 28, 2005, by and among the Issuers,
the Guarantors and U.S. Bank National Association as trustee, pursuant to which the Notes are being
issued, as amended or supplemented from time to time in accordance with the terms thereof.

                    “Initial Purchasers” shall have the meaning set forth in the first introductory paragraph
hereof.

                    “Inspectors” shall have the meaning set forth in Section 5(m) hereof.

                    “Issue Date” shall mean February 28, 2005, the date of original issuance of the Notes.

                    “Issuers” shall have the meaning set forth in the introductory paragraph hereto and shall also
include the Issuers’ permitted successors and assigns.

                    “Legal Holiday” shall mean a Saturday, a Sunday or a day on which banking institutions in New
York, New York are required by law, regulation or executive order to remain closed.

                    “Liquidated Damages” shall have the meaning set forth in Section 4(a) hereof.

                    “Losses” shall have the meaning set forth in Section 7(a) hereof.

                    “NASD” shall have the meaning set forth in Section 5(q) hereof.

                    “Notes” shall have the meaning set forth in the second introductory paragraph hereto.

                    “Participant” shall have the meaning set forth in Section 7(a) hereof.

                    “Participating Broker-Dealer” shall have the meaning set forth in Section 2(b) hereof.

                    “Person” shall mean an individual, corporation, partnership, joint venture association, joint
stock company, trust, unincorporated limited liability company, government or any agency or
political subdivision thereof or any other entity.

                    “Private Exchange” shall have the meaning set forth in Section 2(b) hereof.

                    “Private Exchange Notes” shall have the meaning set forth in Section 2(b) hereof.

                    “Prospectus” shall mean the prospectus included in any Registration Statement (including,
without limitation, any prospectus subject to completion and a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.

                    “Purchase Agreement” shall have the meaning set forth in the second introductory paragraph
hereof.

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                    “Records” shall have the meaning set forth in Section 5(m) hereof.

                    “Registrable Notes” shall mean each Note upon its original issuance and at all times
subsequent thereto, each Exchange Note as to which Section 2(c)(iii) hereof is applicable upon
original issuance and at all times subsequent thereto and each Private Exchange Note upon original
issuance thereof and at all times subsequent thereto, in each case until (i) a Registration
Statement (other than, with respect to any Exchange Note as to which Section 2(c)(ii) hereof is
applicable, the Exchange Offer Registration Statement) covering such Note, Exchange Note or Private
Exchange Note has been declared effective by the Commission and such Note, Exchange Note or such
Private Exchange Note, as the case may be, has been disposed of in accordance with such effective
Registration Statement, (ii) such Note has been exchanged pursuant to the Exchange Offer for an
Exchange Note or Exchange Notes that may be resold without restriction under state and federal
securities laws, (iii) such Note, Exchange Note or Private Exchange Note, as the case may be,
ceases to be outstanding for purposes of the Indenture or (iv) such Note, Exchange Note or Private
Exchange Note has been sold in compliance with Rule 144 or is salable pursuant to Rule 144(k).

                    “Registration Default” shall have the meaning set forth in Section 4(a) hereof.

                    “Registration Statement” shall mean any appropriate registration statement of the Issuers
covering any of the Registrable Notes filed with the Commission under the Securities Act, and all
amendments and supplements to any such Registration Statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.

                    “Requesting Participating Broker-Dealer” shall have the meaning set forth in Section 2(b)
hereof.

                    “Rule 144” shall mean Rule 144 promulgated under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or regulation hereafter
adopted by the Commission providing for offers and sales of securities made in compliance therewith
resulting in offers and sales by subsequent holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus delivery requirements of the Securities
Act.

                    “Rule 144A” shall mean Rule 144A promulgated under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or regulation hereafter
adopted by the Commission.

                    “Rule 415” shall mean Rule 415 promulgated under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.

                    “Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

                    “Shelf Filing Event” shall have the meaning set forth in Section 2(c) hereof.

                    “Shelf Registration” shall have the meaning set forth in Section 3(a) hereof.

                    “Shelf Registration Statement” shall mean a Registration Statement filed in connection with a
Shelf Registration.

                    “TIA” shall mean the Trust Indenture Act of 1939, as amended.

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                    “Trustee” shall mean the trustee under the Indenture and the trustee (if any) under any
indenture governing the Exchange Notes and Private Exchange Notes.

                    “Underwritten registration or underwritten offering” shall mean a registration in which
securities of the Issuers are sold to an underwriter for reoffering to the public.

          Section 2. Exchange Offer

                    (a) The Issuers shall (i) file a Registration Statement (the “Exchange Offer Registration
Statement”) within 150 days after the Issue Date with the Commission on an appropriate
registration form with respect to a registered offer (the “Exchange Offer”) to exchange any
and all of the Registrable Notes for a like aggregate principal amount of notes (the “Exchange
Notes”) that are identical in all material respects to the Notes (except that the Exchange
Notes shall not contain terms with respect to transfer restrictions or Liquidated Damages upon a
Registration Default), (ii) use commercially reasonable efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act within 210 days after the
Issue Date and (iii) use commercially reasonable efforts to consummate the Exchange Offer within
240 days after the Issue Date. Upon the Exchange Offer Registration Statement being declared
effective by the Commission, the Issuers will offer the Exchange Notes in exchange for surrender of
the Notes. The Issuers shall keep the Exchange Offer open for not less than 20 business days (or
longer if required by applicable law) after the date notice of the Exchange Offer is mailed to
Holders.

                    Each Holder that participates in the Exchange Offer will be required to represent to the
Issuers in writing that (i) any Exchange Notes to be received by it will be acquired in the
ordinary course of its business, (ii) it has no arrangement or understanding with any Person to
participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes in
violation of the provisions of the Securities Act or, if it is an affiliate, it will comply with
the registration and prospectus delivery requirements of the Securities Act to the extent
applicable, (iii) if such Holder is not a broker-dealer, it is not engaged in, and does not intend
to engage in, a distribution of Exchange Notes, (iv) if such Holder is a broker-dealer that will
receive Exchange Notes for its own account in exchange for Notes that were acquired as a result of
market-making or other trading activities, it will deliver a prospectus in connection with any
resale of such Exchange Notes and (v) such Holder has full power and authority to transfer the
Notes in exchange for the Exchange Notes and that the Issuers will acquire good and unencumbered
title thereto free and clear of any liens, restrictions, charges or encumbrances and not subject to
any adverse claims.

                    (b) The Issuers and the Initial Purchasers acknowledge that the staff of the Commission has
taken the position that any broker-dealer that elects to exchange Notes that were acquired by such
broker-dealer for its own account as a result of market-making or other trading activities for
Exchange Notes in the Exchange Offer (a “Participating Broker-Dealer”) may be deemed to be
an “underwriter” within the meaning of the Securities Act and must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such Exchange Notes (other than
a resale of an unsold allotment resulting from the original offering of the Notes).

                    The Issuers and the Initial Purchasers also acknowledge that the staff of the Commission has
taken the position that if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and the means by which
Participating Broker-Dealers may resell the Exchange Notes, without naming the Participating
Broker-Dealers or specifying the amount of Exchange Notes owned by them, such Prospectus may be
delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligations under
the Securities Act in

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connection with resales of Exchange Notes for their own accounts, so long as the Prospectus
otherwise meets the requirements of the Securities Act.

                    In light of the foregoing, if requested by a Participating Broker-Dealer (a “Requesting
Participating Broker-Dealer”), the Issuers agree to use their commercially reasonable efforts
to keep the Exchange Offer Registration Statement continuously effective for a period not to exceed
180 days after the date on which the Exchange Registration Statement is declared effective, or such
longer period if extended pursuant to the last paragraph of Section 5 hereof (such period, the
“Applicable Period”), or such earlier date as all Requesting Participating Broker-Dealers
shall have notified the Issuers in writing that such Requesting Participating Broker-Dealers have
resold all Exchange Notes acquired in the Exchange Offer. The Issuers shall include a plan of
distribution in such Exchange Offer Registration Statement that meets the requirements set forth in
the preceding paragraph.

                    If, prior to consummation of the Exchange Offer, the Initial Purchasers or any Holder, as the
case may be, holds any Notes acquired by it that have, or that are reasonably likely to be
determined to have, the status of an unsold allotment in an initial distribution, or if any Holder
is not entitled to participate in the Exchange Offer, the Issuers upon the request of the Initial
Purchasers or any such Holder, as the case may be, shall simultaneously with the delivery of the
Exchange Notes in the Exchange Offer, issue and deliver to the Initial Purchasers or any such
Holder, as the case may be, in exchange (the “Private Exchange”) for such Notes held by the
Initial Purchasers or any such Holder, as the case may be, a like principal amount of notes (the
“Private Exchange Notes”) of the Issuers that are identical in all material respects to the
Exchange Notes except that the Private Exchange Notes may be subject to restrictions on transfer
and bear a legend to such effect. The Private Exchange Notes shall be issued pursuant to the same
indenture as the Exchange Notes and bear the same CUSIP number as the Exchange Notes.

                    For each Note surrendered in the Exchange Offer, the Holder will receive an Exchange Note
having a principal amount equal to that of the surrendered Note. Interest on each Exchange Note
and Private Exchange Note issued pursuant to the Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the Notes surrendered in
exchange therefor or, if no interest has been paid on the Notes, from the Issue Date.

                    Upon consummation of the Exchange Offer in accordance with this Section 2, the Issuers shall
have no further registration obligations, except as set forth in Section (c) hereof.

                    In connection with the Exchange Offer, the Issuers shall:

          (1) mail or cause to be mailed to each Holder entitled to participate in the Exchange
Offer a copy of the Prospectus forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and related documents;

          (2) utilize the services of a depositary for the Exchange Offer with an address in the
Borough of Manhattan, The City of New York;

          (3) permit Holders to withdraw tendered Notes at any time prior to the close of
business, New York time, on the last Business Day on which the Exchange Offer shall remain
open; and

          (4) otherwise comply in all material respects with all applicable laws, rules and
regulations.

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                    As soon as practicable after the close of the Exchange Offer and the Private Exchange, if any,
the Issuers shall:

          (1) accept for exchange all Notes validly tendered and not validly withdrawn by the
Holders pursuant to the Exchange Offer and the Private Exchange, if any;

          (2) deliver or cause to be delivered to the Trustee for cancellation all Notes so
accepted for exchange; and

          (3) cause the Trustee to authenticate and deliver promptly to each such Holder of
Notes, Exchange Notes or Private Exchange Notes, as the case may be, equal in principal
amount to the Registrable Notes of such Holder so accepted for exchange.

                    The Exchange Offer and the Private Exchange shall not be subject to any conditions, other than
that (i) the Exchange Offer or Private Exchange, as the case may be, does not violate applicable
law or any applicable interpretation of the staff of the Commission, (ii) no action or proceeding
shall have been instituted or threatened in any court or by any governmental agency which might
materially impair the ability of the Issuers to proceed with the Exchange Offer or the Private
Exchange, and no material adverse development shall have occurred in any existing action or
proceeding with respect to the Issuers and (iii) all governmental approvals shall have been
obtained, which approvals the Issuers deem necessary for the consummation of the Exchange Offer or
Private Exchange.

                    The Exchange Notes and the Private Exchange Notes shall be issued under (i) the Indenture or
(ii) an indenture identical in all material respects to the Indenture (in either case, with such
changes as are necessary to comply with any requirements of the Commission to effect or maintain
the qualification thereof under the TIA) and which, in either case, has been qualified under the
TIA and shall provide that (a) the Exchange Notes shall not be subject to the transfer restrictions
set forth in the Indenture and (b) the Private Exchange Notes shall be subject to the transfer
restrictions set forth in the Indenture. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes shall vote and consent together on all
matters as one class and that none of the Exchange Notes, the Private Exchange Notes or the Notes
will have the right to vote or consent as a separate class on any matter.

                    (c) In the event that (i) any changes in law or the applicable interpretations of the staff of
the Commission do not permit the Issuers to effect the Exchange Offer, (ii) any Holder, other than
the Initial Purchasers, is prohibited by law or the applicable interpretations of the staff of the
Commission from participating in the Exchange Offer or does not receive Exchange Notes on the date
of the exchange that may be sold without restriction under state and federal securities laws (other
than due solely to the status of such holder as an affiliate of the Issuers within the meaning of
the Securities Act) or (iii) the Initial Purchaser so requests with respect to Notes or Private
Exchange Notes that have, or that are reasonably likely to be determined to have, the status of
unsold allotments in an initial distribution (each such event referred to in clauses (i) through
(iiii) of this sentence, a “Shelf Filing Event”), then the Issuers shall file a Shelf
Registration pursuant to Section 3 hereof.

          Section 3. Shelf Registration

                    If at any time a Shelf Filing Event shall occur, then:

                    (a) Shelf Registration. The Issuers shall file with the Commission a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the
Registrable Notes not exchanged in the Exchange Offer, Private Exchange Notes and Exchange Notes as

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to which Section 2(c)(iii) is applicable (the “Shelf Registration”). The Issuers
shall use commercially reasonable efforts to file with the Commission the Shelf Registration as
promptly as practicable, but in no event more than 60 days following the date on which the
obligation to file such Shelf Registration Statement with the Commission arises. The Shelf
Registration shall be on such appropriate form permitting registration of such Registrable Notes
for resale by Holders in the manner or manners designated by them (including, without limitation,
one or more underwritten offerings). The Issuers shall not permit any securities other than the
Registrable Notes to be included in the Shelf Registration.

                    (b) The Issuers shall use their commercially reasonable efforts (x) to cause the Shelf
Registration to be declared effective under the Securities Act on or prior to the later of 180
calendar days after the Issue Date or 90 days after the Shelf Registration is required to be filed
with the Commission and (y) to keep the Shelf Registration continuously effective under the
Securities Act for the period ending on the date which is two years from the Issue Date, subject to
extension pursuant to the penultimate paragraph of Section 5 hereof (the “Effectiveness
Period”), or such shorter period ending when all Registrable Notes covered by the Shelf
Registration have been sold in the manner set forth and as contemplated in the Shelf Registration;
provided, however, that (i) the Effectiveness Period in respect of the Shelf
Registration shall be extended to the extent required to permit dealers to comply with the
applicable prospectus delivery requirements of Rule 174 under the Securities Act and as otherwise
provided herein and (ii) the Issuers may suspend the effectiveness of the Shelf Registration
Statement under the circumstance referred to in the penultimate paragraph of Section 5 hereof.

                    (c) Supplements and Amendments. The Issuers agree to supplement or make amendments to
the Shelf Registration Statement as and when required by the rules, regulations or instructions
applicable to the registration form used for such Shelf Registration Statement or by the Securities
Act or rules and regulations thereunder for shelf registration, or if reasonably requested by the
Holders of a majority in aggregate principal amount of the Registrable Notes covered by such
Registration Statement or by any underwriter of such Registrable Notes.

          Section 4. Liquidated Damages

                    (a) The Issuers and the Initial Purchasers agree that the Holders will suffer damages if the
Issuers fail to fulfill their obligations under Section 2 or Section 3 hereof and that it would not
be feasible to ascertain the extent of such damages with precision. Accordingly, the Issuers agree
that if:

          (i) the Exchange Offer Registration Statement is not filed with the Commission on or prior

to the 150th day following the Issue Date or, if that day is not a Business Day, the next
day that is a Business Day,

          (ii) the Exchange Offer Registration Statement is not declared effective on or prior to the
210th day following the Issue Date or, if that day is not a Business Day, the next day that
is a Business Day,

          (iii) the Exchange Offer is not consummated on or prior to the 240th day following the Issue
Date, or, if that day is not a Business Day, the next day that is a Business Day; or

          (iv) the Shelf Registration Statement is required to be filed but is not declared effective
by the later of 180 calendar days after the Issue Date or 90 days after the Shelf
Registration is required to be filed with the Commission, or, if either such day is not a
Business Day, the next day that is a Business Day or is declared effective by such date but
thereafter ceases to be effective or usable, except if the Shelf Registration ceases to be
effective or usable as specifically permitted by the penultimate paragraph of Section 5
hereof

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(each such event referred to in clauses (i) through (iv) a “Registration Default”),
liquidated damages in the form of additional cash interest (“Liquidated Damages”) will
accrue on the affected Notes and the affected Exchange Notes, as applicable. The rate of
Liquidated Damages will be 0.25% per annum for the first 90-day period immediately following the
occurrence of a Registration Default, increasing by an additional 0.25% per annum with respect to
each subsequent 90-day period up to a maximum amount of additional interest of 1.00% per annum,
from and including the date on which any such Registration Default shall occur to, but excluding,
the earlier of (1) the date on which all Registration Defaults have been cured or (2) the date on
which all the Notes and Exchange Notes otherwise become freely transferable by Holders other than
affiliates of the Issuers without further registration under the Securities Act.

Notwithstanding the foregoing, (1) the amount of Liquidated Damages payable shall not increase
because more than one Registration Default has occurred and is pending and (2) a Holder of Notes or
Exchange Notes who is not entitled to the benefits of the Shelf Registration Statement
(i.e., such Holder has not elected to include information) shall not be entitled to
Liquidated Damages with respect to a Registration Default that pertains to the Shelf Registration
Statement.

                    (b) So long as Notes remain outstanding, the Issuers shall notify the Trustee within five
Business Days after each and every date on which an event occurs in respect of which Liquidated
Damages is required to be paid. Any amounts of Liquidated Damages due pursuant to clauses (a)(i),
(a)(ii), (a)(iii) or (a)(iv) of this Section 4 will be payable in cash semi-annually on each March
1 and September 1 (each a “Damages Payment Date”), commencing with the first such date
occurring after any such Liquidated Damages commence to accrue, to Holders to whom regular interest
is payable on such Damages Payment Date with respect to Notes that are Registrable Securities. The
amount of Liquidated Damages for Registrable Notes will be determined by multiplying the applicable
rate of Liquidated Damages by the aggregate principal amount of all such Registrable Notes
outstanding on the Damages Payment Date following such Registration Default in the case of the
first such payment of Liquidated Damages with respect to a Registration Default (and thereafter at
the next succeeding Damages Payment Date until the cure of such Registration Default), multiplied
by a fraction, the numerator of which is the number of days such Liquidated Damages rate was
applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day
months and, in the case of a partial month, the actual number of days elapsed), and the denominator
of which is 360.

          Section 5. Registration Procedures

                    In connection with the filing of any Registration Statement pursuant to Section 2 or 3 hereof,
the Issuers shall effect such registrations to permit the sale of the securities covered thereby in
accordance with the intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Issuers hereunder, the Issuers shall:

          (a) Prepare and file with the Commission the Registration Statement or Registration
Statements prescribed by Section 2 or 3 hereof, and use their commercially reasonable
efforts to cause each such Registration Statement to become effective and remain effective
as provided herein; provided, however, that if (1) such filing is pursuant
to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period relating thereto, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Issuers shall furnish to and afford
the Holders of the Registrable Notes covered by such Registration Statement or each such
Participating Broker-Dealer, as the case may be, its counsel (if such counsel is known to
the Issuers) and the managing underwriters, if any, a reasonable opportunity to review

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copies of all such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in each case at least five
Business Days prior to such filing or such later date as is reasonable under the
circumstances). The Issuers shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto if the Holders of a majority in aggregate principal amount
of the Registrable Notes covered by such Registration Statement, or any such Participating
Broker-Dealer, as the case may be, its counsel, or the managing underwriters, if any, shall
reasonably object on a timely basis.

          (b) Prepare and file with the Commission such amendments and post-effective amendments
to each Shelf Registration Statement or Exchange Offer Registration Statement, as the case
may be, as may be necessary to keep such Registration Statement continuously effective for
the Effectiveness Period or the Applicable Period, as the case may be; cause the related
Prospectus to be supplemented by any Prospectus supplement required by applicable law, and
as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in
force) promulgated under the Securities Act; and comply with the provisions of the
Securities Act and the Exchange Act applicable to them with respect to the disposition of
all securities covered by such Registration Statement as so amended or in such Prospectus as
so supplemented and with respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus, in each case, in accordance with
the intended methods of distribution set forth in such Registration Statement or Prospectus,
as so amended.

          (c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto
from whom the Issuers have received written notice that such Broker-Dealer will be a
Participating Broker-Dealer in the applicable Exchange Offer, notify the selling Holders of
Registrable Notes, or each such Participating Broker-Dealer, as the case may be, their
counsel and the managing underwriters, if any, as promptly as possible, and, if requested by
any such Person, confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any Holder may, upon
request, obtain, at the sole expense of the Issuers, one conformed copy of such Registration
Statement or post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and exhibits), (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any preliminary prospectus or
the initiation of any proceedings for that purpose, (iii) if at any time when a Prospectus
is required by the Securities Act to be delivered in connection with sales of the
Registrable Notes or resales of Exchange Notes by Participating Broker-Dealers the
representations and warranties of the Issuers contained in any agreement (including any
underwriting agreement) contemplated by Section 5(l)(i) hereof cease to be true and correct
in all material respects, (iv) of the receipt by the Issuers of any notification with
respect to the suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Notes or the Exchange Notes for offer or
sale in any jurisdiction, or the initiation or threatening of any proceeding for such
purpose, (v) of the happening of any event, the existence of any condition or any
information becoming known to the Issuers that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires the making of any
changes in or amendments or supplements to such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not

9

 

contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not misleading,
and that in the case of the Prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were
made, not misleading, and (vi) of the Issuers’ determination that a post-effective amendment
to a Registration Statement would be appropriate.

          (d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use their
commercially reasonable efforts to prevent the issuance of any order suspending the
effectiveness of a Registration Statement or of any order preventing or suspending the use
of a Prospectus or suspending the qualification (or exemption from qualification) of any of
the Registrable Notes or the Exchange Notes, as the case may be, for sale in any
jurisdiction, and, if any such order is issued, to use their commercially reasonable efforts
to obtain the withdrawal of any such order at the earliest practicable moment.

          (e) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period and if
reasonably requested by the managing underwriter or underwriters (if any), the Holders of a
majority in aggregate principal amount of the Registrable Notes covered by such Registration
Statement or any Participating Broker-Dealer, as the case may be, (i) promptly incorporate
in such Registration Statement or Prospectus a prospectus supplement or post-effective
amendment such information as the managing underwriter or underwriters (if any), such
Holders or any Participating Broker-Dealer, as the case may be (based upon advice of
counsel), reasonably determine is necessary to be included therein and (ii) make all
required filings of such prospectus supplement or such post-effective amendment as soon as
practicable after the Issuers have received notification of the matters to be incorporated
in such prospectus supplement or post-effective amendment; provided,
however, that the Issuers shall not be required to take any action hereunder that
would, in the written opinion of counsel to the Issuers, violate applicable laws.

          (f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, furnish or make
electronically accessible to each selling Holder of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, who so requests, its counsel and each
managing underwriter, if any, at the sole expense of the Issuers, one conformed copy of the
Registration Statement or Registration Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if requested, all documents incorporated
or deemed to be incorporated therein by reference and all exhibits.

          (g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, deliver to each
selling Holder of Registrable Notes or each such Participating Broker-Dealer, as the case
may be, its respective counsel, and the underwriters, if any, at the sole expense of the
Issuers, as many copies of the

10

 

Prospectus or Prospectuses (including each form of preliminary prospectus) and each
amendment or supplement thereto and any documents incorporated by reference therein as such
Persons may reasonably request; and, subject to the last paragraph of this Section 5, the
Issuers hereby consent to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Notes or each such Participating
Broker-Dealer, as the case may be, and the underwriters or agents, if any, and dealers (if
any), in connection with the offering and sale of the Registrable Notes covered by, or the
sale by Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and
any amendment or supplement thereto.

          (h) Prior to any public offering of Registrable Notes or Exchange Notes or any delivery
of a Prospectus contained in the Exchange Offer Registration Statement by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use their
commercially reasonable efforts to register or qualify, and to cooperate with the one
representative chosen by a majority in principal amount of the Registrable Notes held by the
selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case
may be, the managing underwriter or underwriters, if any, and its respective counsel in
connection with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes or Exchange Notes, as the case may be, for offer
and sale under the securities or Blue Sky laws of such jurisdictions within the United
States as such representative, Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request; provided, however, that where Exchange
Notes or Registrable Notes are offered other than through an underwritten offering, the
Issuers agree to use their commercially reasonable efforts to cause the Issuers’ counsel to
perform Blue Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably necessary or advisable
to enable the disposition in such jurisdictions of such Exchange Notes or Registrable Notes
covered by the applicable Registration Statement; provided, however, that
the Issuers shall not be required to (A) qualify generally to do business in any
jurisdiction where they are not then so qualified, (B) take any action that would subject
them to general service of process in any such jurisdiction where it they are not then so
subject or (C) subject themselves to taxation in excess of a nominal dollar amount in any
such jurisdiction where they are not then so subject.

          (i) If a Shelf Registration is filed pursuant to Section 3 hereof, cooperate with the
selling Holders of Registrable Notes and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates representing Registrable
Notes to be sold, which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company and enable such Registrable
Notes to be in such denominations and registered in such names as the managing underwriter
or underwriters, if any, or selling Holders may request at least five Business Days prior to
any sale of such Registrable Notes or Exchange Notes.

          (j) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, upon the
occurrence of any event contemplated by Section 5(c)(v) or 5(c)(vi) hereof, as promptly as
practicable prepare and (subject to Section 5(a) and the penultimate paragraph of this
Section 5) file with the Commission, at the sole expense of the Issuers, a supplement or
post-effective amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by reference,
or file any other required document so that, as

11

 

thereafter delivered to the purchasers of the Registrable Notes being sold thereunder
or to the purchasers of the Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made,
not misleading.

          (k) Prior to the effective date of the first Registration Statement relating to the
Registrable Notes, (i) provide the Trustee with certificates for the Registrable Notes in a
form eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP number
for the Registrable Notes.

          (l) In connection with any underwritten offering of Registrable Notes pursuant to a
Shelf Registration, enter into an underwriting agreement as is customary in underwritten
offerings of debt securities similar to the Notes and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in order to expedite or
facilitate the registration or the disposition of such Registrable Notes and, in such
connection, (i) make such representations and warranties to, and covenants with, the
underwriters with respect to the business of the Issuers and Holly Energy Partners’
subsidiaries, as then conducted (including any acquired business, properties or entity, if
applicable), and the Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings of debt securities similar to the Notes,
and confirm the same in writing if and when requested; (ii) use their commercially
reasonable efforts to obtain the written opinions of counsel to the Issuers and written
updates thereof in form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the underwriters covering the matters customarily
covered in opinions requested in underwritten offerings and such other matters as may be
reasonably requested by the managing underwriter or underwriters; (iii) use their
commercially reasonable efforts to obtain “cold comfort” letters and updates thereof in
form, scope and substance reasonably satisfactory to the managing underwriter or
underwriters from independent certified public accountants, addressed to each of the
underwriters, such letters to be in customary form and covering matters of the type
customarily covered in “cold comfort” letters in connection with underwritten offerings; and
(iv) if an underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in Section 7 hereof (or
such other provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Registrable Notes covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section; provided that the Issuers shall not be
required to provide indemnification to any underwriter selected in accordance with the
provisions of Section 9 hereof with respect to information relating to such underwriter
furnished in writing to the Issuers by or on behalf of such underwriter expressly for
inclusion in such Registration Statement. The above shall be done at each closing under
such underwriting agreement, or as and to the extent required thereunder.

          (m) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, make available
for inspection one representative chosen by a majority in principal amount of the
Registrable Notes held by of the selling Holders of such Registrable Notes being sold or
each such Participating Broker-Dealer, as the case may be, any underwriter participating in
any such disposition of Registrable Notes, if any, and any attorney, accountant or other
agent retained by any such representative or each such Participating Broker-Dealer, as the
case may be, or underwriter (collectively, the “Inspectors”), at

12

 

the offices where normally kept, during reasonable business hours, all financial and
other records, pertinent corporate documents and instruments of the Issuers and Holly Energy
Partners’ subsidiaries (collectively, the “Records”) as shall be reasonably
necessary to enable them to exercise any applicable due diligence responsibilities, and
cause the officers, directors and employees of the Issuers and Holly Energy Partners’
subsidiaries to supply all information reasonably requested by any such Inspector in
connection with such Registration Statement and Prospectus. Each Inspector shall agree in
writing that it will keep the Records confidential and that it will not disclose, or use in
connection with any market transactions in violation of any applicable securities laws, any
Records that the Issuers determine, in good faith, to be confidential and that Holly Energy
Partners notifies the Inspectors in writing are confidential unless (i) the release of such
Records is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, (ii) disclosure of such information is necessary in the opinion of counsel for
an Inspector in connection with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving such Inspector and arising out of, based
upon, relating to, or involving this Agreement or the Purchase Agreement, or any
transactions contemplated hereby or thereby or arising hereunder or thereunder, or (iii)
the information in such Records has been made generally available to the public other than
as a result of a breach of the confidentiality provisions set forth in this section (m);
provided, however, that (i) each Inspector shall agree to use commercially
reasonable efforts to provide notice to the Issuers of the potential disclosure of any
information by such Inspector pursuant to clause (i) or (ii) of this sentence to permit the
Issuers to obtain a protective order (or waive the provisions of this paragraph (m)) and
(ii) each such Inspector shall take such actions as are reasonably necessary to protect the
confidentiality of such information (if practicable).

          (n) Provide an indenture trustee for the Registrable Notes or the Exchange Notes, as
the case may be, and cause the Indenture or the trust indenture provided for in Section 2(a)
hereof to be qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Registrable Notes; and in connection
therewith, cooperate with the trustee under any such indenture and the Holders of the
Registrable Notes or Exchange Notes, as applicable, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use their commercially reasonable efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the Commission to enable such indenture to be so
qualified in a timely manner.

          (o) Comply with all applicable rules and regulations of the Commission and make
generally available to the Issuers’ securityholders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable Notes or Exchange
Notes are sold to underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Issuers after the effective date of a Registration Statement,
which statements shall cover said 12-month periods consistent with the requirements of Rule
158.

          (p) If the Exchange Offer or a Private Exchange is to be consummated, upon delivery of
the Registrable Notes by Holders to the Issuers (or to such other Person as directed by the
Issuers) in exchange for the Exchange Notes or the Private Exchange Notes, as the case may
be, mark, or cause to be marked, on such Registrable Notes that such Registrable Notes are
being

13

 

cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as the case
may be; provided that in no event shall such Registrable Notes be marked as paid or
otherwise satisfied.

          (q) Cooperate with each seller of Registrable Notes covered by any Registration
Statement and each underwriter, if any, participating in the disposition of such Registrable
Notes and their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the “NASD”).

                    The Issuers may require each seller of Registrable Notes or Exchange Notes as to which any
registration is being effected to furnish to the Issuers such information regarding such seller and
the distribution of such Registrable Notes or Exchange Notes as the Issuers may, from time to time,
reasonably request and, in any event, each such seller shall be required to provide to the Issuers
the selling security holder information required by Item 507 or 508, as applicable, of Regulation
S-K under the Exchange Act. The Issuers may exclude from such registration the Registrable Notes
of any seller so long as such seller fails to furnish such information within a reasonable time
after receiving such request and in the event of such an exclusion, the Issuers shall have no
further obligation under this Agreement (including, without limitation, the obligations under
Section 4) with respect to such seller or any subsequent Holder of such Registrable Notes. Each
seller as to which any Shelf Registration is being effected agrees to furnish promptly to the
Issuers all information required to be disclosed in order to make any information previously
furnished to the Issuers by such seller not materially misleading.

                    If any such Registration Statement refers to any Holder by name or otherwise as the holder of
any securities of the Issuers, then such Holder shall have the right to require (i) the insertion
therein of language, in form and substance reasonably satisfactory to such Holder, to the effect
that the holding by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the securities covered thereby and that such holding does
not imply that such Holder will assist in meeting any future financial requirements of the Issuers,
or (ii) in the event that such reference to such Holder by name or otherwise is not required by the
Securities Act or any similar federal statute then in force, the deletion of the reference to such
Holder in any amendment or supplement to the applicable Registration Statement filed or prepared
subsequent to the time that such reference ceases to be required.

                    Each Holder of Registrable Notes and each Participating Broker-Dealer agrees by acquisition of
such Registrable Notes or Exchange Notes that, upon actual receipt of any notice from the Issuers
(x) of the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv),
or 5(c)(v) hereof, or (y) that the Board of Directors of the General Partner (the “Board of
Directors”) has resolved that the Issuers have a bona fide business purpose for doing so, then
the Issuers may delay the filing or the effectiveness of the Exchange Offer Registration Statement
or the Shelf Registration Statement (if not then filed or effective, as applicable) and shall not
be required to maintain the effectiveness thereof or amend or supplement the Exchange Offer
Registration Statement or the Shelf Registration, in all cases, for a period (a “Delay
Period”) expiring upon the earlier to occur of (i) in the case of the immediately preceding
clause (x), such Holder’s or Participating Broker-Dealer’s receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(i) hereof or until it is advised in
writing (the “Advice”) by the Issuers that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto or (ii) in the case of
the immediately preceding clause (y), the date which is the earlier of (A) the date on which such
business purpose ceases to interfere with the Issuers’ obligations to file or maintain the
effectiveness of any such Registration Statement pursuant to this Agreement or (B) 60 days after
the Issuers notify the Holders of such good faith determination. There shall not be more than 60
days of Delay Periods during any 12-month period. Each of the Effectiveness Period and the
Applicable Period, if applicable, shall be extended by the

14

 

number of days during any Delay Period. Any Delay Period will not alter the obligations of
the Issuers to pay Liquidated Damages under the circumstances set forth in Section 4 hereof.

                    In the event of any Delay Period pursuant to clause (y) of the preceding paragraph, notice
shall be given as soon as practicable after the Board of Directors makes such a determination of
the need for a Delay Period and shall advise the recipient thereof of the agreement of such Holder
provided in the next succeeding sentence. Each Holder, by his acceptance of any Registrable Note,
agrees that during any Delay Period, each Holder will discontinue disposition of such Notes or
Exchange Notes covered by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be.

          Section 6. Registration Expenses

                    All fees and expenses incident to the performance of or compliance with this Agreement by the
Issuers (other than any underwriting discounts or commissions) shall be borne by the Issuers,
whether or not the Exchange Offer Registration Statement or the Shelf Registration is filed or
becomes effective or the Exchange Offer is consummated, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including, without limitation,
reasonable fees and disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility of the Registrable Notes
or Exchange Notes for investment under the laws of such jurisdictions (x) where the holders of
Registrable Notes are located, in the case of an Exchange Offer, or (y) as provided in Section 5(h)
hereof, in the case of a Shelf Registration or in the case of Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing prospectuses if the printing of prospectuses is requested
by the managing underwriter or underwriters, if any, or by the Holders of a majority in aggregate
principal amount of the Registrable Notes included in any Registration Statement or in respect of
Exchange Notes to be sold by any Participating Broker-Dealer during the Applicable Period, as the
case may be, (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Issuers and reasonable fees and disbursements of one special counsel for all of the
sellers of Registrable Notes in connection with a Shelf Registration (exclusive of any counsel
retained pursuant to Section 7 hereof), (v) fees and disbursements of all independent certified
public accountants referred to in Section 5(l)(iii) hereof, (vi) fees and expenses of all other
Persons retained by the Issuers, (vii) the fees and expenses incurred in connection with the rating
of the securities, in each case, if applicable, and (viii) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting agreements, indentures and
any other documents necessary in order to comply with this Agreement. Notwithstanding the
foregoing or anything to the contrary, each Holder shall pay all underwriting discounts and
commissions of any underwriters with respect to any Registrable Notes sold by or on behalf of it.

          Section 7. Indemnification

                    (a) The Issuers agree to indemnify and hold harmless each Holder of Registrable Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable Period, each Person, if
any, who controls any such Person within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, the agents, employees, officers and directors of each Holder and each
such Participating Broker-Dealer and the agents, employees, officers and directors of any such
controlling Person (each, a “Participant”) from and against any and all losses,
liabilities, claims, damages and expenses (including, but not limited to, reasonable attorneys’
fees and any and all reasonable out-of-pocket expenses actually incurred in investigating,
preparing or defending against any litigation,

15

 

commenced or threatened, or any claim whatsoever, and any and all reasonable amounts paid in
settlement of any claim or litigation (in the manner set forth in clause (c) below)) (collectively,
“Losses”) to which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise insofar as such Losses (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) or Prospectus (as amended or supplemented if the
Issuers shall have furnished any amendments or supplements thereto), or caused by, arising out of
or based upon any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the case of the Prospectus, in the
light of the circumstances under which they were made, not misleading, provided that (i)
the foregoing indemnity shall not be available to any Participant insofar as such Losses are caused
by any untrue statement or omission or alleged untrue statement or omission made in reliance upon
and in conformity with information relating to such Participant furnished to the Issuers in writing
by or on behalf of such Participant expressly for use therein, and (ii) that the foregoing
indemnity with respect to any preliminary prospectus shall not inure to the benefit of any
Participant from whom the Person asserting such Losses purchased Registrable Notes if (x) it is
established in the related proceeding that such Participant failed to send or give a copy of the
Prospectus (as amended or supplemented if such amendment or supplement was furnished to such
Participant prior to the written confirmation of such sale) to such Person with or prior to the
written confirmation of such sale, if required by applicable law, and (y) the untrue statement or
omission or alleged untrue statement or omission was completely corrected in the Prospectus (as
amended or supplemented if amended or supplemented as aforesaid) and such Prospectus does not
contain any other untrue statement or omission or alleged untrue statement or omission that was the
subject matter of the related proceeding. This indemnity agreement will be in addition to any
liability that the Issuers may otherwise have, including, but not limited to, liability under this
Agreement.

                    (b) Each Participant agrees, severally and not jointly, to indemnify and hold harmless the
Issuers, each Person, if any, who controls the Issuers within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, and each of its agents, employees, officers
and directors and the agents, employees, officers and directors of any such controlling Person from
and against any Losses to which they or any of them may become subject under the Securities Act,
the Exchange Act or otherwise insofar as such Losses (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement (or any amendment thereto) or Prospectus (as amended or supplemented if
the Issuers shall have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by, arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein,
in the case of the Prospectus, in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that any such Loss arises out of or
is based upon any untrue statement or alleged untrue statement or omission or alleged omission made
in reliance upon and in conformity with information relating to such Participant furnished in
writing to the Issuers by or on behalf of such Participant expressly for use therein.

                    (c) Promptly after receipt by an indemnified party under subsection 7(a) or 7(b) above of
notice of the commencement of any action, suit or proceeding (collectively, an “action”),
such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is to be sought in
writing of the commencement of such action (but the failure so to notify an indemnifying party
shall not relieve such indemnifying party from any liability that it may have under this Section 7
except to the extent that it has been prejudiced in any material respect by such failure). In case
any such action is brought against any indemnified party, and it notifies an indemnifying party of
the commencement of such action, the indemnifying party will be entitled to participate in such
action, and to the extent it may elect by written

16

 

notice delivered to the indemnified party promptly after receiving the aforesaid notice from
such indemnified party, to assume the defense of such action with counsel reasonably satisfactory
to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such action, but the reasonable fees and
expenses of such counsel shall be at the expense of such indemnified party or parties unless (i)
the employment of such counsel shall have been authorized in writing by the indemnifying parties in
connection with the defense of such action, (ii) the indemnifying parties shall not have employed
counsel to take charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) the named parties to such action (including any impleaded
parties) include such indemnified party and the indemnifying party or parties (or such indemnifying
parties have assumed the defense of such action), and such indemnified party or parties shall have
reasonably concluded; based on advice of counsel that there may be defenses available to it or them
that are different from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events such reasonable fees
and expenses of counsel shall be borne by the indemnifying parties. In no event shall the
indemnifying party be liable for the fees and expenses of more than one counsel (together with
appropriate local counsel) at any time for all indemnified parties in connection with any one
action or separate but substantially similar or related actions arising in the same jurisdiction
out of the same general allegations or circumstances. Any such separate firm for the Participants
shall be designated in writing by Participants who sold a majority in interest of Registrable Notes
sold by all such Participants and shall be reasonably acceptable to the Issuers and any such
separate firm for the Issuers, their affiliates, officers, directors, representatives, employees
and agents and such control Person of the Issuers shall be designated in writing by the Issuers and
shall be reasonably acceptable to the Holders. An indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent, which consent may not be
unreasonably withheld. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter of such proceeding.

                    (d) In order to provide for contribution in circumstances in which the indemnification
provided for in this Section 7 is for any reason held to be unavailable from the indemnifying
party, or is insufficient to hold harmless a party indemnified under this Section 7, each
indemnifying party shall contribute to the amount paid or payable by such indemnified party as a
result of such aggregate Losses (i) in such proportion as is appropriate to reflect the relative
benefits received by each indemnifying party, on the one hand, and each indemnified party, on the
other hand, from the sale of the Notes to the Initial Purchasers or the resale of the Registrable
Notes by such Holder, as applicable, or (ii) if such allocation is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of each indemnified party, on the one hand, and each
indemnifying party, on the other hand, in connection with the statements or omissions that resulted
in such Losses, as well as any other relevant equitable considerations. The relative benefits
received by the Issuers, on the one hand, and each Participant, on the other hand, shall be deemed
to be in the same proportion as (x) the total proceeds from the sale of the Notes to the Initial
Purchasers (net of discounts and commissions but before deducting expenses) received by the Issuers
are to (y) the total net profit received by such Participant in connection with the sale of the
Registrable Notes. The relative fault of the parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the Issuers or such
Participant and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission or alleged statement or omission.

17

 

                    (e) The parties agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other method of allocation that does not
take into account the equitable considerations referred to above. Notwithstanding the provisions
of this Section 7, (i) in no case shall any Participant be required to contribute any amount in
excess of the amount by which the net profit received by such Participant in connection with the
sale of the Registrable Notes exceeds the amount of any damages that such Participant has otherwise
been required to pay by reason of any untrue or alleged untrue statement or omission or alleged
omission and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 7, notify such party
or parties from whom contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be sought from any
obligation it or they may have under this Section 7 or otherwise, except to the extent that it has
been prejudiced in any material respect by such failure; provided, however, that no
additional notice shall be required with respect to any action for which notice has been given
under this Section 7 for purposes of indemnification. Anything in this section to the contrary
notwithstanding, no party shall be liable for contribution with respect to any action or claim
settled without its written consent, provided, however, that such written consent
was not unreasonably withheld.

          Section 8. Rule 144A

                    The Issuers covenant that they will file the reports required, if any, to be filed by them
under the Securities Act and the Exchange Act and the rules and regulations adopted by the
Commission thereunder in a timely manner in accordance with the requirements of the Securities Act
and the Exchange Act and, if at any time the Issuers are not required to file such reports, they
will, upon the request of any Holder or beneficial owner of Registrable Notes, make available such
information necessary to permit sales pursuant to Rule 144A under the Securities Act.

          Section 9. Underwritten Registrations

                    If any of the Registrable Notes covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager or managers that
will manage the offering will be selected by the Holders of a majority in aggregate principal
amount of such Registrable Notes included in such offering and shall be reasonably acceptable to
the Issuers.

                    No Holder of Registrable Notes may participate in any underwritten registration hereunder if
such Holder does not (a) agree to sell such Holder’s Registrable Notes on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements
and (b) complete and execute all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting arrangements.

          Section 10. Miscellaneous

                    (a) No Inconsistent Agreements. The Issuers have not, as of the date hereof, and
shall not have, after the date of this Agreement, entered into any agreement with respect to any of
their securities that is inconsistent with the rights granted to the Holders of Registrable Notes
in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not conflict with and are not inconsistent with, in any material respect, the
rights granted to the holders of any of the Issuers’ other issued and outstanding securities under any such agreements. The Issuers

18

 

have not entered and will not enter into any agreement
with respect to any of their securities which will grant to any Person piggy-back registration
rights with respect to any Registration Statement.

                    (b) Adjustments Affecting Registrable Notes. The Issuers shall not, directly or
indirectly, take any action with respect to the Registrable Notes as a class that would adversely
affect the ability of the Holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement.

                    (c) Amendments and Waivers. The provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departures from the provisions hereof may not
be given except pursuant to a written agreement duly signed and delivered by (I) the Issuers and
(II)(A) the Holders of not less than a majority in aggregate principal amount of the then
outstanding Registrable Notes and (B) in circumstances that would adversely affect the
Participating Broker-Dealers, the Participating Broker-Dealers holding not less than a majority in
aggregate principal amount of the Exchange Notes held by all Participating Broker-Dealers;
provided, however, that Section 7 and this Section 10(c) may not be amended,
modified or supplemented except pursuant to a written agreement duly signed and delivered by the
Issuers and each Holder and each Participating Broker-Dealer (including any Person who was a Holder
or Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case may be, disposed
of pursuant to any Registration Statement) affected by any such amendment, modification, supplement
or waiver. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof
with respect to a matter that relates exclusively to the rights of Holders of Registrable Notes
whose securities are being sold pursuant to a Registration Statement and that does not directly or
indirectly affect, impair, limit or compromise the rights of other Holders of Registrable Notes may
be given by Holders of at least a majority in aggregate principal amount of the Registrable Notes
being sold pursuant to such Registration Statement.

                    (d) Notices. All notices and other communications (including, without limitation, any
notices or other communications to the Trustee) provided for or permitted hereunder shall be made
in writing by hand-delivery, registered first-class mail, next-day air courier or telecopier:

          (i) if to a Holder of the Registrable Notes or any Participating Broker-Dealer, at the most
current address of such Holder or Participating Broker-Dealer, as the case may be, set forth
on the records of the registrar under the Indenture.

          (ii) if to the Issuers, at the address as follows:

	 	 	 
	

	 	Holly Energy Partners, L.P.
	

	 	100 Crescent Court
	

	 	Suite 1600
	

	 	Dallas, TX 75201
	

	 	Telephone: (214) 871-3555
	

	 	Fax: (214) 615-9380
	

	 	Attention: Chief Financial Officer

          (iii) if to the Initial Purchasers, at the address as follows:

19

 

	 	 	 
	

	 	UBS Securities LLC
	

	 	677 Washington Boulevard
	

	 	Stamford, CT 06901
	

	 	Telephone: (203) 719-3000
	

	 	Fax number: (212) 719-8819
	

	 	Attention: High Yield Capital Markets
	 
	 	 
	

	 	With a copy at such address to the attention of Legal Department, fax
	

	 	number (203) 719-6177

                    All such notices and communications shall be deemed to have been duly given: when delivered
by hand, if personally delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt is acknowledged by the recipient’s telecopier machine, if
telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.

                    Copies of all such notices, demands or other communications shall be concurrently delivered by
the Person giving the same to the Trustee at the address and in the manner specified in such
Indenture.

                    (e) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto, the Holders and the
Participating Broker-Dealers; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the
extent such successor or assign holds Registrable Notes.

                    (f) Counterparts. This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same agreement.

                    (g) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

                    (h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN
THE STATE OF NEW YORK.

                    (i) Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or unenforceable.

                    (j) Securities Held by the Issuers or Their Affiliates. Whenever the consent or
approval of Holders of a specified percentage of Registrable Notes is required hereunder,
Registrable Notes held by the Issuers or any of their affiliates (as such term is defined in Rule 405 under the Securities Act) shall not be counted in determining
whether such consent or approval was given by the Holders of such required percentage.

20

 

                    (k) Third-Party Beneficiaries. Holders and beneficial owners of Registrable Notes and
Participating Broker-Dealers are intended third-party beneficiaries of this Agreement, and this
Agreement may be enforced by such Persons. No other Person is intended to be, or shall be
construed as, a third-party beneficiary of this Agreement.

                    (l) Entire Agreement. This Agreement, together with the Purchase Agreement and the
Indenture, is intended by the parties as a final and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained herein and therein
and any and all prior oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda between the Holders on the one hand and
the Issuers on the other, or between or among any agents, representatives, parents, subsidiaries,
affiliates, predecessors in interest or successors in interest with respect to the subject matter
hereof and thereof are merged herein and replaced hereby.

21

 

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

	 	 	 	 	 	 	 
	 	 	HOLLY ENERGY PARTNERS, L.P.
	 
	 	 	 	 	 	 
	 	 	By:	 	HEP Logistic Holdings, L.P.,
	 	 	 	 	its general partner
	 
	 	 	 	 	 	 
	

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

	 	 	 	 	 	its general partner
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Stephen McDonnell
	 	 	 	 	 
	

	 	 	 	Name:
	 	Stephen McDonnell
	

	 	 	 	Title:
	 	Vice President and Chief Financial

Officer
	 
	 	 	 	 	 	 
	 	 	HOLLY ENERGY FINANCE CORP.
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Stephen McDonnell
	 	 	 	 	 
	

	 	 	 	Name:
	 	Stephen McDonnell
	

	 	 	 	Title:
	 	Vice President and Chief Financial

Officer

 

 

	 	 	 	 	 	 	 
	 	 	GUARANTORS:
	 
	 	 	 	 	 	 
	 	 	HEP LOGISTICS GP, L.L.C., a Delaware limited
	 	 	liability company
	 
	 	 	 	 	 	 
	 	 	By:	 	Holly Energy Partners, L.P., a Delaware limited
	 	 	 	 	partnership, its Sole Member
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	HEP Logistics Holdings, L.P., a Delaware
	

	 	 	 	 	 	limited partnership, its General Partner
	 
	 	 	 	 	 	 
	

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

	 	 	 	 	 	Delaware limited liability company, its
	

	 	 	 	 	 	General Partner
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Stephen McDonnell
	 	 	 	 	 
	

	 	 	 	Name:
	 	Stephen McDonnell
	

	 	 	 	Title:
	 	Vice President and Chief Financial

Officer

 

 

	 	 	 	 	 	 	 
	 	 	HOLLY ENERGY PARTNERS-OPERATING, L.P., a Delaware
	 	 	limited partnership
	 
	 	 	 	 	 	 
	 	 	By:	 	HEP Logistics GP, L.L.C., a Delaware limited
	 	 	 	 	liability company, its General Partner
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	Holly Energy Partners, L.P., a Delaware
	

	 	 	 	 	 	limited partnership, its Sole Member
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	HEP Logistics Holdings, L.P., a Delaware
	

	 	 	 	 	 	limited partnership, its General Partner
	 
	 	 	 	 	 	 
	

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

	 	 	 	 	 	Delaware limited liability company, its
	

	 	 	 	 	 	General Partner
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Stephen McDonnell
	 	 	 	 	 
	

	 	 	 	Name:
	 	Stephen McDonnell
	

	 	 	 	Title:
	 	Vice President and Chief Financial

Officer

 

 

s

	 	 	 	 	 
	 	 	HEP PIPELINE GP, L.L.C., a Delaware limited
	 	 	liability company
	 
	 	 	 	 
	 	 	HEP REFINING GP, L.L.C., a Delaware limited
	 	 	liability company
	 
	 	 	 	 
	 	 	HEP MOUNTAIN HOME, L.L.C., a Delaware limited
	 	 	liability company
	 
	 	 	 	 
	 	 	HEP PIPELINE, L.L.C., a Delaware limited liability
	 	 	company
	 
	 	 	 	 
	 	 	HEP REFINING, L.L.C., a Delaware limited liability
	 	 	company
	 
	 	 	 	 
	 	 	HEP WOODS CROSS, L.L.C., a Delaware limited
	 	 	liability company
	 
	 	 	 	 
	

	 	Each by:
	 	 Holly Energy Partners—Operating, L.P., a
	

	 	 	 	Delaware limited partnership and its Sole
	

	 	 	 	Member

	 	 	 	 	 	 	 
	

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

	 	 	 	 	 	limited liability company, its General
	

	 	 	 	 	 	Partner
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	Holly Energy Partners, L.P., a Delaware
	

	 	 	 	 	 	limited partnership, its Sole Member
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	HEP Logistics Holdings, L.P., a Delaware
	

	 	 	 	 	 	limited partnership, its General Partner
	 
	 	 	 	 	 	 
	

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

	 	 	 	 	 	Delaware limited liability company, its
	

	 	 	 	 	 	General Partner
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Stephen McDonnell
	 	 	 	 	 
	

	 	 	 	Name:
	 	Stephen McDonnell
	

	 	 	 	Title:
	 	Vice President and Chief Financial 

Officer

 

 

	 	 	 	 	 
	 	 	HEP NAVAJO SOUTHERN, L.P., a Delaware limited
	 	 	partnership
	 
	 	 	 	 
	 	 	HEP PIPELINE ASSETS, LIMITED PARTNERSHIP, a Delaware
	 	 	limited partnership
	 
	 	 	 	 
	

	 	Each by:
	 	 HEP Pipeline GP, L.L.C., a Delaware limited
	

	 	 	 	liability company and its General Partner

	 	 	 	 	 	 	 
	

	 	 	 	By:
	 	Holly Energy Partners—Operating, L.P., a
	

	 	 	 	 	 	Delaware limited partnership, its Sole
	

	 	 	 	 	 	Member
	 
	 	 	 	 	 	 
	

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

	 	 	 	 	 	limited liability company, its General
	

	 	 	 	 	 	Partner
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	Holly Energy Partners, L.P., a Delaware
	

	 	 	 	 	 	limited partnership, its Sole Member
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	HEP Logistics Holdings, L.P., a Delaware
	

	 	 	 	 	 	limited partnership, its General Partner
	 
	 	 	 	 	 	 
	

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

	 	 	 	 	 	Delaware limited liability company, its
	

	 	 	 	 	 	General Partner
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Stephen McDonnell
	 	 	 	 	 
	

	 	 	 	Name:
	 	Stephen McDonnell
	

	 	 	 	Title:
	 	Vice President and Chief Financial

Officer

 

 

	 	 	 	 	 	 	 
	 	 	HEP REFINING ASSETS, L.P., a Delaware limited
	 	 	partnership
	 
	 	 	 	 	 	 
	 	 	By:	 	HEP Refining GP, L.L.C., a Delaware limited
	 	 	 	 	liability company and its General Partner
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	Holly Energy Partners—Operating, L.P., a
	

	 	 	 	 	 	Delaware limited partnership, its Sole
	

	 	 	 	 	 	Member
	 
	 	 	 	 	 	 
	

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

	 	 	 	 	 	limited liability company, its General
	

	 	 	 	 	 	Partner
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	Holly Energy Partners, L.P., a Delaware
	

	 	 	 	 	 	limited partnership, its Sole Member
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	HEP Logistics Holdings, L.P., a Delaware
	

	 	 	 	 	 	limited partnership, its General Partner
	 
	 	 	 	 	 	 
	

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

	 	 	 	 	 	Delaware limited liability company, its
	

	 	 	 	 	 	General Partner
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Stephen McDonnell
	 	 	 	 	 
	

	 	 	 	Name:
	 	Stephen McDonnell
	

	 	 	 	Title:
	 	Vice President and Chief Financial

Officer

 

 

	 	 	 	 	 	 	 
	 	 	UBS SECURITIES, LLC
	 	 	On behalf of the several initial purchasers
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Christopher Abbate
	 	 	 	 	 
	

	 	 	 	Name:
	 	Christopher Abbate
	

	 	 	 	Title:
	 	Executive Director
	 
	 	 	 	 	 	 
	

	 	By:
	 	 	 	/s/ Christopher C. Juban
	 	 	 	 	 
	

	 	 	 	Name:
	 	Christopher C. Juban
	

	 	 	 	Title:
	 	Director

 

 

SCHEDULE I

GUARANTORS

HEP Logistics GP, L.L.C.

HEP Mountain Home, L.L.C.

HEP Navajo Southern, L.P.

HEP Pipeline Assets, L.P.

HEP Refining Assets, L.P.

HEP Pipeline GP, L.L.C.

HEP Pipeline, L.L.C.

HEP Refining, L.L.C.

HEP Refining GP, L.L.C.

HEP Woods Cross, L.L.C.

Holly Energy Partners-Operating, L.P.exv10w1

 

 

 

Exhibit 10.1

PIPELINES AND TERMINALS AGREEMENT

by and among

ALON USA, LP,

a Texas limited partnership

and

Holly Energy Partners, L.P.,

a Delaware limited partnership

Dated: February 28, 2005

 

 

 

 

Table of Contents

	 	 	 	 	 
	 	 	 	 	Page
	Section 1.

	 	Definitions
	 	1
	Section 2.

	 	Throughput and Storage Commitment.
	 	7
	Section 3.

	 	Tariffs, Fees and Surcharges.
	 	9
	Section 4.

	 	Billing
	 	12
	Section 5.

	 	Taxes.
	 	12
	Section 6.

	 	Transportation and Delivery of Product
	 	13
	Section 7.

	 	Product Quality Standards and Requirements
	 	16
	Section 8.

	 	Product Measurements; Inventory Reports; Audit Rights
	 	17
	Section 9.

	 	Title to Product and Product Losses
	 	18
	Section 10.

	 	Exceptions to Obligations
	 	18
	Section 11.

	 	Agreement to Remain Shipper
	 	21
	Section 12.

	 	Agreement Not to Challenge Tariffs or Terminal Charges;
Governmental Actions
	 	21
	Section 13.

	 	Term and Renewal; Right to Enter New Agreement
	 	22
	Section 14.

	 	Construction of Upgrades; Expansion of Pipeline
	 	22
	Section 15.

	 	Contract Quarter Adjustments
	 	24
	Section 16.

	 	Events of Default
	 	26
	Section 17.

	 	Remedies
	 	27
	Section 18.

	 	ALON Right of First Refusal
	 	30
	Section 19.

	 	Insurance; Indemnification
	 	31
	Section 20.

	 	Notices.
	 	32
	Section 21.

	 	Miscellaneous
	 	33

Exhibits

	 	 	 	 	 
	Exhibit A

	 	–
	 	Refined Product Pipelines
	Exhibit B

	 	–
	 	Refined Product Terminals
	Exhibit C

	 	–
	 	Terminals Fee Schedule
	Exhibit D

	 	–
	 	Interstate Tariff (Rates, Rules and Regulations)
	Exhibit E

	 	–
	 	Intrastate Tariff (Rates, Rules and Regulations (Public))
	Exhibit F

	 	–
	 	Intentionally Omitted
	Exhibit G

	 	–
	 	Intrastate Tariff (Rates, Rules and Regulations (Private))
	Exhibit H

	 	–
	 	Insurance
	Exhibit I

	 	–
	 	Schedule of Settlement Procedures
	Exhibit J

	 	–
	 	Access Agreement

Pipelines and Terminals Agreement

-i-

 

 

PIPELINES AND TERMINALS AGREEMENT

     This Pipelines and Terminals Agreement (this “Agreement”) is dated as of February 28, 2005, by
and among ALON USA, LP, a Texas limited partnership and Holly Energy Partners, L.P., a Delaware
limited partnership.

RECITALS:

     Pursuant to that certain Contribution Agreement dated as of January 25, 2005 (the
“Contribution Agreement”) by and among HEP, Holly Energy Partners-Operating, L.P., a Delaware
limited partnership, T&R Assets, Inc., a Texas corporation, Fin-Tex Pipeline Company, a Texas
corporation, and ALON USA Refining, Inc., a Delaware corporation (together with T&R Assets, Inc.
and Fin-Tex Pipeline Company, “Transferors”), and ALON Pipeline Logistics, LLC, a Delaware limited
liability company, ALON USA, INC., a Delaware corporation, ALON, and ALON Pipeline Assets, LLC, a
Texas limited liability company, and an Affiliate of ALON (“Newco1”), Transferors have agreed to
contribute to HEP, through Newco1, and HEP has agreed to acquire, certain pipelines and terminals
which historically have been utilized by ALON to transport and terminal Refined Products.

     ALON desires to continue to transport and terminal Refined Products in the Transferred Assets
and HEP desires to provide transportation and terminalling services to ALON, all on the terms set
forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual obligations, covenants and conditions contained
herein, the parties to this Agreement hereby agree as follows:

     Section 1. Definitions

     (a) As used herein, the following terms shall have the meaning specified below:

     “Abilene Pipeline” has the meaning set forth in Section 2(b)(ii).

     “Activity Notice” has the meaning set forth in Section 15(a).

     “Affiliate” means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries Controls, is Controlled by or is under common Control with, the
Person in question.

     “ALON” means ALON USA, LP, a Texas limited partnership.

     “ALON Events of Default” has the meaning set forth in Section 16(b).

     “ALON Indemnified Parties” has the meaning set forth in Section 19(c).

     “Ancillary Documents” has the meaning set forth in the Contribution Agreement.

Pipelines and Terminals 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 ALON, on the one hand, and HEP, 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.

     “bpd” means barrels per day.

     “Capital Amortization Period” has the meaning set forth in Section 14(a)(iv).

     “Capital Improvement” means (a) any modification, improvement, expansion or increase in the
capacity of the Refined Product Pipelines or Refined Product Terminals or any portion thereof, or
(b) any connection, or new point of receipt or delivery for Refined Products, including any
terminals, lateral pipelines or extensions of Refined Products Pipelines.

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

     “Claimant” has the meaning set forth in Section 21(g).

     “Chevron Segment” means the approximately 38-mile, 6-inch pipeline from Coahoma Station to
Midland, Texas, leased by ALON.

     “Common Carrier Requirements” means duties relating to the provision of shipping rights and
prorationing which are required under Applicable Law with respect to any Refined Product Pipeline.

     “Construction Capital Expenditure” has the meaning set forth in Section 14(a)(iii).

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

Pipelines and Terminals Agreement

-2-

 

     “Contract Year” means a year that commences on January 1 and ends on the last day of December,
except that the initial Contract Year shall commence on the Effective Date.

     “Contribution Agreement” has the meaning set forth in the first recital.

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

     “Control Center” has the meaning set forth in Section 6(a)(ix).

     “Controlled Affiliates” means with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries is Controlled by such Person.

     “Deficiency Payment” has the meaning set forth in Section 15(a)(v).

     “Deficient Volumes” has the meaning set forth in Section 15(a)(i).

     “Disputed Amount” has the meaning set forth in Section 15(a)(v).

     “Due Date” has the meaning set forth in Section 4(b).

     “Dyess Pipeline” Section 2(b)(ii).

     “Effective Date” means the date of the closing of the Contribution Agreement.

     “Escrow Agent” has the meaning set forth in Section 15(a)(v).

     “Excess Volumes” has the meaning set forth in Section 15(a)(i).

     “Exercise Period” has the meaning set forth in Section 18(b).

     “Extended HEP Cure Period” has the meaning set forth in Section 16(a)(ii).

     “Fin-Tex Pipeline” has the meaning set forth in Section 2(b)(ii).

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

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Affiliates that is due to the termination, expiration or nonrenewal of such lease shall not be
included within the meaning of Force Majeure.

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

     “HEP” means Holly Energy Partners, L.P., a Delaware limited partnership, and its operating
affiliates.

     “HEP Events of Default” has the meaning set forth in Section 16(a).

     “HEP Indemnified Parties” has the meaning set forth in Section 19(b).

     “Incentive Adjustment” has the meaning set forth in Section 15(a)(vi).

     “Incentive Amount” means $22,891,000, subject to adjustment pursuant to Section 3(b).

     “Incentive Revenues” has the meaning set forth in Section 3(b).

     “Initial HEP Cure Period” Section 16(a)(ii).

     “Initial Term” has the meaning set forth in Section 13(a).

     “Intervention Period” has the meaning set forth in Section 17(c).

     “Losses” has the meaning set forth in Section 19(b).

     “Maintenance Activities” has the meaning set forth in Section 10(c).

     “Maintenance Standards” has the meaning set forth in Section 6(a)(vii).

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

     “Minimum Volumes Revenue” has the meaning set forth in Section 15(a)(iii).

     “Monthly Capital Construction Amount” has the meaning set forth in Section 14(a)(iv).

     “Monthly Services Charge” has the meaning set forth in Section 3(f).

     “Navajo Pipeline Lease” means that certain Pipeline Lease Agreement dated February 21, 1997
between Navajo Pipeline Company and ALON (as successor in interest to American Petrofina Pipe Line
Company).

     “Net Excess Revenues” has the meaning set forth in Section 15(d).

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     “Newco1” has the meaning set forth in the first recital.

     “Objection Notice” has the meaning set forth in Section 15(a)(v).

     “Operations” has the meaning set forth in Section 18(b).

     “Other Products” means heating oil, distillates, transmix, liquified petroleum gas, natural
gas liquids, blend stocks, crude oil and any other hydrocarbons which may hereafter be transported
or stored in the Transferred Assets.

     “PPI” means the inflationary adjustment index utilized by the Federal Energy Regulatory
Commission from time to time, which currently is the Producer Price Index for Finished Goods,
seasonally adjusted, as published by the Department of Labor.

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

     “Pipeline Easements” has the meaning set forth in Section 6(a)(x).

     “Prime Rate” means a rate per annum equal to the sum of (i) 3% plus (ii) the prime rate per
annum announced by Union Bank of California, N.A., or if Union Bank of California, N.A. no longer
announces a prime rate for any reason, the prime rate per annum announced by the largest U.S. bank
measured by deposits from time to time as its base rate on corporate loans, automatically
fluctuating upward or downward with each announcement of such prime rate.

     “Private Tariff” means each of the tariffs on Exhibits D, E, or G which is not
designated as a “Public Tariff”.

     “Proposed Terms” has the meaning set forth in Section 18(b).

     “Public Tariff” means each of the tariffs listed on Exhibits D, E, or G which is
designated as a “Public Tariff” and each other tariff which may hereafter be filed publicly with
respect to a Refined Product Pipeline in accordance with the terms of this Agreement.

     “Quarterly Minimum Volume” has the meaning set forth in Section 15(a)(i).

     “Refined Products” means gasolines, diesel fuel, jet fuel and kerosene.

     “Refined Product Pipelines” means the pipelines described on Exhibit A attached
hereto.

     “Refined Product Terminals” means the terminals and tank farm described on Exhibit B
attached hereto.

     “Refinery” means the refining facilities owned and operated by ALON and its Affiliates in Big
Spring, Texas.

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     “Renewal Terms” has the meaning set forth in Section 13(b).

     “Respondent” has the meaning set forth in Section 21(g).

     “River Pipeline” has the meaning set forth in Section 2(b)(ii).

     “Services Agreement” has the meaning given to such term in the Contribution Agreement.

     “Statement” has the meaning set forth in Section 4(a).

     “Third Party Sale Period” has the meaning set forth in Section 18(b).

     “Total Activity” has the meaning set forth in Section 15(a)(i).

     “Total Deficient Revenues” has the meaning set forth in Section 15(a)(v).

     “Total Excess Revenues” has the meaning set forth in Section 15(a)(v).

     “Total Volumes” has the meaning set forth in Section 15(a)(i).

     “Total Revenues” has the meaning set forth in Section 15(a)(i).

     “Transaction Notice” has the meaning set forth in Section 18(b).

     “Transfer” including the correlative term “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 merger, operation of law, or sale of equity
interests) of all or any portion of the Refined Product Pipelines and the Refined Product Terminals
(including any Capital Improvement).

     “Transferred Assets” has the meaning set forth in Section 2(a)(iii).

     “Transferors” has the meaning set forth in the first recital.

     “Wichita Falls Pipeline” has the meaning set forth in Section 2(b)(ii).

     (b) Other Terms. If other terms are defined elsewhere in the text of this Agreement,
such terms shall have the meaning so indicated.

     (c) Interpretation. Unless the context of this Agreement clearly requires otherwise,
(i) the references to the plural include the singular, the singular the plural, the part the whole,
(ii) “or” has the inclusive meaning frequently identified with the phrase “and/or”, (iii)
“including” has the meaning frequently identified with the phrase “but not limited to”, (iv)
references to “hereunder” or “herein” relate to this Agreement, and (v) references to “Dollars” or
“$” refer to U.S. dollars. Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.

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     Section 2. Throughput and Storage Commitment.

     (a) Minimum Volume Commitment. During the term of this Agreement and subject to the
terms and conditions of this Agreement (including, without limitation, Section 10 hereof), ALON
agrees as follows:

     (i) Commencing on the Effective Date, ALON will transport on the Refined Product
Pipelines and terminal in the Refined Product Terminals volumes of Refined Products equal to
or greater than the minimum volumes per day specified for each Refined Product Pipeline and
Refined Product Terminal on Exhibits A and B hereto (collectively, the “Minimum
Volume Commitment”).

     (ii) Without prejudice to any other remedy available to ALON, if for any period of time
ALON is unable to transport on the Refined Product Pipelines or terminal in the Refined
Product Terminals the volumes of Refined Products which are required to meet the Minimum
Volume Commitment and for which ALON is ready, willing and able to transport or terminal,
whether such inability is due to HEP’s operational difficulties, prorationing, difficulties
with pipeline connections, or otherwise, then the Minimum Volume Commitment will be reduced
for such period of time by the volume of Refined Products that ALON is unable to transport
on the Refined Product Pipelines or terminal in the Refined Product Terminals as reasonably
determined and communicated by ALON to HEP in writing from time to time during such period.

     (iii) The parties acknowledge and agree that all volumes of Refined Products and Other
Products transported or stored in the Refined Product Pipelines, the Refined Product
Terminals and/or the related assets transferred to HEP pursuant to the Contribution
Agreement (the “Transferred Assets”), whether transported or stored for or on behalf of ALON
or any other party, shall apply toward satisfaction of the Minimum Volume Commitment.

     (iv) The Minimum Volume Commitment shall not be reduced and ALON shall be responsible
for providing alternative transportation, at ALON’s sole cost and expense, should the
Chevron Segment be unavailable due to the termination, expiration, or nonrenewal of the
lease.

     (v) Minimum Volume Adjustments. If for any reason ALON shall not utilize a
Refined Product Pipeline or a Refined Product Terminal for a period of 60 consecutive days
and the Minimum Volume Commitment applicable to such Refined Product Pipeline or Refined
Product Terminal shall not otherwise be excused pursuant to this Agreement with respect
thereto, then from and after such 60th day (and only during such non-utilization), the
minimum volume commitment then applicable to such Refined Product Pipeline or Refined
Product Terminal shall be discounted by the rate set forth for such pipeline or terminal in
the column labeled “Section 2(a)(v) 60 Day Discount Rate” on Exhibit A. At such
time as the Refined Product Pipeline or Refined Product Terminal is returned to use, then
the discount rate shall no longer apply. In the event the period of

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non-utilization described in the foregoing sentence shall exceed 180 days or if ALON
shall notify HEP that such non-utilization shall be permanent and such non-utilization is
not otherwise excused pursuant to this Agreement, then, from and after such 180th day or
from and after such notice, whichever is earlier (and only during such non-utilization), the
minimum volume commitment then applicable to such Refined Product Pipeline or Refined
Product Terminal (without giving effect to any discount pursuant to the foregoing sentence)
shall be discounted by the rate set forth for such pipeline or terminal in the column
labeled “Section 2(a)(v) 180 Day Discount Rate” on Exhibit A. At such time as the
Refined Product Pipeline or Refined Product Terminal is returned to use, then the discount
rate shall no longer apply.

     (b) Obligations of HEP.

     (i) During the term of this Agreement and subject to the terms and conditions of this
Agreement, HEP agrees to own or lease, operate and maintain the assets necessary to receive
the Refined Products from ALON and to provide the services required under this Agreement.
Notwithstanding the preceding sentence, subject to Section 17(c), Section 17(d), Section 18,
and Section 21(c) of this Agreement and Section 11.6 of the Contribution Agreement, HEP is
free (A) to sell any of its assets, including assets that provide services under this
Agreement, (B) to merge with another entity (whether or not HEP is the surviving entity in
such merger) or (C) to sell all of its assets or all of its equity to another entity at any
time.

     (ii) At the request of ALON and subject in each case to Common Carrier Requirements and
to Section 10 of this Agreement, HEP agrees to transport by pipeline for ALON each month
during the term of this Agreement: (A) up to 20,000 bpd of Refined Products on the 6” line
from Big Spring to Abilene (the “Abilene Pipeline”), (B) up to 25,000 bpd of Refined
Products on the 8” line from Midland to Orla (the “Fin-Tex Pipeline”), (C) up to 23,000 bpd
of Refined Products on the 8” line from Big Spring to Wichita Falls (the “Wichita Falls
Pipeline”), (D) up to 21,000 bpd of Refined Products on the 6” line from Wichita Falls to
Duncan, OK (the “River Pipeline”), and (E) up to 53,000 bpd of Refined Products on the 8”
line from Abilene to Dyess Air Force Base (the “Dyess Pipeline”). ALON represents that as
of the Effective Date, the respective lines set forth above have the capacity to transport
the volumes set forth above.

     (iii) HEP agrees to provide terminalling services for all ALON volumes of Refined
Products transported to the Refined Product Terminals.

To the extent that ALON is entitled to an exception under Section 10(a) or Section 10(b) of
this Agreement to its obligations under Section 2(a) of this Agreement, the corresponding
obligations of HEP under this Section 2(b) will be proportionately reduced.

     (c) Ancillary Services. HEP will provide ancillary services to ALON with respect to
the Refined Product Pipelines and Refined Product Terminals, including batch tracking, truck

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rack blending, tank sampling, truck sampling, tank-to-tank transfers, information reporting,
customer support services, monitoring and storing additives and such other services requested by
ALON that (i) reasonably relate to ALON’s Refined Products and activities at the Refined Product
Pipelines and the Refined Product Terminals, (ii) are not materially inconsistent with the scope
and nature of ancillary services customarily provided by operators of Refined Product pipelines and
terminals, and (iii) do not impose a material burden on HEP; provided, however, that
irrespective of the foregoing clauses (i) through (iii), HEP shall in any event provide to ALON
such ancillary services as HEP provides from time to time to Holly Corporation without additional
charge under that certain Pipelines and Terminals Agreement dated July 13, 2004 (as may be amended
from time to time). The fees for such ancillary services are included in the fees provided for in
Section 3. All fuel additives, dyes, de-icers and other additives requested to be added to ALON’s
Refined Products will be provided by ALON at no cost to HEP. If any additional ancillary services
are requested by ALON that are different in kind, scope or frequency from the services set forth
above, then HEP and ALON shall negotiate in good faith to determine the appropriate rates to be
charged for such ancillary services and the capital costs, if any, that HEP may reasonably incur to
address such new requirements. Each party shall be responsible for maintaining the integrity of
its operations and the quality of its products so as to not cause additional operating costs
related to ancillary services to be incurred by the other party.

     Section 3. Tariffs, Fees and Surcharges. 

     (a) Tariffs.

     (i) The rules and regulations applicable to (A) interstate service on the Refined
Product Pipelines shall be as set forth in the pro forma rules and regulations tariffs
attached hereto as Exhibit D, and (B) intrastate service (public line) and
intrastate service (private line) on the Refined Product Pipelines shall be as set forth in
the pro forma rules and regulations tariffs attached hereto as Exhibit E and
Exhibit G, respectively; provided that, as between HEP and ALON, the parties
agree in the case of any conflict between the terms of this Agreement and the rules and
regulations tariffs, the terms of this Agreement shall control. The initial tariff rates
for interstate service on the Refined Product Pipelines shall be as set forth in the pro
forma tariffs attached hereto as Exhibit D and the initial tariff rates for
intrastate services (public line) and intrastate service (private line) shall be as set
forth in the pro forma tariffs attached hereto as Exhibit E and Exhibit G,
respectively. In the event that any Governmental Authority having jurisdiction over HEP or
the Refined Product Pipelines takes any action under Applicable Law which requires the
tariff rates set forth in Exhibits D, E and G to be decreased, then the Minimum
Volume Commitment shall be proportionately adjusted in such a manner as may be necessary to
take into account the economic benefits and obligations that would have otherwise been
realized and borne by the parties had there not been a decrease in the tariff rates. If HEP
and ALON are unable to agree, such proportionate adjustments will be determined by binding
arbitration in accordance with Section 21(g) of this Agreement.

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     (ii) Subject to Common Carrier Requirements and the annual adjustments contemplated by
this Section 3(a)(ii), no tariff rates or incentive tariff rates set forth in Exhibits
D, E or G shall be amended or modified and no new tariff shall be filed by HEP with
respect to the Refined Product Pipelines, in each case, without the prior written consent of
ALON. The initial tariff rates and incentive tariff rates set forth in Exhibits D, E
and G (without consideration of any previous adjustment pursuant to this Section 3(a))
shall be adjusted on March 1 of each Contract Year commencing on or after January 1, 2006,
by an amount equal to the percentage change, if any, in the PPI from the month of December
2004 to the month of December immediately preceding such Contract Year, but in no event
shall such adjustment ever lower the tariff rates below the initial tariff rates. HEP will
deliver a copy of the Public Tariffs and the Private Tariffs, if any, to ALON setting forth
the adjusted tariff rates and incentive tariff rates. If the PPI index is no longer
published, ALON and HEP shall negotiate in good faith to agree on a new index that is
recognized in the refined product pipeline and terminal industry or which otherwise gives
comparable protection against inflation or deflation in such industry and the same method of
adjustment for increases or decreases in the new index shall be used to calculate increases
or decreases in the tariff rates. If ALON and HEP are unable to agree, a new index will be
determined by binding arbitration in accordance with Section 21(g) of this Agreement, and
the same method of adjustment for increases or decreases in the new index shall be used to
calculate increases or decreases in the tariff rates.

     (iii) The applicable fees, tariff rates and other charges provided for in this
Agreement will become effective as of the date of this Agreement, or in the case of Public
Tariff rates relating to the Refined Product Pipelines, as soon thereafter as those rates
become effective. HEP will use commercially reasonable efforts to obtain the necessary
regulatory approvals for the Public Tariff rates set forth in Exhibit D and
Exhibit E to become effective on the date of this Agreement or as soon as possible
thereafter.

     (b) Incentive Tariffs. The incentive tariff rates applicable to the Refined Product
Pipelines shall initially be as set forth in Exhibits D, E and G. The incentive tariff
rates will be adjusted each Contract Year as provided in Section 3(a)(ii). In consideration of
ALON’s commitments set forth in Section 2, ALON shall be entitled to the incentive tariff rates for
transportation of Refined Products on the Refined Product Pipelines pursuant to this Agreement.
Notwithstanding the foregoing, ALON hereby waives any claim to the incentive 2 tariff rates until
the aggregate revenues (not including any surcharges, charges or tariff increases pursuant to
Section 3(d), Section 3(e) and Section 3(f), and any Monthly Capital Construction Amount pursuant
to Section 14(a)(iv)) generated by the transportation and storage of Refined Products or Other
Products on the Transferred Assets by ALON (including transportation and storage by ALON on behalf
of third parties where ALON is the shipper of record) exceed the Incentive Amount in any Contract
Year (such excess being the “Incentive Revenues”). At such time as ALON has satisfied the
Incentive Revenues requirement, then ALON will be entitled to receive the incentive 2 tariff rates
applicable during such Contract Year for volumes of Refined Products or Other Products transported
by ALON (including transportation by ALON on behalf of third parties where ALON is the shipper of
record) on each Refined Product Pipeline during such

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Contract Year in excess of the incentive volume requirement for such Refined Product Pipeline
for such Contract Year (which Contract Year incentive volume requirement shall equal the per day
incentive volume requirement as set forth in Exhibit A multiplied by the actual number of
days in such Contract Year). Settlement of any amounts due to ALON with respect to incentive 2
tariff rates shall be calculated as soon as practicable following the end of each Contract Year and
shall be set forth in the Activity Notice for the fourth Contract Quarter in such Calendar Year,
with actual settlement made pursuant to Section 15(a)(vi). The Incentive Amount (without
consideration of any previous adjustment pursuant to this Section 3(b) shall be adjusted on March 1
of each Contract Year commencing on or after January 1, 2006, by an amount equal to the percentage
change, if any, in the PPI from the month of December 2004 to the month of December immediately
preceding such Contract Year.

     (c) Terminal Fees. The initial service fees (as well as the method for subsequent
adjustments in such fees) for terminalling the Refined Products in the Refined Product Terminals
are set forth on the fee schedule attached hereto as Exhibit C.

     (d) New Laws Monthly Surcharge. If new laws or regulations are enacted that require
HEP to make substantial and unanticipated capital expenditures with respect to one or more Refined
Product Terminals, HEP may impose a monthly surcharge to cover ALON’s pro rata share of HEP’s cost
of complying with these laws or regulations; provided, however, that ALON shall have the
option to elect not to incur such monthly surcharge whereupon ALON shall, from and after the date
on which a Refined Product Terminal shall have to satisfy such new law or regulation, no longer be
entitled to utilize such Refined Product Terminal until such time as ALON shall agree to incur such
monthly surcharge; provided further, that (i) during the Initial Term, no such
election shall affect ALON’s Minimum Volume Commitment and (ii) during any Renewal Term, any such
election by ALON shall decrease ALON’s Minimum Volume Commitment by the minimum volume applicable
to such Refined Product Terminal. ALON and HEP shall negotiate in good faith to mitigate the
impact of these laws and regulations and to determine the level of the monthly surcharge. If ALON
and HEP are unable to agree on the level of the monthly surcharge, such surcharge will be
determined by binding arbitration in accordance with Section 21(g) of this Agreement.

     (e) Increases in Pipeline Tariff Rates. If new laws or regulations are enacted that
require HEP to make substantial and unanticipated capital expenditures with respect to one or more
Refined Product Pipelines, HEP may increase the tariff rates set forth on Exhibits D, E and
G to cover ALON’s pro rata share of HEP’s cost (including cost of capital) of complying with
these laws or regulations; provided, however, that ALON shall have the option to elect not
to incur such increased tariff rates whereupon ALON shall, from and after the date on which a
Refined Product Pipeline shall have to satisfy such new law or regulation, no longer be entitled to
utilize such Refined Product Pipeline until such time as ALON shall agree to incur such increased
tariff rates; provided further, that (i) during the Initial Term, no such election
shall affect ALON’s Minimum Volume Commitment and (ii) during any Renewal Term, any such election
by ALON shall decrease ALON’s Minimum Volume Commitment by the minimum volume applicable to such
Refined Product Pipeline. ALON and HEP shall negotiate in good faith to mitigate the impact of
these laws and regulations and to determine the amount of the new

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tariff rates. If ALON and HEP are unable to agree on the amount of the new tariff rates that
HEP will file, such tariff rates will be determined by binding arbitration in accordance with
Section 21(g) of this Agreement.

     (f) Terminal Access and Services Charge. The parties agree that a monthly terminal
access and services charge in the amount of $50,000 (“Monthly Services Charge”) shall be billed
each month to ALON with respect to monitoring, control, reporting and other services to be provided
to ALON at the Refined Product Terminals pursuant to this Agreement. The Monthly Services Charge
(without consideration of any previous adjustments pursuant to this Section 3(f)) shall be adjusted
on March 1 of each Contract Year commencing on or after January 2006 by an amount equal to the
percentage increase, if any, in the PPI from the month of December 2004 to the month of December
immediately preceding such Contract Year; provided, however, the Monthly Services Charge will not
decrease as a result of any decrease in the PPI.

     Section 4. Billing

     (a) Monthly Statement. Each month during the term of this Agreement, HEP will deliver
a statement (the “Statement”) to ALON on or before the 20th day of each month setting forth the
fees due to HEP by ALON for the services rendered under this Agreement for the prior month, net of
the amount of any adjustments due to ALON pursuant to Section 15(a)(vi).

     (b) Due Date. ALON will pay HEP the amount specified on the Statement in the form of
immediately available federal funds by wire transfer to the bank account specified on the
Statement, or any other mutually agreed upon method, within 10 days after receipt of the Statement
(the “Due Date”).

     (c) Late Payments. Payments not received by HEP on or prior to the Due Date will
accrue interest at the Prime Rate from the Due Date until the date actual payment is received by
HEP.

     Section 5. Taxes. 

     ALON will pay all taxes, import duties, license fees and other charges by any Governmental
Authority levied on the Refined Products delivered by ALON for transportation or storage by HEP in
the Refined Product Pipelines and Refined Product Terminals. HEP will pay all taxes, import duties,
license fees, users fees and other charges by any Governmental Authority levied on the
transportation and storage services provided by HEP to ALON under this Agreement or on the Refined
Product Pipelines or the Refined Product Terminals. Should either party be required to pay or
collect any taxes, duties, charges and or assessments pursuant to any federal, state, county or
municipal law or authority now in effect or hereafter to become effective which are payable by the
other party pursuant to this Section 5, the proper party shall promptly reimburse the other party
therefor.

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     Section 6. Transportation and Delivery of Product

     (a) Refined Product Pipelines.

     (i) Origin and Destination. HEP will receive Refined Products from ALON at
each of the Refined Product Pipelines origins as set forth in the applicable tariff. HEP
will deliver the Refined Products shipped pursuant to this Agreement to the destination
point set forth in the applicable tariff. Except as provided by Section 6(a)(vi) or Section
14, or as may be otherwise agreed to by the parties, HEP will not be required to receive
Refined Products from any other origin point, nor deliver Refined Products to any
destination other than as provided in the tariff. Subject to Common Carrier Requirements,
during the term of this Agreement, HEP shall not add or remove any origin or destination
points to the Refined Product Pipelines without ALON’s prior written consent.

     (ii) Flow Rate. HEP shall ship Refined Products tendered by ALON and as
scheduled by ALON pursuant to Section 6(a)(v), in accordance with the tariff rules and
regulations set forth on Exhibits D, E, and G.

     (iii) Minimum Batch Size. No Refined Products will be received or moved
through the Refined Product Pipelines except in compliance with the tariff rules and
regulations set forth on Exhibits D, E, and G. The minimum batch size on the
Refined Product Pipelines shall be 3,000 barrels.

     (iv) Notification of Utilization. When requested by HEP, ALON will, within ten
(10) days of such request, provide to HEP written notification of ALON’s reasonable good
faith estimate of its anticipated future utilization of the Refined Product Pipelines of
HEP.

     (v) Scheduling of Product Movements. Subject to Common Carrier Requirements
and the terms of this Agreement, ALON will have the right and responsibility to schedule all
movements of Refined Products transported for or at the direction of ALON on the Refined
Product Pipelines. HEP will ship such Refined Products at the times, in the specific
pipelines and from the origin and to the destination points as set forth in the applicable
tariffs as scheduled by ALON. Prior to or at the time of scheduling HEP’s shipment of any
Refined Products, ALON will provide a notice to HEP setting forth in detail the
specifications of each shipment of Refined Products; provided that ALON, may change
the scheduling and/or specifications of any shipment of Refined Products up to the time of
such shipment so long as ALON agrees to be responsible for any reasonable additional costs
incurred by HEP as a direct result of such change and which would not have been incurred by
HEP but for such scheduling change. In the event there shall occur any scheduling conflict
between ALON and another shipper on any Refined Product Pipeline, the parties agree that the
proration provisions contained in the document entitled, “Holly Energy Partners-Operating,
L.P. Proration Policy,” effective February 28, 2005, will control, and, to the extent such
policy does not resolve

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the conflict, the party with the greater historical usage over the preceding 24 months
shall have priority.

     (vi) Pipeline Direction and Connections. Without ALON’s prior written consent,
HEP will not reverse the direction of any Refined Product Pipelines or, connect any other
pipeline to the Refined Product Pipelines or the Refined Product Terminals;
provided, however, that HEP may take any (A) emergency action reasonably necessary
to prevent or remedy a release of Refined Products from a Refined Product Pipeline or
Refined Product Terminal, or (B) take any action that may be required by Common Carrier
Requirements without obtaining the consent required by this clause. ALON shall have the
right to reverse the direction of any Refined Product Pipelines so long as (A) ALON agrees
to reimburse HEP for reasonable additional costs and expenses incurred by HEP as a direct
result of changing the direction of the Refined Product on the Refined Product Pipelines
(both to reverse and re-reverse) and which would not have been incurred by HEP but for such
change of direction, and (B) such reversal does not conflict with any of HEP’s other
capacity commitments on the Refined Product Pipelines.

     (vii) Maintenance. Except as set forth below, HEP, at its sole cost and
expense, shall maintain the Refined Product Pipelines in good condition and repair (A) in
accordance with all Applicable Laws, (B) in accordance with accepted industry practices and
procedures in the repair and maintenance of pipeline facilities, and (C) in accordance with
provisions of clauses (i) through (iv) of Section 10(c) (the foregoing clauses (A) through
(C) of this Section 6(a)(vii) are collectively referred to herein as the “Maintenance
Standards”). ALON, for so long as ALON is shipping Refined Products on the Refined Product
Pipelines pursuant to this Agreement, at its sole cost and expense, shall maintain in good
condition and repair all connections, valves, tank farm and mainline pumps and other
pipeline equipment that connects the Refinery to the Refined Product Pipelines, in
accordance with all Applicable Laws and in accordance with applicable industry standards.
Subject to Section 14, HEP, in its sole discretion, will make the determination if any
capital expenditures or improvements are needed to the Refined Product Pipelines, and,
except as provided in Section 3(e) and Section 14, HEP will be responsible for all costs to
implement such capital expenditures and improvements.

     (viii) Shippers. HEP agrees that, without ALON’s prior written consent,
neither HEP nor any of its Affiliates shall be a shipper of any Refined Products or Other
Products in any Refined Product Pipeline, and HEP further agrees that, subject to Common
Carrier Requirements, only ALON and such shippers as ALON shall designate shall be permitted
to ship Refined Products on the Refined Product Pipelines.

     (ix) Control Center. Without ALON’s prior written consent, the control center
for the Refined Product Pipelines (the “Control Center”) shall not be moved from Big Spring,
Texas. HEP shall, during the term of this Agreement, provide ALON such level of
communications with respect to the Refined Product Pipelines and the Refined Product
Terminals as has been historically provided and such additional communications

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services as ALON shall reasonably request so long as same does not impose a material
burden on HEP. In addition, ALON shall retain access to the Control Center for purposes
relating to any asset owned or operated by ALON pursuant to the Services Agreement.
Notwithstanding the foregoing provisions, ALON shall not have access to any information
pertaining to any other shippers, if any.

     (x) No Additional Pipelines. HEP shall not construct or grant any right to
construct any pipeline for transporting Refined Products on any easement, right of way or
other parcel of real property transferred to HEP under the Contribution Agreement (the
“Pipeline Easements”), nor shall HEP permit any pipeline controlled by HEP and currently or
hereafter located or constructed on any Pipeline Easement, other than the Refined Products
Pipelines or Capital Improvements, to transport any Refined Products; provided,
however, HEP shall have the right to construct tanks and connecting lines at the Orla Tank
Farm and the right to utilize any pipelines HEP currently utilizes at the Orla Tank Farm so
long as such use does not interfere with (x) HEP’s service to ALON pursuant to the terms of
this Agreement or (y) ALON’s rights pursuant to the terms of the Navajo Pipeline Lease.

     (b) Refined Product Terminals.

     (i) Deliveries to the Terminal. Deliveries of Refined Products to the Refined
Product Terminals will be made through existing pipeline connections at the Refined Product
Terminals. At the beginning of each month, ALON will schedule the pipeline deliveries into
the Refined Product Terminals, which may include deliveries of Refined Products from the
Refined Product Pipelines or deliveries of third party Refined Products through existing
pipeline connections at the Refined Product Terminals. ALON will provide HEP with a notice
of scheduled deliveries, which notice will include details as to type, grade, quantity and
quality of each Refined Product; provided that ALON may change the scheduling or
specification of any scheduled delivery up to the time of such delivery so long as ALON
agrees to be responsible for any reasonable additional costs incurred by HEP as a direct
result of such change and which would not have been incurred by HEP but for such change.
Deliveries of Refined Products to the Refined Product Terminals may be made 24 hours per
day, seven days per week. HEP agrees that, without ALON’s prior written consent, neither
HEP nor any of its Affiliates will make any deliveries for their own account into the
Refined Product Terminals and, subject to Common Carrier Requirements, deliveries to the
Refined Product Terminals will be limited to deliveries from ALON or from third parties
designated by ALON; provided, however, HEP shall have the right to utilize the Orla Tank
Farm, so long as such use does not interfere with (x) HEP’s service to ALON pursuant to the
terms of this Agreement or (y) ALON’s rights pursuant to the terms of the Navajo Pipeline
Lease.

     (ii) Deliveries from the Terminal. Deliveries of Refined Product from the
Refined Product Terminals will be made to ALON, or to such third parties as ALON may direct,
in accordance with HEP’s operating procedures. HEP may require ALON and each of its
employees, agents and representatives to execute an access agreement in the

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form attached as Exhibit J hereto (and as may be subsequently revised as
mutually agreeable to HEP and ALON) prior to loading Refined Products at the Refined Product
Terminals, to comply with rules and procedures posted at the Refined Product Terminals, and
to undergo training regarding loading at the Refined Product Terminals. HEP may exclude
anyone from the Refined Product Terminals who fails to execute or to comply with an access
agreement, fails to comply with the rules and procedures posted at the Refined Product
Terminals, fails to attend or comply with training, or, in HEP’s reasonable opinion, poses a
risk to the Refined Product Terminals, its personnel, the public, or the environment.
Deliveries of Refined Products to trucks from the Refined Product Terminals may be made 24
hours per day, 7 days per week, unless otherwise notified by HEP due to maintenance-type
activities or emergencies. Unless otherwise consented in writing by the other party hereto,
which consent shall not be unreasonably withheld, each party agrees that it shall continue
the utilization of the terminal operating systems put in place by ALON, including systems to
monitor and control customer identification, credit, access and loading volumes. Subject to
Common Carrier Requirements, HEP agrees to comply with and use commercially reasonable
efforts to enforce the limitations instituted by ALON from time to time with respect to such
systems.

     (iii) Terminal Operations and Maintenance. Except as otherwise provided in
this Agreement, control and operation of the Refined Product Terminals will rest exclusively
with HEP. HEP shall operate and manage the Refined Product Terminals in accordance with
industry standards and customs. Except as otherwise provided in this Agreement, HEP, at
its sole cost and expense, shall maintain the Refined Product Terminals in good condition
and repair, in accordance with all Applicable Laws, and in accordance with accepted industry
practices and procedures in the repair and maintenance of storage facilities. HEP shall
inform ALON promptly of any adverse event or circumstance affecting the Refined Product
Terminals.

     Section 7. Product Quality Standards and Requirements

     (a) Product Quality. ALON warrants that all Refined Products transported or
terminalled by or at the request of ALON will conform to the specifications for such Refined
Products set forth in the rules and regulations of the tariffs attached hereto as Exhibits D,
E, or G when initially tendered by ALON or at the request of ALON. HEP will not be required to
receive Refined Products into the Refined Product Terminals that are contaminated or otherwise fail
to meet those specifications, nor will HEP be required to accept any Refined Products that fail to
meet the quality specifications set forth in the notice. With respect to the Refined Product
Terminals, HEP will not commingle any Refined Product of ALON with any Refined Product of any other
party without ALON’s prior written consent. In addition, unless ALON shall direct otherwise, HEP
will not permit any product or other substance not meeting the definition of “Refined Product” in
this Agreement and the specifications therefore in the rules and regulations tariffs attached
hereto as Exhibits D, E, or G to be transported, terminalled or otherwise introduced into
the Refined Product Pipelines or Refined Product Terminals.

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     (b) Verification of Quality. HEP may require the quality of the Refined Products
initially tendered into the Refined Product Terminals by ALON, its customers or Affiliates (other
than by Refined Product Pipelines) to be verified either by ALON’s laboratory analysis, or by an
independent inspector’s analysis indicating that the Refined Products meet HEP’s minimum Refined
Products quality specifications. All costs for such analysis are to be borne by ALON. HEP may
sample any Refined Products tendered to HEP for ALON’s account for the purpose of confirming the
accuracy of the analysis. The cost of such confirmation shall be borne by HEP.

     (c) Delivery of Product. HEP will (i) deliver to ALON the identical Refined Products
that are stored in any segregated Refined Product Terminals, and (ii) comply with the rules and
regulations of the tariffs attached hereto as Exhibits D, E, or G with respect to delivery
of any Refined Product tendered by ALON into a Refined Product Pipeline. Any delivery by HEP to
ALON will include its allocable share of transmix as specified in the rules and regulations tariffs
attached hereto as Exhibits D, E, or G.

     (d) Tank Cleaning. If any Refined Product Terminals tank or line requires cleaning
due to the written request of ALON to change the type of Refined Products stored therein, HEP shall
clean or arrange for cleaning of such tank and remove or arrange for removal of any Refined
Products and disposal of any waste; provided, however, ALON agrees to reimburse HEP for all
costs and expenses reasonably incurred by HEP in connection with such cleaning and removal within
10 days of receipt of an invoice therefor.

     Section 8. Product Measurements; Inventory Reports; Audit Rights

     (a) All shipments of Refined Products shall be gauged or measured pursuant to the rules and
regulations tariffs attached hereto as Exhibits D, E, or G. Quantities of Refined Products
received into and delivered from the Refined Product Terminals will be determined by pipeline meter
or other appropriate quantity measuring devices, as mutually determined by HEP and ALON and shall
include the volumes of transmix allocable to ALON in accordance with the rules and regulations
tariffs attached hereto as Exhibits D, E, or G. Meter calibration shall be conducted on a
monthly basis. Gauging of Refined Products received, delivered or stored in the Refined Product
Terminals will be taken jointly by representatives of the parties at such times and places as shall
be indicated in a notice to ALON at least five days prior to such gauging; provided if ALON
does not have a representative present for gauging, HEP’s gauging will be conclusive, absent
manifest error. HEP shall provide ALON with records of all of ALON’s transportation and storage
transactions on the Transferred Assets.

     (b) HEP shall maintain accurate inventory records of ALON’s Refined Products at each Refined
Product Terminal. HEP shall forward to ALON copies of receipt and delivery tickets five times per
week or as otherwise requested by ALON. Within five days of the end of each calendar month during
the term of this Agreement, HEP shall provide to ALON for each Refined Product Terminal a monthly
inventory report showing separately, for each Refined Product stored at such Refined Product
Terminal, the beginning physical inventory, receipts into inventory, deliveries from inventory, the
ending book inventory, the ending physical inventory and any gain or loss in inventory for such
month. The ending physical inventory of one month

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shall be the beginning inventory for the next month. During the term of this Agreement, HEP
agrees to provide to ALON all information that is currently reported on ALON’s terminal gain/loss
report summary and product balancing system. HEP agrees to provide such information within five
days of the end of each calendar month.

     (c) ALON shall have the right, on a quarterly basis and upon written notice to HEP, to audit
HEP’s books and records with respect to the inventory services provided by HEP under Section 8(b).
Such audits may be performed by employees, independent accounting firms, and other designated
representatives of ALON (including internal auditing personnel) at its sole cost and expense. HEP
agrees to fully cooperate with ALON to accomplish the audit as expeditiously as possible. Any
audit shall be conducted at HEP’s offices during normal business hours, at ALON’s sole cost and
expense, and in a manner that does not unreasonably interfere with HEP’s normal business
operations. ALON shall maintain in strict confidence the content of any and all books and records
reviewed by ALON pursuant to this Section 8(c).

     Section 9. Title to Product and Product Losses

     Title to the Refined Products transported or stored in the Transferred Assets for or on behalf
of ALON will remain with ALON at all times subject to any lien created under Applicable Law. In no
event shall HEP make any delivery of any of ALON’s Refined Product to any third party unless ALON
shall have directed HEP to make such delivery or ALON shall have otherwise previously consented in
writing to such delivery. With respect to the Refined Product Terminals, HEP will be responsible
to compensate ALON for all product losses other than product losses arising out of ALON’s acts or
omissions as determined on an annual basis on a terminal by terminal basis, that are greater than
0.05% of the product terminalled in accordance with this Agreement and pursuant to the Schedule
attached hereto as Exhibit I. All product gains and losses, if any, with respect to each
respective Refined Product Terminals will be allocated on a monthly basis to ALON and each other
customer, if any, of the terminal based on their percentage of total receipts into the terminal.
HEP’s responsibility for product losses on the Refined Product Pipelines will be determined
pursuant to the tariffs set forth as Exhibits D, E, or G.

     Section 10. Exceptions to Obligations

     (a) Shutdown or Reconfiguration of Refinery. During any Renewal Term, ALON must
deliver to HEP at least twelve months advance written notice of any planned shut down or
reconfiguration (excluding planned maintenance turnarounds) of the Refinery or any portion of the
Refinery that would reduce the Refinery’s output. ALON will use its commercially reasonable
efforts to mitigate any reduction in the Minimum Volume Commitment that would result from such a
shut down or reconfiguration. If ALON shuts down or reconfigures the Refinery or any portion of
the Refinery (excluding planned maintenance turnarounds) and reasonably believes in good faith that
such shutdown or reconfiguration will jeopardize its ability to satisfy the Minimum Volume
Commitment, then within 90 days of the delivery of the written notice of the planned shut down or
reconfiguration, ALON shall (i) propose a new Minimum Volume Commitment, such that the ratio of the
volumes of Refined Products to be transported

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on the Refined Product Pipelines following such shut down or reconfiguration to the
anticipated production level of the Refinery following the shut down or reconfiguration will be
approximately equal to the ratio of the original volumes of Refined Products transported on the
Refined Product Pipelines under this Agreement to the original production level of the Refinery
under this Agreement and (ii) propose the date on which the new Minimum Volume Commitment shall
take effect. Unless objected to by HEP within 60 days of receipt by HEP of such proposal, such new
Minimum Volume Commitment shall become effective as of the date proposed by ALON. To the extent
that HEP does not agree with ALON’s proposal, any changes in ALON’s obligations under this
Agreement, or the date on which such changes take effect, the parties will negotiate in good faith
to resolve such disagreement within 30 days of notice thereof by HEP. In the event the parties are
unable to resolve such disagreement(s) within such time period, the new Minimum Volume Commitment
shall be determined by binding arbitration in accordance with Section 21(g) of this Agreement and
the arbitrators shall consider the factors set forth in this Section 10(a) in resolving such
disagreement. The provisions of this Section 10(a) shall only apply during a Renewal Term and do
not apply to the Initial Term of this Agreement.

     (b) Force Majeure. In the event that any party is rendered unable, in whole or in
part, by a Force Majeure event from performing its obligations under this Agreement, then upon the
delivery of notice and full particulars of the Force Majeure event in writing within a reasonable
time after the occurrence of the Force Majeure event relied on, the obligations of the parties, so
far as they are affected by the Force Majeure event, shall be suspended for the duration of any
inability so caused. Any period during which the obligations of the parties are suspended as a
result of this Section 10(b) shall extend the term of this Agreement. ALON will be required to pay
any amounts accrued and due under this Agreement at the time of the Force Majeure event. The cause
of the Force Majeure event shall so far as possible be remedied with all reasonable dispatch,
except that no party shall be compelled to resolve any strikes, lockouts or other industrial
disputes other than as it shall determine to be in its best interests. In the event a Force
Majeure event prevents ALON from performing its obligations under this Agreement for a period of
more than twelve months, this Agreement may be terminated by HEP as to the Refined Product
Pipeline(s) or Refined Product Terminal(s) as to which ALON’s performance is prevented as a result
of such Force Majeure event. In the event a Force Majeure event prevents HEP from performing its
obligations under this Agreement for a period of more than 90 days, then this Agreement may be
terminated by ALON as to the Refined Product Pipeline(s) or Refined Product Terminal(s) as to which
HEP’s performance is prevented as a result of such Force Majeure event; provided, however,
that ALON agrees to extend such 90 day period to up to twelve months from the date the Force
Majeure event first occurred if, and for so long as, HEP shall (i) provide alternative
transportation and storage service to ALON commensurate to the services suspended by such Force
Majeure event and reasonably acceptable to ALON, and (ii) shall reimburse ALON for all costs and
expenses incurred by ALON in accepting such alternative services and which would not have otherwise
been incurred by ALON absent such Force Majeure event; and provided further that,
in the event that the Force Majeure event preventing performance by HEP arises (x) solely from an
order, decree, regulation or similar requirement of a Governmental Authority with jurisdiction over
HEP or the affected Refined Product Pipeline(s) or Refined Product Terminal(s), and (y) such order,
decree, regulation or

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similar requirement does not relate to and is not otherwise attributable to any negligent
failure by HEP, any of its Affiliates or any of their respective assets, including the Transferred
Assets, to comply with Applicable Law (for the purpose of this Section, “negligent failure” shall
mean the failure of HEP or its Affiliates to act as a reasonable prudent operator in accordance
with standard industry practice), then ALON’s right to terminate this Agreement pursuant to this
Section 10(b) with respect to the affected Refined Product Pipeline(s) or Refined Product
Terminal(s) shall not be exercisable by ALON until the date that is twelve months following the
date on which HEP’s performance was first prevented by such order, decree, regulation or other
requirement, provided that, during the pendency of such Force Majeure event, HEP uses its
commercially reasonable efforts to have such order, decree, regulation or other requirements, to
the extent applicable to HEP or the Transferred Assets, dissolved or eliminated, if possible, and
to otherwise minimize the impact thereof on HEP’s obligations hereunder. Any termination pursuant
to any provision of this Section 10(b) shall not limit the liability of either party for any breach
of this Agreement prior to such termination. Nothing in this Section 10(b) shall alter the
liability of HEP as set forth in the rules and regulations tariffs for the Refined Product
Pipelines attached hereto as Exhibits D, E, or G.

     (c) HEP’s Right to Temporarily Suspend Operations. In the event that HEP is required
temporarily to suspend pipeline operations, in order to effect any construction or repairs to or
any maintenance of any portion of the Refined Product Pipelines or the Refined Product Terminals,
or to perform pipeline integrity testing (or repairs related thereto) (collectively, “Maintenance
Activities”), HEP shall have the right to do so, provided that (i) HEP shall use its
commercially reasonable efforts to schedule and perform any Maintenance Activities so as to
minimize interference with ALON’s transportation schedule, (ii) if ALON provides HEP with at least
120 days advance written notice of the date of any Refinery turnaround, HEP shall use its best
efforts to schedule and perform any Maintenance Activities during the Refinery’s turnarounds
provided such scheduling does not materially increase HEP’s cost of performing such
Maintenance Activities, (iii) HEP shall provide ALON with a minimum of 60 days advance written
notice of any scheduled Maintenance Activities, and (iv) HEP shall complete any Maintenance
Activities (scheduled or unscheduled) with reasonable dispatch. The provisions set forth in
clauses (ii) through (iii) of the immediately preceding sentence of this Section 10(c) shall not
apply to the extent HEP determines in good faith that emergency Maintenance Activities are required
in connection with the Refined Product Pipelines or Refined Product Terminals. In addition, in the
event Maintenance Activities are required to be performed within time periods that do not permit
HEP to provide ALON with 60 days advance written notice of such activities, HEP shall provide ALON
with notice of such Maintenance Activities as soon as is reasonably practical under the
circumstances. If ALON is unable to transport on the Refined Product Pipelines or terminal in the
Refined Product Terminals the volumes of Refined Products required to meet the Minimum Volume
Commitment for any period of time as a result of HEP’s activities under this Section 10(c), then
the Minimum Volume Commitment will be reduced as provided by Section 2(a)(ii).

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     Section 11. Agreement to Remain Shipper

     With respect to any Refined Products that are produced at the Refinery and transported in any
Refined Product Pipeline or handled at any Refined Product Terminal, ALON agrees that it will
continue its historical commercial practice of owning such Refined Products from such point as such
Refined Products leave the Refinery until at least such point as they will not be further
transported in a Refined Product Pipeline or handled at a Refined Product Terminal and to continue
acting in the capacity of the shipper of any such Refined Products for its own account at all times
that such Refined Products are in a Refined Product Pipeline or being handled at the Refined
Product Terminals.

     Section 12. Agreement Not to Challenge Tariffs or Terminal Charges; Governmental
Actions

     (a) ALON agrees to any tariff rate changes for the Refined Product Pipelines determined in
accordance with this Agreement. ALON agrees (a) not to challenge, nor to cause its Controlled
Affiliates to challenge, nor to encourage or recommend to any other Person that it challenge, or
voluntarily assist in any way any other Person in challenging, in any forum, interstate or
intrastate tariffs (including joint tariffs) of HEP relating to the Refined Product Pipelines that
HEP has filed or may file containing rates, rules or regulations that are in effect at any time
during the term of this Agreement and regulate the transportation of Refined Products, (b) not to
protest or file a complaint, nor cause their Controlled Affiliates to protest or file a complaint,
nor encourage or recommend to any other Person that it protest or file a complaint, or voluntarily
assist in any way any other Person in protesting or filing a complaint, with respect to regulatory
filings that HEP has made or may make at any time during the term of this Agreement to change
interstate or intrastate tariffs (including joint tariffs) for transportation of Refined Products
on the Refined Product Pipelines and (c) not to seek, nor cause their Controlled Affiliates to
seek, nor encourage or recommend to any other Person that it seek, or voluntarily assist in any way
any other Person in seeking, regulatory review of, or regulatory jurisdiction over, the contractual
rates charged at any time during the term of this Agreement by HEP for terminalling services at the
Refined Product Terminals or to challenge, in any forum, such rates or changes to such rates, in
each case so long as such tariffs, regulatory filings or rates changed are made in accordance with,
and do not otherwise conflict with, the terms of this Agreement.

     (b) Should any Common Carrier Requirement or any action by any Governmental Authority require
HEP to implement a change in HEP’s obligations with respect to the provision of shipping or
prorationing as stated in this Agreement or any Exhibit hereto, HEP will provide notice to ALON of
such action and will consult with ALON pursuant to Section 21(p) prior to implementing any change
required as a result of such action. HEP further agrees (i) to provide ALON with any
non-privileged information HEP may have to assist ALON if it chooses to challenge such action, and
(ii) to abstain, at ALON’s request, from implementing any change required as a result of such
action until ALON has exhausted any such challenge, subject, however, to HEP’s right to implement a
change upon a good faith determination by HEP, after consulting with its counsel (and prior notice
to ALON), that legal obligations imposed upon HEP require such action. ALON agrees to be
responsible for and reimburse HEP for any fees, fines,

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penalties, or other expenses incurred by HEP in connection with HEP’s non-compliance with such
required action to the extent such non-compliance results from any request by ALON pursuant to this
paragraph 12(b).

     Section 13. Term and Renewal; Right to Enter New Agreement

     (a) Term. This Agreement shall be effective as of the Effective Date and shall
terminate at 12:01 a.m. Dallas, Texas, time on February 28, 2020, (the “Initial Term”) unless
earlier terminated pursuant to the provisions of this Agreement or extended by ALON’s exercise of
its renewal options as set forth in this Section 13; provided, however, that Section 12,
Section 13(c), Section 17, Section 18, Section 19, Section 20, and Section 21 shall survive the
termination of this Agreement.

     (b) Renewal Options. Unless this Agreement shall have been earlier terminated
pursuant to the provisions set forth herein, ALON, so long as no ALON Event of Default shall have
occurred and be continuing, shall have the right to extend the term of this Agreement for three
additional five year periods (“Renewal Terms”) commencing on the first day immediately following
the expiration of the Initial Term or any Renewal Term by giving notice to HEP of its desire to
exercise such option at least 180 days prior to the end of the Initial Term or any Renewal Term, as
applicable. At ALON’s option, such renewal option may apply to only such Refined Product
Pipelines or Refined Product Terminals as ALON shall designate and shall then still be subject to
this Agreement.

     (c) New Agreement. For a period of one year following the termination without renewal
of this Agreement, ALON will have the right to enter into a new pipelines and terminals agreement
with HEP with respect to the Refined Product Pipelines or Refined Product Terminals designated by
ALON on commercial terms which the parties agree are substantially similar to the terms which HEP
could enter into an agreement with a third party for similar services. In furtherance of the
foregoing rights of ALON, in the event that HEP proposes to enter into any pipelines and terminals
agreement or similar agreement with any third party with respect to any Refined Product Pipeline or
Refined Product Terminal after termination without renewal of this Agreement, HEP shall give ALON
45 days prior written notice of such proposed agreement, which notice shall include the fee
schedules, tariffs, throughput volumes, duration and any other terms proposed in such agreement.

     Section 14. Construction of Upgrades; Expansion of Pipeline 

     (a) Capital Improvements. During the term of this Agreement, ALON shall be entitled
to designate Capital Improvements to be made to the Refined Product Pipelines and the Refined
Product Terminals. The following provisions shall set forth the procedures pursuant to which
Capital Improvements designated by ALON may be constructed:

     (i) For any Capital Improvement designated by ALON, ALON shall submit a written
proposal, including all specifications then available to it, of the nature of

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the proposed Capital Improvement to the Refined Product Pipelines and/or the Refined
Product Terminals.

     (ii) HEP will review such proposal to determine, in its sole discretion, whether it
will consent to proceed with the proposed Capital Improvement.

     (iii) Should HEP determine to proceed and construct or cause to be constructed the
approved Capital Improvement, HEP will obtain bids from two or more general contractors
reasonably acceptable to ALON for the construction of the Capital Improvement. Based upon
the bids, HEP will notify ALON of the total estimated cost of the amount necessary to
construct such Capital Improvement (which amount shall include the costs of capital and any
other costs necessary to place such Capital Improvement in service) (“Construction Capital
Expenditure”). Within 30 days of such notice, ALON will notify HEP whether or not ALON
agrees to such Construction Capital Expenditure. In the event ALON does not agree with such
Construction Capital Expenditure, the parties shall work together in good faith to reach
agreement on the Construction Capital Expenditure; provided that, in the event the
parties do not reach such agreement within 30 days, ALON shall be entitled to proceed with
the construction of the Capital Improvement in accordance with Section 14(a)(v) below.

     (iv) Prior to beginning any construction on the Capital Improvement, (x) HEP shall have
received all necessary regulatory approvals, and (y) HEP and ALON shall agree on an
additional monthly revenue amount (the “Monthly Capital Construction Amount”) which amount
(1) shall be payable over a mutually agreed to term not to exceed the then remaining balance
of the Initial Term (or the then current Renewal Term) plus any Renewal Term to which ALON
is then committed or shall then commit (the “Capital Amortization Period”), and (2) shall be
sufficient to provide HEP the equivalent of a rate of return equal to prime rate plus an
additional rate of return to be agreed to by the parties over the Capital Amortization
Period on the Construction Capital Expenditure after taking into account the increased cash
flows to HEP committed to by ALON and otherwise reasonably anticipated to be received by HEP
from ALON (or from a third party pursuant to a direct contractual commitment to HEP) in
connection with such Capital Improvement. The Monthly Capital Construction Amount shall be
billed and paid monthly following ALON’s acceptance (which shall not be unreasonably
withheld) of the Capital Improvement as meeting the specifications delivered to HEP pursuant
to Section 14(a)(i) and ALON’s obligation to pay the Monthly Capital Construction Amount
shall survive the termination of this Agreement due to an ALON Event of Default. In
connection with the construction of any Capital Improvement pursuant to this Section
14(a)(iv), ALON shall be entitled to participate in all stages of planning, scheduling,
implementing, and oversight of the construction. ALON shall also be entitled to audit all
expenditures incurred in connection with the Capital Improvement and HEP shall provide all
invoices and other documentation reasonably requested by ALON for this purpose.

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     (v) If for any reason the Capital Improvement shall not be constructed pursuant to
Section 14(a)(iv) above, and such Capital Improvement is in accordance with applicable
required engineering and regulatory standards, and could not reasonably be expected to have
a material adverse impact on the operations or efficiency of the Refined Product Pipelines
or the Refined Product Terminals or result in any material additional unreimbursed costs to
HEP, then ALON may proceed with the construction and financing of the Capital Improvement
and, upon completion of construction, ALON shall be the owner and operator of such Capital
Improvement. The parties agree that any Capital Improvement constructed by ALON shall be
treated as the separate property of ALON. HEP shall cooperate with ALON in insuring that
the Capital Improvement shall operate as intended, including by operating and maintaining
all necessary connections to the Refined Product Pipelines and the Refined Product
Terminals, subject to ALON’s reimbursing HEP on a monthly basis for any incremental expenses
arising from operating or maintaining such connections.

     (b) Ownership and Operation. Upon completion of the construction, HEP or ALON, as
applicable, will own all Capital Improvements to the Refined Product Pipelines and the Refined
Product Terminals, and will operate and maintain the Capital Improvements in accordance with
Applicable Law and recognized industry standards.

     Section 15. Contract Quarter Adjustments

     (a) Activity Notice. As soon as practicable following the end of each Contract
Quarter under this Agreement, HEP shall deliver to ALON a written notice in a form mutually agreed
by the parties hereto (the “Activity Notice”) which shall set forth the following:

     (i) The total volumes of Refined Products and Other Products, if any, transported by
ALON and any other party on each Refined Product Pipeline or stored by ALON or any other
party in each Refined Product Terminal during such Contract Quarter (the “Total Volumes”),
together with the total revenues attributable to such volumes (the “Total Revenues” and,
together with the Total Volumes, the “Total Activity”);

     (ii) A statement of the amount by which the Total Volumes for each Refined Product
Pipeline and Refined Product Terminal were greater than (“Excess Volumes”) or less than
(“Deficient Volumes”) an amount equal to the Minimum Volume Commitment for such Refined
Product Pipeline or Refined Product Terminal multiplied by the actual number of days in such
Contract Quarter (such product being referred to herein as the “Quarterly Minimum Volume”);

     (iii) For each Refined Product Pipeline or Refined Product Terminal with Excess Volumes
for such Contract Quarter, the amount (the “Excess Revenues”) by which the Total Revenues
for such Refined Product Pipeline or Refined Product Terminal exceeded the product obtained
by multiplying (1) the Quarterly Minimum Volume for such Refined Product Pipeline or Refined
Product Terminal, by (2) the tariff rate set forth in Exhibits D, E, or G, as
adjusted pursuant to this Agreement, which is then applicable

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to such Refined Product Pipeline, or the terminal fees then applicable to such Refined
Product Terminal (the “Minimum Volumes Revenue”);

     (iv) For each Refined Product Pipeline or Refined Product Terminal with Deficient
Volumes for such Contract Quarter, the revenue due to HEP with respect to such Deficient
Volumes (the “Deficient Revenues”), which shall be calculated by multiplying the Deficient
Volumes by the tariff rates set forth in Exhibits D, E and G, as adjusted pursuant
to this Agreement, which are then applicable to such Refined Product Pipeline, or the
terminal fees, as adjusted pursuant to this Agreement, then applicable to such Refined
Product Terminal;

     (v) The total amount of Deficient Revenues with respect to such Contract Quarter (the
“Total Deficient Revenues”), the total amount of Excess Revenues with respect to such
Contract Quarter (the “Total Excess Revenues”), and the difference obtained by subtracting
the Total Excess Revenues from the Total Deficient Revenues which difference, if positive,
shall be the “Deficiency Payment” required to be paid by ALON to HEP pursuant to this
Section 15. If ALON agrees with the Activity Notice, ALON shall pay the Deficiency Payment
to HEP within 10 days after its receipt of the Activity Notice. If ALON disagrees with the
Activity Notice, then ALON shall (i) notify HEP of its objection(s) to the Activity Notice
(the “Objection Notice”), (ii) pay to HEP the amount, if any, of the Deficiency Payment
which ALON does not dispute and (iii) deliver the amount of the Deficiency Payment that ALON
disputes (the “Disputed Amount”) to a mutually agreeable escrow agent (the “Escrow Agent”)
with instructions to distribute such Disputed Amount pursuant to the terms of this Section
15; and

     (vi) Any adjustment due to ALON with respect to (A) Incentive Tariffs in accordance
with Section 3(b) (the “Incentive Adjustment”) and (B) any Deficiency Payments in accordance
with Section 15(d) below to the extent such Deficiency Payments shall not have previously
been applied pursuant to Section 15(d). For each adjustment due to ALON in accordance
with this clause (vi), ALON shall be entitled to a credit on the next monthly invoice
delivered by HEP pursuant to Section 4(a) in an amount equal to such adjustment plus
interest thereon at the Prime Rate from the last day of the preceding Contract Quarter to
the date of such invoice.

     (b) Payment and Dispute. If ALON disagrees with the Activity Notice, then following
the delivery of the Objection Notice, the chief financial officers of ALON and HEP shall meet or
communicate by telephone at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary and shall negotiate in good faith to attempt to resolve any differences
that they may have with respect to matters specified in the Activity Notice. During the 30-day
period following the delivery of the Objection Notice, ALON shall have access to the working papers
of HEP relating to the Activity Notice. If such differences are not resolved within 30 days
following delivery of the Objection Notice, ALON and HEP shall, within 45 days following the
delivery of the Objection Notice, submit any and all matters which remain in dispute and which were
properly included in the Activity Notice to arbitration in accordance with Section 21(g).

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     (c) Refund. Upon final resolution of the disputed Activity Notice, HEP and ALON shall
promptly (i) amend the disputed Activity Notice and (ii) direct the Escrow Agent to distribute the
Disputed Amount, if any, together with any interest earned thereon, in immediately available funds
to HEP and/or ALON, each in accordance with the terms of such resolution. With respect to any
portion of the Disputed Amount to be paid to HEP, ALON shall pay to HEP an amount equal to (i)
interest on such portion of the Disputed Amount at the Prime Rate, less (ii) any interest earned on
such portion of the Disputed Amount and paid to HEP by the Escrow Agent pursuant to the preceding
sentence. With respect to any portion of the Disputed Amount to be paid to ALON, HEP shall pay to
ALON an amount equal to (i) interest on such portion of the Disputed Amount at the Prime Rate, less
(ii) any interest earned on such portion of the Disputed Amount and paid to ALON by the Escrow
Agent pursuant to the first sentence of this Section 15(c).

     (d) Deficiency Payment Adjustments. For each Contract Quarter for which the Total
Revenues shall exceed the Minimum Volumes Revenue (such excess being the “Net Excess Revenues”),
ALON shall be entitled to a credit solely against any payments owed by ALON for such Net Excess
Revenues for such Contract Quarter equal to any Deficiency Payments made in the prior four Contract
Quarters and not previously so credited.

     Section 16. Events of Default

     (a) Events of Default by HEP. The occurrence of any of the following events shall
constitute “HEP Events of Default”:

     (i) Any failure to make any payment required to be made by HEP hereunder, where such
failure continues for 10 days after receipt of written notice from ALON, subject to the
right of HEP, reasonably exercised, to contest any such payment. In the event HEP withholds
any such payment, and it is determined that such withholding was wrongful, HEP agrees to pay
interest to ALON on such monies wrongfully withheld at the Prime Rate;

     (ii) A failure by HEP to observe and perform any material provision or covenant of this
Agreement (other than the obligation to pay amounts when due as the result of same being
covered by clause (i) preceding) to be observed or performed by HEP where such failure
continues unremedied for a period of 30 days after receipt of written notice thereof from
ALON to HEP (the “Initial HEP Cure Period”); provided, however, in the event a
breach specified in this clause (ii) cannot be reasonably cured within such 30-day period
and HEP is diligently proceeding to cure such breach, HEP shall have an additional period of
time as is reasonably necessary to cure such breach, not to exceed 180 days after HEP’s
receipt of notice from ALON regarding such breach (the “Extended HEP Cure Period”);

     (iii) The making by HEP of any general assignment for the benefit of creditors, the
filing by or against HEP of a petition to have HEP adjudged a bankrupt, or a petition for
reorganization or arrangement under any law relating to bankruptcy (unless,

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in the case of a petition filed against HEP, the same is dismissed within 60 days), or
the appointment of a trustee or receiver to take possession that is not restored to HEP
within 30 days; and

     (iv) Any default by HEP or its Affiliates under any mortgage, or other security
document or instrument to which it is a party which default would entitle any third party
(other than a third party who is bound by a Non-Disturbance Agreement with ALON), to acquire
all or any material portion of the Refined Product Pipelines or the Refined Product
Terminals.

     (b) Events of Default by ALON. The occurrence of any of the following shall
constitute “ALON Events of Default”:

     (i) Any failure to make any payment required to be made by ALON hereunder, where such
failure continues for 10 days after receipt of written notice from HEP, subject to the right
of ALON, reasonably exercised, to contest any such payment. In the event ALON withholds any
such payment, and it is determined that such withholding was wrongful, ALON agrees to pay
interest to HEP on such monies wrongfully withheld at the Prime Rate;

     (ii) A failure by ALON to observe and perform any material provision or covenant of
this Agreement (other than the obligation to pay amounts when due as the result of same
being covered by clause (i) preceding) to be observed or performed by ALON where such
failure continues unremedied for a period of 30 days after receipt of written notice thereof
to ALON; provided, however, in the event a breach specified in this clause (ii)
cannot be reasonably cured within such 30-day period and ALON has diligently proceed to cure
such breach, ALON shall have such period of time, not to exceed 180 days, as is reasonably
necessary to cure such breach; and

     (iii) The making by ALON of any general assignment for the benefit of creditors, the
filing by or against ALON of a petition to have ALON adjudged a bankrupt, or a petition for
reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against ALON, the same is dismissed within 60 days), or the appointment of a
trustee or receiver to take possession that is not restored to ALON within 30 days.

     Section 17. Remedies

     (a) Remedies of HEP. In the event an ALON Event of Default occurs and is not cured,
HEP shall have the right to enforce performance by ALON of this Agreement and recover damages for
the breach thereof and with respect to an ALON Event of Default specified in Section 16(b)(i), HEP
shall have the right to refuse receipts and deliveries by or on behalf of ALON on 10 days prior
written notice to ALON; provided, however, that HEP shall not (i) with respect to
an ALON Event of Default, specified in Section 16(b)(i), be entitled to terminate this Agreement
unless such ALON Event of Default is not cured within 60 days after receipt of

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written notice from HEP; provided further that to the extent ALON has
enforceable rights to receive insurance proceeds which are sufficient to cure such default, ALON
shall be entitled to an additional 60 days to cure such default so long as it is using commercially
reasonable efforts to collect such insurance proceeds and pay them to HEP; and (ii) with respect to
an ALON Event of Default specified in Section 16(b)(ii) or Section 16(b)(iii), be entitled to
refuse receipts and deliveries by or on behalf of ALON or to terminate this Agreement until such
time as HEP shall have been awarded any such right pursuant to a final binding and nonappealable
decision of an Arbitrable Dispute pursuant to Section 21(g). Notwithstanding any other provision
of this Agreement to the contrary, HEP agrees to subordinate any lien or other possessory interest
of HEP in any Refined Products to any lien held by ALON’s lenders.

     (b) Remedies of ALON. In the event an HEP Event of Default occurs and is not cured,
ALON shall have the right to enforce performance by HEP of this Agreement and recover damages for
the breach thereof in accordance with the provisions of Section 21(g). In addition, if an HEP
Event of Default specified in Section 16(a)(i), Section 16(a)(iii) or Section 16(a)(iv) occurs and
is not cured, ALON shall have the right to terminate this Agreement on 30 days written notice to
HEP; provided, however, that ALON shall not, with respect to an HEP Event of Default
specified in Section 16(a)(i), be entitled to terminate this Agreement unless such HEP Event of
Default is not cured within 60 days after receipt of written notice from ALON; and
provided, further that to the extent HEP has enforceable rights to receive
insurance proceeds which are sufficient to cure such default, HEP shall be entitled to an
additional 60 days to cure such default so long as it is using all commercially reasonable efforts
to collect such insurance proceeds and pay them to ALON. In the event an HEP Event of Default
specified in Section 16(a)(ii) occurs and is not cured, ALON shall have the right to terminate this
Agreement by written notice to HEP following expiration of the Extended HEP Cure Period.

     (c) ALON’s Option to Operate. In the event (x) an HEP Event of Default described in
Section 16(a)(ii) occurs and is not cured before the expiration of the Initial HEP Cure Period, (y)
an HEP Event of Default pursuant to Section 16(a)(iii) or Section 16(a)(iv) occurs and is not
cured, or (z) a Force Majeure event prevents HEP from substantially performing its obligations
under this Agreement for more than 30 days, then ALON shall have the option (1) to exercise the
remedies in Section 17(b), and/or (2) to directly or indirectly through a designee, enter the
Refined Product Terminals and the control center for the Refined Product Pipelines and (at ALON’s
election) commence (and thereafter continue during the Intervention Period) the operation and
maintenance thereof or the taking of such actions as may be necessary to obtain substitute
performance for those obligations of HEP hereunder that are not being performed by HEP;
provided, however, that with respect to clause (x) above, if the HEP Event of
Default results directly from a breach by ALON of any representation, warranty or covenant under
the Contribution Agreement (without giving effect to any limitations on the survival period, if
any) or any Ancillary Document, then ALON’s rights pursuant to clause (2) above shall be limited to
the performance and provision of transportation or terminalling services in compliance with Section
2(b) which HEP is unable to perform or provide as a result of such HEP Event of Default and for
which ALON is then capable of performing or providing. The period of ALON’s operations pursuant to
clause (2) above (the “Intervention Period”) shall commence upon ALON’s entry into the Refined
Product Terminals and control center and shall extend until the

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earlier of (i) the expiration of this Agreement (including any Renewal Terms), (ii) the
election by ALON in its sole discretion to terminate the Intervention Period, and (iii) the date
upon which such Force Majeure Event ends or HEP cures such HEP Event of Default. All costs
reasonably incurred by ALON in exercise of its rights and remedies under this Section 17(c) shall
be reimbursed or paid by HEP no later than 10 days following written demand from ALON (which demand
may be given by ALON periodically as such costs are incurred) or ALON may set-off all or any part
of such costs against any amounts owed by ALON to HEP under this Agreement.

     (d) ALON’s Option to Purchase. Upon the occurrence of a failure by HEP described in
Section 16(a)(ii) which is not cured before the expiration of the Extended HEP Cure Period (other
than a failure that results directly from a breach by ALON of any representation, warranty or
covenant under the Contribution Agreement (without giving effect to any limitations on the survival
period, if any) or any Ancillary Document), the occurrence and continuance for over 180 days of an
HEP Event of Default under Section 16(a)(iii) or Section 16(a)(iv), or upon any termination of this
Agreement pursuant to Section 10(b) due to a Force Majeure event affecting HEP, ALON shall have the
option, and HEP hereby grants to ALON such option, to purchase (or to cause an Affiliate of ALON to
purchase) all, or such portion as ALON shall designate, of the Refined Product Pipelines and
Refined Product Terminals from HEP by delivering notice of the exercise of such option to HEP
within 60 days of the end of such 180-day period or such termination. Such purchase shall be made
pursuant to an asset purchase agreement containing the same terms and conditions as the
Contribution Agreement except that (i) ALON, or its designated Affiliate, shall be the purchaser
and HEP shall be the seller, (ii) any terms or conditions in the Contribution Agreement that are
clearly inapplicable to the purchase by ALON shall be omitted, (iii) the purchase price for the
Refined Product Pipelines and Refined Product Terminals to be purchased by ALON shall be paid in
cash and in an amount determined by an appraisal of the fair market value of the assets to be
purchased at the time of exercise of ALON’s option, which appraisal shall (x) take into account all
factors relevant to determining the purchase price for such assets including, without limitation,
the condition of the assets, the purpose intended for the assets, any repairs required to be made,
and the terms and nature of the transaction to be effected pursuant to this Section 17(d), and (y)
shall be performed by an independent third party appraiser with substantial experience in valuing
petroleum product pipelines and terminals, (iv) such purchase shall be free and clear of any liens
or security interests relating to indebtedness for borrowed money, but shall otherwise be on an
“as-is, where-is” basis, and (v) shall close within 180 days of the notice of exercise of the
option. In addition, ALON shall have the right, at its own expense, to conduct a due diligence
investigation of the Refined Product Pipelines and the Refined Product Terminals and HEP shall
provide ALON reasonable access to such assets and all related records and documents for the purpose
of such investigation. ALON shall have the right to terminate its purchase option if it is
dissatisfied with the results of such due diligence investigation.

     (e) Further Obligations. Each party shall make commercially reasonable efforts to
mitigate any of the damages to which it may be entitled under any provision of this Agreement.

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     Section 18. ALON Right of First Refusal

     (a) HEP hereby grants to ALON a right of first refusal on any proposed Transfer (excluding (i)
a Transfer to a Controlled Affiliate made solely for the purpose of such Controlled Affiliate
thereafter owning and operating the Transferred Assets in accordance with this Agreement, or (ii)
the grant of security interest to a bona fide third party lender which complies with the provisions
of Section 21(c), but not excluding any foreclosure or other realization on such security interest)
of all or any portion of the Refined Product Pipelines or the Refined Product Terminals. ALON’s
right of first refusal granted hereunder shall survive any Transfer of the Refined Product
Pipelines or the Refined Product Terminals or any assignment of this Agreement and shall be binding
upon all successors or permitted assigns of HEP.

     (b) If (1) HEP desires to (x) Transfer all or part of its interest in the Refined Product
Pipelines or in the Refined Product Terminals (collectively, the “Operations”) or (y) Transfer
title to all or a part of its interests in the Operations to its mortgagee in lieu of foreclosure;
or (2) all or a part of HEP’s interest in the Operations will be Transferred pursuant to
foreclosure of a mortgage of any such interest, and any such Transfer is subject to the right of
first refusal in Section 18(a) above; HEP shall promptly give written notice to ALON or its
successors and assigns with full information concerning such transaction (the “Transaction
Notice”).

     The Transaction Notice shall (a) include the name and address of the prospective transferee
(who must be a bona fide purchaser), the purchase price, the form of consideration
proposed, and all other terms of the proposed transaction (collectively, the “Proposed Terms”), (b)
include a complete copy of any proposed or executed written agreement that sets forth the Proposed
Terms, including all exhibits, schedules and related agreements; and (c) in the event the Transfer
of HEP’s interest in the Operations is to be made pursuant to subsections (b)(1)(y) or (b)(2)
above, the Transaction Notice shall include all material notices received by HEP from its mortgagee
relating to the Transfer in lieu of foreclosure or foreclosure of a mortgage on any such interest.

     ALON shall then have the right for a period of thirty (30) days (the “Exercise Period”) after
the Transaction Notice is delivered, to elect to purchase all of the Operations which HEP proposes
to Transfer on the Proposed Terms. ALON shall have the right, at its own expense, to conduct a due
diligence investigation of the Operations during the Exercise Period and HEP shall provide ALON
reasonable access to conduct such investigation. In the event that ALON shall exercise its right
of first refusal by delivery of written notice of such exercise to HEP within the Exercise Period,
ALON shall close the Transfer of the Operations within 90 days of the end of the Exercise Period
and HEP shall use all commercially reasonable efforts to cooperate with ALON in effecting such
closing on the Proposed Terms. ALON shall have the right to confirm the fair market value of any
non-cash consideration included within the purchase price set forth in the Proposed Terms by an
independent appraisal by a generally recognized valuation firm. If the proposed Transfer includes
other assets of HEP or is structured as a non-simultaneous, like-kind exchange under Section 1031
of the Internal Revenue Code of 1986, as amended, the interest that is subject to ALON’s right of
first refusal pursuant to Section 18(a) shall be

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separately valued and the Transaction Notice shall state the value attributed to such interest
by the prospective transferee.

     If ALON does not exercise its right of first refusal granted pursuant to this Section 18
within the Exercise Period, HEP may enter into a binding agreement or proceed to close on any such
agreement already executed to Transfer its interests in the Operations on terms and conditions in
the aggregate no less favorable to HEP than the Proposed Terms to the prospective transferee,
during a period (“Third Party Sale Period”) ending 90 days after the Exercise Period. If however,
no such binding agreement is entered into or no closing occurs with the prospective transferee
during the Third Party Sale Period, then no Transfer may thereafter be entered into by HEP without
first again complying with this Section 18. Notwithstanding the application of this Section 18,
any Transfer made pursuant to this paragraph must comply with the provisions of Section 21(c).
Notwithstanding the foregoing, any Transfer made pursuant to the last proviso under Section 21(c)
shall not give rise to a right of first refusal under this Section 18.

     Section 19. Insurance; Indemnification

     (a) Insurance. In connection with this Agreement, each party shall maintain insurance
providing for coverage and minimum limits contained in Exhibit H attached hereto and
incorporated herein by reference. Each party shall furnish the other party with certificates of
insurance sufficient to establish that such party is maintaining the coverage so specified. Said
certificates shall not be canceled or otherwise materially altered without at least 30 days prior
written notice to the other party. Insurance covering the Refined Products, if any, shall be
carried by ALON at its own expense.

     (b) Indemnification by ALON. To the extent permitted by Applicable Law and except as
otherwise specifically provided in this Agreement, ALON agrees to defend and indemnify HEP, its
Subsidiaries and Affiliates and their respective directors, officers, employees, agents and other
representatives (the “HEP Indemnified Parties”), from and against all liabilities, losses, damages,
Claims, suits, penalties, fines, judgments, costs and expense (including reasonable attorney fees
and other costs of litigation) (collectively “Losses”), resulting from, associated with or arising
out of (i) ALON’s failure to comply with applicable governmental or quasi-governmental laws,
regulations or rules, (ii) bodily injury or death of any Person, including, without limitation,
ALON’s and HEP’s employees, agents and representatives, (iii) damage to natural resources or to
property of any nature, including, without limitation, that involving the Refined Products and
other property of ALON and the Refined Product Terminals, Refined Product Pipelines and other
property of HEP, or (iv) discharges, spills, or leaks of products; in each case (x) regardless of
the negligence of any of the HEP Indemnified Parties, but (y) only to the extent caused by the
negligent, gross negligent or willful acts or omissions of ALON, its employees, agents,
representatives or contractors in the exercise of any of the rights granted under this Agreement.

     (c) Indemnification by HEP. To the extent permitted by Applicable Law and as otherwise
specifically provided in this Agreement, HEP agrees to defend and indemnify ALON, its Subsidiaries
and Affiliates and their respective directors, officers, employees, agents and

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other representatives (the “ALON Indemnified Parties”), from and against any Losses resulting
from, associated with or arising out of (i) HEP’s failure to comply with applicable governmental or
quasi-governmental laws, regulations or rules, (ii) bodily injury or death of any Person,
including, without limitation, ALON’s and HEP’s employees, agents or representatives, (iii) damage
to natural resources or to property of any nature, including, without limitation, that involving
Refined Products and the Refined Product Terminals, Refined Product Pipelines or other property of
HEP, or (iv) discharges, spills, or leaks of products; in each case (x) regardless of the
negligence of any of the ALON Indemnified Parties, but (y) only to the extent caused by the
negligent, gross negligent or willful acts or omissions of HEP, its employees, agents,
representatives or contractors in the exercise of any of the rights granted under this Agreement.

     (d) Joint Liability. Under the foregoing indemnities, where the personal injury to or
death of any Person, or loss of or damage to property is the result of the joint or concurrent
negligence or willful acts or omissions of ALON and HEP, each party’s duty of indemnification will
be in proportion to its share of such joint or concurrent negligence, or willful misconduct.

     (e) Procedures relating to Indemnification. To receive the foregoing indemnities, the
party seeking indemnification must notify the other in writing of a Claim or suit promptly
(provided that any failure to provide such notice shall not limit a party’s right to
indemnification except to the extent that the indemnifying party shall have been materially
prejudiced thereby) and provide reasonable cooperation (at the indemnifying party’s expense) and
full authority to defend the Claim or suit. Notwithstanding the foregoing, no indemnifying party
shall be entitled to settle any Claim or suit without the consent of the indemnified party unless
such settlement contains a full release of the indemnified party without any liability for any
monetary damages or any type of equitable relief. Neither party shall have any obligation to
indemnify the other under any settlement made without its written consent.

     (f) Administration of Indemnity Claims. Notwithstanding anything else in this Section
19, any claims for indemnification pursuant to this Section 19, (i) on behalf of an ALON
Indemnified Party must be made and administered by ALON, or its successors or assigns as permitted
herein, and (ii) on behalf of an HEP Indemnified Party must be made and administered by HEP, or its
successors and assigns as permitted herein.

     Section 20. Notices. 

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

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other address as such party may stipulate to the other parties in the manner provided in this
Section 20:

	 	 	 	 	 
	

	 	if to ALON:
	 	ALON USA, LP
	

	 	 	 	7616 LBJ Freeway, Suite 300
	

	 	 	 	Dallas, Texas 75251
	

	 	 	 	Attn: Chief Executive Officer
	

	 	 	 	Copy to: General Counsel
	

	 	 	 	Telecopy: (972) 367-3723
	 
	 	 	 	 
	

	 	if to HEP:
	 	Holly Energy Partners, L.P.
	

	 	 	 	100 Crescent Court
	

	 	 	 	Suite 1600
	

	 	 	 	Dallas, Texas 75201
	

	 	 	 	Attn: Bruce Shaw
	

	 	 	 	Telecopy: 214-615-9371

     Section 21. Miscellaneous

     (a) Intention as to Refineries. ALON represents to HEP that, as of the date of this
Agreement, they are not considering a shut down of the Refinery, other than a scheduled maintenance
turnaround in the first quarter of 2005, or any changes to the Refinery that would have a material
adverse effect on the operation of the Refinery.

     (b) Amendments and Waivers. 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. 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.

     (c) Successors and Assigns. This Agreement shall inure to the benefit of, and shall
be binding upon, ALON, HEP and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights or obligations hereunder shall be assigned without the prior
written consent of the other parties, which consent may not be unreasonably withheld;
provided, however, that (i) HEP may make such an assignment (including a partial pro rata
assignment) to a Controlled Affiliate of HEP provided that HEP continues to remain liable
for its obligations hereunder, (ii) ALON may make such an assignment (including a partial pro rata
assignment) to a Controlled Affiliate of ALON provided that ALON continues to remain liable
for its obligations hereunder, (iii) ALON may make such an assignment to any Person to which ALON
has sold its Refinery which relies on the services provided by HEP under this Agreement if such
Person (A) is reasonably capable of performing ALON’s obligations under this Agreement assigned to
such Person, which determination shall be made by ALON in its reasonable

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judgment and (B) has agreed in writing with HEP to assume the obligations of ALON assigned to
such Person, (iv) ALON may make a collateral assignment of its rights and obligations hereunder to
any bona fide third party lender of ALON, (v) HEP may make a collateral assignment of its rights
and obligations hereunder and/or grant a security interest in all or a portion of the Refined
Product Pipelines and the Refined Product Terminals to a bona fide third party lender or debt
holder, or a trustee or representative for any of them of HEP if such third party lender, debt
holder or trustee shall have executed and delivered to ALON a non-disturbance agreement in
substantially the form attached to the Contribution Agreement or in such other form as is
reasonably satisfactory to ALON and ALON executes an acknowledgment of such collateral assignment
in such form as may from time to time be reasonably requested, and (vi) subject to Section 11.6 of
the Contribution Agreement, HEP may assign its rights in connection with a sale of all or
substantially all its assets to a person who (A) is reasonably capable of performing HEP’s
obligations under this Agreement assigned to such person, which determination shall be made by HEP
in its reasonable judgment, and (B) has agreed in writing with ALON to assume the obligations of
HEP assigned to such person. Any attempt to make an assignment of this Agreement otherwise than as
permitted by the foregoing shall be null and void. For purposes of this Section 21(c), an
“assignment” shall include any direct or indirect assignment, transfer, sale, pledge, hypothecation
or other disposition of this Agreement or any rights and obligations hereunder; provided,
however, that the consent requirements set forth in this Section 21(c) shall not apply to any
merger, sale of equity interests, or change of control involving a party hereto. The parties
hereto agree to require their respective successors (including any Person to which all or any
portion of the Refined Product Pipelines or Refined Product Terminals are to be Transferred), if
any, to expressly assume, in a form of agreement acceptable to the other parties, their obligations
under this Agreement. From and after any assignment permitted or consented to hereunder, all
references to HEP or ALON, as applicable, shall be deemed to refer to such party’s assignee.

     (d) 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. Upon determination that any term or other
provision is invalid or unenforceable, the parties agree to negotiate in good faith to modify this
Agreement to effect the original intent of the parties as closely as possible in an acceptable
manner so that the transactions contemplated hereby are fulfilled to the extent possible.

     (e) Choice of Law. This Agreement shall be subject to and governed by the laws of the
State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction
or interpretation of this Agreement to the laws of another state. Each party hereby submits to the
jurisdiction of the state and federal courts in the State of Texas and to venue in Dallas, Texas.

     (f) Exclusion of Punitive Damages. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY
FOR PUNITIVE OR EXEMPLARY DAMAGES, BY STATUTE, IN TORT OR CONTRACT.

Pipelines and Terminals Agreement

-34-

 

     (g) 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 or for 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 (a) be neutral parties who
have never been officers, directors or employees of any of ALON, HEP or any of their Affiliates and
(b) have not less than seven years experience in the energy industry. The hearing will be
conducted in Dallas, Texas and commence within 30 days after the selection of the third arbitrator.
ALON, HEP 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 punitive damages.

     (h) Entire Agreement. This Agreement and the Exhibits hereto constitute the complete
understanding of the parties relating to the subject matter hereof and supersede all prior oral and
written discussions, negotiations, representations or agreements relating thereto. There are no
understandings or commitments relating to the present subject matter not expressly set forth
herein.

     (i) Drafting. As between the parties, it shall be conclusively presumed that each and
every provision of this Agreement was drafted jointly by the parties.

     (j) Headings. Section headings contained in this Agreement are for convenient
reference only and shall not in any way affect the meaning or interpretation of this Agreement.

     (k) Expenses. Except as otherwise set forth herein, each party shall pay and
discharge all liabilities and expenses incurred by or on behalf of it in connection with the
preparation, authorization, execution and performance of this Agreement and the transactions

Pipelines and Terminals Agreement

-35-

 

contemplated herein, including all fees and expenses of agents, representatives, counsel and
accountants.

     (l) 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.

     (m) No Personal Liability. Each party acknowledges and agrees that that in no event
shall any Affiliate of either party or any partner, member, shareholder, owner, officer, director
or employee of either party or of any such Affiliate be personally liable to the other party for
any payments, obligations or performance due under this Agreement or any breach or failure of
performance of either party and the sole recourse for payment or performance of the obligations
under this Agreement shall be against HEP or ALON (as applicable) and each such party’s respective
assets and not against any other Person, except for such liability as expressly assumed by an
assignee pursuant to an assignment of this Agreement in accordance with the terms hereof.

     (n) Counterparts. This Agreement may be executed in two or more counterparts, each of
which when delivered (which deliveries may take place by facsimile) shall be deemed an original,
but all of which shall constitute one and the same instrument.

     (o) Confidentiality. Each party hereto shall cause, and shall cause each of its
Affiliates and each of their respective officers, directors and employees, to hold confidential all
information relating to the business of the other party disclosed to it by reason of this Agreement
and not disclose any of such information to any party unless (i) such party obtains the prior
written consent of the other party, or (ii) required to disclose such information by operation of
Applicable Law (including pursuant to the rules of the Securities Exchange Commission) or pursuant
to rules of any securities exchange. If either party or any of its representatives or affiliates
is requested or required by operation of Applicable Law (including pursuant to the Exchange Act of
1934 or the rules of the SEC) or pursuant to the rules of any securities exchange to disclose any
Confidential Information, such party shall provide the other party with prompt written notice of
such request or requirement (which shall be treated as Confidential Information hereunder), which
notice shall be at least 48 hours prior to making such disclosure (or in the case of a disclosure
pursuant to the Exchange Act, the rules of the SEC or the rules of any securities exchange, such
time period (which may be shorter than 48 hours but shall not be longer than 48 hours) as may be
reasonably possible), so that the other party hereto may seek a protective order or other
appropriate assurance of confidential treatment of the information required to be so disclosed
and/or waive compliance with the provisions of this Section 21(o). Notwithstanding the foregoing,
either party shall be entitled to disclose each other’s confidential information with its advisors
(legal and accounting), bankers, lenders, underwriters/purchasers and their respective advisors,
provided that they are notified of the requirements of this Section 21(o) and instructed to
keep such information confidential.

Pipelines and Terminals Agreement

-36-

 

     (p) Unlawful Actions. Notwithstanding anything in this Agreement to the contrary, the
parties acknowledge and agree that in no event will HEP or ALON ever be deemed to be in breach of
this Agreement for any failure of HEP or ALON to observe or perform any provision or covenant of
this Agreement if such failure to perform is attributable to any provision in this Agreement, any
tariff, or any Ancillary Document, which is invalid or in violation of Applicable Law. In such
event, or in the event of any action described in Section 12(b), the parties shall negotiate in
good faith in an attempt to agree to another provision (instead of the provision which is invalid
or in violation of Applicable Law) that is valid and legal and carries out the parties’ intentions
under this Agreement.

     (q) Memorandum of Agreement. HEP acknowledges and agrees that ALON shall have the
right to record a memorandum of this Agreement (the form of which shall be mutually agreed to by
the parties) with respect to ALON’s rights under Section 17 and Section 18 in such jurisdictions as
ALON shall deem appropriate.

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

Pipelines and Terminals Agreement

-37-

 

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

	 	 	 	 	 
	 	ALON USA, LP

 	 
	 	By:  	ALON USA GP, LLC,
 	 
	 	 	   its General Partner 	 

	 	 	 	 	 
	 	By:  	 	                                   /s/ Jeff D. Morris
 	 
	 	 	 	Jeff D. Morris,      	 
	 	 	 	President and Chief Executive Officer 	 

	 	 	 	 	 
	 	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/ Mathew P. Clifton
 	 
	 	 	Mathew P. Clifton 	 
	 	 	Chairman of the Board and
Chief Executive Officer 	 
	 

Signature Page 

Pipelines And Terminals Agreement

 

 

EXHIBIT A

REFINED PRODUCT PIPELINES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Minimum	 	 	Incentive	 	 	Section 2(a)(v)	 	 	Section 2(a)(v)	 
	 	 	Miles of	 	 	 	 	 	 	 	 	 	 	Volume	 	 	Volume	 	 	60 Day	 	 	180 Day	 
	Origin and Destination	 	Pipeline	 	 	Diameter	 	 	Capacity	 	 	Commitment	 	 	Requirement	 	 	Discount Rate	 	 	Discount Rate	 
	 	 	 	 	 	 	(inches)	 	 	(bpd)	 	 	(bpd)	 	 	(bpd)	 	 	 	 	 	 	 	 	 
	Big Spring, TX to Abilene, TX (6”)
	 	 	105.2	 	 	 	6	 	 	 	20,000	 	 	 	7,580	 	 	 	8,843	 	 	 	6.8	%	 	 	32.6	%
	Midland, TX to Orla, TX*
	 	 	136.5	 	 	 	8/10	 	 	 	25,000	 	 	 	14,040	 	 	 	16,380	 	 	 	8.5	%	 	 	27.5	%
	Big Spring, TX to Wichita Falls, TX
	 	 	226.5	 	 	 	6/8	 	 	 	23,000	 	 	 	15,815	 	 	 	18,451	 	 	 	3.7	%	 	 	16.1	%
	Wichita Falls, TX to Duncan, OK
	 	 	46.7	 	 	 	6	 	 	 	21,000	 	 	 	4,844	 	 	 	5,652	 	 	 	16.8	%	 	 	57.3	%
	Abilene, TX to Dyess AFB
	 	 	1.6	 	 	 	8	 	 	 	53,000	 	 	 	1,167	 	 	 	1,362	 	 	 	4.6	%	 	 	22.4	%

	 	 	*Excludes 38 mile, 6-inch leased
Chevron pipeline from Coahoma Station to
Midland, TX and 3.4 miles of ALON owned
pipeline from the Refinery to Coahoma
Station.

A-1

 

EXHIBIT B

REFINED PRODUCT TERMINALS AND TANK FARMS

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Minimum Volume	 
	 	 	 	 	 	 	 	 	 	 	Commitment	 
	Location	 	Storage Capacity (barrels)	 	 	Number of Tanks	 	 	(bpd)	 
	Refined Product Terminals
	 	 	 	 	 	 	 	 	 	 	 	 
	Abilene, TX
	 	 	127,000	 	 	 	5	 	 	 	7,523	 
	Wichita Falls, TX
	 	 	220,000	*	 	 	11	 	 	 	5,586	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Refined Product Tank Farm
	 	 	 	 	 	 	 	 	 	 	 	 
	Orla, TX
	 	 	134,782	 	 	 	7	 	 	 	13,853	 

	*	 	Includes 50,000 barrels of
storage capacity that is currently
out of service.

B-1

 

EXHIBIT C

TERMINALS FEE SCHEDULE

	1.  	ALON will pay a terminal service fee of (a) $0.30 per barrel for deliveries out of the
Refined Product Terminals into trucks, and (b) $0.10 per barrel for deliveries out of the
Refined Product Terminals into any adjacent pipelines.

	2.  	Each of the service fees listed on this Exhibit C will adjust at the beginning of
each Contract Year by an amount equal to the percentage change between the two preceding
Contract Years in the index comprised of comparable fees posted by Conoco, Wichita Falls;
Equilon, Odessa; Pride, Abilene; and Valero, Abernathy terminals.

C-1

 

EXHIBIT D

INTERSTATE TARIFF (RATES, RULES AND REGULATIONS)

D-1

 

EXHIBIT E

INTRASTATE TARIFF (RATES, RULES AND REGULATIONS (PUBLIC))

E-1

 

EXHIBIT F

INTENTIONALLY OMITTED

F-1

 

EXHIBIT G

INTRASTATE TARIFF (RATES, RULES AND REGULATIONS (PRIVATE))

G-1

 

EXHIBIT H

INSURANCE

     Each party’s insurance coverage as stated on this Exhibit H shall be primary in all instances
regardless of like coverage maintained by the other party.

     (a) Workmen’s Compensation Coverage in the statutory amount as prescribed under the Workmen’s
Compensation Acts of Texas, and Employer’s Liability insurance in the amount of $1,000,000.

     (b) Comprehensive General Liability

	 	 	 	 	 
	

	 	Bodily Injury:
	 	$1,000,000 Per Person
	 
	 	 	 	 
	

	 	 	 	$1,000,000 Per Occurrence
	 
	 	 	 	 
	

	 	Property Damage:
	 	$1,000,000 Per Occurrence
	 
	 	 	 	 
	 	 	Including but not limited to the following with the same above limit of liability
for bodily injury and property damage:

	 	(i)  	Contractual Liability
	 
	 	(ii)  	Contingent Liability (if contractors are to be used)
	 
	 	(iii)  	Owner Contractors Protective Liability (if contractors are to be used)
	 
	 	(iv)  	Completed Operations
	 
	 	(v)  	Broad Form Care, Custody and Control
	 
	 	(vi)  	Explosion, collapse and underground $1,000,000 Per Occurrence

     (c) Comprehensive vehicle liability to cover all licensed or unlicensed vehicles and/or
automotive equipment owned, leased or rented when used in connection with the performance of this
Agreement.

	 	 	 	 	 
	 	 	Coverage limits shall be:
	 
	 	 	 	 
	

	 	Bodily Injury:
	 	$1,000,000 Per Person
	 
	 	 	 	 
	

	 	 	 	$1,000,000 Per Occurrence
	 
	 	 	 	 
	

	 	Property Damage:
	 	$1,000,000 Per Occurrence

H-1

 

     (d) Umbrella/Excess Insurance over that required in (a), (b) and (c) above with minimum limits
of $50,000,000.

H-2

 

EXHIBIT I

SCHEDULE OF

SETTLEMENT PROCEDURES

REFINED PRODUCT TERMINALS

If in any year the overall product losses at any Refined Product Terminal exceed 0.05%, then the
amount to be paid by HEP to ALON as compensation for such product losses shall be an amount equal
to (A) the sum of the volumes of losses (in barrels) for each type of product having an overall
loss at such Refined Product Terminal in such year multiplied by the yearly average of the daily
high and low price per barrel for such product for (i) Abilene, Texas (with respect to the Abilene
Terminal), (ii) Wichita Falls, Texas (with respect to the Wichita Falls Terminal),and (iii) El
Paso, Texas (with respect to the Orla Tank Farm) for the year in which the loss occurred as set
forth in publications of Oil Price Information Service (“OPIS”), less (B) the sum of the volumes of
gains (in barrels) for each type of product having an overall gain at such Refined Product Terminal
in such year multiplied by the yearly average of the daily high and low price per barrel for such
product for (i) Abilene, Texas (with respect to the Abilene Terminal), (ii) Wichita Falls, Texas
(with respect to the Wichita Falls Terminal),and (iii) El Paso, Texas (with respect to the Orla
Tank Farm) for the year in which the gain occurred as set forth in publications of OPIS. In the
case of the following products, the product price used to determine the required payment shall be
as follows:

	 	 	 	 	 	 
	 
	 	product	 	 	opis product price used	 
	 	On-Road Diesel Fuel

	 	 	Unbranded	 
	 	Unleaded Regular Gasoline

	 	 	Unbranded	 
	 	Unleaded Premium Gasoline

	 	 	Unbranded	 
	 	Kerosene

	 	 	On-Road Diesel plus $.05	 
	 	Jet Fuel  — JP8 Military Grade

	 	 	On-Road Diesel plus $.07	 
	 

In the event of a loss or gain with respect to a product type not specified above, the OPIS product
price used to determine the payment amount shall be the price for the OPIS product category for
Abilene, Texas (with respect to the Abilene Terminal), Wichita Falls, Texas (with respect to the
Wichita Falls Terminal), and El Paso, Texas (with respect to the Orla Tank Farm), that is most
similar to the product type as adjusted for differences in quality. For purposes of these
settlement procedures, the term “OPIS” shall mean the entity that performs the price reporting
functions now performed by OPIS in the event that OPIS ceases to perform these functions. In the
event required price levels cease to be reported for any of the foregoing markets, then the prices
for the major market nearest to the terminal for which such loss occurred and for which petroleum
product prices are reported shall be used in place of such market prices.

I-1

 

EXHIBIT J

TERMINAL ACCESS AGREEMENT

     This Terminal Access Agreement (this “Agreement”) is entered into this ___day of
______, 2005, by ______(“Carrier”) located at
______, who will be obtaining product from the Abilene and Wichita
Falls Terminals (collectively, the “Terminal”) operated by Holly Energy Partners-Operating, L.P.
(“HEP-Operating”) on behalf of Holly Energy Partners, L.P. and its affiliate companies
(collectively referred to herein as “Holly Energy Partners”) which Carrier represents and warrants
it has legal rights to obtain from the Terminal.

For good consideration, the sufficiency of which is hereby acknowledged, the parties do hereby
agree as follows:

A. HEP-Operating routinely stores various petroleum products, petroleum byproducts and other
substances (hereinafter referred to as “Petroleum Products”) at the Terminal. The purpose of this
Agreement is to afford Carrier access to such Terminal and to protect and safeguard the interests
of Holly Energy Partners and all shippers in permitting Carrier to have such access. This
Agreement shall be applicable to the Terminal identified herein.

B. Carrier shall have access to the Terminal for the sole purpose of either making or taking
delivery of Petroleum Products. Carrier agrees that the permission granted by HEP-Operating to
Carrier to enter the Terminal under this Agreement is non-exclusive, and may be revoked at any time
(i) for Carrier’s failure to comply with this Agreement, (ii) for Carrier’s failure to comply with
the rules and procedures posted at the Terminal, (iii) for Carrier’s failure to attend or comply
with training, and (iv) if HEP-Operating believes in its reasonable opinion, that Carrier poses a
risk to the Terminal, its personnel, the public or the environment.

C. Access to the Terminal is or will be controlled by a card-lock or key system activated by
proximity cards (“Access Card(s)” and/or “Access Code(s)”). Carrier desires to have Access Card(s)
and/or Access Code(s) to the Terminal to obtain Petroleum Products.

D. Carrier agrees to comply with all Terminal operating rules promulgated by HEP-Operating and its
agents, including those promulgated (whether communicated verbally or in writing) for security or
safety reasons, and any amendments or supplements thereto that HEP-Operating in its discretion, may
issue from time to time. Carrier agrees to comply with all applicable federal, state, and local
laws and regulations, including but not limited to pertinent provisions of the “Hazardous Materials
Transportation Act”, as fully set forth as 49 U.S.C. 1801, et seq., its amendments and implementing
regulations. Carrier shall take steps, including providing instruction, to ensure that its drivers
and other authorized representatives observe any rules, laws and regulations governing use of the
Terminal at all times while on any premises owned or operated by Holly Energy Partners.

J-1

 

E. Carrier agrees to be solely liable for, and to indemnify, defend and save harmless Holly Energy
Partners, its affiliates and their respective directors, officers, employees and agents of from any
and all loss, damage, claims demands or liabilities (including reasonable attorneys’ fees), from
any cause whatsoever, for the injury to or death of any person or persons or for the damage to or
loss of any real or personal property, whether it be that of the parties hereto or of third
persons, caused by or in any manner arising out of or connected with the Carrier’s presence and
activities in the Terminal or of any other person or persons who might gain entry into the Terminal
by means of the misappropriation or unauthorized use or duplication of any Access Card(s) or Access
Code(s) delivered by HEP–Operating to Carrier or by any other means caused in whole or in part by
Carrier, whether through negligence or otherwise.

F. Carrier will provide to HEP–Operating certificates of insurance issued by acceptable
underwriters and insurance companies evidencing satisfactory insurance coverage of Carrier. Said
certificates will be provided by Carrier to HEP–Operating before any automotive equipment operated
by Carrier enters the Terminal for the purpose of loading Petroleum Products. The insurance
coverage will be in the minimum amounts set forth below and will be maintained in force by Carrier
at its own expense at all times during the term of this Agreement. Insurance carried by Carrier
shall be primary to any other insurance similar or not, that may be acquired, managed, or
maintained by Holly Energy Partners. (Carrier agrees to notify HEP–Operating in writing
immediately upon knowledge of an occurrence that might materially diminish the minimum amounts of
insurance coverage set forth below). The certificates will provide that the insurance coverage may
be cancelled or materially modified by the issuing underwriters and insurance companies only upon
their giving 30 days’ prior written notice to HEP–Operating:

     1. Worker’s Compensation and Occupational Disease Insurance as required by the laws of the
State in which the Terminal(s) is/are located, and Employers’ Liability Insurance with a limit of
not less than $1,000,000.00 per occurrence; such coverage to be endorsed waiving right of
subrogation against the Holly Energy Partners entities as permitted by the respective state law.

     2. Comprehensive General liability Insurance with bodily injury limits of not less than
$2,000,000.00 per occurrence, and property damage limits of not less than $2,000,000.00 per
occurrence. Carrier own certificates of insurance will be endorsed to cover the indemnity
provisions of Paragraph B above. Such coverage to also be endorsed naming the Holly Energy
Partners entities as additional insureds as respects operations of or on behalf of Carrier under
this Agreement.

     3. Automotive Liability Insurance with limits of not less than $1,000,000.00 applicable to
bodily injury, sickness or death, to each person, and $1,000,000.00 for more than one person per
occurrence, and $1,000,000.00 for the loss or damage to property per occurrence. Such coverage to
be endorsed naming the Holly Energy Partners entities as additional insureds as respects operations
of or on behalf of Carrier under this Agreement.

     4. All policies herein described shall include coverage for all liability assumed by Carrier
under the terms of this Terminal Access Agreement and for all claims caused by or arising from
Carrier’s exercise of the rights and privileges granted herein, including the loading and unloading
operations by Carrier and its agents, representatives, and employees at the Terminal.

J-2

 

G. Carrier acknowledges that the dispensing of Petroleum Products at the Terminal is controlled by
the Access Card(s) or Access Code(s) that activate a system which controls the Terminal’s entry and
exit gates, truck loading racks and automated accounting equipment. Carrier hereby requests such
Access Card(s) and/or Access Code(s) for its use at the Terminal. Carrier agrees to accept such
Access Card(s) and/or Access Code(s) subject to the following terms and conditions:

     1. By its execution of attached Addendum A, entitled “Receipt for Cards,” incorporated herein
by reference, Carrier acknowledges receipt from HEP–Operating of the Access Card(s) and/or Access
Code(s) specified in Addendum A.

     2. Carrier understands that such Access Card(s) and/or Access Code(s) are to cause the
Terminal’s automated accounting equipment to charge to the HEP–Operating account number(s)
specified in attached Addendum A for all Petroleum Products withdrawn from the Terminal by means of
such Access Card(s) and/or Access Code(s).

     3. Carrier agrees to indemnify Holly Energy Partners, its affiliates and their respective
employees, officers and directors against and hold harmless from any claims, obligations or
liabilities, including claims based on the value of any Petroleum Products lost, stolen or
misappropriated at a Terminal and charged to HEP–Operating or any other Holly Energy Partners
entity by means of the misappropriation or unauthorized use or duplication of any Access Card(s) or
Access Code(s) delivered to Carrier under this Agreement or by any other means caused in whole or
in part by Carrier, whether through negligence or otherwise.

     4. Carrier will notify HEP–Operating in writing within 24 hours of any lost, misplaced or
misappropriated Access Card(s).

     5. Any Access Card(s) or Access Code(s) delivered by HEP–Operating to Carrier hereunder is
for the exclusive purpose of enabling Carrier to gain access to a Terminal and its truck-loading
racks in order to load or unload Petroleum Products. The Access Card(s) or Access Code(s) is not a
means by which HEP–Operating extends credit to Carrier and Carrier’s obligation of payment to
shipper for any Petroleum Products purchased from a shipper is separate and apart from this
Agreement.

H. HEP–Operating shall have the right, in its sole discretion, to terminate this Agreement upon any
notification, either telephonic or otherwise, to Carrier. Carrier agrees that, upon such
termination, it will immediately surrender to HEP–Operating any Access Card(s) or Access Code(s)
obtained by Carrier through HEP–Operating.

I. Notwithstanding anything else contained in this Agreement, it is the purpose of this Agreement
that Holly Energy Partners, and/or employees, officers or directors of any Holly Energy Partners
entity, shall incur no risk, obligation or liability of any kind whatsoever by reason of
HEP–Operating’s delivery to Carrier of an Access Card(s) to any Terminal, as such delivery is made
by HEP–Operating solely as an accommodation and for the convenience of Carrier. Accordingly, upon
request of HEP-Operating, Carrier agrees to execute and deliver to

J-3

 

HEP–Operating such further and additional documents or instruments as HEP–Operating may request
from time to time to safeguard its interests.

J. Any Access Card(s) or Access Code(s) delivered by HEP–Operating to Carrier shall be used
only by Carrier. Any attempt by Carrier to permit the use of the Access Card(s) or Access
Code(s) by anyone other than an authorized employee shall be void and shall constitute a material
breach of this Agreement permitting HEP–Operating at its option to terminate the same without any
obligation to Carrier.

K. It is hereby understood that Carrier is an independent contractor and that no liability of
Carrier, or of its agents and/or employees becomes an obligation of Holly Energy Partners by reason
of this Agreement.

L. This Agreement shall be binding upon and shall inure to the benefits of the parties, their
successors and assigns, provided that this Agreement may not be assigned by Carrier without the
prior written consent of HEP–Operating.

M. This Agreement shall be subject to and governed by the laws of the State of Texas, excluding any
conflicts-of-law rule or principle that might refer the construction or interpretation of this
Agreement to the laws of another state. Each party hereby submits to the jurisdiction of the state
and federal courts in the State of Texas and to venue in Dallas, Texas.

N. This Agreement may be amended only in a writing signed by each of 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. 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.

O. This Agreement constitutes the entire agreement of the parties hereto concerning terminal
access, and supercedes any previous agreements or understanding.

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     IN WITNESS WHEREOF, this Agreement has been executed on behalf of Holly Energy
Partners–Operating, L.P. and Carrier by their respective representatives hereunto duly signed as of
the day and year first written above.

	 	 	 
	                                                                               

	 	Holly Energy Partners–Operating, L.P.
	 
	 	 
	By:                                                                         

	 	By:                                                                            
	 
	 	 
	Title:                                                                      

	 	Title:                                                                         

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