Section 6.8 Preparation of Proxy Statement; Special Meeting.
(a) As promptly as reasonably practicable following the date hereof, Parent and New Parent, as applicable, shall prepare and cause to be filed
with the Commission, a proxy statement (together with any amendments thereof or supplements thereto, the Proxy Statement) in order to seek the Parent Stockholder Approval. Parent shall cause the Proxy Statement to comply as to
form in all material respects with the applicable provisions of the Exchange Act and the rules and regulations thereunder and other applicable Law. Each of the Company and Sinclair HoldCo shall (i) cooperate with Parent in the preparation of
the Proxy Statement; (ii) use its reasonable best efforts to furnish the information reasonably requested by Parent for inclusion in the Proxy Statement and (iii) use its reasonable best efforts to provide such other assistance as may be
reasonably requested by Parent or Parents outside legal counsel in connection with the preparation, filing and distribution of the Proxy Statement. Each of Parent and New Parent shall use its reasonable best efforts to have the Proxy Statement
cleared by the Commission as promptly as is practicable after filing and cause the Proxy Statement to be mailed to the holders of Parent Common Stock as promptly as reasonably practicable after the Proxy Statement shall have been cleared by the
Commission. Each Party shall also take any action required to be taken and make any necessary filings under the Securities Act, the Exchange Act or any applicable state securities Laws in connection with the Contemplated Transactions, this Agreement
or the issuance of New Parent Common Stock in the Contemplated Transactions. All filings by the Company or Parent with the Commission in connection with the Contemplated Transactions and all mailings to the Parent Stockholders in connection with the
Contemplated Transactions shall be subject to the reasonable opportunity for prior review and comment by the other Party, which comments the Company or Parent, as applicable, shall consider in good faith, acting reasonably.
(b) Sinclair HoldCo, the Company and Parent each agrees, as to itself and its Subsidiaries, to use reasonable best efforts so that none of the
information supplied or to be supplied by it for inclusion or incorporation by reference in the Proxy Statement and any amendment or supplement thereto will, at the date of mailing to the Parent Stockholders and at the time of the Special Meeting,
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 light of the circumstances under which such statement was made, not misleading.
(c) If at any time prior to the Closing, any Party discovers any information relating to the Company or Parent, or any of their respective
Affiliates, directors or officers that should be set forth in an amendment or supplement to the Proxy Statement so that such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading, the Party that discovers such information shall promptly notify the other Party and Parent shall promptly cause to be filed with the Commission an
appropriate amendment or supplement describing such information and, to the extent required by Law, disseminate such information to the Parent Stockholders. Nothing in this Section 6.8(c) shall limit the obligations of any
Party under Section 6.8(a), Section 6.8(b) and Section 6.8(d).
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(d) Parent shall notify the Company promptly of the receipt of any correspondence,
communications or comments from the Commission or the staff of the Commission and of any request by the Commission or the staff of the Commission for amendments or supplements to the Proxy Statement or for additional information and shall supply the
Company with (i) copies of all correspondence and a description of all material oral discussions between it or any of its Representatives, on the one hand, and the Commission or the staff of the Commission, on the other hand, with respect to
the Proxy Statement or the Contemplated Transactions and (ii) copies of all orders of the Commission relating to the Proxy Statement.
(e) Except as otherwise set forth herein, as promptly as practicable, Parent shall duly call, give notice of, convene and hold a meeting of the
Parent Stockholders for the purpose of obtaining the Parent Stockholder Approval (the Special Meeting). Subject to the terms hereof, such Special Meeting shall in any event be no later than 45 calendar days after Parent mails the
Proxy Statement to the Parent Stockholders. Parent may postpone or adjourn the Special Meeting (i) (A) due to the absence of a quorum or (B) if Parent has not received proxies representing a sufficient number of shares of Parent
Common Stock for the Parent Stockholder Approval, whether or not a quorum is present, to solicit additional proxies; or (ii) to allow reasonable additional time for the filing and mailing of any supplemental or amended disclosure that the
Parent Board has determined in good faith after consultation with outside legal counsel is necessary under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by the Parent Stockholders prior to the Special
Meeting; provided, that Parent may not postpone or adjourn the Special Meeting more than a total of two (2) times pursuant to clause (i)(A) and/or clause (i)(B) of this
Section 6.8(e). Notwithstanding the foregoing, Parent shall, at the request of the Company, to the extent permitted by Law, adjourn the Special Meeting to a date specified by the Company for the absence of a quorum or if
Parent has not received proxies representing a sufficient number of shares of Parent Common Stock for the Parent Stockholder Approval; provided, that Parent shall not be required to adjourn the Special Meeting more than one time pursuant to
this sentence, and no such adjournment pursuant to this sentence shall be required to be for a period exceeding thirty (30) days. Except in the case of an Adverse Recommendation Change by Parent specifically permitted by
Section 6.7(c), Parent, through the Parent Board, shall (i) make the Parent Recommendation to its stockholders and (ii) include the Parent Recommendation in the Proxy Statement. Without limiting the generality of
the foregoing, Parent agrees that (x) except in the event of an Adverse Recommendation Change specifically permitted by Section 6.7(c), Parent shall use its reasonable best efforts to solicit proxies to obtain the
Parent Stockholder Approval and (y) its obligations pursuant to this Section 6.8(e) shall not be affected by the occurrence of any Adverse Recommendation Change in response to an Intervening Event. For the avoidance of
doubt, the Parties agree that Parent shall not be obligated to establish a record date for, duly call, give notice of, convene or hold the Special Meeting in the event of an Adverse Recommendation Change specifically permitted by
Section 6.7(c) in response to a Superior Proposal. Parent shall cooperate with Sinclair HoldCo and keep Sinclair HoldCo reasonably informed regarding the status of the proxy solicitation.
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Section 6.9 Employee Matters.
(a) Prior to and effective upon the Closing Date, Parent shall offer employment at Parent or an Affiliate of Parent to each employee set forth
on Schedule 6.9 (each such employee listed on Schedule 6.9, as updated in accordance with this Section 6.9(a), a Sinclair Employee), subject to satisfactory completion of Parent or
Parents Affiliates customary onboarding requirements and procedures (including typical pre-employment screening, including background checks and drug tests). Notwithstanding the foregoing,
from and after the date of this Agreement until the Closing Date, if Sinclair HoldCo or any member of the Company Group or the Midstream Company Group hires any employee having any of the titles or positions set forth on Schedule 6.9(a)
(each, a Sinclair Executive Officer Position) on terms and conditions (including compensation and benefits) that are not substantially similar to the employee(s) having such titles or positions as of the date of this Agreement,
the terms and conditions (including compensation and benefits) of Parents offer of employment to such employee holding a Sinclair Executive Officer Position shall not be required to be any more favorable to such employee (including with
respect to any termination, severance of other Liabilities) than the terms of employment of the person holding such Sinclair Executive Officer Position on the date of this Agreement. From and after the date of this Agreement until the Closing Date,
Sinclair HoldCo shall, within five Business Days following the end of each calendar month, provide Parent with an updated Schedule 6.9 (or written confirmation of no updates thereto); provided, however, that Sinclair HoldCo may
only update Schedule 6.9 (i) to remove an employee whose employment was terminated, (ii) to add an employee or (iii) with the written consent of Parent; provided, further, that, Sinclair HoldCo shall deliver the final
Schedule 6.9 to Parent no fewer than twenty Business Days prior to the Closing Date. Each such offer of employment shall include terms such that such offer shall not give rise to a right of the applicable Sinclair Employee to terminate such
Sinclair Employees employment for Good Reason and receive Severance Benefits in each case as defined in and pursuant to the terms of the Severance Plan applicable to such Sinclair Employee. With respect to each such
Sinclair Employee who accepts such offer of employment from Parent, except as otherwise specifically provided in this Agreement or as required by applicable Law, effective as of the Closing Date, the employment of such Sinclair Employees with
Sinclair HoldCo and its Subsidiaries (other than any member of the Company Group or the Midstream Company Group) shall terminate without any severance obligation on the part of Sinclair HoldCo or any of its Subsidiaries, and such Sinclair Employees
shall cease all active participation in and accrual of benefits under the Sinclair Benefit Plans. Immediately prior to the Closing, the co-employment of each employee who is at that time employed by any member
of the Company Group or Midstream Company Group shall terminate such that neither the Company nor any member of the Company Group or Midstream Company Group employs any employees on the Closing Date.
(b) With respect to each Sinclair Employee who remains in the employment of Parent or any of its Affiliates following the Closing Date (each, a
Continuing Employee), for a period of at least one year following the Closing, Parent shall, or shall cause its Affiliate to, provide such Continuing Employee with (i) compensation and benefits that would not reasonably be
expected to give rise to a right of the applicable Continuing Employee to terminate such Continuing Employees employment during such one-year period for Good Reason and receive
Severance Benefits in each case as defined in and pursuant to the terms of the Severance Plan applicable to such Sinclair Employee, or (ii) Severance Benefits as defined in and pursuant to the terms of the Severance Plan in
the event that such Continuing Employee would be eligible for such Severance Benefits under the Severance Plan as in effect immediately prior to the date hereof. For the avoidance of doubt, Parent shall also, or shall cause its Affiliate
to, provide such Severance Benefits for any Continuing Employee for whom clause (i) of this Section 6.9(b) applies.
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(c) With respect to any employee benefit plans, arrangements and employment related
entitlements (including under any Parent Benefit Plan or any other applicable pension, 401(k), savings, medical, dental, vision, life insurance, disability insurance, vacation, long-service leave or other leave entitlements, post-retirement health
and life insurance, severance or separation pay plans) provided, sponsored, maintained or contributed to by New Parent or its Affiliates in which any Continuing Employee will be eligible to participate on or after the Closing Date, New Parent shall,
and shall cause its Affiliates to, use commercially reasonable efforts to recognize all service of such Continuing Employee with any member of the Company Group or Midstream Company Group and any predecessor employers as if such service were with
Parent for purposes of eligibility to participate and level of benefits; provided, however, that such service shall not be recognized to the extent that (i) such recognition would result in a duplication of benefits for the same
period of service or (ii) such service was not recognized under the corresponding Sinclair Benefit Plan.
(d) New Parent shall, and
shall cause its Affiliates to, use commercially reasonable efforts to waive any pre-existing condition limitations, exclusions,
actively-at-work requirements and waiting periods under any welfare benefit plan maintained by New Parent or any of its Affiliates in which Continuing Employees (and
their eligible dependents) will be eligible to participate from and after the Closing, except to the extent that such pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods would not have been satisfied or waived under the comparable Sinclair Benefit Plan immediately prior to the Closing. Parent shall, and shall cause its
Affiliates to, use commercially reasonable efforts to recognize the dollar amount of all co-payments, deductibles and similar expenses incurred by each Continuing Employee (and his or her eligible dependents)
during the calendar year in which the Closing occurs for purposes of satisfying such years deductible and co-payment limitations under the relevant welfare benefit plans in which they will be eligible to
participate from and after the Closing.
(e) Sinclair HoldCo shall be solely responsible for any retention bonus or similar arrangements
established on or prior to the Closing Date, and the employer portion of any payroll tax liabilities associated therewith.
(f) The
provisions of this Section 6.9 are for the sole benefit of the Parties and nothing herein, expressed or implied, is intended or shall be construed to confer on or give to any Person (including any current or former
employees, directors, or independent contractors of the Company Group, Midstream Company Group, Parent or any of its Affiliates), other than the Parties and their respective permitted successors and assigns, any legal or equitable or other rights or
remedies with respect to the matters provided for in this Section 6.9. Nothing contained herein shall be (i) deemed an amendment of any Sinclair Benefit Plan or any Parent Benefit Plan or other benefit plan of Parent
or any of its Affiliates or (ii) construed as requiring, and the Company shall take no action that would have the effect of requiring, Parent or its Affiliates to continue any specific employee benefit plans or to continue the employment of any
specific Person.
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Section 6.10 280G Cooperation.
(a) As soon as reasonably practicable following the execution of this Agreement but in any case no later than thirty (30) Business Days
prior to the Closing Date, Sinclair HoldCo shall provide to New Parent and New Parents advisors, for their reasonable review and comment, its preliminary analysis (Section 280G Analysis) regarding the
application of Section 280G of the Code and the regulations promulgated thereunder (Section 280G) in connection with the Contemplated Transactions (either alone or in combination with any other additional
or subsequent event, including a termination of employment) to each Person who is determined by Sinclair HoldCo to be a disqualified individual within the meaning of Section 280G (each such Person, a 280G Disqualified
Individual). No later than fifteen (15) Business Days prior to the Closing Date, Sinclair HoldCo shall provide to New Parent and New Parents advisors, for their reasonable review and comment, its final Section 280G
Analysis.
(b) Sinclair HoldCo shall (a) use commercially reasonable efforts to obtain, prior to the solicitation of the 280G Approval
(as defined below), a waiver agreement from each 280G Disqualified Individual who could otherwise receive or retain or have the right or entitlement to receive or retain any parachute payment within the meaning of Section 280G,
waiving any and all rights or entitlements to receive or retain any such payment to the extent that the value thereof (determined in accordance with Section 280G) equals or exceeds three times such Persons base amount (within
the meaning of and determined in accordance with Section 280G), unless the 280G Approval is obtained (each such waiver agreement, a 280G Waiver); provided that a disqualified individuals election not to
execute a 280G Waiver despite Sinclair HoldCos commercially reasonable efforts to obtain such waiver will not, by itself, constitute a breach of this Section 6.10, and (b) following the execution of the 280G
Waivers by any applicable disqualified individuals, solicit and take commercially reasonable efforts to obtain any necessary stockholder approval of any such payments or benefits so waived in a manner that is intended to satisfy all the
requirements of Section 280G(b)(5)(B) of the Code and the regulations promulgated thereunder (the 280G Approval); provided that the stockholders failure to approve such waived payments and benefits pursuant to the 280G
Approval despite Sinclair HoldCos commercially reasonable efforts to obtain such 280G Approval will not, by itself, constitute a breach of this Section 6.10.
(c) No later than ten (10) Business Days prior to soliciting the 280G Waivers as provided above, Sinclair HoldCo shall provide to New
Parent and New Parents advisors drafts of the stockholder approval materials (including Section 280G Waivers, disclosure and consent documentation) for their reasonable review and comment (which such comments shall be considered in good
faith by Sinclair HoldCo for incorporation into such documentation).
Section 6.11 Takeover Laws.
Each of Parent, the Parent Board, the Company and Sinclair HoldCo, acting in its capacity as sole member of the Company, shall (a) take no
action to cause any Takeover Law to become applicable to this Agreement or the Contemplated Transactions and (b) if any Takeover Law is or becomes applicable to this Agreement or the Contemplated Transactions, take all reasonable action
necessary to cause the Contemplated Transactions to be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such Takeover Law with respect to this Agreement and the Contemplated
Transactions.
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Section 6.12 Notification of Certain Matters.
Prior to the Closing, each of Parent and the Company shall, to the extent permitted by applicable Law, promptly notify the other Party of
(a) any notice or other communication received from any Person alleging that the consent of such Person is or may be required in connection with the Contemplated Transactions, (b) any Action commenced or, to such Partys knowledge,
threatened against, that challenges the validity or legality of the Contemplated Transactions or seeks damages in connection therewith or (c) (i) any change, condition or event that results in any of the conditions in
Sections 7.2(a) or 7.3(a) not being met or (ii) the failure of such Party to comply with or satisfy in any material respect any covenant, condition or agreement (including any condition set forth in
Article 7) to be complied with or satisfied hereunder; provided, however, that no such notification shall affect any of the representations, warranties, covenants, rights or remedies, or the conditions to the
obligations of, the Parties.
Section 6.13 Indemnification and Insurance.
(a) Following the Closing, New Parent agrees (and shall cause the Company and each Company Subsidiary to agree) that all rights to exculpation,
indemnification and advancement of expenses for acts or omissions occurring at or prior to the Closing, whether asserted or claimed prior to, at or after the Closing (including in respect of any matters arising in connection with this Agreement and
the Contemplated Transactions), in favor of a D&O Person as provided in the organizational documents of any member of the Company Group (in each case as in effect on the date hereof) shall survive the Closing and shall continue in full force and
effect in accordance with their respective terms for a period of six (6) years from the Closing Date, it being the intent of the Parties that all such D&O Persons shall continue to be entitled to such exculpation, indemnification and
advancement of expenses to the fullest extent permitted by applicable Law; provided, however, that all rights to indemnification in respect of any pending or asserted Action or any claim made within such period shall continue until the
disposition of such Action or resolution of such claim.
(b) In the event that New Parent, the Company or any of their respective
successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving company or entity of such consolidation or merger or (ii) transfers or conveys fifty percent (50%) or more of its properties
and other assets to any Person (including by liquidation, dissolution or assignment for the benefit of creditors or similar action), then, and in each such case, New Parent or the Company, as the case may be, shall cause proper provision to be made
so that the applicable successors and assigns or transferees expressly assume the obligations set forth in this Section 6.13.
(c) The obligations of New Parent under this Section 6.13 shall not be terminated, amended or modified in any manner
so as to adversely affect any D&O Person to whom this Section 6.13 applies without the consent of such D&O Person. The provisions of this Section 6.13 are intended to be for the benefit of,
and shall be enforceable by, each D&O Person, his or her heirs and his or her executors, administrators and personal representatives, each of whom is an intended third party beneficiary of this Section 6.13, and are in
addition to, and not in substitution of, any other rights, including rights to indemnification or contribution that any such Person may have by Contract or otherwise. The provisions of this Section 6.13 shall survive the
Closing.
Section 6.14 Termination of Affiliate Obligations.
On or before the Closing Date, except as set forth on Schedule 6.14, and except for this Agreement and the Transaction Documents, all
Sinclair Affiliate Contracts shall be settled and terminated in full and there shall be no Liability or obligations of the Company or any Company Subsidiary surviving such termination, such termination being effective as of the completion of the
Closing.
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Section 6.15 Certain NYSE Matters.
Parent shall use its reasonable best efforts to cause the shares of New Parent Common Stock to be issued in the Parent Merger and Sinclair
Contribution, in each case, as provided for in Article 2, to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Closing.
Section 6.16 Use of Certain Names.
(a) Except as disclosed on Schedule 6.16, Sinclair HoldCo agrees that, within one hundred eighty (180) days after the Closing Date,
except as otherwise permitted in a separate written agreement signed by Parent, Sinclair HoldCo shall, and shall cause its Affiliates to, cease using the Trademarks listed on Company Disclosure Schedule 4.11(a) (the Company
Marks), including removing, or causing to be removed, all such Company Marks from any public-facing physical or digital products, facilities, signage or materials (including on any website or social media account). Notwithstanding anything
to the contrary provided in this Section 6.16, Sinclair HoldCo and its Affiliates may use (a) the Company Marks (i) in a neutral, non-trademark manner (e.g., to describe the
historical relationship of the Parties), or (ii) to the extent required by Law, and (b) the names of any member of the Company Group to the extent necessary for any public filings or press releases made by Sinclair HoldCo or its
Affiliates, but solely to the extent related to the Contemplated Transactions.
(b) As promptly as practicable following the Closing,
Sinclair HoldCo shall cause the name of Sinclair Oil Corporation, a Delaware corporation (SOC Delaware), to be changed to a name that does not reference or include Sinclair. Concurrently with such name change, Sinclair HoldCo
shall, and shall cause SOC Delaware to, cooperate with New Parent and to execute and deliver to New Parent all such documents as may be reasonably necessary for a Subsidiary of New Parent formed in Delaware to use the name Sinclair Oil Corporation.
Section 6.17 Other Insurance Efforts.
(a) With respect to the Insurance Policies maintained by the Company Group, Sinclair HoldCo or its Affiliates at or prior to the Closing, the
members of the Company Group may make claims under any such applicable Insurance Policy following the Closing with respect to claims made or occurrences prior to the Closing to the extent such claims or occurrences apply to the Downstream Business,
including in the event that, after the date of this Agreement but prior to or on the Closing Date, any portion of the assets of the Downstream Business is damaged or destroyed by fire, explosion, hurricane, flood, storm, weather events, earthquake,
act of nature, civil unrest or similar disorder, terrorist acts, war or any other hostilities or other casualty (each, a Casualty Event). Sinclair HoldCo shall (and shall cause its Affiliates to) use reasonable best efforts to
assist the Company Group in asserting any such claims and making the benefits of any such Insurance Policies available to the Company Group. In furtherance of the foregoing, Sinclair HoldCo shall provide reasonable assistance to New Parent and the
Company Group in connection with New Parents or the Company Groups investigation of the facts and circumstances underlying any
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potential claims, and the Company Groups assertion of any such claims under any such Insurance Policies, which shall include, for the avoidance of doubt, providing information and
documentation reasonably requested by New Parent or the Company Group and their respective Representatives, including access to facilities and personnel of Sinclair HoldCo, to the extent such information and documentation reasonably relates to any
such potential claim, as soon as reasonably practicable, and in any event, with sufficient time to permit the Company Group to comply with the terms of the applicable Insurance Policy.
(b) In the event that a Casualty Event occurs prior to the Closing, Sinclair HoldCo and its Affiliates shall, and shall cause the members of
the Company Group to, make all claims under the applicable Insurance Policies with respect to such Casualty Event and use, and cause the members of the Company Group to use, commercially reasonable efforts to restore the affected assets to the
condition prior to such Casualty Event during the period prior to the Closing, in each case, to the extent reasonably practicable to do so prior to the Closing, as determined by Sinclair HoldCo in good faith, and without prejudice to any claim by
Sinclair HoldCo or any of its Affiliates under the Insurance Policies. Following the Closing, New Parent shall, and shall cause the members of the Company Group to, use commercially reasonable efforts to continue the pursuit of any such claims.
(i) If, prior to the Closing, Sinclair HoldCo and its Affiliates, including the members of the Company Group, actually receive proceeds for
property damages coverage under a property Insurance Policy with respect to a Casualty Event that occurred prior to the Closing, all such proceeds shall be retained by or contributed to the applicable member of the Company Group that suffered such
Casualty Event. In such case, (i) the amount of such proceeds equal to the excess of the reasonable documented out-of-pocket costs and expenses of Sinclair HoldCo
or the Company Group incurred in connection with pursuing and collecting such proceeds and restoring the affected assets prior to the Closing over the amounts of the applicable deductible(s) with respect to the applicable Casualty Event (such
amount, the Sinclair Casualty Expenses) shall be included in the calculation of Closing Cash pursuant to Section 2.5(d) and Section 2.6(a), and (ii) all other amounts of
such proceeds shall not be included in the calculation of Closing Cash pursuant to Section 2.5(d) and Section 2.6(a).
(ii) If, following the Closing, New Parent or the Company Group actually receives proceeds for property damages coverage under a property
Insurance Policy with respect to a Casualty Event that occurred prior to the Closing that are in excess of the reasonable documented out-of-pocket costs and expenses of
New Parent or the Company Group in pursuing and collecting such proceeds, New Parent shall pay or shall cause the Company Group to pay to Sinclair HoldCo an amount equal to the Sinclair Casualty Expenses, and, for the avoidance of doubt, New Parent
or the Company Group shall retain any amounts (and the right to receive any amounts) of such proceeds in excess thereof. If the Sinclair Casualty Expenses are less than the applicable deductible(s) with respect to the applicable Casualty Event, an
amount equal to the difference between such deductible(s) and the Sinclair Casualty Expenses shall be included as a Current Liability for purposes of Section 2.5(d) and Section 2.6(a). By way of
example only, if the applicable deductible(s) for a Casualty Event is $10,000,000 in the aggregate and the Sinclair Casualty Expenses are $12,000,000, the related Current Liability would be $0, but, if the Sinclair Casualty Expenses are $6,000,000,
the related Current Liability would be $4,000,000.
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(iii) If, following the Closing, New Parent or the Company Group actually receives proceeds
from an Insurance Policy covering business interruption with respect to a matter that occurred prior to the Closing, New Parent shall, and shall cause the Company Group to, pay to Sinclair HoldCo the portion of the amount actually received that
relates to the period prior to the Closing and that is in excess of the reasonable documented out-of-pocket costs and expenses of New Parent or the Company Group in
pursuing and collecting such proceeds.
(c) Other than as set forth in Section 6.17(a), Parent acknowledges that
all insurance policies maintained by Sinclair HoldCo or its Affiliates shall be terminated as of Closing with respect to the Company Group, and Parent shall be solely responsible for obtaining insurance for the Company Group from and after the
Closing.
(d) With respect to any insurance policies maintained by the Company Group at or prior to the Closing, Sinclair HoldCo or its
Affiliates may make claims under an applicable policy following the Closing with respect to claims made or occurrences prior to the Closing, to the extent such claims or occurrences apply to the Retained Business, the Retained Liabilities or the
Legacy Assets. New Parent shall (and shall cause its Affiliates to) use reasonable best efforts to assist Sinclair HoldCo and its Affiliates in asserting any such claims and making the benefits of any such insurance policies available to Sinclair
HoldCo and its Affiliates. In furtherance of the foregoing, New Parent shall provide reasonable assistance to Sinclair HoldCo and its Affiliates in connection with Sinclair HoldCos or any of its Affiliates investigation of the facts and
circumstances underlying any potential claims, and Sinclair HoldCos or its Affiliates assertion of any such claims under any such policies, which shall include, for the avoidance of doubt, providing information and documentation
reasonably requested by Sinclair HoldCo or its Affiliates and its and their respective Representatives, including access to facilities and personnel of the Company Group members, to the extent such information and documentation reasonably relates to
any such potential claim, as soon as reasonably practicable, and in any event, with sufficient time to permit Sinclair HoldCo and its Affiliates to comply with the terms of the applicable policy.
Section 6.18 Books and Records.
(a) Parent shall preserve and keep any books and records of the Company Group that relate to any period beginning on or before the Closing Date
for a period of six (6) years after the Closing Date (or longer for Tax records if required by Section 6.3) and shall reasonably cooperate with Sinclair HoldCo and its Affiliates to make available to Sinclair HoldCo
and its Affiliates, during normal business hours and in such a manner as to not unreasonably interfere with the business of Parent, the Company Group or their respective Affiliates, such books and records as are reasonably necessary in connection
with any dispute, litigation or defense of any indemnification claim, or in order to enable Sinclair HoldCo or its Affiliates to comply with its obligations under this Agreement or to perform the Contemplated Transactions. Following such six
(6) year period (or such longer period with respect to Tax records as may be required in Section 6.3), Parent may retain or destroy such books and records; provided, however, that Parent shall notify
Sinclair HoldCo prior to any such destruction and, if requested by Sinclair HoldCo no more than fifteen (15) Business Days after such notification, shall deliver such books and records to Sinclair HoldCo, at Sinclair HoldCos sole expense,
prior to such destruction. Notwithstanding anything in this Agreement to the contrary, Sinclair HoldCo and its Affiliates may retain copies of the books and records and minute books of the Company relating to the period on or before the Closing
Date.
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(b) Sinclair HoldCo shall preserve and keep any books and records of the Company Group that
are not delivered to Parent or its Affiliates in connection with the Closing or prior to the termination of the Transition Services Agreement and relate to any period beginning on or before the Closing Date for a period of six (6) years after
the Closing Date (or longer for Tax records if required by Section 6.3) and shall reasonably cooperate with Parent and its Affiliates to make available to Parent and its Affiliates, during normal business hours and in such
a manner as to not unreasonably interfere with the business of Sinclair HoldCo or its Affiliates, such books and records as are reasonably necessary in connection with any dispute, litigation or defense of any indemnification claim, or in order to
enable Parent or its Affiliates to comply with its obligations under this Agreement or to perform the Contemplated Transactions. Following such six (6) year period (or such longer period with respect to Tax records as may be required in
Section 6.3), Sinclair HoldCo may retain or destroy such books and records; provided, however, that Sinclair HoldCo shall notify Parent prior to any such destruction and, if requested by Parent no more than
fifteen (15) Business Days after such notification, shall deliver such books and records to Parent, at Parents sole expense, prior to such destruction.
Section 6.19 Delivery of Written Consents.
Promptly following the execution of this Agreement, (a) Parent will, in accordance with applicable Law and the organizational documents of
Parent, acting in its capacity as the sole stockholder of New Parent, deliver to Sinclair HoldCo a duly executed written consent adopting this Agreement on behalf of New Parent, and (b) New Parent will, in accordance with applicable Law and the
organizational documents of New Parent, acting in its capacity as the sole stockholder of Parent Merger Sub, deliver to Sinclair HoldCo a duly executed written consent adopting this Agreement on behalf of Parent Merger Sub. Concurrently with the
execution of this Agreement Sinclair HoldCo has, in accordance with applicable Law and the organizational documents of Sinclair HoldCo and the Company, acting in its capacity as the sole member of the Company, delivered to Parent a duly executed
written consent adopting this Agreement.
Section 6.20 Wrong Pockets.
The Parties acknowledge that all assets (and rights to future payments related thereto) with respect to the Downstream Business are intended to
be transferred to New Parent pursuant to the Sinclair Contribution, except as otherwise provided herein. If, following the Closing, Sinclair HoldCo or any of its Affiliates receives or collects any funds relating to the Downstream Business or any
asset of any member of the Company Group on behalf of New Parent, except as otherwise provided herein, Sinclair HoldCo shall, or shall cause its Affiliates to, promptly remit such funds to New Parent. The Parties acknowledge that all assets (and
rights to future payments related thereto) with respect to the Retained Business are intended to be retained by Sinclair HoldCo or any Affiliates thereof. If, following the Closing, New Parent or any of its Affiliates (including the Company Group)
receives or collects any funds relating to the Retained Business on behalf of Sinclair HoldCo, New Parent shall, or shall cause its Affiliates to, promptly remit such funds to Sinclair HoldCo.
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Section 6.21 Interim Financial Statements.
(a) Sinclair HoldCo shall deliver to Parent on or prior to Closing to the extent required to be delivered prior to the Closing:
(i) as soon as reasonably practicable but in no event later than the morning of August 25, 2021, (A) a reviewed combined consolidated
balance sheet of the Financial Statement Businesses as of June 30, 2021 and December 31, 2020, and the related reviewed combined consolidated statements of operations, changes in parents net investment and cash flows for the three
and six months ended June 30, 2021, and June 30, 2020, prepared in accordance with GAAP, and (B) a reviewed combined consolidated balance sheet of the Financial Statement Businesses as of March 31, 2021 and December 31,
2020, and the related reviewed combined consolidated statements of operations, changes in parents net investment and cash flows for the three months ended March 31, 2021, and March 31, 2020, prepared in accordance with GAAP,
including, in each case, all notes to such reviewed combined consolidated balance sheets or the related reviewed combined consolidated statements of operations, changes in parents net investment and cash flows, except that such reviewed
combined consolidated balance sheets and the related reviewed combined consolidated statements of operations, changes in parents net investment and cash flows shall be subject to normal audit adjustments which are not material in the
aggregate;
(ii) (A) promptly after Sinclair HoldCos receipt thereof and in no event later than thirty-five (35) days
following the end of the quarter ending September 30, 2021, a reviewed combined consolidated balance sheet of the Financial Statement Businesses as of September 30, 2021 and the related reviewed combined consolidated statements of
operations, changes in parents net investment and cash flows for the three and nine months ending on September 30, 2021 and September 30, 2020, prepared in accordance with GAAP, (B) promptly after Sinclair HoldCos receipt
thereof and in no event later than thirty-five (35) days following the end of each quarter ending March 31, June 30 or September 30 after December 31, 2021, a reviewed combined consolidated balance sheet for the business to
be acquired by Parent as of each March 31, June 30 or September 30 quarter-end, as applicable, occurring on or after December 31, 2021 through the Closing Date and the related unaudited
combined consolidated statements of operations, changes in parents net investment and cash flows for each quarter ending on or after December 31, 2021 through the Closing Date prepared in accordance with GAAP and (C) concurrently
with the delivery of the audited combined consolidated balance sheet for the business to be acquired by Parent pursuant to Section 6.21(a)(iii), an unaudited combined consolidated balance sheet for the business to be
acquired by Parent as of each December 31 quarter-end occurring on or after September 30, 2021 through the Closing Date and the related unaudited combined consolidated statements of operations,
changes in parents net investment and cash flows for such quarter prepared in accordance with GAAP, including in each case, all notes to such unaudited combined consolidated balance sheet or the related unaudited combined consolidated
statements of operations, changes in parents net investment and cash flows, except that such unaudited combined consolidated balance sheet and the related unaudited combined consolidated statements of operations, changes in parents net
investment and cash flows shall be subject to normal audit adjustments which are not material in the aggregate;
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(iii) promptly after Sinclair HoldCos receipt thereof and in no event later than
forty-five (45) days following the end of the applicable fiscal year, the audited combined consolidated balance sheet for the business to be acquired by Parent as of December 31 for each fiscal year ending after September 30, 2021
that occurs prior to the Closing Date, and the related audited combined consolidated statements of operations, changes in parents net investment and cash flows for each fiscal year ending after September 30, 2021 that occurs prior to the
Closing Date, including in each case the notes thereto, together with the report thereon of the independent auditor prepared in accordance with GAAP;
(iv) within forty-five (45) days following the end of the fiscal year ended December 31, 2021, (A) the audited combined consolidated
balance sheet for the business to be acquired by Parent as of December 31, 2020 and the related audited combined consolidated statements of operations, changes in parents net investment and cash flows for such fiscal year, including the
notes thereto, together with the report thereon of the independent auditor prepared in accordance with GAAP, and (B) the unaudited combined consolidated balance sheet for the business to be acquired by Parent as of each quarter end during the
year ended December 31, 2020, and the related unaudited combined consolidated statements of operations, changes in parents net investment and cash flows for each quarter of the year ended December 31, 2020 prepared in accordance with
GAAP, except that (1) there shall be no notes to such unaudited combined consolidated balance sheet or the related unaudited combined consolidated statements of operations, changes in parents net investment and cash flows and
(2) such unaudited combined consolidated balance sheet and the related unaudited combined consolidated statements of operations, changes in parents net investment and cash flows shall be subject to normal audit adjustments which are not
material in the aggregate; and
(v) concurrently with the delivery of each interim financial statement set forth in clause
(i) above, an unaudited complete trial balance showing balance sheet and income statement information for each of the legal entities that comprise such interim financial statements as of the same dates specified in, and for the same
periods covered thereby.
(b) The financial statements required to be delivered by Sinclair HoldCo pursuant to clauses (ii)(B), (ii)(C),
(iii) and (iv) in subsection (a) above shall be prepared on a basis, as reasonably agreed to by Sinclair HoldCo and Parent, sufficient to permit Parent to satisfy Parents obligations to file acquisition financial statements required
to be included under Item 2.01 or Item 9.01 of Form 8-K under the Exchange Act as a result of the consummation of the Contemplated Transactions. Parent shall reimburse Sinclair HoldCo for all third party
expenses of Sinclair HoldCos independent accountants relating to the preparation of the foregoing financial statements (other than the audited financials for the year ended December 31, 2021).
(c) With respect to clauses (iii), (iv) and (v) in subsection (a) above, from the date hereof through the Closing Date, Sinclair
HoldCo will take all appropriate and customary actions in advance of the deadlines specified in such clauses in order to position Parent to receive the applicable financial statements within the delivery deadlines specified therein.
(d) Sinclair HoldCo shall cooperate with Parent and take commercially reasonable efforts to prepare and deliver to Parent such additional
financial information as may be reasonably necessary for Parent and its Affiliates to comply with any applicable obligations under federal securities laws and all applicable accounting rules pursuant to GAAP, including monthly unaudited combined
consolidated balance sheets for the Financial Statement Businesses and trial balances showing balance sheet and income statement information for each of the individual legal entities that comprise the Historical Financial Statements.
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(e) In the event that the Closing occurs prior to March 1, 2022, following the Closing,
the Parties shall cooperate and take commercially reasonable efforts to prepare and complete the financial statements contemplated by clauses (iii) and (iv) in subsection (a) above and Sinclair HoldCo will fully cooperate with and direct
its independent accountants to complete the contemplated audits within the timeframes specified above; provided that the Parties acknowledge that following the Closing, Parent is expected to be the employer of substantially all of the
individuals responsible for accounting functions and financial statement preparation prior to the Closing and own and control related accounting books and records; provided, further, that Sinclair HoldCo shall provide Parent and its
Affiliates (including any member of the Company Group) access to any assets, systems, personnel, Contracts, books and records and other documents and data reasonably requested by Parent in connection with the preparation or completion of the
financial statements contemplated by clauses (iii) and (iv) in subsection (a) above.
(f) In the event that the Closing occurs
after March 1, 2022, following the Closing, the Parties shall cooperate and take commercially reasonable efforts to prepare and complete the financial statements contemplated by clause (ii) in subsection (a) above for the quarter end
immediately preceding the Closing and Sinclair HoldCo will fully cooperate with and direct its independent accountants to complete such financial statements within the timeframes specified above; provided that the Parties acknowledge that
following the Closing, Parent is expected to be the employer of substantially all of the individuals responsible for accounting functions and financial statement preparation prior to the Closing and own and control related accounting books and
records; provided, further, that Sinclair HoldCo shall provide Parent and its Affiliates (including any member of the Company Group) access to any assets, systems, personnel, Contracts, books and records and other documents and data
reasonably requested by Parent in connection with the preparation or completion of the financial statements contemplated by clause (ii) in subsection (a) above.
Section 6.22 Fuels Compliance.
(a) Sinclair HoldCo shall cause the members of the Company Group to take all actions needed to comply with and satisfy, all obligations under
the Fuel Credit Programs for all periods prior to the Closing (Pre-Closing Fuel Obligations), including by causing the members of the Company Group to create, maintain and retain records
needed for compliance, to calculate applicable renewable volume obligations in accordance with 40 C.F.R. § 80.1407 accurately and completely, to file all reports required to be filed with the Environmental Protection Agency and the
California Air Resources Board and to retire RINs or other applicable credits, or deliver to New Parent sufficient RINs or other applicable credits, required to demonstrate compliance with the Pre-Closing Fuel
Obligations by the applicable compliance dates set by the Environmental Protection Agency or the California Air Resources Board for the year to which such obligations apply. At the Closing, Sinclair HoldCo shall cause the Company Group to possess
RINs that are sufficient to satisfy a minimum of seventy five percent (75%) of the Company Groups unsatisfied Pre-Closing Fuel Obligations for the portion of the calendar year (the RINs Closing
Compliance Period) that elapses prior to the Closing (the RINs Volume Requirement). To the extent that it is determined following the Closing that Sinclair Holdco did not meet the RINs Volume
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Requirement, Sinclair HoldCo shall reimburse New Parent for all costs that New Parent or the Company Group incurs as a result of the RINs Volume Requirement shortfall, including the price of any
RINs purchased by New Parent to make up for the RINs Volume Requirement shortfall. New Parent will take commercially reasonable efforts to minimize the amount that Sinclair HoldCo would be required to reimburse New Parent for any such shortfall. To
the extent that it is determined following the Closing that any Pre-Closing Fuel Obligations have not been fully satisfied in respect of any period other than the RINs Closing Compliance Period, Sinclair
HoldCo shall deliver sufficient RINs to New Parent to satisfy such shortfall, or reimburse New Parent for any such shortfall obligations. Following the Closing, Sinclair HoldCo shall provide, and shall cause its Affiliates to provide, any
information in the possession of Sinclair HoldCo or its Affiliates that is reasonably requested by New Parent and necessary to file any reports or satisfy any other obligations under the Fuel Credit Programs.
(b) Sinclair HoldCo will retain both the benefits and burdens, including any costs and expenses and any exempted or refunded RINs, related to
the Company Groups pending small refinery exemption (SRE) petitions and any other SRE petitions related to a year prior to the year in which the Closing occurs. Sinclair HoldCo will also retain the benefits and burdens,
including any costs and expenses, related to the Company Groups pending litigation over such petitions as set forth on Schedule 6.22(b) hereto, together with any similar actions the Company Group files relating to any period prior to
the Closing (collectively, the Existing SRE Litigation). Following the Closing, the Parties shall reasonably cooperate and take such actions as are reasonably necessary to pursue the Existing SRE Litigation or other SRE petitions
for any period prior to the Closing or litigation over such petitions in accordance with the terms of this Section 6.22, including New Parent reasonably cooperating with Sinclair HoldCo to facilitate (A) its receipt
and liquidation of any refunded RINs as a result of the Existing SRE Litigation or SRE petitions and (B) the filing of other SRE petitions or litigation over such petitions for any period prior to the Closing. Sinclair HoldCo will not be
responsible for, or benefit from, any litigation filed by the Company Group following the Closing to the extent such litigation relates to the period following the Closing.
(c) To the extent that both Parties wish to seek an SRE for the year in which the Closing occurs, the Parties agree to cooperate and take such
actions as are reasonably necessary to pursue such an SRE and any litigation regarding such SRE that may subsequently arise, including New Parent reasonably cooperating with Sinclair HoldCo to facilitate its receipt and liquidation of any refunded
RINs as a result of any SRE petition or related litigation for the year in which the Closing occurs. The benefits and costs of seeking such SRE and any costs of potential subsequent litigation related to such SRE shall be shared by New Parent and
Sinclair HoldCo on a pro rata basis relative to the amount of applicable fuel produced by the Company Group during the applicable period prior to Closing. In the event that one Party elects not to participate in seeking such SRE or any subsequent
litigation related to it, the other Party will cover all costs associated with, and receive all associated benefits from, the SRE.
(d) To
the extent that following the Closing any member of the Company Group receives a refund or credit pursuant to any of the Fuel Credit Programs other than the RFS Program with respect to a period prior to the Closing, New Parent shall cause such
member to pay to Sinclair HoldCo the amount of such refund or credit that corresponds to the amount of applicable fuel produced by the Company Group during the applicable period prior to the Closing.
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(e) To the extent that following the Closing credits under any Fuel Credit Program generated
or used prior to Closing by any member of the Company Group are invalidated by the United States Environmental Protection Agency or California Air Resources Board, Sinclair HoldCo shall replace such credits with valid credits or reimburse New Parent
for the reasonable costs incurred by the Company Group in purchasing replacement credits, including the price of any replacement credits purchased. New Parent will take commercially reasonable efforts to minimize the amount that Sinclair HoldCo
would be required to reimburse New Parent for any such replacement credits.
Section 6.23 Title Insurance Cooperation.
In the event that New Parent elects to obtain one or more New Parent Title Policies, New Parent shall pay directly to the Title Insurance
Company, at New Parents sole cost and expense, the cost of all title insurance policy premiums (including, without limitation, the cost of any additional premiums required to secure extended title coverage and the cost of any modifications and
endorsements to the New Parent Title Policies requested by New Parent) as well as the cost of any related title searches, title abstracting, lien searches, rundowns, photocopies, and all other costs and charges in connection with the obtaining or
procurement of any New Parent Title Policies. Sinclair Holdco agrees to use commercially reasonable efforts, at New Parents sole cost and expense (such cost and expense to exclude Sinclair Holdcos internal costs, which shall remain the
responsibility of Sinclair Holdco), in connection with New Parents obtaining or procurement of the New Parent Title Policies; provided, however, that in no event shall Sinclair Holdco or any of its Affiliates (other than members of the
Company Group) be required or obligated to assume, create or incur any liability to any Person in connection with such cooperation. Without limiting the foregoing, in no event shall Sinclair Holdco or any of its Affiliates or any other Persons have
any obligation to cure any title defects or title exceptions disclosed in or on any title commitments, title reports, surveys, or any other reports or documents, and neither Sinclair Holdco nor any of its Affiliates shall be under any obligation to
execute, deliver, obtain or procure any estoppels, releases or modifications of Encumbrances, lien waivers, proofs of payment, title curative documents, or any similar documents or instruments from any Person in connection with the New Parent Title
Policies. At New Parents or the Title Insurance Companys request, Sinclair Holdco shall execute and deliver at Closing, or shall cause the appropriate member of the Company Group to execute and deliver at Closing, one or more customary
title affidavits in form and substance reasonably acceptable to Sinclair HoldCo and Parent (each a Title Affidavit) in connection with the issuance of the New Parent Title Policies; provided, however, that in no
event shall Sinclair Holdco or any of its Affiliates or any other Persons (other than members of the Company Group) be obligated or required to execute and deliver any affidavit (other than Title Affidavits), agreement, instrument, indemnity,
certificate, or any other document or undertaking in connection with the issuance of the New Parent Title Polices. Additionally, and notwithstanding anything in this Section 6.23 or elsewhere in this Agreement to the
contrary, neither the issuance of, nor the commitment, agreement, or willingness on the part of the Title Insurance Company to issue, the New Parent Title Policies (or any of them), regardless of form, shall in any event constitute a condition
precedent to the obligation of the Parent Parties to consummate the Contemplated Transactions.
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Section 6.24 Credit Support Arrangements.
(a) Prior to the Closing, Parent shall use commercially reasonable efforts to deliver to the applicable beneficiary or counterparty replacement
or substitute guaranties, letters of credit, bonds, security deposits, and other surety obligations and evidence of financial capacity, in each case acceptable to the relevant beneficiary or counterparty, in substitution and replacement of those
credit support arrangements relating to the Downstream Business set forth in Schedule 6.24 (the Credit Support Arrangements), and Parent and Sinclair HoldCo shall cooperate and use commercially reasonable efforts to secure
the release as of the Closing of Sinclair HoldCo and its Affiliates from the obligations relating to the Credit Support Arrangements.
(b)
To the extent that a Credit Support Arrangement has not been replaced or substituted by Parent thereof prior to the Closing as contemplated by Section 6.24(a), New Parent shall have a continuing obligation after the Closing
to use its commercially reasonable efforts to have any such Credit Support Arrangement replaced or substituted by New Parent or its Affiliates as contemplated by Section 6.24(a).
(c) From and after the Closing, New Parent shall (i) indemnify and hold harmless Sinclair HoldCo and its Affiliates to the extent they
remain obligated under any Credit Support Arrangement from and against any and all Damages that such Person incurs arising out of: (A) any such Person being required to pay or reimburse the issuer of any Credit Support Arrangement; and
(B) any claim or demand for payment made on any such Person with respect to any Credit Support Arrangement.
ARTICLE 7.
CONDITIONS TO CLOSING
Section 7.1 Conditions to the Obligations of the Parties.
The respective obligations of each of the Parties to consummate the Contemplated Transactions shall be subject to the satisfaction of each of
the following conditions precedent at or prior to the Closing:
(a) No Legal Restraint or Law shall be in effect preventing the
Contemplated Transactions.
(b) The waiting period applicable under the HSR Act, including any extensions thereof, and any timing agreement
with a Governmental Authority, shall have expired or been earlier terminated.
(c) The Parent Stockholder Approval shall have been
obtained.
(d) The shares of New Parent Common Stock to be issued in the Parent Merger and Sinclair Contribution, as provided for in
Article 2, shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance.
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(e) The Midstream Contribution shall have been consummated or shall be consummated
substantially contemporaneously with the consummation of the Contemplated Transactions.
Section 7.2 Conditions to the
Obligations of Parent Parties.
The obligation of the Parent Parties to consummate the Contemplated Transactions shall be
subject to the satisfaction or Parents waiver of each of the following additional conditions precedent at or prior to the Closing:
(a) (i) Each of the Company Fundamental Representations and the representations and warranties contained in
Section 4.8(b) shall be true and correct in all respects (except, in the case of the Company Fundamental Representations, where the failure of such representations and warranties to be so true and correct would not,
individually or in the aggregate, be reasonably expected to result in more than de minimis Damages to the Parent Parties or their Affiliates) as of the Closing Date with the same effect as though made at and as of the Closing Date (except for
any such representations and warranties that expressly relate to an earlier or a particular date, which shall be true and correct in all respects as of such date (except, in the case of the Company Fundamental Representations, where the failure of
such representations and warranties to be so true and correct would not, individually or in the aggregate, be reasonably expected to result in more than de minimis Damages to the Parent Parties or their Affiliates)) and (ii) the
representations and warranties of Sinclair HoldCo and the Company contained in Article 4 (other than the Company Fundamental Representations and the representations and warranties contained in
Section 4.8(b)) shall be true and correct in all respects as of the Closing Date with the same effect as though made at and as of the Closing Date (except for those representations and warranties that expressly relate to an
earlier or a particular date, which shall be true and correct in all respects as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any qualification contained therein
as to materiality or a Material Adverse Effect) has not had and would not reasonably be expected to have a Material Adverse Effect.
(b)
Sinclair HoldCo and the Company shall have performed in all material respects their respective obligations contained in this Agreement that are required to be performed by Sinclair HoldCo or the Company at or before the Closing.
(c) All documents, instruments, certificates or other items required to be delivered at or prior to the Closing by the Company or Sinclair
HoldCo pursuant to Section 3.2(a) and Section 3.2(c) shall have been delivered.
(d)
Parent shall have received a written opinion from Morgan, Lewis & Bockius LLP, counsel to Parent, or another nationally recognized law firm reasonably satisfactory to Parent (Parent Tax Counsel), in form and substance
reasonably satisfactory to Parent, dated as of the Closing Date, to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, the Parent Merger and Sinclair Contribution will be integrated
transactions constituting a single exchange qualifying as a transaction described in Section 351 of the Code and/or that the Parent Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. In
rendering the opinion described in this Section 7.2(d), Parent Tax Counsel shall have received and may rely upon the Parent Tax Counsel Sinclair Tax Certificate and the Parent Tax Counsel Parent Tax Certificate and such
other information requested by it and provided to it by the Company, Sinclair HoldCo, New Parent, Parent or others for purposes of rendering such opinion.
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Section 7.3 Conditions to the Obligations of Sinclair HoldCo and the
Company.
The obligation of Sinclair HoldCo and the Company to consummate the Contemplated Transactions shall be subject to the
satisfaction or Sinclair HoldCos or the Companys waiver of each of the following additional conditions precedent at or prior to Closing:
(a) (i) The Parent Fundamental Representations and the representations and warranties contained in
Section 5.7(b) shall be true and correct in all respects (except, in the case of the Parent Fundamental Representations, where the failure of such representations and warranties to be so true and correct would not,
individually or in the aggregate, be reasonably expected to result in more than de minimis Damages to Sinclair HoldCo, the Company or their respective Affiliates ) as of the Closing Date with the same effect as though made at and as of the
Closing Date (except for any such representations and warranties that expressly relate to an earlier or a particular date, which shall be true and correct in all respects as of such date (except, in the case of the Parent Fundamental
Representations, where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, be reasonably expected to result in more than de minimis Damages to Sinclair HoldCo, the Company
or their respective Affiliates )) and (ii) the representations and warranties of the Parent Parties contained in Article 5 (other than the Parent Fundamental Representations and the representations and warranties
contained in Section 5.7(b)) shall be true and correct in all respects as of the Closing Date with the same effect as though made at and as of the Closing Date (except for those representations and warranties that expressly
relate to an earlier or a particular date, which shall be true and correct in all respects as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any qualification
contained therein as to materiality or a Parent Material Adverse Effect) has not had and would not reasonably be expected to have a Parent Material Adverse Effect.
(b) The Parent Parties shall have performed in all material respects their respective obligations contained in this Agreement that are required
to be performed by the Parent Parties at or before the Closing.
(c) All documents, instruments, certificates or other items required to be
delivered at or prior to the Closing by any Parent Party pursuant to Section 3.2(b) shall have been delivered.
(d) Sinclair HoldCo shall have received a written opinion from Vinson & Elkins L.L.P, counsel to Sinclair HoldCo and the Company, or
another nationally recognized law firm reasonably satisfactory to Sinclair HoldCo (Company Tax Counsel), in form and substance reasonably satisfactory to the Sinclair HoldCo, dated as of the Closing Date, to the effect that, on
the basis of the facts, representations and assumptions set forth or referred to in such opinion, the Parent Merger and Sinclair Contribution will be integrated transactions constituting a single exchange qualifying as a transaction described in
Section 351 of the Code. In rendering the opinion described in this Section 7.3(d), Company Tax Counsel shall have received and may rely upon the Company Tax Counsel Sinclair Tax Certificate and the Company Tax Counsel
Parent Tax Certificate and such other information requested by it and provided to it by the Company, Sinclair HoldCo, New Parent, Parent or others for purposes of rendering such opinion.
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Section 7.4 Frustration of Closing Conditions.
No Party may rely on the failure of any condition in this Article 7 to be satisfied if such failure was caused by
such Partys willful failure to act in good faith or to use its required efforts to cause the Closing to occur, in accordance with and subject to any limitations in Section 6.1 and
Section 6.2.
ARTICLE 8.
TERMINATION
Section 8.1 Termination Events.
Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated, and the Contemplated Transactions abandoned, at
any time prior to the Closing:
(a) by mutual written consent of the Parties;
(b) by Sinclair HoldCo if any Parent Party shall have breached any of its representations or warranties or failed to perform any of its
covenants or other agreements contained in this Agreement (other than with respect to a breach of Section 6.7 or Section 6.8(e) as to which Section 8.1(f) will
apply), which breach or failure to perform (i) would result in the failure of a condition set forth in Section 7.1 or Section 7.3 and (ii) (A) cannot be cured by the End Date or
(B) if capable of being cured by the End Date, shall not have been cured within thirty (30) days following receipt of written notice from Sinclair HoldCo of such breach or failure to perform or any shorter period of time that remains
between the date of such written notice and the End Date, provided, that Sinclair HoldCo shall not have the right to terminate this Agreement pursuant to this Section 8.1(b)(ii)(B) if Parent demonstrates that it is
using good faith efforts to cure such breach or failure to perform; provided, however, that Sinclair HoldCo may not terminate this Agreement pursuant to this Section 8.1(b) if (x) any of Sinclair
HoldCos or the Companys representations and warranties shall have become and continue to be untrue in a manner that would cause the condition specified in Section 7.2(a) not to be satisfied or (y) there has
been, and continues to be, a failure by Sinclair HoldCo or the Company to perform its obligations in such a manner as would cause the condition specified in Section 7.2(b) not to be satisfied;
(c) by Parent if Sinclair HoldCo or the Company shall have breached any of its representations or warranties or failed to perform any of its
covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would result in the failure of a condition set forth in Section 7.1 or Section 7.2 and
(ii) (A) cannot be cured by the End Date or (B) if capable of being cured by the End Date, shall not have been cured within thirty (30) days following receipt of written notice from Parent of such breach or failure to perform or
any shorter period of time that remains between the date of such written notice and the End Date, provided, that Parent shall not have the right to terminate this Agreement pursuant to this Section 8.1(c)(ii)(B) if
Sinclair HoldCo demonstrates that it is using good faith efforts to cure such breach or failure to perform; provided, however, that Parent may not terminate this Agreement
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pursuant to this Section 8.1(c) if (x) any of Parents representations and warranties shall have become and continue to be untrue in a manner that would cause
the condition specified in Section 7.3(a) not to be satisfied or (y) there has been, and continues to be, a failure by Parent to perform its obligations in such a manner as would cause the condition specified in
Section 7.3(b) not to be satisfied;
(d) by either Sinclair HoldCo or Parent if (i) any of the
conditions in Section 7.1 shall have become incapable of fulfillment due to (A) the final and nonappealable entry of any Order preventing or enjoining the Contemplated Transactions or (B) the final and
nonappealable entry of any Legal Restraint preventing the Contemplated Transactions, or (ii) the Closing has not occurred (other than through the failure of any Party seeking to terminate this Agreement pursuant to this
Section 8.1(d) to comply fully with its obligations under this Agreement) on or before the first Business Day of the month following the date that is nine (9) months following the date of this Agreement (such date or
such later date as the Parties may agree on or as may be extended pursuant to this Section 8.1(d), the End Date); provided that if, on the End Date, all of the conditions set forth in
Article 7, other than the conditions set forth in Section 7.1(a) (to the extent any such Legal Restraint is in respect of, or any such Law is, an Antitrust Law) or
Section 7.1(b) and those conditions that by their nature are to be satisfied on the Closing (if such conditions would be satisfied or validly waived were the Closing to occur at such time), shall have been satisfied or
waived, then either Sinclair HoldCo or Parent may extend the End Date for all purposes hereunder by a period of three (3) months; provided, further that, absent mutual agreement of the parties, the End Date may only be extended
twice;
(e) by either Sinclair HoldCo or Parent if the Parent Stockholder Approval shall not have been obtained at the Special Meeting duly
convened therefor or at any adjournment or postponement thereof at which a vote on the Parent Stockholder Approval was taken;
(f) by
Sinclair HoldCo, prior to, but not after, the time the Parent Stockholder Approval is obtained, if (i) an Adverse Recommendation Change shall have occurred with respect to Parent, or (ii) Parent shall have breached or failed to perform any
obligation set forth in Section 6.7 or Section 6.8(e) in any material respect and such breach or failure to perform constituted a Willful Breach; or
(g) by Parent, prior to, but not after, the time the Parent Stockholder Approval is obtained, if the Parent Board shall have approved, and
Parent shall concurrently enter into, an Alternative Acquisition Agreement relating to a Superior Proposal; provided, that Parent shall have complied with its obligations under Section 6.7 and shall have paid (or shall
concurrently pay) the Parent Termination Fee pursuant to Section 8.3;
(h) automatically without action by Parent
or Sinclair HoldCo if the Midstream Contribution Agreement is terminated.
The Party desiring to terminate this Agreement pursuant to this
Section 8.1 (other than pursuant to Section 8.1(a)) shall give written notice of such termination to the other Party.
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Section 8.2 Survival After Termination.
The Parties termination rights under Section 8.1 are in addition to any other rights they may have under this
Agreement or otherwise, and the exercise of a right of termination hereunder will not be an election of remedies. If this Agreement is terminated in accordance with Section 8.1, this Agreement shall become void and of no
further force and effect with no liability to any Person on the part of any Party (or any officer, agent, employee, direct or indirect holder of any equity interest or securities, or Affiliates of any Party); provided, however, that
(a) Article 1 (Definitions and Terms), Section 6.5(b) (Access; Information and Documents), Section 6.5(e) (Confidential
Information), this Section 8.2 (Survival After Termination), Section 8.3 (Fees and Expenses), Section 10.5 (Parties in Interest; Non-Recourse Parties), Section 10.7 (Expenses), Section 10.8 (Governing Law), Section 10.12 (Exclusive
Jurisdiction), and Section 10.13 (Waiver of Jury Trial) shall each survive the termination of this Agreement and (b) nothing herein shall relieve any Party from any Liability or Damages resulting from a
Willful Breach of this Agreement or Fraud prior to its termination, in which case, the non-breaching Party shall be entitled to all rights and remedies available at law or in equity.
Section 8.3 Fees and Expenses.
(a) In the event that:
(i) (A)
after the date of this Agreement, a bona fide Parent Acquisition Proposal (whether or not conditional) is made directly to the Parent Stockholders or is otherwise publicly disclosed (other than through a breach of this Agreement by Sinclair HoldCo
or its Affiliates) prior to the Special Meeting, (B) this Agreement is terminated by Sinclair HoldCo or Parent pursuant to Section 8.1(e) (Failure to Obtain Parent Stockholder Approval), (C) within 12
months after the date of such termination, Parent enters into an agreement in respect of any Parent Acquisition Proposal or recommends or submits any Parent Acquisition Proposal to the Parent Stockholders for adoption, which, in each case, need not
be the same Parent Acquisition Proposal that was made, disclosed or communicated prior to termination hereof (provided, that for purposes of this clause (C), each reference to twenty percent (20%) or more in the
definition of Parent Acquisition Proposal shall be deemed to be a reference to fifty percent (50%) or more) and (D) such transaction in respect of such Parent Acquisition Proposal described in clause (C) is
consummated; or
(ii) this Agreement is terminated by Sinclair HoldCo pursuant to Section 8.1(f) (Adverse
Recommendation Change); or
(iii) this Agreement is terminated by Parent pursuant to Section 8.1(g)
(Termination for Superior Proposal);
then, in such event, Parent shall pay to Sinclair HoldCo the Parent Termination Fee,
less the amount of Company Expenses previously paid to Sinclair HoldCo (if any) pursuant to Section 8.3(b) by wire transfer of same-day funds to the accounts designated by
Sinclair HoldCo on the earliest of (i) the consummation of the transaction contemplated by a Parent Acquisition Proposal, as applicable in the case of a Parent Termination Fee payable pursuant to Section 8.3(a)(i),
(ii) as promptly as reasonably practicable after termination (and, in any event,
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within two (2) Business Days thereof), in the case of a Parent Termination Fee payable pursuant to Section 8.3(a)(ii), or (iii) the termination of this
Agreement pursuant to Section 8.3(a)(iii); provided, that the payment by Parent of the Parent Termination Fee pursuant to this Section 8.3(a) shall not relieve Parent from any Liability for
Damages in excess of the amount of the Parent Termination Fee resulting from a Willful Breach of this Agreement or Fraud.
(b) In the event
that this Agreement is terminated by Parent or Sinclair HoldCo pursuant to Section 8.1(e) under circumstances in which the Parent Termination Fee is not then payable pursuant to Section 8.3(a),
then Parent shall pay Sinclair HoldCo an amount in cash equal to $35,000,000 (the Company Expenses) in respect of the costs and expenses of Sinclair HoldCo and the Company in connection with the Contemplated Transactions by wire
transfer of same-day funds to the accounts designated by Sinclair HoldCo as promptly as reasonably practicable after such termination (and, in any event, within two (2) Business Days thereof);
provided, that the payment by Parent of the Company Expenses pursuant to this Section 8.3(b) shall not relieve Parent (x) of any subsequent obligation to pay the Parent Termination Fee pursuant to
Section 8.3(a) except to the extent indicated in such Section or (y) from any Liability for Damages in excess of the amount of the Company Expenses resulting from a Willful Breach of this Agreement or Fraud.
(c) Parent acknowledges that the agreements contained in this Section 8.3 are an integral part of the Contemplated
Transactions, and that, without these agreements, Sinclair HoldCo would not enter into this Agreement. Accordingly, if Parent fails to promptly pay the Parent Termination Fee or Company Expenses, and, in order to obtain such payment, Sinclair HoldCo
commences a suit that results in a judgment against Parent awarding the Parent Termination Fee or Company Expenses, Parent shall pay to Sinclair HoldCo its costs and expenses (including reasonable attorneys fees and expenses) in connection
with such suit, together with interest on the amounts awarded from the date such payment was required to be made until the date of payment at the prime lending rate as published in The Wall Street Journal in effect on the date such payment was
required to be made.
(d) Notwithstanding anything to the contrary contained herein (but subject to the rights of Sinclair HoldCo set forth
in Section 10.11), except in the case of a Willful Breach of this Agreement or Fraud, in any circumstance in which the Parent Termination Fee or the Company Expenses are payable hereunder, the sole and exclusive remedies
available to the Company and Sinclair HoldCo for any breach of this Agreement prior to the termination of this Agreement, shall be termination of this Agreement pursuant to Section 8.1, if applicable, receipt of payment of
the Company Expenses in accordance with Section 8.3(b), or receipt of the payment of the Parent Termination Fee pursuant to Section 8.3(a), as applicable. In no event shall Parent be required to
pay the Parent Termination Fee or Company Expenses on more than one occasion or if the Closing occurs, and under no circumstances shall any of the Company, Sinclair HoldCo, or any of their respective Affiliates, individually or collectively, be
permitted or entitled to receive both a grant of specific performance of this Agreement to cause the Closing to occur (if the Closing occurs) and payment of the Parent Termination Fee or Company Expenses. In no event shall Parent be required to pay
Company Expenses if the Closing occurs or if Parent pays the Parent Termination Fee. In any circumstance in which the Parent Termination Fee or the Company Expenses are paid hereunder, all such amounts shall be applied against any Damages for which
Parent is liable under this Agreement resulting from a Willful Breach of this Agreement or Fraud.
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ARTICLE 9.
INDEMNIFICATION
Section 9.1 Survival.
Except as set forth in this Article 9 and in the case of Fraud, none of the representations or warranties (other than
(x) the Company Fundamental Representations and the corresponding representations and warranties set forth in the Company Officers Certificate and (y) the Parent Fundamental Representations and the corresponding representations and
warranties set forth in the Parent Officers Certificate) in this Agreement or in any instrument delivered pursuant to this Agreement (including the Company Officers Certificate or the Parent Officers Certificate), shall survive the
Closing. The Company Fundamental Representations (and the corresponding representations and warranties set forth in the Company Officers Certificate) and the Parent Fundamental Representations (and the corresponding representations and
warranties set forth in the Parent Officers Certificate) shall, subject to the limitations and other provisions of this Article 9, survive the Closing indefinitely. The covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement, (i) to the extent they contemplate performance prior to the Closing, shall terminate as of the Closing, and all rights, claims and causes of action (whether in contract or in tort or
otherwise, or whether at law or in equity, except in the case of Fraud) with respect thereto shall terminate as of the Closing, and (ii) to the extent they contemplate performance following the Closing, shall survive until fully performed or
discharged in accordance with their terms, and all rights, claims and causes of action (whether in contract or in tort or otherwise, or whether at law or in equity) with respect thereto shall survive the Closing for the applicable periods in
accordance with their terms. Each Parent Party, on the one hand, and Sinclair HoldCo, on the other, acknowledges and agrees that, from and after the Closing, except for Fraud and except as expressly provided in Section 9.2,
such Party and its Affiliates (and any Person claiming under, or in the name or right of, such Party or any of its Affiliates), will not have any right of indemnification, contribution, subrogation or reimbursement from, or any other remedy against,
the other Party, its Affiliates or its or their respective Representatives in respect of the representations, warranties, covenants or other agreements contained in this Agreement or any certificate delivered in respect hereof or any schedule
(including the Company Disclosure Schedules and the Parent Disclosure Schedules, as applicable), certificate or other similar instrument delivered pursuant to this Agreement, regardless of applicable Law or the legal theory under which such remedy
may be sought to be asserted, whether in contract or in tort or otherwise, or whether at law or in equity.
Section 9.2
Indemnification.
(a) Effective as of the Closing, New Parent hereby indemnifies Sinclair HoldCo, its Affiliates and its and
their respective Representatives (together, in each case, with their respective successors and assigns, the Sinclair HoldCo Indemnified Parties) against, and agrees to hold them harmless from, any and all Damages arising out of,
resulting from or related to:
(i) any breach or inaccuracy of any of the Parent Fundamental Representations;
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(ii) Parent or New Parents breach of or failure to perform any of its covenants or
agreements contained in this Agreement, to the extent they contemplate performance following the Closing; and
(iii) any Assumed
Liabilities (including claims arising out of, resulting from or related to the failure of Parent Party to in due course pay or discharge any Assumed Liability).
(b) Effective as of the Closing, Sinclair HoldCo hereby indemnifies the Parent Parties, their respective Affiliates and their respective
Representatives (together, in each case, with their respective successors and assigns, the Parent Indemnified Parties) against, and agrees to hold them harmless from, any and all Damages arising out of, resulting from or related
to:
(i) any breach or inaccuracy of any of the Company Fundamental Representations;
(ii) Sinclair HoldCos or the Companys breach or failure to perform any of its covenants or agreements contained in this Agreement,
to the extent they contemplate performance following the Closing;
(iii) any Indebtedness of the Company Group as of the Closing, other
than Indebtedness referred to in clauses (d), (g) and (i) (with respect to Indebtedness referred to in clauses (d) and (g) of the definition thereof) of the definition thereof;
(iv) any Retained Liabilities (including claims arising out of, resulting from or related to Sinclair HoldCos failure to in due course
pay or discharge any Retained Liability); and
(v) Pre-Closing Taxes.
(c) Any indemnification payments hereunder shall be treated as adjustments to the Sinclair Contribution Consideration for all Tax purposes,
except to the extent otherwise required by Law.
(d) No claim for indemnification (or otherwise) in connection with a representation,
warranty, covenant or agreement shall be brought or made after the applicable date set forth in Section 9.1, except for particular claims that have been asserted in accordance with the terms of this Agreement by any
Indemnified Party against any Indemnifying Party prior to or on the applicable date set forth in Section 9.1. For the avoidance of doubt, this Section 9.2(d) shall not apply to claims under
Section 9.2(b)(v) with respect to Pre-Closing Taxes, and any Pre-Closing Tax claims under Section 9.2(b)(v) shall
survive until thirty (30) days following the expiration of the applicable statute of limitations (as the same may be extended).
(e)
Notwithstanding anything in this Article 9 to the contrary, the Parent Indemnified Parties will not be entitled to indemnification for any Damages pursuant to Section 9.2(b)(v) (except to the
extent such Damages arise out of, result from or relate to (i) Income Taxes, (ii) Property Taxes, or (iii) any Liability resulting from a reduction or disallowance of any Blenders Tax Credits for any
Pre-Closing Tax Period or for the portion of any Straddle Period ending on and including the Closing Date, in which case this Section 9.2(e) shall not apply) unless and until the
aggregate of all such indemnifiable Damages exceeds an aggregate amount of $1,000,000.
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(f) The Parties agree that all indemnities provided by Sinclair Tulsa Refining Company to
Holly-Frontier Tulsa Refining LLC and HEP Tulsa LLC pursuant to the Asset Sale and Purchase Agreement dated October 19, 2009 (the ASPA), are hereby terminated and are of no further force and effect, and that the Notice of
Indemnification Claim dated November 19, 2019, submitted by Holly-Frontier Tulsa Refining LLC and HEP Tulsa LLC pursuant to the ASPA is rescinded, canceled and withdrawn, and that Sinclair Tulsa Refining Company and Sinclair Oil Corporation
have no further obligations pursuant to Section 8.2 or any other provision of the ASPA.
(g) Notwithstanding anything to the contrary
in this Section 9.2, the Sinclair HoldCo Indemnified Parties, on the one hand, and the Parent Indemnified Parties, on the other hand, shall not be entitled to indemnification under this Article 9
for any Damages to the extent the amount of such Damages was taken into account in the calculation of the Closing Adjustment Amount.
Section 9.3 Procedures.
(a) If any Sinclair HoldCo Indemnified Party seeks indemnification pursuant to Section 9.2(a), or if any Parent
Indemnified Party seeks indemnification pursuant to Section 9.2(b), the Person seeking indemnification (the Indemnified Party) shall give written notice to the Party from whom such indemnification is
sought (the Indemnifying Party) promptly (and in any event within fifteen (15) days) after the Indemnified Party (or, if the Indemnified Party is not a natural person, any Representative of the Indemnified Party) becomes
aware of the facts giving rise to such claim for indemnification (an Indemnified Claim) specifying in reasonable detail the factual basis of the Indemnified Claim, stating the amount of Damages (or if not known, a good faith
estimate of the amount of Damages) and the method of computation thereof, containing a reference to the provision of this Agreement in respect of which such Indemnified Claim arises and a copy of any papers theretofore served on or delivered to the
Indemnified Party and demanding indemnification therefor. The failure of an Indemnified Party to provide notice in accordance with this Section 9.3(a), or any delay in providing such notice, shall not limit the Indemnified
Partys rights or constitute a waiver of the Indemnified Partys claims to indemnification pursuant to Section 9.2, except to the extent that any such failure or delay in giving notice causes the amounts paid or
to be paid by the Indemnifying Party to be greater than they otherwise would have been or otherwise results in prejudice to the Indemnifying Party. Notwithstanding anything to the contrary contained in this Agreement, New Parent shall deliver notice
of any Indemnified Claim on behalf of any Parent Indemnified Party and Sinclair HoldCo shall deliver notice of any Indemnified Claim on behalf of any Sinclair HoldCo Indemnified Party. For the avoidance of doubt, no Parent Indemnified Party (other
than New Parent) and no Sinclair HoldCo Indemnified Party (other than Sinclair HoldCo) shall be entitled to bring an indemnification claim hereunder, it being understood that New Parent may bring, but shall not be required to bring, any
indemnification claim on behalf of any Parent Indemnified Party and Sinclair HoldCo may bring, but shall not be required to bring, any indemnification claim on behalf of any Sinclair HoldCo Indemnified Party.
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(b) The Indemnifying Party will have the right, upon written notice delivered to the
Indemnified Party within thirty (30) days of receipt of written notice of such Indemnified Claim, to assume the defense and control of any Third Party Claim (so long as prior to assuming the defense of same, the Indemnifying Party acknowledges
its obligation to indemnify the Indemnified Party in writing), including the appointment and selection of counsel on behalf of the Indemnified Party so long as such counsel is reasonably acceptable to the Indemnified Party; provided,
however, if the Indemnifying Party declines or fails to assume the defense of such Third Party Claim pursuant to this Section 9.3(b), then any Damages relating to such Indemnified Claim will include the reasonable fees
and expenses (including reasonable attorneys fees and expenses) incurred by the Indemnified Party with respect thereto. Notwithstanding anything to the contrary in this Section 9.3(b), the Indemnified Party will
control such indemnification claim (i) to the extent that the object of such Third Party Claim is to obtain an injunction, restraining order, declaratory relief or other material non-monetary relief
against the Indemnified Party, (ii) if the named parties to any such Proceeding (including any impleaded parties) include both the Indemnified Party and the Indemnifying Party and the former shall have been advised in writing by counsel (with a
copy to the Indemnifying Party) that there are one or more legal or equitable defenses available to it that are different from or additional to those available to Indemnifying Party, (iii) if the Indemnifying Party fails to provide reasonable
assurance to the Indemnified Party of its financial capacity to defend the Third Party Claim and provide indemnification with respect to such Third Party Claim, (iv) if the Third Party Claim arises in connection with any criminal Proceeding
against the Indemnified Party, (v) if the Third Party Claim, if adversely determined, would materially and adversely affect it or its Affiliates other than as a result of monetary Damages for which it would be entitled to indemnification under
this Agreement (including by being reasonably likely to establish a precedent or custom that would be materially adverse to the Indemnified Party, whether or not monetary Damages are also asserted in connection with such claim), or (vi) an
actual or readily apparent conflict of interest exists between the Indemnifying Party and the Indemnified Party with respect to the Third Party Claim that precludes effective joint representation; provided, that, in each case the Indemnifying Party
will have reasonable information and consultation rights in connection therewith and the Indemnified Party not shall settle such Third Party Claim without the Indemnifying Partys prior consent, such consent not to be unreasonably withheld,
conditioned or delayed, unless (A) such settlement includes an unconditional release from all Damages with respect to the Third Party Claim in favor of the Indemnified Party or (B) the Indemnified Party stipulates in writing that there are
no Damages for which it is entitled to indemnification under this Article 9. Whether the Indemnifying Party or the Indemnified Party is defending and controlling any such Third Party Claim, it shall select counsel,
contractors, experts and consultants of recognized standing and competence, shall take reasonable steps necessary in the investigation, defense or settlement thereof, and shall diligently and promptly pursue the resolution thereof. The Indemnified
Party shall, and shall cause each of its Affiliates and Representatives to, cooperate with the Indemnifying Party in connection with any Third Party Claim. Once the Indemnifying Party has duly assumed the defense of a Third Party Claim, the
Indemnified Party shall have the right, but not the obligation, to participate in any such defense and to employ separate counsel of its choosing at its sole cost and expense. If the Indemnifying Party assumes the defense of any such Third Party
Claim but fails to diligently prosecute such Third Party Claim, the Indemnified Party may assume control of such defense and in the event it is finally determined that the Third Party Claim was a matter for which the Indemnifying Party is required
to provide indemnification under the terms of this Section 9.3, the Indemnifying Party will bear the reasonable costs and expenses of such defense (including reasonable attorneys fees and expenses).
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(c) Notwithstanding anything to the contrary in this Agreement, the Indemnifying Party will
not be permitted to settle, compromise, take any corrective or remedial action or enter into an agreed judgment or consent decree, in each case, (i) that does not unconditionally release the Indemnified Party from all Liabilities and
obligations with respect to such Third Party Claim, (ii) that imposes injunctive or other equitable relief against the Indemnified Party, (iii) that contains any admission or statement admitting or suggesting any wrongdoing or Liability on
behalf of the Indemnified Party, or (iv) under which the Indemnified Party would be required to pay any portion of any monetary Damages arising as a result of the Third Party Claim, in each case without the Indemnified Partys prior
written consent.
(d) If an Indemnifying Party makes any payment on an Indemnified Claim, the Indemnifying Party shall be subrogated, to
the extent of such payment, to all rights and remedies of the Indemnified Party to any insurance benefits or other claims or benefits of the Indemnified Party with respect to such claim.
Section 9.4 Release.
Effective as of the Closing, Sinclair HoldCo, on the one hand, and each of the Parent Parties, on the other hand, on their own behalf and on
behalf of each of their respective Affiliates and their respective Representatives and their respective successors and assigns (each a Releasing Person), hereby fully and unconditionally releases, acquits and forever discharges
the other Party and such Partys Affiliates and their respective Representatives and their respective successors and assigns (each a Released Person) from all debts, Proceedings, costs, expenses, torts, Damages, offsets,
judgments and Liabilities whatsoever, of every name and nature, whether in Law (including Environmental Laws) or in equity, whether in Contract or in tort or otherwise, known or unknown, accrued or unaccrued, contingent or otherwise, including in
respect of any right of indemnification, contribution, subrogation or reimbursement, which have been or could have been asserted against any Released Person, that any Releasing Person has or ever had to the extent arising out of, resulting from or
relating to the Company Group, Sinclair HoldCo or their operations, affairs, or conduct of business prior to or at the Effective Time (each a Released Claim), except for Fraud and except as expressly provided in
Section 9.1 or Section 9.2. Sinclair HoldCo, on the one hand, and each of the Parent Parties, on the other, further covenants and agrees (a) that it will not, and will cause its Affiliates and
its and their respective Representatives not to, take any action inconsistent with this Section 9.4 (including commencing any Proceeding in respect of, or directly or indirectly transferring to another Person, any Released
Claim) and (b) to indemnify and hold harmless each Released Person from and against and in respect of any and all such debts, Proceedings, costs, expenses, torts, Damages, offsets, judgments and Liabilities whatsoever, of every name and nature,
incurred by any Released Person as a result of any action by such Party or any of its Affiliates that is inconsistent with this Section 9.4. This Section 9.4 shall survive the Closing, is intended
for the benefit of and may be enforced directly by each of the Released Persons and is binding on all successors and assigns of Sinclair HoldCo, on the one hand, and each of the Parent Parties, on the other hand.
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ARTICLE 10.
MISCELLANEOUS
Section 10.1 Notices.
All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have
been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF document (with written confirmation of receipt) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or
(d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a Party
as shall be specified in a notice given in accordance with this Article 10):
if to any member of the Company
Group prior to the Closing:
The Sinclair Companies
550 East South Temple
Salt
Lake City, UT 84102
Attn: Lynn Hart
Telephone: (801) 524-2756
Email: lhart@sinclairoil.com
with a copy to (which shall not constitute notice):
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
Attn:
Scott N. Wulfe
Alan Beck
Telephone: (713) 758-2750
(713) 758-3638
Email:
swulfe@velaw.com
abeck@velaw.com
if to Sinclair HoldCo:
The Sinclair Companies
550
East South Temple
Salt Lake City, UT 84102
Attn: Lynn Hart
Telephone: (801) 524-2756
Email: lhart@sinclairoil.com
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with a copy to (which shall not constitute notice):
Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
Attn:
Scott N. Wulfe
Alan Beck
Telephone: (713) 758-2750
(713) 758-3638
Email:
swulfe@velaw.com
abeck@velaw.com
if to a Parent Party or to a member of the Company Group following the Closing:
c/o HollyFrontier Corporation
2828 North Harwood Street, Suite 1300
Dallas, TX 75201
Email:
president@hollyfontier.com
Attn:
President
with a copy to (which shall not
constitute notice):
c/o HollyFrontier Corporation
2828 North Harwood Street, Suite 1300
Dallas, TX 75201
Email:
generalcounsel@hollyfrontier.com
Attn:
General Counsel
and
Morgan Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attn:
Benjamin R. Wills
Telephone: (215)
963-5541
Email: Benjamin.wills@morganlewis.com
and
Watchtell, Lipton,
Rosen & Katz
51 W. 52nd St.
New York, NY 10019
Attn: David
A. Katz; Elina Tetelbaum
Telephone: (212) 403-1361; (212)
403-1061
Email: DAKatz@wlrk.com; ETetelbaum@wlrk.com
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Section 10.2 Amendment; Waiver.
Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and, in the case of an
amendment, signed by the Parties. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No failure or delay by any Party in exercising any right, remedy,
power or privilege arising hereunder shall operate or be construed as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
Section 10.3 Assignment.
Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned or delegated by any Party without the prior
written consent of the other Party.
Section 10.4 Entire Agreement.
This Agreement (including Annexes, Schedules and Exhibits), the Midstream Contribution Agreement (including the annexes, schedules and exhibits
thereto) and the Reorganization Agreement (including the annexes, schedules and exhibits thereto) comprise the entire agreement among the Parties with respect to the subject matter contained herein and therein and supersede all prior and
contemporaneous agreements and understandings, oral or written, with respect to such subject matters, except for the Confidentiality Agreement, which will remain in full force and effect for the term provided for therein and any other written
agreement of the Parties that expressly provides that it is not superseded by this Agreement, the Midstream Contribution Agreement or the Reorganization Agreement.
Section 10.5 Parties in Interest; Non-Recourse Parties.
(a) This Agreement shall inure to the benefit of and be binding on the Parties and their respective successors and permitted assigns. Except as
provided in Section 6.13(c), Section 9.2 and Section 9.4 this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns
and nothing herein, express or implied, is intended to or shall confer on any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
(b) Notwithstanding anything to the contrary contained herein or otherwise, this Agreement may only be enforced against, and any claims or
causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement or the Contemplated Transactions, may only be made against the entities and Persons that are expressly
identified as Parties in their capacities as such and no former, current or future stockholders, equity holders, controlling persons, directors, officers, employees, general or limited partners, members, managers, agents or Affiliates of any Party
hereto, or any former, current or future direct or indirect stockholder, equity holder, controlling person, director, officer, employee, general or limited partner, member, manager, agent or Affiliate of any of the foregoing (each, a Non-Recourse Party) shall have any liability for any Liabilities of the Parties or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, the Contemplated
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Transactions or in respect of any representations made or alleged to be made in connection herewith. Without limiting the rights of any Party against the other Parties in no event shall any Party
or any of its Affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary Damages from, any Non-Recourse Party.
Section 10.6 Public Disclosure.
Neither Sinclair HoldCo nor any of its Affiliates shall issue or make any communication, release or announcement to the public or to employees
or others not directly involved in the negotiation or approval of this Agreement or the Contemplated Transactions without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), except as such
communication, release or announcement may, be required by Law or the rules or regulations of any applicable securities exchange or similar organization. Prior to issuing or making any communication, release or announcement to the public with
respect to the Contemplated Transactions, Parent shall allow Sinclair HoldCo reasonable time to comment thereon and Parent shall consider in good faith the comments of Sinclair HoldCo in advance of such issuance. Notwithstanding the foregoing, each
Party may make internal announcements to its respective employees that are consistent with any prior public disclosures regarding the Contemplated Transactions after reasonable prior notice to and consultation with the other Parties.
Section 10.7 Expenses.
Except as otherwise provided in Section 6.2(a) or Section 8.3, regardless of whether the
Contemplated Transactions are consummated, each of the Parties shall be responsible for the payment of its own costs and expenses incurred in connection with the negotiations leading up to and the performance of its own obligations pursuant to this
Agreement, including the fees of any attorneys, accountants, brokers or advisors employed or retained by or on behalf of such Party.
Section 10.8 Governing Law.
This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, without giving effect
to the conflicts of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.
Section 10.9 Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one
and the same agreement. A signed copy of this Agreement delivered by e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of
this Agreement.
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Section 10.10 Severability.
If any term or provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid, illegal or unenforceable
in any jurisdiction, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision and
(b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity, illegality or unenforceability, nor shall such invalidity, illegality or unenforceability in
any jurisdiction affect the validity, legality or enforceability of such provision, or the application thereof, in any other jurisdiction.
Section 10.11 Specific Performance.
(a) The Parties agree that irreparable damage would occur in the event that the Parties do not perform the provisions of this Agreement in
accordance with its terms or otherwise breach such provisions. Accordingly, the Parties acknowledge and agree that the Parties shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches or threatened
breaches of this Agreement and to enforce specifically the terms and provisions hereof, except to the extent set forth in Section 8.3(d), in addition to any other remedy to which they are entitled at law or in equity.
(b) Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief as
provided herein on the basis that (i) it has an adequate remedy at law or (ii) an award of specific performance is not an appropriate remedy for any reason at law or equity. Any Party seeking an injunction or injunctions to prevent
breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement shall not be required to provide any bond or other security in connection with any such Order, and each Party irrevocably waives
any right it may have to require the obtaining, furnishing or posting of any such bond or other security.
(c) If prior to the End Date,
any Party hereto brings an Action to enforce specifically the performance of the terms and provisions hereof by any other Party, the End Date shall automatically be extended by such other time period established by the court presiding over such
Action. Notwithstanding anything to the contrary contained herein or otherwise, after the Closing, no Party may seek to rescind this Agreement or any of the Contemplated Transactions.
Section 10.12 Exclusive Jurisdiction.
Any Proceeding arising out of or relating to this Agreement or any Contemplated Transactions shall only be brought in the Court of Chancery of
the State of Delaware or if such court does not have jurisdiction, in any federal court within the State of Delaware only, and each Party expressly consents to personal jurisdiction and venue in such courts, waiving any claim of improper venue or
that such courts are an inconvenient forum, or the absence of any property in the forum. Each Party irrevocably consents to the service of process of any of the aforementioned courts in any such Proceeding by the providing of notice in accordance
with the provisions of Article 10.
Section 10.13 Waiver of Jury Trial.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE CONTEMPLATED TRANSACTIONS (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
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(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.13.
Section 10.14 Attorney Client Privilege; Waiver of Conflicts.
All communications involving attorney-client confidences between directors, officers or employees of Sinclair HoldCo or its Subsidiaries,
including the Company Group, or direct or indirect holders of equity interests in Sinclair HoldCo, on the one hand, and Vinson & Elkins L.L.P., on the other hand, in the course of the negotiation, documentation and consummation of the
Contemplated Transactions shall be deemed to be attorney-client confidences that belong solely to Sinclair HoldCo (and not the Company Group). Accordingly, the Company Group shall have no access to any such communications or to the files of
Vinson & Elkins L.L.P. relating to such engagement from and after the Closing. Without limiting the generality of the foregoing, from and after the Closing, (a) Sinclair HoldCo (and not the Company Group) shall be the sole holder of
the attorney-client privilege with respect to such engagement, and no member of the Company Group shall be a holder thereof, (b) to the extent that files of Vinson & Elkins L.L.P. in respect of such engagement constitute property of
the client, only Sinclair HoldCo (and not Company Group) shall hold such property rights and (c) Vinson & Elkins L.L.P. shall have no duty whatsoever to reveal or disclose any such communications involving attorney-client confidences
or files to any members of the Company Group by reason of any attorney-client relationship between Vinson & Elkins L.L.P. and any member of the Company Group.
108
The Parties have executed or caused this Agreement to be executed as of the date first
written above.
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PARENT
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HOLLYFRONTIER CORPORATION
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By:
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/s/ Michael C. Jennings
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Name:
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Michael C. Jennings
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Title:
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Chief Executive Officer and President
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NEW PARENT
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HIPPO PARENT CORPORATION
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By:
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/s/ Michael C. Jennings
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Name:
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Michael C. Jennings
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Title:
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Chief Executive Officer and President
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PARENT MERGER SUB
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HIPPO MERGER SUB, INC.
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By:
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/s/ Michael C. Jennings
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Name:
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Michael C. Jennings
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Title:
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Chief Executive Officer and President
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[Signature Page to
Business Combination Agreement]
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SINCLAIR HOLDCO
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THE SINCLAIR COMPANIES
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By:
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/s/ Ross B. Matthews
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Name:
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Ross B. Matthews
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Title:
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Chief Operating Officer
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COMPANY
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HIPPO HOLDING LLC
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By:
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/s/ Ross B. Matthews
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Name:
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Ross B. Matthews
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Title:
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President
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[Signature Page to
Business Combination Agreement]
ANNEX A
DEFINITIONS
Unless the
context otherwise requires, the capitalized terms used in this Agreement have the meanings specified or referenced below:
280G
Approval has the meaning ascribed to such term in Section 6.10.
280G Disqualified
Individual has the meaning ascribed to such term in Section 6.10.
280G Waiver has the meaning ascribed
to such term in Section 6.10.
Acceptable Confidentiality Agreement has the meaning ascribed
to such term in Section 6.7(a).
Action means any actual or threatened claim, action, suit,
proceeding, investigation, or other similar legal proceeding, whether civil, criminal, administrative or investigative.
Adjustment Time means, (a) if the Closing Date is on the first day of a calendar month, 12:01 a.m. on the Closing
Date, or (b) if the Closing Date is not the first day of a calendar month, 12:01 a.m. on the first day of the calendar month in which the Closing Date occurs.
Adverse Recommendation Change has the meaning ascribed to such term in Section 6.7(b)(i).
Affiliate means, with respect to any specified Person, any other Person directly or indirectly controlling, controlled by,
or under common control with, such specified Person at any time during the period for which the determination of affiliation is being made, where the term control (including, with correlative meaning, the terms
controlling, controlled by and under common control with), as used with respect to any specified Person, means the possession, directly or indirectly, 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. Prior to the Closing, the Company Group shall be considered Affiliates of Sinclair HoldCo, and following the
Closing, the Company Group shall be considered Affiliates of Parent.
Agreement means this Business Combination
Agreement, as it may be amended or supplemented from time to time in accordance with the terms hereof.
Alternative Acquisition
Agreement has the meaning ascribed to such term in Section 6.7(b)(ii).
Antitrust
Laws means any applicable supranational, national, federal, state, county, local or foreign Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade
or lessening competition through merger or acquisition, including the HSR Act, the Sherman Act, the Clayton Act and the Federal Trade Commission Act, in each case, as amended, and other similar laws regulating antitrust, competition or restraint of
trade of any U.S., foreign or international jurisdiction.
ANNEX A-1
Applicable Hydrocarbon Inventory Amount means, with respect to each item
of Hydrocarbon Inventory, the volume of such item of Hydrocarbon Inventory as of the Adjustment Time, measured in accordance with the procedures set forth in Exhibit A.
Applicable Hydrocarbon Inventory Price means, with respect to each item of Hydrocarbon Inventory, the price per barrel set
forth opposite such item of Hydrocarbon Inventory in Exhibit A.
Applicable RINs Amount
means, with respect to each type of RIN, the amount of such RINs owned by the applicable members of the Company Group as of the Adjustment Time.
Applicable RINs Obligation means, with respect to each type of RIN (i.e., D3, D4, D5, and D6), the collective renewable
volume obligation of the applicable members of the Company Group for such type of RIN, calculated in accordance with 40 C.F.R. § 80.1407 using the standard applicable to the year in which Closing occurs pursuant to 40 C.F.R. §
80.1405(a), as of the Adjustment Time; provided, however, that if no such standard has been established as of the Adjustment Time, the calculation shall be conducted in accordance with the standards provided for the later of 2020 or the most recent
calendar year for which standards have been provided in 40 C.F.R. § 80.1405(a).
Applicable RINs Price means,
with respect to each type of RIN, the average of the daily closing prices for such type of RIN for the twenty (20) full trading days prior to the Adjustment Time as reported by OPIS.
ASPA has the meaning ascribed to such term in Section 9.2(f).
Assumed Liabilities means (a) all Liabilities, other than Retained Liabilities, of any kind, character or description,
to the extent arising out of, resulting from or relating to, the operation, affairs or conduct of the Downstream Business or Midstream Business, including, for the avoidance of doubt, all Liabilities related to the refinery and associated assets in
Tulsa, Oklahoma previously owned by the Company Group, whether before, at or after the Closing and (b) Employment Liabilities.
Benefit Plan means including each employee benefit plan within the meaning of Section 3(3) of ERISA and
each other employment, consulting, offer letter, executive compensation, pension, profit-sharing, retirement, deferred compensation, bonus, commission or other incentive, stock option, stock grant, phantom equity or other equity or equity-based,
change in control, transaction, retention, severance, termination, salary continuation, welfare, health, medical, dental, vision, disability, life insurance, accidental death and dismemberment, cafeteria, flexible spending account, health spending
account, health reimbursement arrangement, paid time off, tuition reimbursement or scholarship, loan, gross-up, workers compensation, fringe or any other plan, agreement, contract, obligation, program,
policy, practice or arrangement with respect to compensation, benefits or terms and conditions of employment or service of any current or former employee or independent contractor, including with respect to a single individual, and in each case
whether or not reduced to writing, funded, tax-qualified, subject to ERISA or legally enforceable.
ANNEX A-2
Benefits Liabilities means all Liabilities arising out of, resulting from
or relating to the Sinclair Benefit Plans or any other Benefit Plan maintained, sponsored or contributed to by Sinclair HoldCo or any of its ERISA Affiliates or under which any Sinclair HoldCo or any of its ERISA Affiliates has or could reasonably
be expected to have any Liability, in each case, whether before, at, or after the Closing (including, for the avoidance of doubt, any Liabilities arising under Section 4980H of the Code or otherwise arising from any failure to offer benefits to
any current or former employee or independent contractor who provides or has provided services directly or indirectly to any member of the Company Group (including as an employee of Sinclair Services Company) or any other current or former employee
or independent contractor of Sinclair HoldCo or its ERISA Affiliates).
Blenders Tax Credits means any Excise Tax
credit with respect to Section 6426 of the Code (or any successor thereto) or any similar or corresponding provision of state or local Law.
Business Day means a day (excluding Saturday and Sunday) on which banks are generally open for business in the State of
Texas.
Business Intellectual Property Rights means all Owned Business Intellectual Property Rights and Licensed
Business Intellectual Property Rights.
Cash as of any time means, without duplication, all cash and cash equivalents,
including deposits, marketable securities, any checks received (but not yet deposited), and any cash collateral accounts, in each case as determined in accordance with the accounting principles set forth on Schedule 2.6(a); it being
understood that Cash shall be reduced by the amount of any checks written (but not yet cashed) (to the extent the Liability related thereto has not been included in the calculation of Closing Working Capital).
Casualty Event has the meaning ascribed to such term in Section 6.17(a).
Closing means the consummation of the transactions contemplated by this Agreement.
Closing Adjustment Amount means, as of any date of determination, an amount (which may be positive or negative) equal to
(a) Final Closing Working Capital, minus Estimated Closing Working Capital, plus (b) Final Closing Cash, minus Estimated Closing Cash, plus (c) Final Closing Hydrocarbon Inventory Amount, minus
Estimated Closing Hydrocarbon Inventory Amount, plus (d) Final Closing Blenders Tax Credits, minus Estimated Blenders Tax Credits, plus (e) Final Closing RINs Adjustment, minus Estimated Closing RINs Adjustment,
minus (f) Final Closing Indebtedness, minus Estimated Closing Indebtedness.
Closing Accounting
Statement has the meaning ascribed to such term in Section 2.6(a).
Closing Blenders Tax
Credits means Blenders Tax Credits as of the Adjustment Time.
Closing Cash means Cash of the Company Group
as of the Adjustment Time.
Closing Date has the meaning ascribed to such term in
Section 3.1.
Closing Divestiture Shares has the meaning ascribed to such term in
Section 2.5(f)(v).
ANNEX A-3
Closing Hydrocarbon Inventory Amount means the Hydrocarbon Inventory
Amount as of the Adjustment Time.
Closing Indebtedness means the aggregate amount of Indebtedness of the Company Group
as of the Adjustment Time, determined in accordance with the accounting principles set forth on Schedule 2.6(a), without giving effect to the Contemplated Transactions.
Closing RINs Adjustment means the amount (which may be negative number) equal to (a) the Closing RINs Amount
minus (b) the Closing RINs Obligation.
Closing RINs Amount means the aggregate amount equal to the sum of,
for each type of RIN (i.e., D3, D4, D5 and D6), (a) the Applicable RINs Amount, multiplied by (b) the Applicable RINs Price.
Closing RINs Obligation means the aggregate amount equal to the sum of, for each type of RIN (i.e., D3, D4, D5 and D6), (a)
the Applicable RINs Obligation, multiplied by (b) the Applicable RINs Price.
Closing Working
Capital means Working Capital as of the Adjustment Time.
Code means the Internal Revenue Code of 1986, as
amended.
Commission means the Securities and Exchange Commission.
Company has the meaning ascribed to such term in the Preamble.
Company Acquisition Proposal has the meaning ascribed to such term in Section 6.7(k).
Company Benefit Plan means each Benefit Plan (i) that is maintained, sponsored or contributed to by any member of the
Company Group or (ii) under which any member of the Company Group has or could reasonably be expected to have any Liability. For the avoidance of doubt, Company Benefit Plan shall not include any HoldCo Benefit Plan.
Company Disclosure Schedules has the meaning ascribed to such term in Article 4.
Company Employees has the meaning ascribed to such term in Section 4.18(a).
Company Employment Group means, with respect to services provided to the Company Group, collectively, the Company Group,
Sinclair HoldCo and its Affiliates.
Company Expenses has the meaning ascribed to such term in
Section 8.3(b).
Company Fundamental Representations means the representations and warranties
set forth in Section 4.1 (Organization), Section 4.2 (Authority; Binding Effect), Section 4.3(a)
(Non-Contravention of Organizational Documents), Section 4.6 (Capitalization of the Company), Section 4.7(a) and (b) (Subsidiaries;
Equity Ownership), Section 4.24 (Brokers) and Section 4.26 (Board Approval; Vote Required).
Company Group means the Company and all of the Company Subsidiaries, collectively.
ANNEX A-4
Company LLC Interests means the limited liability company interests of
the Company.
Company Marks has the meaning ascribed to such term in Section 6.16.
Company Officers Certificate has the meaning ascribed to such term in Section 3.2(c)(ii).
Company Reorganization has the meaning ascribed to such term in the Recitals.
Company Revolving Credit Facility means that certain Fourth Amended and Restated Credit Agreement, dated as of
July 24, 2018 among Sinclair HoldCo, as borrower, the subsidiaries of Sinclair HoldCo party thereto, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent and issuing bank, as amended,
amended and restated, supplemented or otherwise modified from time to time.
Company Software means all of the Software
owned exclusively by any of the Company Group.
Company Subsidiary has the meaning ascribed to such term in
Section 4.7(a).
Company Systems means the hardware (whether general purpose or special
purpose), servers, circuits, platforms, computers, cable, networks and other computer systems that are owned by, or used in the operation of the business of, any of the Company Group.
Company Tax Counsel has the meaning ascribed to such term in Section 7.3(d).
Company Tax Counsel Sinclair Tax Certificate has the meaning ascribed to such term in
Section 6.3(g).
Company Tax Counsel Parent Tax Certificate has the meaning ascribed to such
term in Section 6.3(g).
Confidentiality Agreement means that certain Confidentiality
Agreement by and between Sinclair Oil Corporation and Parent, dated as of August 31, 2020.
Contemplated
Transactions means all of the transactions contemplated by this Agreement, including the Parent Merger and the Sinclair Contribution, and the performance by the Parties of their respective obligations under this Agreement. For purposes of
clarity, the Contemplated Transactions do not include the transactions being consummated pursuant to the Midstream Contribution Agreement.
Continuing Employee has the meaning ascribed to such term in Section 6.9(b).
Contract means any agreement, contract, obligation or undertaking (whether written or oral) that is or is intended to be
legally binding.
Copyrights has the meaning ascribed to such term in the definition of Intellectual Property Rights.
ANNEX A-5
Credit Support Arranagements has the meaning ascribed to such term in
Section 6.24.
Current Assets means the current assets of the Company Group on a consolidated
basis determined in accordance with the accounting principles set forth on Schedule 2.6(a), a sample calculation of which is set forth on Schedule 2.6(a) under the heading Current Assets; provided, that
neither the amount of the Puri Note nor the amount of the Stinker Stores Note shall be included in Current Assets.
Current
Liabilities means the current liabilities of the Company Group on a consolidated basis determined in accordance with the accounting principles set forth on Schedule 2.6(a), a sample calculation of which is set forth on Schedule
2.6(a) under the heading Current Liabilities.
D&O Person means each current and former
director or officer of the Company Group and each Person who serves or served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee plan or enterprise if such
service is/was at the request or for the benefit of the Company Group (together with any such Persons heirs, successors, executors or administrators).
Damages means any and all loss, cost, damages, Taxes, amounts paid in settlement, cost, expense (including reasonable fees
of, and actual disbursements by, attorneys, consultants, experts or other Representatives, including litigation costs), fine, penalty, judgement, or liability of any other nature.
DGCL has the meaning ascribed to such term in the Recitals.
Disputed Item has the meaning ascribed to such term in Section 2.6(b).
Divestiture Action has the meaning ascribed to such term in Section 6.2(b).
DOJ means the Antitrust Division of the United States Department of Justice.
Domain Names has the meaning ascribed to such term in the definition of Intellectual Property Rights.
Downstream Business means the ownership, operation, management and maintenance of the Facilities and all associated assets
and infrastructure pertaining to the downstream business of the Company Group, including all activities related thereto (including the direct or indirect participation in the refining, transportation, marketing, storage or sale of hydrocarbons and
refined products), but, for the avoidance of doubt, excluding the Retained Business, the Retained Liabilities, Legacy Assets and the Midstream Business.
EBITDA means earnings before interest, taxes, depreciation, and amortization.
Effective Time has the meaning ascribed to such term in Section 2.1(b).
Employment Liabilities means Liabilities of any kind, character or description to extent arising out of, resulting from or
relating to the employment or engagement of individuals providing services to the Downstream Business or Midstream Business whether before, at, or after the Closing, excluding all Benefits Liabilities.
ANNEX A-6
Encumbrance means any charge, claim, lien (statutory or otherwise),
option, pledge, security interest, mortgage, deed of trust, easement, encroachment, right of first refusal or first offer or restriction or encumbrance of any kind.
End Date has the meaning ascribed to such term in Section 8.1(d).
Environment shall mean surface water, groundwater, land, surface or subsurface strata, ambient air, indoor air, and flora,
fauna and biota.
Environmental Law means Laws or Orders of any Governmental Authority relating to pollution or
protection of the Environment, worker health and occupational safety, including Laws or Orders related to the Release or threatened Release of, or exposure to, any Hazardous Material and/or governing the handling, use, generation, treatment,
recycling, storage, transportation, disposal, manufacture, registration, distribution, formulation, packaging or labeling of Hazardous Materials.
Environmental Notice means any written complaint, citation, notice, demand or claim arising from or regarding any actual or
alleged noncompliance with any Environmental Law or Law or Order of any Governmental Authority issued thereunder or Environmental Permit, any actual or alleged liability or any potential responsibility for the assessment, investigation, response,
removal, remediation, corrective action or monitoring costs related to a Release of any Hazardous Material under Environmental Laws.
Environmental Permit means any federal, state, local, provincial, or foreign permits, licenses, approvals, registrations,
waivers, consents or authorizations required or issued by any Governmental Authority under or in connection with any Environmental Law.
Equitable Exceptions has the meaning ascribed to such term in Section 4.2(b)
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate means, together with the applicable Person, any other Person that is or was at any time treated as a single
employer with such Person under Section 414 of the Code or Section 4001 of ERISA and any general partnership of which the applicable Person is or has been a general partner.
Estimated Adjustment Payment means an aggregate amount of cash (which may be a negative number) equal to: (i) the
Estimated Closing Working Capital Adjustment, plus (ii) the Estimated Closing Cash, plus (iii) the Estimated Hydrocarbon Inventory Adjustment, plus (iv) the Estimated Blenders Tax Credits,
plus (v) the Estimated Closing RINs Adjustment, minus (vi) the Estimated Closing Indebtedness.
Estimated Blenders Tax Credits has the meaning ascribed to such term in Section 2.5(d).
Estimated Closing Cash has the meaning ascribed to such term in Section 2.5(d).
ANNEX A-7
Estimated Closing Hydrocarbon Inventory Amount has the meaning ascribed
to such term in Section 2.5(d).
Estimated Closing Indebtedness has the meaning ascribed to
such term in Section 2.5(d).
Estimated Closing RINs Adjustment has the meaning ascribed to
such term in Section 2.5(d).
Estimated Closing Working Capital has the meaning ascribed to
such term in Section 2.5(d).
Estimated Closing Working Capital Adjustment means the amount
(which may be a negative number) equal to (a) Estimated Closing Working Capital minus (b) the Working Capital Target Amount.
Estimated Hydrocarbon Inventory Adjustment means the amount (which may be a negative number) equal to (a) Estimated
Closing Hydrocarbon Inventory Amount minus (b) the Hydrocarbon Inventory Target Amount.
Exchange
Act means the Securities Exchange Act of 1934, as amended.
Excise Taxes means all federal, state and local
fuel excise Taxes, including motor fuel Taxes imposed under Sections 4041 and 4081 of the Code, federal oil spill liability Taxes imposed under Section 4611 of the Code and any similar Taxes (which shall include for purposes of this definition
petroleum product delivery fees, petroleum product inspection fees, petroleum release and cleanup fees, underground storage tank and release fees, environmental surcharge fees, propane education and research fees, and any similar fees, in each case,
that apply generally to industry participants and that are in the nature of a Tax).
Existing SRE Litigation has the
meaning ascribed to such term in Section 6.22(b).
Facilities means the Refineries and the
Companys Wyoming Renewable Diesel Facility, located in Sinclair, Wyoming.
Final Closing Blenders Tax Credits has
the meaning ascribed to such term in Section 2.6(c).
Final Closing Cash has the meaning
ascribed to such term in Section 2.6(c).
Final Closing Hydrocarbon Inventory Amount has the
meaning ascribed to such term in Section 2.6(c).
Final Closing Indebtedness has the meaning
ascribed to such term in Section 2.6(c).
Final Closing RINs Adjustment has the meaning
ascribed to such term in Section 2.6(c).
Final Closing Working Capital has the meaning
ascribed to such term in Section 2.6(c).
Financial Statement Businesses has the meaning
ascribed to such term in Section 4.5(a).
ANNEX A-8
Financial Statements has the meaning ascribed to such term in
Section 4.5(a).
Fraud means a knowing and intentional misrepresentation of a material fact
or concealment of a material fact by a Party with respect to any representation or warranty by the Party in Article 4 or 5 of this Agreement (or the corresponding Company Disclosure Schedules or Parent Disclosure
Schedules, as applicable) (but not, for the avoidance of doubt, in any other actual or alleged representation or warranty made orally or in writing), which is made or concealed with the intent of inducing another Party to enter into this Agreement
and upon which such other Party has reasonably relied (and does not include any fraud claim based on constructive knowledge, negligent misrepresentation, recklessness or a similar theory).
FTC means the United States Federal Trade Commission.
Fuel Credit Programs means the Laws relating to emissions credits, allowances, offsets, compliance instruments, allotments,
renewable identification numbers, certificates, authorizations, and other credits (relating to applicable fuel quality standards, renewable fuel and emissions standards, and other matters) as described in Schedule 1.1(f).
GAAP means the generally accepted accounting principles and practices in effect in the United States from time to time, as
applied on a consistent basis by the Company.
Governmental Authority means any national, federal, state, regional,
provincial, local or municipal administrative, judicial, legislative, executive, regulatory, police or taxing government or governmental or quasi-governmental authority of any nature, including any agency, branch, bureau, department, official or
government-owned, government-operated, or government-controlled entity or any court or other tribunal, whether domestic or foreign.
Hazardous Material means any chemical, material, substance or waste defined or regulated as hazardous or toxic or as a
pollutant or contaminant under any Environmental Law, including any petroleum, waste oil or petroleum constituents or by-products, radioactive materials, asbestos or asbestos-containing materials, gasoline,
diesel fuel, pesticides, radon, urea formaldehyde, polychlorinated biphenyls, per- and polyfluoroalkyl substances; and any other chemicals, materials, substances or wastes in any amount or concentration for
which Liability is imposed under Environmental Laws.
Historical Financial Statements has the meaning ascribed to such
term in Section 4.5(a).
HoldCo Benefit Plan means each Benefit Plan with respect to any
current or former employee or independent contractor who provides or has provided services directly or indirectly to any member of the Company Group (including as an employee of Sinclair Services Company) that (i) is maintained, sponsored or
contributed to by Sinclair HoldCo or any of its ERISA Affiliates (other than the Company Group) or under which Sinclair HoldCo or any of its ERISA Affiliates (other than the Company Group) has or could reasonably be expected to have any Liability.
ANNEX A-9
Hospitality Business means (a) the ownership, operation and
management of hotels in Utah, Wyoming, Arizona and California, including (i) Little America Hotels and Resorts and (ii) various roadside hotel and truck stop properties, (b) the ownership, operation and management of ski resort
properties in Utah and Idaho, including Sun Valley Ski Resort, (c) the ownership, operation and management of the Sinclair branded retail location in each of (i) Mountain Green, Utah, (ii) Salt Lake City, Utah and (iii) Sun
Valley, Idaho, and (d) the ownership and management of the properties set forth on Schedule 1.1(e) and other undeveloped real estate for future development or sale, which real estate is not related to the crude supply, refining,
logistics or refined products marketing businesses of the Company Group or used in support of the Sinclair brand.
HSR
Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
Hydrocarbon Inventory means the products set forth in Exhibit A.
Hydrocarbon Inventory Amount means the aggregate amount equal to the sum of, for each item of Hydrocarbon Inventory,
(a) the Applicable Hydrocarbon Inventory Amount multiplied by (b) the Applicable Hydrocarbon Inventory Price for such item.
Hydrocarbon Inventory Target Amount means the aggregate amount equal to the sum of, for each item of Hydrocarbon Inventory,
(a) the volume target (in barrels) set forth opposite such item of Hydrocarbon Inventory in Exhibit A multiplied by (b) the Applicable Hydrocarbon Inventory Price for such item.
Income Taxes means any federal, state, local or foreign Tax (i) measured or imposed on or with reference to net income
or gross income (in lieu of net income) or (ii) imposed on, or with reference to, multiple bases including net income.
Income Tax Returns means any Tax Return with respect to Income Taxes.
Indebtedness means, with respect to the Company Group, without duplication, (a) indebtedness for borrowed money or
indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed money, (b) indebtedness evidenced by any note, bond, debenture, mortgage, loan or other debt instrument or debt security, (c) obligations under any
performance bond or letter of credit, but only to the extent drawn or called prior to the Adjustment Time, (d) obligations, contingent or otherwise, under any lease arrangements that are required to capitalized under GAAP, (e) obligations
for purchase price adjustments, royalty payments, the deferred purchase price of property, assets, services or equity interests, including earn-outs and seller notes (but excluding any trade payables, purchase
orders, accrued expenses or Contracts for the purchase of goods or services prior to the delivery of such goods or services, in each case arising in the ordinary course of business), (f) obligations under any derivative financial instruments,
including interest rate swaps, collars, caps, hedging and other derivative and similar arrangements, (g) obligations (that are not otherwise Indebtedness) secured by an Encumbrance (other than any Permitted Encumbrance) on property owned by any
member of the Company Group, (h) amounts owed to any Affiliates of any member of the Company Group (other than amounts owed between members of the Company Group), (i) guarantees with respect to any indebtedness of any other Person of a type
described in clauses (a) through (h) above and (j), and (j) for clauses (a) through (i) above, all accrued interest thereon, if any, and, solely in the case of
the Specified Funded Indebtedness, any termination fees, prepayment penalties, breakage costs or similar payments associated with the repayment of such Specified Funded Indebtedness on the
ANNEX A-10
Closing Date. For the avoidance of doubt, Indebtedness shall not include (i) trade payables, (ii) any obligations under any performance bond or letter of credit to the extent undrawn or
uncalled as of the Adjustment Time, (iii) any intercompany Indebtedness of the Company and the Company Subsidiaries, (iv) any Indebtedness incurred by the Parent Parties and their Affiliates (and subsequently assumed by the Company or any
Company Subsidiary) on the Closing Date, (v) any endorsement of negotiable instruments for collection in the ordinary course of business, (vi) any deferred revenue, (vii) any Taxes of the Company or any Company Subsidiary or
(viii) any liability under any Contract, agreement or other arrangement between the Company or any Company Subsidiary, on the one hand, and any Parent Party or any of its Affiliates, on the other hand.
Indebtedness Payoff Amount means the aggregate principal amount of the Specified Funded Indebtedness, plus all
accrued but unpaid interest, fees and other amounts payable thereon (including any premiums, penalties or other obligations relating thereto), in each case, calculated as of the Adjustment Time without giving effect to the Contemplated Transactions.
Indemnified Claim has the meaning ascribed to such term in Section 9.3(a).
Indemnified Party has the meaning ascribed to such term in Section 9.3(a).
Indemnifying Party has the meaning ascribed to such term in Section 9.3(a).
Independent Accountant has the meaning ascribed to such term in Section 2.6(c).
Initial Sinclair Directors has the meaning ascribed to such term in Section 2.2(d).
Insurance Policies has the meaning ascribed to such term in Section 4.20.
Insured Sinclair Owned Real Property means those parcels of Sinclair Owned Real Property with respect to which New Parent
elects to purchase title insurance at Closing.
Intellectual Property Rights means intellectual property rights arising
from or in respect of the following, whether protected, created or arising under the Laws of the United States or any other jurisdiction or under any international convention, including all: (i) patents and patent applications, including all
continuations, divisionals, continuations-in-part, and provisionals, and patents issuing on any of the foregoing, and all reissues, reexaminations, substitutions,
renewals and extensions of any of the foregoing (clause (i), collectively, Patents); (ii) trademarks, service marks, trade names, trade dress, logos, corporate names and other similar indicia of origin or
business identifiers, together with the goodwill associated with any of the foregoing, and all applications, registrations, renewals and extensions of any of the foregoing (clause (ii), collectively,
Trademarks); (iii) copyrights, works of authorship (including any rights in software), including copyrights in Software website content and code, documentation, advertising copy, marketing materials, specifications, translations,
drawings, graphics, databases and all registrations, applications, renewals, extensions and reversions of any of the foregoing (clause (iii), collectively, Copyrights); (iv) trade secrets, confidential
business information and other proprietary information (including concepts, ideas, designs, processes, procedures, techniques, technical information, specifications, operating and maintenance manuals, drawings, methods, know-how, technical data and databases, discoveries, inventions, rights in research and development, formulas, modifications, extensions, software algorithms, improvements and other
ANNEX A-11
proprietary rights) (clause (iv), collectively, Trade Secrets); (v) domain names, domain name registrations and rights, social media accounts, and web pages
(clause (v), collectively, Domain Names); (vi) rights of privacy and publicity; and (vii) the right to sue and collect Damages for past, present and future infringement, misappropriation or other
violation with respect to any of the foregoing intellectual property rights.
Intended Tax Treatment has the meaning
ascribed to such term in Section 6.3(f)(i).
Interim Balance Sheet has the meaning ascribed
to such term in Section 4.5(a).
Intervening Event has the meaning ascribed to such term in
Section 6.7(i)(iii).
IRS means the United States Internal Revenue Service.
Joint Venture Interests has the meaning ascribed to such term in Section 4.7(e).
Joint Ventures means Saddle Butte Pipeline III, LLC, a Delaware limited liability company, UNEV Pipeline, LLC, a Delaware
limited liability company, Pioneer Investments Corp., a Delaware corporation, and Prairie Field Services, LLC, a North Dakota limited liability company.
Knowledge of the Company means, when used with respect to the representations and warranties of Sinclair HoldCo and the
Company in Article 4, the actual knowledge of one or more of the individuals identified on Schedule 1.1(a)(i) of such fact or matter (as opposed to imputed, implied, or constructive knowledge, and without any duty or
obligations of inquiry).
Knowledge of Parent means, when used with respect to the representations and warranties of
Parent in Article 5, the actual knowledge of one or more of the individuals identified in Schedule 1.1(a)(ii) of such fact or matter (as opposed to imputed, implied, or constructive knowledge, and without any duty or
obligations of inquiry).
Law means any statute, law, ordinance, regulation, rule, code, Order, constitution, treaty,
common law, judgment, decree, other requirement or rule of law of any Governmental Authority.
Legacy Assets means
(a) all refining, pipeline, storage or terminalling assets (including the former Shawnee, New Madrid, Iola and Mexico terminals and any pipeline and related assets, including pipeline breakout stations and tanks, owned or operated in or around
Hartford, Illinois) (and associated real property interests and buildings or improvements related to the foregoing) that (i) were previously owned or operated by Sinclair HoldCo, its Affiliates (including the Company Group) or any of their
respective former Affiliates, including those related to the Downstream Business or the Midstream Business, but have been disposed of prior to the Closing, other than the refinery and associated assets in Tulsa, Oklahoma, previously owned by the
Company Group or (ii) are located off-site of the Sinclair Real Property and that have been permanently idled or are currently non-operational and not expected to
return to operational service and (b) the assets listed on Schedule 1.1(g).
ANNEX A-12
Legacy Liabilities means (a) all Liabilities to the extent they
arise out of, result from or relate to Sinclair Marketing, Inc. or Sinclair Services Company, (b) all Liabilities to the extent they arise out of, result from or relate to the Legacy Assets, including Liabilities specific to a Legacy Asset,
such as environmental contamination of the particular Legacy Asset and any associated real property or adjacent real property, claims for personal injury or death arising out of the presence of environmental contamination at or emanating from any
Legacy Asset, Liabilities relating to specific activities or operations at a Legacy Asset (other than activities constituting participation in the industry generally, which shall not constitute Legacy Liabilities in accordance with the proviso
below) or Liabilities related to the dismantling or disposition of the particular Legacy Asset, and (c) the SFC Liabilities (as defined in the Reorganization Agreement); but, in all cases of clauses (a), (b) and (c) above, excluding
(i) Employment Liabilities, (ii) products Liabilities and (iii) Liabilities that arise primarily from participation in the refining industry or any of the businesses of transporting, selling or marketing hydrocarbons or refined
products generally and would be generally applicable to any participants in such industries, such as climate change litigation.
Legal Restraint means any temporary restraining order, preliminary or permanent injunction or other judgment or Order
issued by any Governmental Authority.
Liabilities means all debts, liabilities, Taxes, guarantees, assurances,
commitments and obligations, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including
whether arising out of any Contract or tort based on negligence or strict liability) and regardless of whether such item would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto.
Licensed Business Intellectual Property Rights means Intellectual Property Rights that any third Person owns and that any
member of the Company Group is licensed to use in its business as currently conducted and as proposed to be conducted.
Licensed
Parent Intellectual Property Rights means Intellectual Property Rights that any third Person owns and that any of the Parent Entities is licensed to use in its business as currently conducted and as proposed to the conducted.
Material Adverse Effect means any event, occurrence, fact, condition or change that, individually or in the aggregate, has
had (a) a material and adverse effect on the assets, business, financial condition or results of operations of the Company Group, taken as a whole, or (b) a material and adverse effect on the ability of the Company or Sinclair HoldCo
to consummate the Contemplated Transactions; provided, however, that, in the case of clause (a) above, none of the following shall be taken into account in determining whether there has been a Material Adverse Effect:
(i) changes or conditions generally affecting the economy or the financial markets in the United States or globally; (ii) changes or conditions generally affecting the industries in which the Company Group operates; (iii) armed
hostilities, acts of war, terrorism, military actions or any escalation or material worsening thereof following the date hereof; (iv) changes in Laws (including applicable Environmental Laws) or GAAP, or in the interpretation thereof;
(v) the announcement of this Agreement or the pendency of the Contemplated Transactions (including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, licensors, distributors, vendors, partners, or
employees); (vi) compliance by the Company with this Agreement, any actions taken or not taken by the Company that are required to be taken or not taken pursuant to
ANNEX A-13
this Agreement; (vii) the failure, in and of itself, of the Company Group to meet any projections, forecasts, estimates or predictions (provided that any event, occurrence, fact,
condition or change that caused or contributed to such failure to meet any projection, forecast, estimate or prediction shall not be excluded from the definition of Material Adverse Effect for purposes of this
clause (vii)); (viii) any effects of weather, geological or meteorological events or other natural disaster; (ix) any strikes, work stoppages or other labor disturbances; (x) any epidemic, pandemic, disease
outbreak (including the COVID-19 virus) or other public health crisis or public health event, or the worsening of any of the foregoing; or (xi) any increases in the costs of commodities or supplies or
decreases in the price of refined or finished products; except to the extent such effect relating to or arising in connection with matters described in clauses (i), (ii), (iii), (iv), (viii),
(ix) and (x) above disproportionately affects the Company Group, as compared to other Persons that conduct business in, and derive substantially all of their revenues from, the industries in which the Company Group is engaged
within the geographic area in which the Company Group principally operates.
Midstream Business means the ownership,
operation, management and maintenance of the Facilities and all associated assets and infrastructure pertaining to the midstream business of the Company Group, including all sourcing, crude supply, midstream, transporting, gathering, terminalling,
pipelines and logistics activities associated therewith and all ancillary activities related thereto.
Midstream
Company means the Company, as such term is defined in the Midstream Contribution Agreement.
Midstream
Company Group means the Company Group, as such term is defined in the Midstream Contribuiton Agreement.
Midstream Contribution has the meaning ascribed to such term in the Recitals.
Midstream Contribution Agreement has the meaning ascribed to such term in the Recitals.
Midstream Liabilities means all Liabilities of any kind, character or description, to the extent arising out of, resulting
from or relating to, the operation, affairs or conduct of the Midstream Business.
MLP has the meaning ascribed to such
term in the Recitals.
New Parent has the meaning ascribed to such term in the Preamble.
New Parent Base Stock Amount means a number of shares of New Parent Common Stock equal 60,230,036.
New Parent Board has the meaning ascribed to such term in the Recitals.
New Parent Bylaws has the meaning ascribed to such term in Section 2.2(b).
ANNEX A-14
New Parent Certificate of Incorporation has the meaning ascribed to such
term in Section 2.2(b).
New Parent Common Stock means the common stock of New Parent, par
value $0.01.
New Parent Dividend Equivalent has the meaning ascribed to such term in
Section 2.4(c).
New Parent PSU Award has the meaning ascribed to such term in
Section 2.4(b).
New Parent Restricted Stock Unit Award has the meaning ascribed to such term
in Section 2.4(a).
New Parent Stockholder Approval has the meaning ascribed to such term in
the Recitals.
New Parent Title Policies means, collectively, ALTA owners policies of title insurance, with such
endorsements as may be required by New Parent, and otherwise in form and substance reasonably satisfactory to New Parent, effective as of the Closing Date, insuring the applicable Company Group members good and marketable fee simple title to
the Insured Sinclair Owned Real Property (and such Company Group members rights under any easements appurtenant thereto), free and clear of all Encumbrances, except Permitted Encumbrances.
Non-Recourse Party has the meaning ascribed to such term in
Section 10.5(b).
O&G Business means (a) the development, leasing, acquisition,
exploration, and production of unrefined oil, gas, coal seam gas, casinghead gas, condensate, distillate, liquid hydrocarbons and gaseous hydrocarbons (O&G Hydrocarbons) and (b) (i) the ownership, operation, maintenance,
expansion, construction, commissioning and decommissioning of, and acquisition of, gathering systems and pipelines through which such O&G Hydrocarbons are transported, and (ii) the transportation and disposal of water (including fluids and
materials contained therein) produced in association with the production of such O&G Hydrocarbons, including, in each of clauses (i) and (ii), through the ownership of equity interests in Wolf Midstream Holdings, LLC;
provided, however, that the O&G Business shall exclude (x) any of the foregoing actions taken in connection with any gathering systems and pipelines located downstream from the point in which control and custody of such
O&G Hydrocarbons is transferred to a Person other than any Person who held a direct or indirect interest in such O&G Hydrocarbons at the wellhead and (y) the Powder Flats crude oil gathering system owned by the Saddle Butte Pipeline
III, LLC.
O&G Hydrocarbons has the meaning ascribed to such term in the definition of O&G Business.
Off-The-Shelf Software means licenses for
commercially available and unmodified off-the-shelf Software used solely for internal use with a replacement cost or aggregate fee, royalty, or other consideration for
any such Software or group of related Software licenses of no more than $25,000 per year.
Office Lease has the meaning
ascribed to such term in Section 3.2(b)(vi).
ANNEX A-15
Open Source means any Software that is distributed as free software, open
source software, copyleft software, freeware or shareware or under similar licensing or distribution models, including, without limitation, any Software licensed under the GNU General Public License, the GNU Library General
Public License, the GNU Lesser General Public License, the Affero General Public License, the Mozilla Public License, the Common Development and Distribution License, the Eclipse Public License or any Creative Commons sharealike license.
Order means any order, judgment, injunction, award, decree, writ or other legally enforceable requirement handed down,
adopted or imposed by, including any consent decree, settlement agreement or similar written agreement with, any Governmental Authority.
Other Consideration has the meaning ascribed to such term in Section 2.5(f).
Other Real Estate HoldCo Liabilities has the meaning ascribed to such term in the Reorganization Agreement.
Owned Business Intellectual Property Rights means all Intellectual Property Rights that the Company Group owns or purports
to own, including, but not limited to the Registered Business Intellectual Property Rights set forth on Company Disclosure Schedule 4.11(a).
Owned Parent Intellectual Property Rights means all Intellectual Property Rights that the Parent Entities own or purport to
own.
Parent has the meaning ascribed to such term in the Preamble.
Parent Acquisition Proposal has the meaning ascribed to such term in Section 6.7(i)(i).
Parent Award Agreement means any agreement memorializing the grant of, or terms and conditions applicable to, any Parent
Restricted Stock Unit Award or Parent Performance Share Unit Award granted under a Parent Plan, including, as applicable, any Notice of Grant of Restricted Stock Units, Restricted Stock Unit Agreement and Performance Share Unit Agreement.
Parent Benefit Plan means each Benefit Plan (i) that is maintained, sponsored or contributed to by any Parent Party,
or (ii) under which any Parent Party has or could reasonably be expected to have any Liability.
Parent Board has
the meaning ascribed to such term in the Recitals.
Parent Certificate of Merger has the meaning ascribed to such term
in Section 2.1(b).
Parent Common Stock means the common stock of Parent, par value $0.01 per
share.
Parent Disclosure Schedules means both the disclosure schedules containing certain exceptions to, or
information required by, the representations and warranties in Article 5 of this Agreement delivered by Parent to Sinclair HoldCo concurrently with the execution of this Agreement and any information in the Parent SEC
Documents publicly available and filed with or furnished to the Commission after January 1, 2021 and before the date of this Agreement (excluding any disclosures in the Parent SEC Documents (i) in any risk factors section, (ii) in the
Forward-Looking Statements section and (iii) in any other disclosures that are similarly
ANNEX A-16
predictive, cautionary or forward-looking in nature), to the extent the relevance of such information to the representations and warranties in Article 5 is reasonably
apparent on the face of such information. For the avoidance of doubt, any reference in this Agreement to a specific schedule of the Parent Disclosure Schedules shall also be deemed to be a reference to any applicable Parent SEC Documents to the
extent satisfying the criteria set forth in this definition.
Parent Dividend Equivalent has the meaning ascribed to
such term in Section 2.4(c).
Parent Easements has the meaning ascribed to such term
in Section 5.8(c).
Parent Employees has the meaning ascribed to such term in
Section 5.17(a).
Parent Entities means each of Parent, New Parent and all of their
respective Significant Subsidiaries, but expressly excluding the MLP.
Parent Financial Statements has the meaning
ascribed to such term in Section 5.22(b).
Parent Fundamental Representations means the
representations and warranties set forth in Section 5.1 (Organization), Section 5.2 (Authority; Binding Effect), Section 5.3(a) (Non-Contravention of Organizational Documents), Section 5.5 (Capitalization of Parent), Section 5.6(a) and (d) (Subsidiaries; Equity
Ownership), Section 5.20 (Brokers) and Section 5.23 (No Prior Activities of New Parent and Parent Merger Sub) and Section 5.26 (Board Approval; Vote
Required).
Parent Indemnified Parties has the meaning ascribed to such term in
Section 9.2(b).
Parent Intellectual Property Rights means all Owned Parent Intellectual
Property Rights and Licensed Parent Intellectual Property Rights.
Parent Leased Real Property has the meaning ascribed
to such term in Section 5.8(a).
Parent Leases has the meaning ascribed to such term in
Section 5.8(b).
Parent Material Adverse Effect means any event, occurrence, fact, condition
or change that, individually or in the aggregate, has had (a) a material and adverse effect on the assets, business, financial condition or results of operations of the Parent Entities, taken as a whole, or (b) a material and adverse
effect on the ability of the Parent Parties to consummate the Contemplated Transactions; provided, however, that, in the case of clause (a) above, none of the following shall be taken into account in determining whether there has
been a Parent Material Adverse Effect: (i) changes or conditions generally affecting the economy or the financial markets in the United States or globally; (ii) changes or conditions generally affecting the industries in which the Parent
Entities operate; (iii) armed hostilities, acts of war, terrorism, military actions or any escalation or material worsening thereof following the date hereof; (iv) changes in Laws (including applicable Environmental Laws) or GAAP, or in
the interpretation thereof; (v) the announcement of this Agreement or the pendency of the Contemplated Transactions (including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, licensors, distributors,
vendors, partners, or employees); (vi) compliance by Parent with this Agreement, any actions taken or not taken by Parent that are required to be taken or not taken pursuant to this
ANNEX A-17
Agreement; (vii) the failure, in and of itself, of the Parent Entities to meet any projections, forecasts, estimates or predictions (provided that any event, occurrence, fact,
condition or change that caused or contributed to such failure to meet any projection, forecast, estimate or prediction shall not be excluded from the definition of Parent Material Adverse Effect for purposes of this
clause (vii)); (viii) any effects of weather, geological or meteorological events or other natural disaster; (ix) any strikes, work stoppages or other labor disturbances; (x) any epidemic, pandemic, disease
outbreak (including the COVID-19 virus) or other public health crisis or public health event, or the worsening of any of the foregoing; or (xi) any increases in the costs of commodities or supplies or
decreases in the price of refined or finished products; except to the extent such effect relating to or arising in connection with matters described in clauses (i), (ii), (iii), (iv), (viii),
(ix) and (x) above disproportionately affects the Parent Entities, as compared to other Persons that conduct business in, and derive substantially all of their revenues from, the industries in which the Parent Entities are engaged
within the geographic area in which the Parent Entities principally operate.
Parent Material Contracts has the meaning
ascribed to such term in Section 5.9(a).
Parent Merger has the meaning ascribed to such term
in the Recitals.
Parent Merger Sub has the meaning ascribed to such term in the Preamble.
Parent Merger Sub Stockholder Approval has the meaning ascribed to such term in the Recitals.
Parent Officers Certificate has the meaning ascribed to such term in
Section 3.2(b)(iii).
Parent Owned Real Property has the meaning ascribed to such term
in Section 5.8(a).
Parent Parties has the meaning ascribed to such term in the Preamble.
Parent Performance Share Unit Award has the meaning ascribed to such term in Section 2.4(b).
Parent Plans means the HollyFrontier Corporation 2020 Long Term Incentive Plan and the HollyFrontier Corporation
Long-Term Incentive Compensation Plan, as amended, and including, in each case, the UK Sub-Plans adopted thereunder.
Parent Real Property means the Parent Owned Real Property and the Parent Leased Real Property.
Parent Recommendation has the meaning ascribed to such term in Section 5.26(a).
Parent Restricted Stock Unit Award has the meaning ascribed to such term in Section 2.4(a).
Parent SEC Documents has the meaning ascribed to such term in Section 5.22(a).
ANNEX A-18
Parent Software means all of the Software owned exclusively by any of the
Parent Entities.
Parent Stockholder Approval has the meaning ascribed to it in
Section 5.26(d).
Parent Stockholders has the meaning ascribed to such term in the Recitals.
Parent Surviving Corporation has the meaning ascribed to such term in Section 2.1(a).
Parent Systems means the hardware (whether general purpose or special purpose), servers, circuits, platforms, computers,
cable, networks and other computer systems that are owned by, or used in the operation of the business of, any of the Parent Entities.
Parent Tax Counsel has the meaning ascribed to such term in Section 7.2(d).
Parent Tax Counsel Sinclair Tax Certificate has the meaning ascribed to such term in
Section 6.3(g).
Parent Tax Counsel Parent Tax Certificate has the meaning ascribed to such
term in Section 6.3(g).
Parent Termination Fee means a fee equal to $200,000,000.
Parties and Party have the meanings ascribed to such terms in the Preamble.
Patents has the meaning ascribed to such term in the definition of Intellectual Property Rights.
Payoff Letters has the meaning ascribed to such term in Section 2.5(d).
Permits means all licenses, permits, consents, certificates, exemptions, registrations, waivers and other authorizations
and approvals obtained or required to be obtained from Governmental Authorities.
Permitted Encumbrances means
(i) with respect to the Company Group, Encumbrances listed on Schedule 1.1(b) (which Encumbrances shall be removed on the Closing Date); (ii) statutory Encumbrances arising out of operation of Law with respect to a Liability incurred in
the ordinary course of business consistent with prior practice securing payments not yet due and payable as of the Closing and that are not delinquent or are being actively contested in good faith and for which appropriate reserves have been
established under GAAP; (iii) easements, rights of way, zoning ordinances and other similar encumbrances affecting the Sinclair Real Property or the Parent Real Property, as applicable, that would not result in or reasonably be expected to
result in a Material Adverse Effect or a Parent Material Adverse Effect, as applicable; (iv) rights of parties under the Sinclair Leases or Parent Leases, as applicable; (v) with respect to the Parent Entities and their assets, including
the Parent Real Property and the Parent Easements, all matters disclosed by the Parent SEC Documents, including the Parent Financial Statements that would not result in or not reasonably be expected to result in a Parent Material Adverse Effect;
(vi) all matters that current, accurate surveys would show that would not result in or not reasonably be expected to
ANNEX A-19
result in a Material Adverse Effect or a Parent Material Adverse Effect, as applicable; (vii) all matters reflected in recorded documents affecting the Sinclair Real Property or Sinclair
Easements, or the Parent Real Property or Parent Easements, as applicable, that would not result in or not reasonably be expected to result in a Material Adverse Effect or a Parent Material Adverse Effect, as applicable; (viii) Encumbrances
arising under original purchase price conditional sales Contracts and equipment leases with third parties entered into in the ordinary course of business; (ix) Encumbrances and other imperfections of title that do not materially detract from
the value or materially interfere with or impair the present use of the property subject thereto; (x) liens for Taxes not yet due and payable or that are being contested in good faith and for which appropriate reserves have been established
under GAAP; (xi) mechanics, materialmens, carriers, workmens, warehousemens, repairmens, landlords or other similar liens and security obligations arising or incurred in the ordinary course of business
securing payments not yet due and payable as of the Closing; (xii) any pledge or deposit made in the ordinary course of business in compliance with workers compensation, unemployment insurance and other social security Laws, or to secure
the performance of bids, tenders, or government Contracts, leases, licenses, statutory obligations, surety bonds, performance bonds, completion bonds or other obligations of a like level, or as otherwise incurred in the ordinary course of business;
(xiii) title of a lessor under any capital or operating lease; (xiv) Encumbrances on goods in transit incurred pursuant to documentary letters of credit or shippers Encumbrances; (xv) Encumbrances affecting the assets or
properties of the Company Group or Parent, as applicable, which are fully released prior to Closing; and (xvi) any other imperfection or irregularity of title or other Encumbrance that would not result in or not reasonably be expected to result
in a Material Adverse Effect or Parent Material Adverse Effect, as applicable; provided, however, that no mortgages, deeds of trust, judgments, liens for Taxes (other than liens for Taxes described in
clause (x) of this definition or Encumbrances described in clause (xi) of this definition) or other monetary Encumbrances encumbering any Sinclair Owned Real Property or any interest of any member of the Company
Group in the Sinclair Leased Real Property or the Sinclair Easements shall be deemed or considered a Permitted Encumbrance to the extent not fully released and satisfied at or prior to Closing.
Person means an individual, a corporation, a general or limited partnership, a limited liability company, an association, a
trust, other legal entity or organization or Governmental Authority.
Personal Information means, in addition to any
definition for any similar term (e.g., personal data or personally identifiable information or PII) provided by applicable Law, (a) all information that identifies an individual person, (b) all personal
information subject to the California Consumer Privacy Act, (c) nonpublic personal information subject to the Gramm-Leach Bliley Act and state financial privacy laws and regulations, and (d) credit card information financial account
numbers (including credit card and procurement card numbers) subject to the Payment Card Industry Data Security Standard.
Post-Closing Divestiture Shares has the meaning ascribed to such term in Section 2.5(f)(vi).
Pre-Closing Fuel Obligations has the meaning ascribed to such term in
Section 6.22(a).
Pre-Closing Statement has the
meaning ascribed to such term in Section 2.5(d).
ANNEX A-20
Pre-Closing Tax Period means any
taxable period ending on or before the Closing Date.
Pre-Closing Tax Return
has the meaning ascribed to such term in Section 6.3(a)(i).
Pre-Closing Taxes means, without duplication, any and all (i) Taxes of
Sinclair HoldCo or any ultimate beneficial owner of Sinclair HoldCo, including any Taxes resulting from the Contemplated Transactions, (ii) Taxes of any member of the Company Group (including relating or attributable to any assets, rights,
activities or properties of the Company Group) for any Pre-Closing Tax Period or for the portion of any Straddle Period ending on and including the Closing Date (determined in accordance with
Section 6.3(i) and, for the avoidance of doubt, determined without regard to any carryback of a loss or credit arising in a taxable period beginning after the Closing Date), including, but not limited to, any Excise Taxes
for any Pre-Closing Tax Period or for the portion of any Straddle Period ending on and including the Closing Date (including, for the avoidance of doubt, any increase in such Excise Taxes resulting from a
reduction or disallowance of any Tax credit or refund with respect to such Excise Taxes), (iii) Taxes of any member of the Company Group for any Pre-Closing Tax Period or for the portion of any Straddle Period
ending on and including the Closing Date resulting from a reduction or disallowance of any Tax credit or refund (including, for the avoidance of doubt, any Blenders Tax Credit or any other Tax credit or refund with respect or related to Excise
Taxes), (iv) Liability for Taxes of any member of any affiliated, consolidated, combined, unitary or similar group of which any member of the Company Group was a member for any period prior to the Closing Date, (v) Liability for Taxes as a
result of any obligation of any member of the Company Group to indemnify any other Person with respect to Taxes (including any Liability for Taxes of a predecessor or transferor or otherwise by operation of Law) to the extent such obligation arises
on or prior to Closing, (vi) withholding Taxes imposed with respect to any payment made to Sinclair HoldCo under this Agreement, and (vii) Taxes attributable to the Company Reorganization; provided, however, that Pre-Closing Taxes shall not include any Taxes, expenses or liabilities included in the calculation of the Closing Adjustment Amount (or any item included therein). Notwithstanding any other provision of this
Agreement to the contrary, the Parties acknowledge that Sinclair HoldCo shall have no obligation to indemnify any Parent Indemnified Party for (or otherwise pay any Parent Indemnified Party for any Damages resulting from) any loss, reduction or
disallowance (in whole or in part) of, or any limitation imposed on, any Tax credit or other Tax attribute (whether federal, state, local or foreign) of any member of the Company Group used in or with respect to the portion of any Straddle Period
beginning after the Closing Date or any taxable period beginning after the Closing Date.
Proceeding means any action,
arbitration, audit, claim, hearing, investigation, litigation or suit (whether civil, commercial, administrative, criminal, investigative or informal) commenced, brought, conducted or heard by or before, or otherwise involving any Governmental
Authority or arbitrator.
Property Taxes means ad valorem, property or similar Taxes but excluding, for the avoidance
of doubt, Income Taxes, Excise Taxes and Transfer Taxes.
Proxy Statement has the meaning ascribed to such term in
Section 6.8(a).
ANNEX A-21
Puri Note means that certain Promissory Note, dated as of June 2017, by
and between Preet S. Puri, as borrower, and Sinclair Finance Company, as lender.
Ranching Business means the
ownership, leasing, operation and management of farm, ranch and cattle feedlot properties in Big Horn County, Treasure County, Carbon County, Fergus County and Yellowstone County, Montana, and Park County and Sheridan County, Wyoming.
Refineries means the refining facilities owned by the Company Group and located in Sinclair, Wyoming and Casper, Wyoming.
Registered Business Intellectual Property Rights means all Patents, Copyrights, Trademarks and Domain Names,
respectively, that (a) are registered to or (b) were applied for by or issued to, and, in each case, currently assigned to the Company Group by any Governmental Authority or authorized private Domain Name registrar in any jurisdiction.
Release means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge,
dispersal, placing, pumping, discarding, abandoning, emptying, escaping, leaching or migration into or through the Environment.
Released Claim has the meaning ascribed to such term in Section 9.4.
Released Person has the meaning ascribed to such term in Section 9.4.
Releasing Person has the meaning ascribed to such term in Section 9.4.
Remaining Parent Plan Shares has the meaning ascribed to such term in Section 2.4(d).
Reorganization Agreement means that certain Reorganization Agreement, dated as of the date of this Agreement, by and among
Sinclair HoldCo, the Company, Real Estate Holding LLC, a Delaware limited liability company, Sinclair Oil Corporation, a Wyoming corporation, Sinclair Transportation Company, a Wyoming corporation, Sinclair Wyoming Refining Company, a Wyoming
corporation, Sinclair Finance Company, a Wyoming corporation, SOC Delaware, Wyoming Renewable Diesel Company LLC, a Wyoming limited liability company, Sinclair Trucking Company, a Wyoming corporation, Sinclair Casper Refining Company, a Wyoming
corporation, Sinclair Tulsa Refining Company, a Wyoming corporation, Sinclair Crude Company, a Wyoming corporation, Field Services LLC, a Wyoming limited liability company, Sinclair Golf Course, Inc., a Wyoming corporation, Sinclair Pipeline Company
LLC, a Wyoming limited liability company, and Sinclair Logistics LLC, a Wyoming limited liability company.
Representatives means, as to any Person, its officers, directors, employees, managers, members, partners, trustees,
shareholders, owners, counsel, accountants, financial advisors, sources of financing (including counsel to such sources) and consultants.
Resolution Period has the meaning ascribed to such term in Section 2.6(c).
Retained Business means, collectively, the Hospitality Business, the O&G Business and the Ranching Business.
ANNEX A-22
Retained Liabilities means (a) the Legacy Liabilities, (b) the
Other Real Estate HoldCo Liabilities, (c) all Liabilities arising out of, resulting from or relating to the operation of the Retained Business, (d) all Liabilities primarily resulting from the failure of the intended tax treatment of the
Company Reorganization, or the failure of the definitive agreements relating to the Company Reorganization to be valid and binding on each party thereto, and (e) all Benefits Liabilities, in each case, whether before, at, or after the Closing.
Retention Closing Payments has the meaning ascribed to such term in Section 3.2(a)(ii).
RFS Program means the Renewable Fuel Standard Program under the Energy Policy Act of 2005 and the Energy Independence and
Security Act of 2007 (42 U.S.C. § 7545(o)) and implementing regulations, including without limitation, 40 CFR Part 80 Subpart M, as the same may be amended from time to time.
RIN means a renewable identification number, which is the serial number assigned to a batch of biofuel for the purpose of
tracking its production, use and trading as required by the RFS Program.
RINs Closing Compliance Period has the
meaning ascribed to such term in Section 6.22(a).
Sarbanes-Oxley Act means the
Sarbanes-Oxley Act of 2002, as amended.
Section 280G has the meaning ascribed to such term in
Section 6.10.
Securities Act means the Securities Act of 1933, as amended.
Senior Management Employee means any executive-level employee, including, but not limited to, the top twenty (20) most
highly compensated employees of the Company Group.
Severance Plan means the Sinclair Services Company Employee Change
of Control Severance Policy, effective as of August 3, 2021, and the Sinclair Services Company Employee Change of Control Severance Plan for Over the Road Drivers, effective as of August 3, 2021.
Share Price means, as of the date of determination, the VWAP for the ten (10) consecutive trading days ending on (and
including) the trading day immediately prior to the date of determination (or, if the date of determination is not a trading day, the trading day immediately prior to the date of determination), rounded to three decimal places.
Significant Subsidiary means any Subsidiary of Parent that has the meaning ascribed to the term Significant
Subsidiary in Rule 1.02(w) of Regulation S-X promulgated pursuant to the Exchange Act, and shall explicitly exclude the MLP and its Subsidiaries.
Sinclair Affiliate Contracts has the meaning ascribed to such term in Section 4.22.
Sinclair Benefit Plan means each Company Benefit Plan and each HoldCo Benefit Plan.
Sinclair Casualty Expenses has the meaning ascribed to such term in Section 6.17(b)(i).
ANNEX A-23
Sinclair Contribution has the meaning ascribed to such term in the
Recitals.
Sinclair Contribution Consideration has the meaning ascribed to such term in
Section 2.5(b).
Sinclair Divestiture Portion has the meaning ascribed to such term in
Section 2.5(f)(iv).
Sinclair Easements has the meaning ascribed to such term in
Section 4.9(d).
Sinclair Executive Officer Position has the meaning ascribed to such term in
Section 6.9(a).
Sinclair HoldCo has the meaning ascribed to such term in the Preamble.
Sinclair HoldCo Indemnified Parties has the meaning ascribed to such term in Section 9.2(a).
Sinclair Leased Real Property has the meaning ascribed to such term in Section 4.9(b).
Sinclair Leases has the meaning ascribed to such term in Section 4.9(b).
Sinclair Material Contracts has the meaning ascribed to such term in Section 4.10(a).
Sinclair Owned Real Property has the meaning ascribed to such term in Section 4.9(a).
Sinclair Real Property means, collectively, the Sinclair Owned Real Property and the Sinclair Leased Real Property.
Sinclair Stock Consideration has the meaning ascribed to such term in Section 2.5(b).
Sinclair Third Party Leases has the meaning ascribed to such term in Section 4.9(e).
SOC Delaware has the meaning ascribed to such term in Section 6.16(b).
Software means software and firmware, databases, any and all software implementations of algorithms, specifications, models
and methodologies, whether in source code or object code, design documents, flow-charts, user manuals and training materials relating thereto and all translations, compilations, arrangements, adaptations, and derivative works thereof, and
documentation related thereto.
Special Meeting has the meaning ascribed to such term in
Section 6.8(e).
Specified Funded Indebtedness means the Indebtedness set forth on
Schedule 1.1(c).
SRE has the meaning ascribed to such term in Section 6.22(b).
Stinker Stores Note means that certain Promissory Note, dated as of February 7, 2017, by and between Stinker Stores
Co., Inc., as borrower, and Sinclair Finance Company, as lender.
ANNEX A-24
Stockholders Agreement means that certain Stockholders
Agreement, dated as of the date of this Agreement, by and among New Parent, Sinclair HoldCo and the stockholders of Sinclair HoldCo set forth on Schedule I thereto.
Straddle Period means any taxable period beginning before and ending after the Closing Date.
Straddle Tax Return has the meaning ascribed to such term in Section 6.3(a)(ii).
Subsidiary or Subsidiaries means, with respect to any Person, any other Person of which (i) if a
corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; (ii) if a limited liability company, partnership, association or other business entity (other than a corporation), either
the managing member or general partner or a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more other Subsidiaries of that Person or a
combination thereof and for this purpose, a Person or Persons owns a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entitys gains or
losses or shall be any managing director or general partner of such business entity (other than a corporation) or control any managing director or general partner of such business entity (other than a corporation); or (iii) is otherwise
contractually entitled to direct and control such Person.
Takeover Laws has the meaning ascribed to such term in
Section 4.28.
Tax or Taxes means: (i) any and all taxes, charges,
duties, fees or other assessments (including income, corporation, excise, property, sales, use, value-added, gross receipts, profits, gains, license, withholding (with respect to compensation or otherwise), payroll, employment, unemployment,
disability, wealth, welfare, net worth, capital gains, purchase, transfer, stamp, ad valorem, conveyance, severance, production, escheat, unclaimed property, registration, social security, environmental, occupation, franchise, alternative minimum,
estimated, or other taxes of any kind whatsoever, whether disputed or not) imposed by any Governmental Authority, and including any interest, penalties or addition thereto; (ii) any Liability for the payment of any amounts of the type described
in clause (i) above of another Person arising as a result of being (or ceasing to be) a member of any consolidated or affiliated group (or being included (or required to be included) in any Tax Return relating thereto); and (iii) any
Liability for the payment of any amounts of the type described in clause (i) above of another Person as a result of any transferee or secondary Liability or any Liability assumed by Contract or Law.
Tax Proceeding has the meaning ascribed to such term in Section 6.3(c).
Tax Return means any return, declaration (including any declaration of estimated Taxes), report, claim for refund, or
information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
Third Party Claim means any claim, or the commencement of any Proceeding, brought by a Person that is not an Indemnified
Party.
ANNEX A-25
Title Affidavit has the meaning ascribed to such term in
Section 6.23.
Title Insurance Company means, collectively, Fidelity National Title Insurance
Company and Chicago Title Insurance Company.
Trade Secrets has the meaning ascribed to such term in the definition of
Intellectual Property Rights.
Trademarks has the meaning ascribed to such term in the definition of Intellectual
Property Rights.
Transaction Documents means the Stockholders Agreement, the Transition Services Agreement and
any other agreement or certificate required to be delivered pursuant hereto. For purposes of clarity, the Transaction Documents do not include the Midstream Contribution Agreement or documents delivered pursuant to the Midstream Contribution
Agreement.
Transfer Legend means the following restrictive legend to be placed on the New Parent Common Stock:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR ANY
NON-U.S. OR STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH.
Transfer Taxes has the meaning ascribed to such term in Section 6.3(b).
Transition Services Agreement means the Transition Services Agreement substantially in the form of
Exhibit E.
Trial Balance and Income Information has the meaning ascribed to such term in
Section 4.5(a).
VWAP means the volume weighted average trade price per share of Parent
Common Stock on the New York Stock Exchange (calculated to the nearest one-hundredth of a cent) as reported by Bloomberg L.P., or any successor thereto, through its Volume Weighted Average Price
function.
WARN Act has the meaning ascribed to such term in Section 4.18(d).
Willful Breach means, with respect to any Party, that such Party willfully and intentionally takes an action or fails to
take an action, with the knowledge that the taking of such action or the failure to take such action would reasonably be expected to cause a material breach of this Agreement and which act or failure to act constitutes in and of itself a material
breach of this Agreement, regardless of whether breaching this Agreement was the conscious object of the act or failure to act.
Woods Cross Divestiture Notice has the meaning ascribed to such term in Section 2.5(f).
Woods Cross Divestiture Proceeds has the meaning ascribed to such term in Section 2.5(f)(vii).
ANNEX A-26
Woods Cross Refinery Assets means the refinery located in Davis County,
Utah, and includes all assets, licenses, agreements, contracts, and permits used in the operation of the refinery, and any licenses used in the marketing, distribution or sale of the products produced at the refinery, including any leasehold,
ownership, fee, or any other interest in real estate at the refinery grounds in Davis County, Utah, including, but not limited to the plant, the refinery tanks, the 2-mile refined products pipeline from the
refinery to the Pioneer Pipeline Companys terminal, the four-mile refined products pipeline from the refinery to the UNEV Pipeline, LLC origin pump station, the four-mile refined products pipeline from the refinery to the MPLX, LP Northwest
Pipeline origin station in Salt Lake City, Utah, the four-mile hydrogen pipeline from Chevron to the refinery, the 700-foot crude oil delivery pipeline into the refinery, the truck loading rack, and loading
facilities.
Woods Cross Refinery Divestiture Action has the meaning ascribed to such term in
Section 6.2(b).
Working Capital means, as of any given date, (i) Current Assets
minus (ii) Current Liabilities.
Working Capital Target Amount means an amount equal to negative
$66,941,121.77.
ANNEX A-27
EXHIBIT A
HYDROCARBON INVENTORY VALUATION METHODOLOGIES AND
PROCEDURES
Omitted
pursuant to Item 601(a)(5) of Regulation S-K
EXHIBIT B
NEW PARENT CERTIFICATE OF INCORPORATION
Omitted pursuant to Item 601(a)(5) of Regulation S-K
EXHIBIT C
NEW PARENT BYLAWS
Omitted
pursuant to Item 601(a)(5) of Regulation S-K
EXHIBIT D
PARENT SURVIVING CORPORATION CERTIFICATE OF INCORPORATION
Omitted pursuant to Item 601(a)(5) of Regulation S-K
EXHIBIT E
TRANSITION SERVICES AGREEMENT
Omitted pursuant to Item 601(a)(5) of Regulation S-K
EXHIBIT F
OFFICE LEASE KEY TERMS
Omitted pursuant to Item 601(a)(5) of Regulation S-K
EXHIBIT G-1
COMPANY TAX COUNSEL TAX CERTIFICATE
Omitted pursuant to Item 601(a)(5) of Regulation S-K
EXHIBIT G-2
COMPANY TAX COUNSEL PARENT TAX CERTIFICATE
Omitted pursuant to Item 601(a)(5) of Regulation S-K
EXHIBIT G-3
PARENT TAX COUNSEL SINCLAIR TAX CERTIFICATE
Omitted pursuant to Item 601(a)(5) of Regulation S-K
EXHIBIT G-4
PARENT TAX COUNSEL PARENT TAX CERTIFICATE
Omitted pursuant to Item 601(a)(5) of Regulation S-K
Exhibit 10.1
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this Agreement) is made and entered into as of August 2, 2021, to be effective as of the
Closing Date, by and among Hippo Parent Corporation, a Delaware corporation (the Company), The Sinclair Companies, a Wyoming corporation (Sinclair HoldCo) and the other stockholders set forth on Schedule
I hereto, as may be amended from time to time after the date hereof (each, together with Sinclair HoldCo, a Stockholder and collectively, the Stockholders).
WHEREAS, the Company, Sinclair HoldCo, Hippo Holding LLC, a Delaware limited liability company (Sinclair NewCo),
HollyFrontier Corporation, a Delaware corporation and Hippo Merger Sub, Inc., a Delaware corporation have entered into a Business Combination Agreement (the BCA), dated as of the date hereof, pursuant to which, following the
consummation of the transactions contemplated thereby (collectively, the Transactions), Sinclair NewCo will become a wholly-owned subsidiary of the Company and Sinclair HoldCo will become a stockholder of the Company;
WHEREAS, the Company, Sinclair HoldCo and the Stockholders desire to enter into this Agreement to provide for (a) registration
rights with respect to the shares of Common Stock to be held by Sinclair HoldCo (on behalf of the Stockholders) immediately after the closing of the Transactions and (b) certain other governance matters and restrictions on Transfer and other
matters set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. Definitions. As used in this Agreement, the following terms shall have the
meanings set forth in Section 1. Capitalized terms used, but not otherwise defined herein, shall have the meanings ascribed to such terms in the BCA.
Accountants means the independent registered public accounting firm selected by the Board.
Activist means, as of any date of determination, a Person (other than a Sinclair Party) that has, directly or indirectly
through its Affiliates, whether individually or as a member of a Group, within the two-year period immediately preceding such date of determination, (i) publicly made, engaged in or been a
participant in any solicitation of proxies (as such terms are used in the proxy rules of the Commission) to vote, or advise or influence any Person with respect to the voting of, any equity securities of any
issuer, including in connection with a proposed change of control or other extraordinary or fundamental transaction, or a proposal for the election or replacement of directors, not approved (at the time of the first such proposal) by the board of
directors of such issuer, (ii) called, or publicly sought to call, a meeting of the shareholders of any issuer or initiated any shareholder proposal for action by shareholders of any issuer, in each case not approved (at the time of the first
such action) by the board of directors of such issuer, (iii) otherwise publicly acted, alone or in concert with others, to seek to control the management or the policies of any issuer (provided, that this clause (iii) is not intended to
include the activities of any
member of the board of directors of any issuer, with respect to such issuer, taken in good faith solely in his or her capacity as a director of such issuer), (iv) commenced a tender
offer (as such term is used in Regulation 14D under the Exchange Act) to acquire the equity securities of an issuer that was not approved (at the time of commencement) by the board of directors of such issuer in a Schedule 14D-9 filed under Regulation 14D under the Exchange Act, or (v) publicly disclosed any intention, plan, arrangement or other contract to do any of the foregoing.
Affiliate means, with respect to any Person, any other Person which directly or indirectly, through one or more
intermediaries, controls, or is under common control with, or is controlled by, such Person. As used in this definition, control (including, with its correlative meanings, controlling, controlled by and
under common control with) shall mean possession, directly or indirectly, of power to direct or cause the direction of the actions, management or policies of the specified person (whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise).
Agreement has the meaning set forth in the preamble hereto.
BCA has the meaning set forth in the recitals hereto.
Beneficially Own has the meaning set forth in Rule 13d-3 under the Exchange Act,
except that a Person shall be deemed to have beneficial ownership of (i) all securities that any such Person has the right to acquire, regardless of whether such right may be exercised immediately or only after the passage of time and
regardless of whether such right is conditional, and (ii) all securities in which such Person has any economic interest, including pursuant to a cash settled call option or other derivative security, contract or instrument in any way related to
the price of shares of such securities. As used in this definition, Beneficial Ownership shall have a correlative meaning.
Block Trade has the meaning set forth in Section 5(h)(i).
Blue Sky Filings has the meaning set forth in Section 5(l)(i).
Board means the Board of Directors of the Company.
Business Day means a day other than a Saturday, Sunday or other day on which commercial banks in Dallas, Texas, are
authorized or required by Law to close.
Change of Control means any of the following: (i) individuals who, as of
the Closing Date, constitute the Board (the Incumbent Board) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the Companys shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; (ii) a sale, lease, exchange or other transfer (in one transaction or a related series of transactions) of all or substantially all of the assets
of the Company and its Subsidiaries on a
2
consolidated basis to any Person or Group; or (iii) consummation by the Company of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets of another entity (each, a Business Combination), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the outstanding Common Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote generally in the election of directors (or equivalent governing authority), as the case may be, of the entity resulting from such Business Combination (including an entity which as a
result of such transaction owns the Company or all or substantially all of the Companys assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business
Combination, of the outstanding Common Stock, and (B) at least a majority of the members of the board of directors (or equivalent governing authority) of the entity resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination.
Commission means the Securities and Exchange Commission or any other Governmental Authority at the time administering the
Securities Act.
Common Stock means (a) the Companys common stock, par value $0.01 per share and
(b) any securities issued or issuable directly or indirectly with respect to shares of Common Stock by way of conversion, exercise or exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization,
reclassification, merger, consolidation, reorganization or other similar event.
Company has the meaning set forth in
the preamble hereto.
Company Bylaws means the Amended and Restated Bylaws of the Company.
Company Certificate of Incorporation means the Amended and Restated Certificate of Incorporation of the Company.
Confidential Information has the meaning set forth in Section 9(b)(i).
Demanding Holder shall mean any Holder or group of Holders that together elects to dispose of Registrable Securities having
an aggregate value of at least $100 million, at the time of the Underwritten Demand, under a Registration Statement pursuant to an Underwritten Offering. Any action to be taken by the Demanding Holders hereunder with respect to an Underwritten
Offering shall be taken by the Demanding Holders that hold a majority of the Registrable Securities to be included in such Underwritten Offering.
DGCL means the General Corporation Law of the State of Delaware, as the same shall be in effect from time to time.
Director means a member of the Board.
3
Disinterested Directors means all of the members of the Board other than
the Sinclair Directors.
Exchange Act means the Securities Exchange Act of 1934, and the Rules and Regulations adopted
under such act, all as the same shall be in effect from time to time.
Financial Counterparty shall have the meaning
set forth in Section 5(h)(i).
FINRA has the meaning set forth in
Section 5(j)(xviii).
Fully Diluted Basis means, as of the time of determination, the sum of
(i) the number of registered and unregistered shares of Common Stock issued and outstanding, plus (ii) the number of shares of Common Stock issuable upon vesting of all outstanding New Parent Restricted Stock Unit Awards (as defined
in the BCA) that by their terms are to be settled in Common Stock, plus (iii) the number of shares of Common Stock issuable upon vesting at Target levels of all outstanding New Parent PSU Awards (as defined in the BCA) that
by their terms are to be settled in Common Stock. If after the Closing the Company issues any securities to employees of the Company or any Director pursuant to a plan that is not substantially similar to plans in effect as of the date hereof, the
calculation of the Companys outstanding shares of Common Stock on a Fully Diluted Basis shall be revised to reflect such issuance as determined by the Board in its reasonable discretion. An illustrative calculation of the Companys
outstanding shares of Common Stock on a Fully Diluted Basis as determined based on the assumptions set forth above is set forth as Exhibit A hereto.
Governmental Authority means any Federal, state, municipal, local or foreign government, governmental authority, regulatory
or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court, tribunal, arbitrator or arbitral body.
Group has the meaning given to such term in Section 13(d)(3) of the Exchange Act.
Holder means any holder of Registrable Securities.
Information has the meaning set forth in Section 5(j)(x).
Issuer Free Writing Prospectus means each free writing prospectus (as defined in Rule 405) prepared by or on
behalf of the Company or used or referred to by the Company in any offering of Registrable Securities pursuant to Section 5.
Law means any federal, state, local, municipal or foreign order, judgment, decree, constitution, law (including common
law), ordinance, rule, regulation, statute or treaty, as well as any legally binding policy, guidance, interpretation, manual or binding communication of any Governmental Authority or stock exchange on which the Common Stock is listed.
Lock-up Period means the period commencing on the Closing and ending on the date
that is fifteen (15) months following the Closing.
4
Nominating Committee means the Nominating, Governance and Social
Responsibility Committee of the Board or any other committee of the Board that performs similar functions.
NYSE means
the New York Stock Exchange.
Order means any order, writ, judgment, injunction, decree, stipulation, determination,
ruling, subpoena or award or other decision issued, promulgated or entered by or with any Governmental Authority.
Other
Coordinated Offering has the meaning set forth in Section 5(h)(i).
Pending
Transaction has the meaning set forth in Section 6(e).
Permitted Issuer
Information means any issuer information (as defined in Rule 433 of the Rules and Regulations) used with the prior written consent of the Company in any offering of Registrable Securities pursuant to
Section 5.
Permitted Transfer has the meaning set forth in
Section 3(b).
Permitted Transferee has the meaning set forth in
Section 3(b).
Person shall be construed broadly and shall include an individual, a
partnership, a limited liability partnership, an investment fund, a limited liability company, a corporation (including not-for-profit), an association, a joint stock
corporation, a trust, estate, a joint venture, an unincorporated organization and any Governmental Authority or any other entity of any kind or nature.
Piggyback Registration has the meaning set forth in Section 5(f).
Preliminary Prospectus means any preliminary prospectus relating to an offering of Registrable Securities pursuant to
Section 5, including any prospectus supplement thereto, as filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations, including all material incorporated by reference in the prospectus.
Prohibited Actions has the meaning set forth in Section 6(a).
Prohibited Transferee has the meaning set forth in Section 4(a)(i).
Prospectus means the final prospectus relating to any offering of Registrable Securities pursuant to
Section 5, including any prospectus supplement thereto, as filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations, including all material incorporated by reference in the prospectus.
Records has the meaning set forth in Section 5(j)(x).
Registrable Securities means the Subject Shares until (i) such Subject Shares have been sold pursuant to an effective
Registration Statement or (ii) such Subject Shares have been sold pursuant to Rule 144 promulgated under the Securities Act; provided, that, in the case of either clause (i) or clause (ii), the Subject Shares will remain Registrable
Securities when sold or otherwise Transferred to any Permitted Transferee.
5
Registration Expenses has the meaning set forth in
Section 5(k).
Registration Statement means any registration statement under the Securities
Act that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration
statement, and all exhibits to and all material incorporated by reference in such registration statement.
Restricted
Shares means 75% of the shares of the Common Stock issued to Sinclair HoldCo as of the Closing Date pursuant to the BCA.
Road Show Material has the meaning set forth in Section 5(l)(i).
Rule 144 means Rule 144 of the Rules and Regulations or any successor rule thereto or any complementary rule thereto.
Rule 405 means Rule 405 of the Rules and Regulations or any successor rule thereto or any complementary rule thereto.
Rule 433 means Rule 433 of the Rules and Regulations or any successor rule thereto or any complementary rule thereto.
Rules and Regulations means the rules and regulations of the Commission, as the same shall be in effect from time to time.
Securities Act means the Securities Act of 1933, and the Rules and Regulations adopted under that act, all as the same
shall be in effect from time to time.
Sellers Counsel has the meaning set forth in
Section 5(j)(ii).
Shelf Registration Statement has the meaning set forth in
Section 5(a).
Sinclair Designee Calculation Date has the meaning set forth in
Section 2(a).
Sinclair Designees has the meaning set forth in
Section 2(a).
Sinclair Directors means any Sinclair Designees elected or otherwise serving
as a Director.
Sinclair Family Member means (i) Carol Holding; (ii) Stephen Holding, Anne Holding Peterson
and Kathleen Holding; (iii) any spouse, former spouse, sibling, niece, nephew, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of any person named in clause (ii); (iv) any lineal descendent of any Person identified in clause (ii) or (iii) and any spouse or former spouse of any
such Person, including adoptive relationships and stepchildren; (v) any trust established by, and in which at least 75% of the beneficial interest is
6
directly or indirectly held by or for the benefit of, any one or more Persons identified in clauses (i), (ii), (iii), (iv) or (ix) of this definition and one or more Persons exempt from
federal taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended; (vi) any limited liability company, partnership or other estate planning or family business vehicle of which one or more Persons identified in
clauses (i), (ii), (iii), (iv) or (ix) of this definition serves as managing member, manager, general partner or otherwise, as applicable, and in which at least 75% of the economic interest is directly or indirectly held by or for the benefit
of any one or more of such Persons; (vii) any tax-exempt foundation, charitable trust, non-profit entity or other entity established by any Person identified in
clauses (i), (ii), (iii), (iv) or (ix) of this definition, so long as the voting and disposition authority with respect to the Subject Shares are controlled by or under the appointment of any Person identified in clauses (i), (ii), (iii), (iv)
or (ix) of this definition; (viii) any other Person directly or indirectly controlled by any Person or combination of persons identified in this definition; and (ix) executors, administrators or beneficiaries of the estates of any
such now or hereafter deceased Person, guardians or members of a committee for any such Person who is or becomes incompetent, or similar Persons duly authorized by Law to administer the estate or assets of any such Person identified in this
definition.
Sinclair HoldCo has the meaning set forth in the preamble hereto.
Sinclair NewCo has the meanings set forth in the preamble hereto.
Sinclair Parties means, collectively, Sinclair HoldCo, the Stockholders and their Permitted Transferees, and each,
individually, a Sinclair Party.
Standstill Termination Date means the earliest to occur of
(i) the fourth anniversary of the Closing, (ii) the date on which the Sinclair Parties Beneficially Own Common Stock constituting less than 10% of all outstanding Common Stock on a Fully Diluted Basis, and (iii) the date on which a
Change of Control occurs.
Stockholder and Stockholders have the meanings set
forth in the preamble hereto.
Subject Shares means all of the shares of the Common Stock issued to Sinclair HoldCo at
the Closing pursuant to the BCA.
Subsequent Shelf Registration Statement has the meaning set forth in
Section 5(a)(iii).
Sunset Date means the earliest to occur of (i) the date on which the
Sinclair Parties Beneficially Own Common Stock constituting less than 5% of all outstanding Common Stock on a Fully Diluted Basis and (ii) the date on which a Change of Control occurs.
Transfer has the meaning set forth in Section 3(a).
Underwritten Demand has the meaning set forth in Section 5(b).
Underwritten Offering means a sale of Common Stock to an underwriter for reoffering to the public.
Valid Business Reason has the meaning set forth in Section 5(c).
7
Section 2. Sinclair Designees.
(a) As soon as practicable following, but no earlier than the day after and no later than five (5) Business Days
after, the Closing, subject to the other provisions of this Section 2, the Company and Sinclair HoldCo shall cooperate and take appropriate actions to cause the Board to include among its membership a number of Directors
designated by Sinclair HoldCo (on behalf of the Stockholders) for election or appointment as Directors (the Sinclair Designees) as follows: (i) if the Sinclair Parties Beneficially Own Common Stock constituting not less than
15% of all outstanding Common Stock on a Fully Diluted Basis as of the Sinclair Designee Calculation Date, there shall be two Sinclair Designees; (ii) if the Sinclair Parties Beneficially Own Common Stock constituting less than 15% but more
than or equal to 5% of all outstanding Common Stock on a Fully Diluted Basis as of the Sinclair Designee Calculation Date, there shall be one Sinclair Designee; and (iii) if the Sinclair Parties Beneficially Own Common Stock constituting less
than 5% of all outstanding Common Stock on a Fully Diluted Basis as of the Sinclair Designee Calculation Date, there shall be no Sinclair Designees and Sinclair HoldCo shall not have the right to designate any directors to the Board. For purposes of
this Agreement, the Sinclair Designee Calculation Date shall mean the close of business on the date that is one hundred twenty (120) days prior to the anniversary of the Companys annual meeting of stockholders for the
immediately preceding year; provided, that the first Sinclair Designee Calculation Date shall be the Closing Date, after giving effect to the Closing.
(b) If at any time the number of Sinclair Designees serving as Directors exceeds the number provided for in
Section 2(a), the Sinclair Parties shall cause one or more of such Sinclair Designees, as applicable, to offer to resign from the Board within thirty (30) days (it being understood that it shall be in the Boards
sole discretion whether to accept or reject such offer of resignation, unless any such Sinclair Designee no longer wishes to serve on the Board in which event the resignation shall be accepted).
(c) The Sinclair Designees shall resign and the Companys obligations under this
Section 2 shall terminate effective upon such time that any Sinclair Party violates, through the act of such Sinclair Party or any of its Affiliates, Section 6(a) or Section 7(a) of this Agreement,
which breach is not cured within the earlier of (i) twenty (20) Business Days following written notice from the Company to Sinclair HoldCo of such breach and (ii) the next occurring date of nomination of Directors. Any Sinclair Party shall
be entitled to terminate such Sinclair Partys rights under this Section 2 by providing prior written notice to the Company and Sinclair HoldCo, which notice shall state the number of shares of Common Stock Beneficially Owned by
such Sinclair Party and the date on which such termination shall be effective. Upon the effectiveness of such termination, the shares of Common Stock Beneficially Owned by such Sinclair Party shall cease to be counted for purposes of determining the
amount of Common Stock Beneficially Owned by the Sinclair Parties for purposes of Section 2(a).
(d) Subject to compliance with applicable Laws and the regulations of the NYSE, in connection with each annual meeting
of the Companys stockholders held after the Closing, Sinclair HoldCo may designate for nomination by the Board or the Nominating Committee the number of persons Sinclair HoldCo is entitled to designate pursuant to
Section 2(a), based on the aggregate Beneficial Ownership of the Sinclair Parties as of the Sinclair Designee Calculation Date. All Sinclair Designees shall possess the director characteristics and
8
qualifications (i) contained in the Company Bylaws and Corporate Governance Guidelines and (ii) described on Exhibit C, in each case as consistently applied to other members of
the Board. In addition, at all times at least one Sinclair Director, if there is any, shall possess significant management experience in the refining industry, as determined by the Board in its reasonable discretion.
(e) Each Sinclair Designee shall be nominated by the Board or the Nominating Committee, as applicable, for election or
appointment as a Director following the Nominating Committees interview of each such individual and review of such individuals qualifications, including such individuals independence status, and shall be so nominated to serve on
the Board unless the Board or the Nominating Committee, as applicable, reasonably determines that (i) such individual is an officer, director, partner, principal stockholder or Affiliate of any significant competitor, (ii) such individual
would not qualify as an independent director pursuant to NYSEs listing rules relating to director independence, as then in effect, (iii) the appointment of such individual as a director would cause the Company not to be in compliance with
applicable Law, (iv) such individual is subject to any order, decree or judgment of any Governmental Authority prohibiting service as a director of any public company or (v) such individual is an Affiliate of an Activist. If the Board or
the Nominating Committee, as applicable, determines that any individual designated by Sinclair HoldCo does not satisfy the criteria set forth in the preceding sentence or if any Sinclair Designee is unable to serve on the Board due to resignation,
death or disability, the Board or the Nominating Committee, as applicable, will promptly notify Sinclair HoldCo of such determination and Sinclair HoldCo will be entitled to designate another individual for nomination. The Sinclair Parties agree
that the Sinclair Designees will not become a party to any agreement, arrangement or understanding with any Sinclair Party or any third party (other than the Company with respect to the compensation and other items referred to in Section 2(h)
below) with respect to any compensation (other than indemnification and expense reimbursement) in connection with service or action as a Sinclair Designee.
(f) The Company shall use its commercially reasonable efforts to solicit from the stockholders of the Company eligible
to vote for the election of Directors proxies in favor of the Sinclair Designees designated in accordance with this Section 2 in substantially the same manner that it solicits proxies for all other Director nominees
recommended by the Board.
(g) Each Sinclair Party acknowledges that each of the Sinclair Directors shall be
required to comply, during the Sinclair Directors term as a director of the Company, with all policies, processes, procedures, codes, rules, standards, and guidelines applicable, from time to time, to members of the Board, and that each of the
Sinclair Directors shall be required to strictly preserve Confidential Information, including the discussion of any matters considered in meetings of the Board whether or not the matters relate to material
non-public information, subject to the exceptions set forth in Section 9(b)(i) and Section 9(b)(ii). The Sinclair Directors and Sinclair HoldCo shall provide
the Company with such information as is reasonably requested by the Company concerning the Sinclair Designees and Sinclair Directors as is required to be disclosed under applicable Law or stock exchange regulations, including the completion of the
Companys current standard director and officer questionnaire, in each case promptly after such Sinclair Designees are nominated and from time to time as promptly as necessary to enable the timely filing of the Companys proxy statement on
Schedule 14A and periodic reports on Forms 10-K and 10-Q with the Commission.
9
(h) The Company agrees that the Sinclair Directors shall receive the
same compensation, director and officer insurance, indemnity and exculpation arrangements and other benefits as are available to the other non-employee directors on the Board.
Section 3. Lock-Up.
(a) During the Lock-up Period, no Sinclair Party shall, directly or indirectly,
sell, offer or agree to sell, or otherwise transfer, or loan or pledge (other than a pledge in connection with a bona fide third party debt financing), through swap or hedging transactions, or grant any option to purchase, make any short sale or
otherwise dispose of (Transfer), any of the Restricted Shares, except as permitted by Section 3(b) or Section 3(c).
(b) Notwithstanding anything to the contrary in Section 3(a), and subject to the other terms
and conditions of this Section 3, a Sinclair Party may Transfer Restricted Shares as set forth below (each, a Permitted Transfer and the transferee permitted hereby, a Permitted
Transferee):
(i) to a Sinclair Family Member;
(ii) as a bona fide gift or gifts (whether or not the recipient is a Sinclair Family Member); or
(iii) with the prior written approval of a majority of the Disinterested Directors.
It shall be a condition to any Permitted Transfer that the Permitted Transferee execute a joinder to this Agreement in the form attached hereto as
Exhibit D (at which time, such Permitted Transferees name will be added to Schedule I, and such Permitted Transferee will be deemed a Stockholder for purposes of this Agreement). Subject to
Section 4(d), each Sinclair Party agrees and consents to the entry of stop transfer instructions with the Companys transfer agent and registrar against the transfer of any Restricted Shares except in compliance with
the foregoing restrictions; provided that, subject to the requirements of securities Laws, the Company shall cause such stop transfer instructions to be terminated immediately upon expiration of the
Lock-up Period. The Company agrees to provide an indemnification in customary form required by its transfer agent so that Permitted Transfers, as well as sales pursuant to Section 5,
may be effected without the requirement for any Sinclair Family Member to deliver a medallion guaranty or similar assurance in connection with any such Transfer.
(c) The Restricted Shares shall cease to be Restricted Shares and shall be released from the restrictions
on Transfer in Section 3(a) on the dates and in the amounts set forth below:
(i) on the date that is six months following the Closing,
one-third of the Restricted Shares shall be relieved from the restrictions on Transfer in Section 3(a);
(ii) on the date that is the one year following the Closing,
one-half of the remaining Restricted Shares shall be relieved from the restrictions on Transfer in Section 3(a); and
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(iii) on the date is that fifteen months following
the Closing, the remaining Restricted Shares shall be relieved from the restrictions on Transfer in Section 3(a);
(d) provided, however, that any or all of the Restricted Shares may be Transferred in connection with the
commencement of any tender offer or exchange offer or the Companys entry into a definitive agreement with respect to a merger, consolidation or other similar transaction, which tender offer, exchange offer or definitive agreement has been
approved or recommended by the Board or a committee thereof; provided, further, that all shares of Common Stock that cease to be Restricted Shares shall continue to be Subject Shares that remain subject to the other terms
and conditions of this Agreement in accordance with their terms, including Section 4, Section 5, Section 6 and Section 7. Any attempt to Transfer
any Restricted Shares in violation of the terms of this Agreement shall be null and void ab initio and no right, title or interest therein or thereto shall be Transferred to the purported Transferee. The Company will not give, and will
not permit the Companys transfer agent to give, any effect to such attempted Transfer on its records.
Section 4. General Transfer Restrictions.
(a) Until the Sunset Date, without the prior written approval of a majority of the Disinterested Directors, no Sinclair
Party shall, either individually or acting together with any other Sinclair Parties:
(i) Knowingly
Transfer any Subject Shares to any Person or Group who is listed on Exhibit B (each, a Prohibited Transferee); or
(ii) Transfer any Subject Shares to any Person or Group who, after giving effect to such Transfer and to
the Transferring Sinclair Partys knowledge, would own 5% or more of the outstanding shares of Common Stock (other than any Person or Group entitled to file a Schedule 13G pursuant to Rule 13d-1(b)(1)
under the Exchange Act);
provided, however, the Subject Shares may be Transferred in connection with the commencement of any
tender offer or exchange offer or the Companys entry into a definitive agreement with respect to a merger, consolidation or other similar transaction, which tender offer, exchange offer or definitive agreement has been approved or recommended
by the Board or a committee thereof.
Notwithstanding anything in this Agreement to the contrary, this
Section 4(a) shall not apply to (A) any Permitted Transfer, (B) any Transfer effected through an Underwritten Offering, Block Trade or Other Coordinated Offering pursuant to an exercise of the registration rights
pursuant to Article 5 so long as the Sinclair Parties effecting any such Transfers shall instruct the managing underwriter(s) of any such Underwritten Offering or the distribution agent of any such Block Trade or Other Coordinated Offering to
exclude (as potential purchasers) Prohibited Transferees from such Underwritten Offering, Block Trade or Other Coordinated Offering, or (C) any Transfer effected through an open market transaction, block trade (other than a Block Trade) or
brokerage sale conducted through a market maker or broker. For the purposes of determining
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knowledge for purposes of Section 4(a)(ii), excluding any Transfers contemplated by the immediately preceding sentence, the Transferring Sinclair Party shall
be required to undertake reasonable inquiry into the identity of any potential purchaser(s), which shall be satisfied by (x) reviewing (or causing the applicable Sinclair Partys legal counsel to review) filings made by the prospective
purchaser on the Commissions EDGAR system in order to determine whether or not such purchaser beneficially owns 5% or more of the outstanding shares of Common Stock and (y) in the case of any Transfer (in one transaction or a series of
transactions with any potential purchaser) of Subject Shares constituting 1% or more of the outstanding shares of Common Stock, causing such purchaser to execute a certification in form and substance reasonably satisfactory to the Company,
certifying that such purchaser will not own 5% or more of the outstanding shares of Common Stock after giving effect to the proposed Transfer.
(b) Any attempt to Transfer any Subject Shares in violation of the terms of this Agreement shall be null and void ab
initio and no right, title or interest therein or thereto shall be Transferred to the purported Transferee. The Company will not give, and will not permit the Companys transfer agent to give, any effect to such attempted Transfer on
its records.
(c) The Subject Shares held by a Stockholder, whether represented by certificates or in book-entry
form, will bear a legend in substantially the following form:
The securities represented by this certificate have not been
registered under the United States Securities Act of 1933, as amended (the Act), or applicable state securities Laws and the holder of such securities may not, directly or indirectly, sell, offer or agree to
sell such securities, or otherwise transfer, directly or indirectly, or loan or pledge, through swap or hedging transactions (or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or
disposition of such securities even if such securities would be disposed of by someone other than such holder thereof) such securities (Transfer) other than in accordance with the terms and
conditions of the Stockholders Agreement, dated as of August 2, 2021, as it may be amended from time to time by and among Hippo Parent Corporation (the Company) and certain of
its stockholders and other persons (the Stockholders Agreement). The Stockholders Agreement contains, among other things, significant restrictions on the Transfer of the securities of the Company and other
restrictions on the actions by certain stockholders of the Company relating to the Company and/or its securities. A copy of the Stockholders Agreement is available upon request from the Company.
(d) The restrictive legends on any Subject Shares, including the legend in Section 4(c),
shall be removed if (i) such Subject Shares are sold pursuant to an effective Registration Statement, (ii) a Registration Statement covering the resale of such Subject Shares is effective under the Securities Act and the applicable
Stockholder delivers to the Company a representation letter (substantially in the form attached as Exhibit F, with such changes and modifications as any broker may reasonably request) agreeing that such Subject Shares will be sold under such
effective Registration Statement, pursuant to Rule 144 or pursuant to an exemption from registration under the Securities Act (subject to the transferee agreeing to similar restrictions), (iii) if such Subject Shares may be sold by the holder
thereof free of restrictions pursuant to Rule
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144(b) under the Securities Act, or (iv) such Subject Shares are being sold, assigned or otherwise transferred pursuant to Rule 144 under the Securities Act; provided, that with
respect to clause (iii) or (iv) above, the holder of such shares of Common Stock has provided all necessary documentation and evidence (which may include an opinion of counsel) as may reasonably be required by the Company to
confirm that the legend may be removed under applicable securities Law. The Company shall cooperate with the applicable Stockholder of Subject Shares to effect removal of the legends on such shares pursuant to this
Section 4(d) as soon as reasonably practicable after delivery of notice from such Holder that the conditions to removal are satisfied (together with any documentation required to be delivered by such Stockholder pursuant to
the immediately preceding sentence). The Company shall bear all costs and expenses associated with the removal of a legend pursuant to this Section 4(d).
Section 5. Registration Rights.
(a) Shelf Registration.
(i) Within five (5) Business Days following the Closing Date, the Company shall file with the
Commission a Registration Statement covering the resale or other disposition of all of the Registrable Securities of Holders that have furnished in writing by the Closing Date the information requested under Section 5(n)
hereof (a Shelf Registration Statement).
(ii) The Company shall use its
commercially reasonable efforts to cause such Shelf Registration Statement to become immediately effective upon filing, or if the form of such Shelf Registration Statement would not permit immediate effectiveness, to be declared effective by the
Commission as soon as reasonably practicable after the initial filing of the Shelf Registration Statement, but in any event within ninety (90) days following filing of a Registration Statement on Form S-1
and within forty-five (45) days after filing of a Registration Statement on Form S-3 (if such Form S-3 is not immediately effective upon filing). If at any time a
Registration Statement filed with the Commission pursuant to this Section 5 is effective and Sinclair HoldCo provides written notice to the Company that one or more Holders intend to effect an offering of all or part of the
Registrable Securities included on such Registration Statement, the Company will amend or supplement such Registration Statement as may be necessary in order to enable such offering to take place in accordance with the terms of this Agreement.
(iii) If any Registration Statement ceases to be effective under the Securities Act for any reason at
any time (including by expiration of effectiveness with respect to any Registration Statement on Form S-3ASR) while Registrable Securities are still outstanding, the Company shall use its commercially
reasonable efforts to (a) cause, as promptly as is reasonably practicable, such Registration Statement to again become effective under the Securities Act (including using its commercially reasonable efforts to obtain the prompt withdrawal of
any order suspending the effectiveness of such Registration Statement), and shall use its commercially reasonable efforts to amend, as promptly as is reasonably practicable, such Registration Statement in a manner reasonably expected to result in
the
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withdrawal of any order suspending the effectiveness of such Registration Statement or (b) to file an additional Registration Statement as a Shelf Registration Statement (a
Subsequent Shelf Registration Statement) registering the resale of all Registrable Securities (determined as of two (2) Business Days prior to such filing), and pursuant to any method or combination of methods legally
available to, and requested by, any Holder named therein. If a Subsequent Shelf Registration Statement is filed, the Company shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration Statement to become
effective under the Securities Act as promptly as is reasonably practicable after the filing thereof but in any event within ninety (90) days following filing of a Registration Statement on Form S-1 and
within forth-five (45) days after filing of a Registration Statement on Form S-3 (if such Form S-3 is not immediately effective upon filing) and (ii) keep such
Subsequent Shelf Registration Statement continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time
as there are no longer any Registrable Securities.
(b) Underwritten Offerings. Subject to the provisions of
this Section 5, at any time and from time to time during the term of this Agreement, Sinclair HoldCo (on behalf of any Demanding Holder) shall have the right to make written requests to the Company for an Underwritten
Offering pursuant to a Registration Statement filed with the Commission pursuant to this Section 5 (an Underwritten Demand). Prior to making any Underwritten Demand, Sinclair HoldCo shall give prior
written notice of such Underwritten Demand to all of the other Holders, and such Underwritten Demand shall contain all of the Registrable Securities requested by all of the other Holders for inclusion in such Registration Statement. All Holders
proposing to distribute their Registrable Securities through such Underwritten Offering under this Section 5(b) shall enter into an underwriting agreement in customary form with the underwriter(s) selected for such
Underwritten Offering by the Company as described below. Any Underwritten Demand shall specify the aggregate amount of Registrable Securities intended to be included in such Underwritten Offering and the intended method of distribution thereof and
whether such offering shall be a firm commitment underwriting. Subject to Section 5(g), the Company shall include in such Underwritten Offering all of the Registrable Securities requested by any Holders for
inclusion in such Underwritten Demand. The Company shall have the right to select the managing underwriter or underwriters to administer any Underwritten Offering related to Underwritten Demands, which managing underwriters shall be selected from
those listed on Exhibit E, or, to the extent not listed on Exhibit E, which underwriter(s) shall be agreed upon by the Company and Sinclair HoldCo; provided, that in the event of a bought deal or similarly structured
transaction where underwriting terms and pricing are solicited from multiple managing underwriters, the Company shall designate three (3) or more participating underwriters for such transaction from those listed on Exhibit E or which are
otherwise agreed to by the Company and Sinclair HoldCo, and in such case, Sinclair HoldCo shall be entitled to select the managing underwriter from among the participating underwriters designated by the Company. In no event will the Company be
required to effect (i) more than eight (8) Block Trades, Other Coordinated Offerings or Underwritten Offerings relating to Underwritten Demands in the aggregate, or (ii) more than one (1) Block Trade, Other Coordinated Offering
or Underwritten Offering relating to an Underwritten Demand in the aggregate during any one hundred and eighty (180)-day period. The one hundred and eighty (180)-day
periods reference in the preceding sentence will be counted beginning on the Closing Date.
14
(c) Companys Right to Defer Registration. The Company
shall be entitled (A) to delay or suspend the (i) initial effectiveness (but not the preparation) of any Registration Statement or (ii) launch of any Underwritten Offering, in each case, filed or requested pursuant to this Agreement,
and (B) from time to time to require the Holders not to sell under any Registration Statement or Prospectus or to suspend the effectiveness thereof, if such initial effectiveness or offering launch would (I) materially interfere with any
active and ongoing material financing, acquisition, corporate reorganization or merger or other material transaction involving the Company, including negotiations related thereto, (II) require the Company to disclose any material nonpublic
information the disclosure of which would reasonably be likely to be detrimental to the Company, or (III) would otherwise have a material adverse effect on the Companys business or financial condition, in each case as reasonably
determined by the Board in good faith (a Valid Business Reason); provided, however, that the Company may not delay or suspend a Registration Statement, Prospectus or Underwritten Offering for more than sixty
(60) consecutive calendar days, or more than ninety (90) days total in any twelve (12)-month period. The Company shall give written notice to Sinclair HoldCo (on behalf of the Holders) of its determination to delay or suspend a
Registration Statement, Prospectus or Underwritten Offering and of the fact that the Valid Business Reason for such postponement no longer exists, in each case, promptly after the occurrence thereof.
(d) Registration Statement Form. Registrations under this Section 5 shall be on such
appropriate registration form of the Commission (i) as shall be selected by the Company and as shall be reasonably acceptable to Sinclair HoldCo (on behalf of the Holders) and (ii) as shall permit the transfer of Registrable Securities in
accordance with the intended method or methods of transfer specified by the Holders of Registrable Securities, it being agreed with respect to clauses (i) and (ii) that any Registration Statement shall be an automatic shelf registration
statement (as defined in Rule 405) if the Company is a well-known seasoned issuer (as defined in Rule 405) at the most recent applicable eligibility determination date and (iii) any such Registration Statement shall be on Form S-3 or similar short-form registration statement available to the Company to the extent that the Company is eligible to use such form. If, in connection with any registration under this
Section 5, the managing underwriter, if any, shall advise the Company in writing that in its opinion the use of another permitted form is of material importance to the success of the offering, then such registration shall
be on such other permitted form.
(e) Withdrawal. The Demanding Holders initiating an Underwritten Offering
pursuant to this Section 5 shall have the right to withdraw from such Underwritten Offering for any or no reason whatsoever upon written notification from Sinclair HoldCo to the Company of the intention to withdraw from
such Underwritten Offering prior to the launch of such Underwritten Offering. Following the delivery of any such withdrawal notice to the Company, Sinclair HoldCo shall promptly forward such Withdrawal Notice to any other Holders that had elected to
participate in such Underwritten Offering. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with an Underwritten Demand prior to its withdrawal. The
Demanding Holders shall be deemed to have effected an Underwritten Demand if (i) the Underwritten Demand is launched but not consummated, unless (x) the Registration Statement applicable to such Underwritten
15
Offering is or becomes subject to any stop order, injunction or other Order of the Commission or other Governmental Authority or court by reason of an act or omission by the Company, (y) the
conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such Underwritten Offering are not satisfied or waived because of an act or omission by the Company (other than a failure of the
Company or any of its officers or employees to execute or deliver any closing certificate by reason of facts or circumstances existing due to actions of any Holder) or (z) the Holders participating in such Underwritten Offering elect to pay and
have paid to the Company in full the Registration Expenses associated with such Underwritten Offering.
(f) Piggyback Registration. If the Company at any time proposes for any reason other than a filing made pursuant
to Section 5(a) or a request made pursuant to Section 5(b) to (i) register Common Stock under the Securities Act (other than on Form S-4 or Form S-8 promulgated under the Securities Act or any successor forms thereto) or (ii) consummate an Underwritten Offering, in either case, for its own account or for the account of other stockholders of the Company,
it shall promptly give notice of such proposed action to Sinclair HoldCo on behalf of the Holders as soon as reasonably practicable (but in the case of filing a Registration Statement, no later than twenty (20) days before the anticipated
filing date), which notice shall (A) describe the amount and type of securities to be included, the intended method(s) of distribution and the name of the proposed managing underwriter or underwriters, if any, and (B) offer to all of the
Holders the opportunity to register or offer for sale such number of Registrable Securities as such Holders may request in writing within (a) five (5) Business Days in the case of filing a Registration Statement and (b) two (2)
Business Days in the case of an Underwritten Offering (unless such offering is an overnight or bought Underwritten Offering, then one (1) Business Day), in each case after receipt of such written notice (such Registration, a Piggyback
Registration). The Company shall use its commercially reasonable efforts to cause all such Registrable Securities for which such a request(s) is timely received by the Company to be included in such Piggyback Registration on the same terms
and conditions as the Common Stock otherwise being sold in such Piggyback Registration, and in any event, the Company shall include the Registrable Securities on the same terms and conditions as the Common Stock otherwise being sold in such
Piggyback Registration. Any Holder shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the underwriter or underwriters (if any) of his, her or its intention to
withdraw from such Piggyback Registration prior to, as applicable, the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or the pricing of the Underwritten Offering with respect to such
Piggyback Registration. The Company (whether on its own good faith determination or as the result of a request for withdrawal by Persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the
Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement or abandon an Underwritten Offering in connection with a Piggyback Registration at any time prior to the launch of such
Underwritten Offering. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration. For purposes of clarity, any Registration or
Underwritten Offering effected pursuant to this Section 5(f) shall not be counted as an Underwritten Offering pursuant to an Underwritten Demand effected under Section 5(b).
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(g) Cutbacks. If the managing underwriter in good faith
advises the Company that the inclusion of all such Registrable Securities proposed to be included in any Underwritten Demand or Piggyback Registration pursuant to Section 5(b) or Section 5(f) would
have a negative effect on the pricing of the Common Stock of the Company to be offered thereby, then the number of shares of Common Stock proposed to be included in such Underwritten Demand or Piggyback Registration shall be allocated among the
Company and the selling Holders in the following order of priority:
(i) In the case of an
Underwritten Offering pursuant to Section 5(b),
|
(A)
|
first, to the Registrable Securities to be offered by the Holders pro rata based on the number of shares
of Registrable Securities Beneficially Owned;
|
|
(B)
|
then, to Common Stock to be offered by the Company, if any; and
|
|
(C)
|
then, to Common Stock to be offered by other stockholders who are not Holders, if any.
|
(ii) In the case of a registration pursuant to Section 5(f) or any other
registration,
|
(A)
|
first, to the Common Stock to be offered by the Company;
|
|
(B)
|
then, to the Registrable Securities to be offered by the Holders pro rata based on the number of shares
of Registrable Securities Beneficially Owned; and
|
|
(C)
|
then, to Common Stock to be offered by other stockholders who are not Holders, if any.
|
(h) Block Trade; Other Coordinated Offerings.
(i) Subject to Section 5(b) and Section 5(c), at any
time and from time to time when an effective Registration Statement is on file with the Commission, if a Demanding Holder wishes to engage in (a) an underwritten registered offering not involving a roadshow, an offer commonly known
as a block trade (a Block Trade), or (b) an at the market or similar registered offering through a broker, sales agent or distribution agent, whether as agent or principal, (an Other
Coordinated Offering), in each case, (x) with a total offering price reasonably expected to exceed, in the aggregate, $100 million or (y) involving all remaining Registrable Securities held by the Demanding Holder, then if
such Demanding Holder requires any assistance from the Company pursuant to this Section 5(h), Sinclair HoldCo shall notify the Company of the Block Trade or Other Coordinated Offering at least ten (10) Business Days
prior to the day such offering is to commence and the Company shall as expeditiously as possible use its commercially reasonable efforts to facilitate such Block Trade or Other Coordinated Offering;
17
provided that the Demanding Holders representing a majority of the Registrable Securities wishing to engage in the Block Trade or Other Coordinated Offering shall use commercially
reasonable efforts to work with the Company and any underwriters, brokers, sales agents or placement agents (each, a Financial Counterparty) prior to making such request in order to facilitate preparation of the registration
statement, prospectus and other offering documentation related to the Block Trade or Other Coordinated Offering.
(ii) Prior to the filing of the applicable red herring prospectus or prospectus supplement
used in connection with a Block Trade or Other Coordinated Offering, a majority-in interest of the Demanding Holders initiating such Block Trade or Other Coordinated Offering shall have the right to withdraw
from such Block Trade or Other Coordinated Offering for any or no reason whatsoever upon written notification to the Company, the underwriter or underwriters (if any) and Financial Counterparty (if any). Notwithstanding anything to the contrary in
this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Block Trade or Other Coordinated Offering prior to its withdrawal.
(iii) The Company shall have the right to select the underwriter or Financial Counterparty (if any) for
any Block Trade or Other Coordinated Offering, which underwriter or Financial Counterparty, to the extent not listed on Exhibit E, shall be agreed upon by the Company and Sinclair HoldCo; provided, that in the event of a
bought deal or similarly structured transaction where underwriting terms and pricing are solicited from multiple managing underwriters, the Company shall designate three (3) or more participating underwriters for such transaction
from those listed on Exhibit E or which are otherwise agreed to by the Company and Sinclair HoldCo, and in such case, Sinclair HoldCo shall be entitled to select the managing underwriter from among the participating underwriters
designated by the Company; and provided, further, that to the extent the Demanding Holders can demonstrate to the Company that a proposed Block Trade or Other Coordinated Offering was the result of a reverse inquiry by a Financial
Counterparty to the Demanding Holders, the Demanding Holders may request the Companys consent to use such Financial Counterparty, which consent will not be unreasonably withheld.
(i) Holdback Agreement. In connection with any Underwritten Offering (including any Block Trade or Other
Coordinated Offering) in which a Holder includes Registrable Securities pursuant to this Agreement, each such Holder agrees to execute and deliver a lock-up agreement pursuant to which such Holder agrees with
the underwriter not to sell or purchase any securities of the Company for the shorter of (i) the same period of time following the Underwritten Offering as is agreed to by the Company and the other participating Holders (not to exceed the
shortest number of days that a director of the Company, executive officer (as defined under Rule 3b-7 of the Exchange Act) of the Company or any stockholder of the Company (other than such Holder
or director or employee of, or consultant to, the Company) who owns 10% or more of the outstanding Shares contractually agrees with the underwriters of such Underwritten Offering not to sell any securities of the Company following such Underwritten
Offering and (ii) forty-five (45) days from the date of the execution of the underwriting agreement with respect to such Underwritten Offering).
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(j) Preparation and Filing. If and whenever the Company is
under an obligation pursuant to the provisions of this Agreement to use its commercially reasonable efforts to effect the registration of any Registrable Securities, the Company shall, as expeditiously as practicable:
(i) use its commercially reasonable efforts to cause a Registration Statement that registers such
Registrable Securities to become and remain effective until all of such Registrable Securities have been transferred or are no longer outstanding;
(ii) furnish, at least five (5) days before filing a Registration Statement that registers such
Registrable Securities, any Preliminary Prospectus and the Prospectus relating thereto or any amendments or supplements relating to such a Registration Statement or such prospectuses, to one counsel acting on behalf of all selling Holders selected
by Holders of a majority of the Registrable Securities to be sold (the Sellers Counsel), copies of all such documents proposed to be filed (it being understood that such five (5) day period need not apply to successive
drafts of the same document proposed to be filed so long as such successive drafts are supplied to such counsel in advance of the proposed filing by a period of time that is customary and reasonable under the circumstances), and shall use its
commercially reasonable efforts to reflect in each such document, when so filed with the Commission, such comments as the Holders whose Registrable Securities are to be covered by such Registration Statement may reasonably propose, unless contrary
to applicable Law or the Company reasonably expects that so doing would cause the document to 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
not misleading;
(iii) prepare and file with the Commission such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may be reasonably requested by the Holders and as may be necessary to update the list of selling stockholders therein or to keep such Registration Statement effective (in each
case including all exhibits thereto and documents incorporated by reference therein) until all of such Registrable Securities have been transferred or are no longer outstanding and to comply with the provisions of the Securities Act with respect to
the sale or other transfer of such Registrable Securities;
(iv) promptly notify the Sellers
Counsel in writing (A) of the receipt by the Company of any notification with respect to any comments by the Commission with respect to such Registration Statement, any Preliminary Prospectus, the Prospectus or any Issuer Free Writing
Prospectus, or any request by the Commission for the amending or supplementing thereof or for additional information with respect thereto, (B) of the receipt by the Company of any
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notification with respect to the issuance or threatened issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement or any amendment or supplement
thereto or the initiation of any proceedings for that purpose and (C) of the receipt by the Company of any notification with respect to the suspension of the qualification of such Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purposes;
(v) use its commercially reasonable
efforts to (A) register or qualify the Registrable Securities covered by the applicable Registration Statement under such securities or blue sky Laws of such jurisdictions in the United States as the selling Holders included in such
Registration Statement (in light of their intended plan of distribution) may request (or provide evidence satisfy to such selling Holders that the Registrable Securities are exempt from such registration or qualification) and (B) cause such
Registrable Securities to be registered with or approved by such other Governmental Authorities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Registrable Securities to consummate the
transfer of such Registrable Securities;
(vi) furnish to each selling Holder and the underwriters
or Financial Counterparties, if any, such number of copies of such Registration Statement, any amendments thereto, any exhibits thereto or documents incorporated by reference therein (but only to the extent not publicly available on EDGAR or the
Companys website), any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus (each in conformity with the requirements of the Securities Act), and such other documents as such selling Holder, underwriters or Financial
Counterparties may reasonably request in order to facilitate the public offering and sale or other transfer of such Registrable Securities;
(vii) notify in writing on a timely basis each selling Holder at any time when the Prospectus is
required to be delivered under the Securities Act, when the Company becomes aware of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of such Holder, prepare and furnish to such
Holder a number of copies reasonably requested by such Holder of a supplement to or an amendment of such Prospectus as may be necessary so that, as thereafter delivered to the offerees of such Registrable Securities, such Prospectus shall not
include 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 not misleading in light of the circumstances then existing;
(viii) use its commercially reasonable efforts to prevent the issuance of an Order suspending the
effectiveness of a Registration Statement, and if one is issued, use its commercially reasonable efforts to obtain the withdrawal of any Order suspending the effectiveness of a Registration Statement as soon as possible;
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(ix) retain in accordance with the Rules and
Regulations all Issuer Free Writing Prospectuses not required to be filed pursuant to the Rules and Regulations; and if at any time after the date thereof any event shall have occurred as a result of which any Issuer Free Writing Prospectus, as then
amended or supplemented, would conflict with the information in the Registration Statement, the most recent Preliminary Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or, if for any other reason it shall be necessary to amend or supplement any Issuer Free Writing Prospectus in order to effect
compliance with the Securities Act and the Rules and Regulations, to notify promptly in writing the selling Holders, underwriters and Financial Counterparties and, if required by applicable Law, to file such document and to prepare and furnish
without charge to each such selling Holder, underwriter and Financial Counterparty as many copies as each such selling Holders, underwriter and Financial Counterparty may from time to time reasonably request of an amended or supplemented Issuer Free
Writing Prospectus that will correct such conflict, statement or omission or effect compliance with the Securities Act and the Rules and Regulations;
(x) make available for inspection by any underwriter or Financial Counterparty participating in any
transfer pursuant to such Registration Statement and any attorney, accountant or other agent retained by any such Financial Counterparty, during normal business hours and at the offices where normally kept, all pertinent financial and other records,
pertinent corporate documents and properties of the Company (collectively, the Records), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Companys officers,
managers and employees to supply all information (together with the Records, the Information) reasonably requested by any such Person in connection with such Registration Statement;
(xi) in the case of an Underwritten Offering, a Block Trade or an Other Coordinated Offering, use its
commercially reasonable efforts to obtain from its Accountants a comfort letter delivered to the underwriters in such offering in customary form and covering such matters of the type customarily covered by comfort letters;
(xii) in the case of an Underwritten Offering, a Block Trade or an Other Coordinated Offering, use its
commercially reasonable efforts to obtain from its counsel an opinion or opinions in customary form;
(xiii) in the case of an Underwritten Offering, a Block Trade or an Other Coordinated Offering, enter
into and perform its obligations under an underwriting or other purchase or sales agreement, in usual and customary form, with the managing Underwriter or Financial Counterparty of such offering or sale;
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(xiv) provide a transfer agent and registrar (which
may be the same entity) for all such Registrable Securities and a CUSIP number for such Registrable Securities, in each case no later than the effective date of such registration;
(xv) upon the request of any Financial Counterparty, issue to any Financial Counterparty to which any
selling Holder may sell Registrable Securities in such offering, certificates evidencing such Registrable Securities;
(xvi) use its commercially reasonable efforts to list for trading such Registrable Securities on any
national securities exchange on which any shares of Common Stock are listed for or admitted to trading;
(xvii) in connection with an Underwritten Offering, participate, to the extent reasonably requested by
the managing underwriter for the offering and the selling Holders, in customary efforts to sell the Registrable Securities being offered, including making available senior management officers of the Company for participation in road
shows, drafting sessions and other meetings or presentations as is customary;
(xviii) reasonably cooperate with each Holder, underwriter and Financial Counterparty participating in
the transfer of Registrable Securities and their respective counsel in connection with any filings required to be made with the Financial Industry Regulatory Authority, Inc. (FINRA), including, if appropriate, the pre-filing of the Prospectus as part of a shelf registration in advance of an Underwritten Offering, a Block Trade or an Other Coordinated Offering;
(xix) during the period when the Prospectus is required to be delivered under the Securities Act,
promptly file all documents required to be filed with the Commission, including pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act; and
(xx) use its commercially reasonable efforts to take all other steps necessary to effect the
registration of such Registrable Securities contemplated hereby.
(k) Expenses. All expenses incident to the
Companys performance of, or compliance with, this Section 5, including (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with any stock exchange,
the Commission and FINRA (including, if applicable, the fees and expenses of any qualified independent underwriter and its counsel as may be required by the rules and regulations of FINRA); (ii) all fees and expenses of compliance with
state securities or blue sky Laws (including fees and disbursements of counsel for the underwriters or Holders in connection with blue sky qualifications of the Registrable Securities and determination of their eligibility
for investment under the Laws of such jurisdictions as the managing underwriters may designate); (iii) all printing and related messenger and delivery expenses (including expenses of printing certificates for the Registrable Securities in a form
eligible for deposit with The Depository Trust Company (or any other depositary or transfer agent/registrar) and of printing any Preliminary Prospectus, any Issuer
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Free Writing Prospectus and the Prospectus and any amendments thereto); (iv) all fees and disbursements of counsel for the Company and of all independent certified public accountants of the
issuer (including the expenses of any special audit and comfort letters required by or incident to such performance); (v) all Securities Act liability insurance if the Company so desires or the underwriters so require; (vi) all fees
and expenses incurred in connection with the listing of the Registrable Securities for trading on any securities exchange; (vii) all road show or similar marketing expenses; and (viii) reasonable fees and expenses of one (1) legal
counsel selected by the Demanding Holders holding a majority of the Registrable Securities to be sold by all the Demanding Holders initiating an Underwritten Demand, or in the case of a Piggyback Registration, by the Holders of a majority of the
Registrable Securities participating in the registration or offering, or in the case of a Block Trade or Other Coordinated Offering, by the Holders of a majority of the Registrable Securities participating in the offering (all such expenses being
herein called Registration Expenses), will be borne by the Company, regardless of whether the Registration Statement becomes effective or any Underwritten Offering, Block Trade or Other Coordinated Offering is consummated;
provided, however, that all underwriting discounts and selling commissions applicable to the Registrable Securities shall not be borne by the Company, but shall be borne by the seller or sellers thereof, in proportion to the number of
Registrable Securities sold by such seller or sellers. In addition, the Company will, in any event, pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of
any audit and the fees and expenses of any Person, including special experts, retained by the Company.
(l) Indemnification.
(i) In connection with any registration of any Registrable Securities under the Securities Act or any Underwritten
Offering, Block Trade or Other Coordinated Offering pursuant to this Agreement, the Company shall indemnify and hold harmless each Holder of such Registrable Securities, each underwriter, Financial Counterparty or any other Person acting on behalf
of such seller and each other Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act against any losses, claims, damages or liabilities and expenses, joint or several, to which any of the foregoing Persons
may become subject under the Securities Act or otherwise, to the extent that such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (1) any untrue statement or alleged untrue statement of a
material fact contained in (A) any Preliminary Prospectus, any Registration Statement, the Prospectus or in any amendment or supplement thereto, (B) any Issuer Free Writing Prospectus or in any amendment or supplement thereto, (C) any
Permitted Issuer Information used or referred to in any free writing prospectus (as defined in Rule 405) used or referred to by any underwriter or Financial Counterparty, (D) any road show (as defined in Rule 433) not
constituting an Issuer Free Writing Prospectus, when considered together with the most recent Preliminary Prospectus (collectively, Road Show Material), or (E) any filing made in connection with the qualification of the
offering under the securities or other blue sky Laws of any jurisdiction in which Registrable Securities are offered (collectively, Blue Sky Filings), (2) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any Permitted Issuer Information or any Road Show Material or any Blue Sky Filings any material
fact required to be stated therein or necessary to make the statements therein (in the case of any Preliminary Prospectus, Issuer Free Writing Prospectus, Permitted Issuer Information, Road
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Show Material, Blue Sky Filings and the Prospectus, in the light of the circumstances under which they were made) not misleading or (3) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any other federal Law, any state or foreign securities Law, or any rule or regulation promulgated under any of the foregoing Laws, relating to the offer or sale of the Registrable Securities or blue
sky Laws applicable to the Company and relating to action or inaction required of the Company in connection with such registration or qualification under such state securities or blue sky Laws; and the Company shall reimburse such seller,
underwriter, Financial Counterparty or other Person acting on behalf of such seller and each such controlling Person for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case to any Holder, Underwriter or Financial Counterparty to the extent that any such loss, claim, damage or liability (or action
in respect thereof) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or
in any such amendment or supplement thereto or in any Permitted Issuer Information or any Road Show Material in reliance upon and in conformity with written information relating to such Holder, Underwriter or Financial Counterparty, as the case may
be, furnished to the Company through an instrument duly executed by such Holder, Underwriter or Financial Counterparty, as applicable, specifically for use in the preparation thereof.
(ii) In connection with any registration of Registrable Securities under the Securities Act or any Underwritten
Offering, Block Trade or Other Coordinated Offering pursuant to this Agreement, each seller of Registrable Securities shall indemnify and hold harmless (in the same manner and to the same extent as set forth in the preceding paragraph of this
Section 5(l)) the Company, each officer of the Company who shall sign such Registration Statement, each underwriter, Financial Counterparty or other Person acting on behalf of such seller, each Person who controls any of
the foregoing Persons within the meaning of the Securities Act and each other seller of Registrable Securities under such Registration Statement with respect to any statement or omission from any Preliminary Prospectus, the Registration Statement,
the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any Road Show Material or Blue Sky Filings, if such statement or omission was made in reliance upon and in conformity with written information
relating to such seller or Registrable Securities furnished to the Company or such underwriter or Financial Counterparty through an instrument duly executed by such seller specifically for use in connection with the preparation of such Preliminary
Prospectus, Registration Statement, Prospectus, Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any Road Show Material or Blue Sky Filings; provided, however, that the obligation to indemnify shall be
individual, not joint and several, for each seller of Registrable Securities and that the maximum amount of liability in respect of such indemnification shall be, limited, in the case of each seller of Registrable Securities, to an amount equal to
the net proceeds actually received by such seller from the sale of Registrable Securities effected pursuant to such registration.
(iii) Indemnification similar to that specified in Sections 5(l)(i) and (l)(ii) shall be given by the
Company and each seller of Registrable Securities (with such modifications as may be appropriate) with respect to any required registration or other qualification of such sellers Registrable Securities under any Federal or state Law or
regulation of Governmental Authority other than the Securities Act.
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(iv) Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding paragraphs of this Section 5(l), such indemnified party will, if a claim in respect thereof is made against an indemnifying party, give written
notice to the latter of the commencement of such action (provided, however, that an indemnified partys failure to give such notice in a timely manner shall not relieve the indemnifying party of any liability that it may have to
the indemnified party hereunder except to the extent that the indemnifying party forfeits substantive rights or defenses by reason of such failure). In case any such action is brought against an indemnified party, the indemnifying party will be
entitled to participate in and to assume the defense thereof at its own expense, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof. The indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be paid by the indemnified party
unless (i) the indemnifying party agrees to pay the same, (ii) the indemnifying party fails to assume the defense of such action with counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such
action (including any impleaded parties) include both the indemnifying party and the indemnified party and such parties have been advised by such counsel that either (A) representation of such indemnified party and the indemnifying party by the
same counsel would be inappropriate under applicable standards of professional conduct or (B) there may be one or more legal defenses available to the indemnified party which are different from or additional to those available to the
indemnifying party. In any of such cases referred to in clauses (i)-(iii) of the immediately preceding sentence, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party; it being
understood, however, that the indemnifying party shall not be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties. No indemnifying party shall be liable for any
settlement entered into without its written consent, which consent shall not be unreasonably withheld. No indemnifying party shall, without the written consent of such indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which such indemnified party is a party and indemnity has been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability for claims that are the
subject matter of such proceeding.
(v) If the indemnification provided for in this
Section 5(l) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage or liability referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage or liability as well as any other relevant equitable considerations;
provided, however, that the maximum amount of liability in respect of such contribution shall be
25
limited, in the case of each seller of Registrable Securities, to an amount equal to the net proceeds actually received by such seller from the sale of Registrable Securities effected pursuant to
such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. No Person
guilty of fraud shall be entitled to indemnification or contribution hereunder.
(vi) The indemnification and
contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party and will survive the transfer of Registrable Securities and the termination of this
Agreement.
(m) Underwritten Offerings; Other Offerings. Notwithstanding anything to the contrary set forth
in this Agreement, to the extent that the Company and all the Holders selling Registrable Securities in any Underwritten Offering, Block Trade, Other Coordinated Offering or Piggyback Registration shall enter into an underwriting or similar
agreement on terms reasonably acceptable to the Company and such Holders (to the extent such terms are applicable to such Holders), which agreement contains provisions covering one or more issues addressed in this
Section 5, the provisions contained in this Section 5 addressing such issue or issues shall be of no force or effect with respect to such Underwritten Offering, Block Trade, Other Coordinated
Offering or Piggyback Registration; provided, however, that Section 5(l) shall remain in full force and effect unless such underwriting or similar agreement states that the indemnification provisions of such
agreement supersede Section 5(l).
(n) Information by Holder. Each Holder whose
Registrable Securities are to be included in any Registration Statement or any Underwritten Offering, Block Trade or Other Coordinated Offering shall furnish to the Company such written information regarding such Holder and the distribution proposed
by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Agreement.
(o) Exchange Act Compliance. The Company shall comply with all of the reporting requirements of the Exchange Act
and shall comply with all other public information reporting requirements of the Commission which are conditions to the availability of Rule 144 for the sale of Registrable Securities. The Company shall cooperate with each Holder in supplying such
information as may be necessary for such Holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144 (or any comparable successor rules). The Company
shall furnish to each Holder upon request a written statement executed by the Company as to the steps it has taken to comply with the current public information requirement of Rule 144 (or such comparable successor rules). Subject to the
restrictions on Transfer set forth in this Agreement, the Company shall use its commercially reasonable efforts to facilitate and expedite transfers of Registrable Securities pursuant to Rule 144 under the Securities Act, which efforts shall include
timely notice to its transfer agent to expedite such transfers of Registrable Securities.
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(p) Termination of Registration Rights. No Holder shall have
any registration rights under this Section 5 upon such Holder ceasing to Beneficially Own any Registrable Securities. In addition, any Holder shall be entitled to terminate such Holders rights under this
Section 5 by providing prior written notice to the Company and Sinclair HoldCo, which notice shall state the number of Registrable Securities held by such Holder and the date on which such termination shall be effective. Upon the
effectiveness of such termination, the Registrable Securities held by such Holder shall cease to have any registration rights under this Section 5; provided, that, for the avoidance of doubt, the indemnity provisions and expense
provisions contained in this Section 5 shall remain operative and in full force and effect regardless of any such termination.
(q) Registration Rights Notices. For administrative convenience, all notices to or from the Company in respect
of the Sinclair Parties shall be coordinated through Sinclair HoldCo or its designee.
(r) Other Registration
Rights. The Company represents and warrants, as of the date hereof and as of the Closing Date, that no Person has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in
any Registration Statement filed by the Company for the sale of securities for its own account or for the account of any other Person. Effective beginning the date of this Agreement, the Company shall not, without the prior consent of a majority-in-interest of the Registrable Securities enter into any agreement with respect to its securities that is inconsistent in any material respect with, or provides
registration rights that are senior in priority to, the rights granted to Sinclair HoldCo or the Holders by this Agreement. In furtherance of the foregoing, in no event will the Company enter into any agreement that would permit another holder of
securities of the Company to participate on a pari passu basis (in terms of priority of cut-back based on advice of underwriters) with the Holders in an Underwritten Offering pursuant to
Section 5(b) or a Piggyback Registration pursuant to Section 5(f).
Section 6. Stockholder Actions; Standstill Restrictions.
(a) Each Sinclair Party agrees that, prior to the Standstill Termination Date, without the prior written approval of a
majority of the Disinterested Directors, or except as expressly contemplated by this Agreement, such Sinclair Party will not, and each Sinclair Party will cause each Sinclair Family Member that it controls (as distinguished from the ability to
influence) not to, directly or indirectly, in any manner (each of the following, Prohibited Actions):
(i) make a public announcement, proposal or offer (including any solicitation of proxies) to the Board or any of the
Companys stockholders regarding, or otherwise solicit, seek or offer to effect, or otherwise publicly disclose an intent to propose or enter into or agree to enter into, singly or with any other Person, directly or indirectly, to effect
(A) any business combination, merger, tender offer, exchange offer or similar transaction (whether or not involving a Change of Control) involving the Company or any of its subsidiaries, or (B) any restructuring, recapitalization,
liquidation or similar transaction involving the Company or any of its subsidiaries; provided, however, that the Sinclair Parties and their Affiliates may privately communicate any such proposal or offer to the Company so long as such
private communications do not trigger public disclosure obligations (including the filing of a Schedule 13D or Schedule 13G or any amendment to such a filing);
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(ii) form, join or participate in any Group with respect to the
Common Stock other than forming, joining or participating in a group solely between or among (i) Sinclair HoldCo and some or all of the Stockholders or (ii) Sinclair HoldCo, some or all of the Stockholders and their Permitted Transferees
with respect to any shares of Common Stock lawfully transferred to any such Permitted Transferee;
(iii) enter,
agree to enter, propose or offer to enter into any merger, business combination, recapitalization, restructuring, change in control transaction or other similar extraordinary transaction involving the Company or any of its subsidiaries (unless such
transaction is recommended by the Board);
(iv) otherwise act with any Person, including by providing financing
for another party, to seek to control the management, the Board or the policies of the Company (other than any appointment or removal of a Sinclair Designee);
(v) acquire, agree or propose or offer to acquire (including through any hedging, swap or other similar transaction)
directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another Person, by joining a partnership, limited partnership, syndicate or other group (including any group of Persons that would be
treated as a single person under Section 13(d) of the Exchange Act) any Common Stock or securities that are convertible or exchangeable into (or exercisable for) Common Stock, other than (A) pursuant to a Permitted Transfer or
(B) as a result of any stock split, reverse stock split, stock dividend, distributions, combinations, reclassifications or other similar transaction of voting securities of the Company;
(vi) engage in any solicitation of proxies or written consents to vote any voting securities of the Company, or
conduct any non-binding referendum with respect to any voting securities of the Company, or knowingly assist or participate in any other way, directly or indirectly, in any solicitation of proxies or written
consents with respect to any voting securities of the Company, or otherwise become a participant in a solicitation, as such terms are defined in the rules under the Exchange Act;
(vii) call, or seek to call, a meeting of the stockholders of the Company or initiate any stockholder proposal for
action by stockholders of the Company or advise, encourage or influence any Person (other than its Affiliates and the other Sinclair Parties) with respect to the voting or disposition of any Common Stock (including in any vote no,
withhold or similar campaign);
(viii) seek, or encourage any Person, to submit nominations to the
Board in furtherance of a contested solicitation for the election or removal of directors from the Board or seek or knowingly encourage the removal of any members of the Board or the election of any directors (other than nominees
recommended by the Board);
(ix) demand a copy of the Companys list of stockholders, whether pursuant to
Section 220 of the DGCL or pursuant to any other statutory right;
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(x) deposit any Common Stock in any voting trust or subject any
Common Stock to any arrangement or agreement with respect to the voting of any Common Stock (other than any such voting trust, arrangement or agreement solely among the Sinclair Parties that is otherwise in accordance with this Agreement);
(xi) publicly disclose any intention, plan or arrangement prohibited by, or inconsistent with, the foregoing or enter
into any negotiations, agreements or understandings with any Person with respect to any of the foregoing;
(xii) publicly disclose, or take any action that would reasonably cause the public disclosure (including the filing of
any document with the Commission or any disclosure to any journalist, member of the media or securities analyst) of, any intent, purpose, plan or proposal to request that the Company or the Board waive, terminate or amend the restrictions in this
Section 6(a); or
(xiii) knowingly facilitate, encourage or assist any third party to do any of the
foregoing.
Notwithstanding anything to the contrary contained in this Agreement, none of the Sinclair Parties shall be prohibited or restricted from:
(A) communicating privately with the Board or any officer or director of the Company regarding any matter, so long as such communications are not intended to, and would not reasonably be expected to, require any public disclosure of such
communications by any of the Sinclair Parties or their respective Affiliates, the Company or its Affiliates or any third party, subject in any case to any confidentiality obligations to the Company of any such director or officer and applicable Law,
rules or regulations; (B) taking any action necessary to comply with any Law or any action required by any Governmental Authority or stock exchange that has, or may have, jurisdiction over any Sinclair Party, provided that a breach by
such Sinclair Party of this Agreement is not the cause of the applicable requirement; (C) privately communicating to any Sinclair Family Member publicly available information regarding the Company, provided such communications are not
otherwise reasonably expected to be publicly disclosed; (D) privately communicating to any Sinclair Family Member in a manner that otherwise does not violate the terms of this Agreement; or (E) publicly providing the information required
by Item 5.02(a) of Form 8-K.
(b) The provisions set forth in
Section 6(a) shall not limit the actions of any Sinclair Designee in his or her capacity as a director of the Company (including receipt of any equity incentive or similar awards), recognizing that such actions are subject
to such persons fiduciary duties to the Company and its stockholders (it being understood and agreed that none of Sinclair HoldCo, the Stockholders, or any of their Affiliates shall seek to do indirectly through any Sinclair Designee any
action that would be prohibited if done directly by Sinclair HoldCo, a Stockholder, or any of their respective Affiliates pursuant to this Section 6).
(c) Other than with respect to Subject Shares that are not Restricted Shares, each of the Sinclair Parties represents
and warrants to the Company that, as of the date hereof and as of the effectiveness of this Agreement, neither it, nor any of its Affiliates is engaged in any discussions or negotiations with any Person who is not a Sinclair Family Member, and
neither it, nor any of its Affiliates has any agreements, arrangements, or understandings, written or oral, formal or informal, and whether or not legally enforceable with any Person who is not a Sinclair Family Member concerning the acquisition of
Beneficial Ownership of any securities of the Company.
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(d) No later than ten (10) calendar days following the Closing
(or such other date as required by applicable Law), Sinclair HoldCo shall file a Schedule 13D with the Commission with respect to the Company reporting the entry into this Agreement, responding to applicable items of Schedule 13D to conform to their
obligations thereunder and appending or incorporating by reference this Agreement as an exhibit thereto. Sinclair HoldCo shall provide the Company and its counsel a reasonable opportunity to review and comment on the Schedule 13D prior to such
filing, which comments shall be considered in good faith. During the term of this Agreement, each Sinclair Party shall file a Schedule 13D and any amendments to such Schedule 13D with the Commission as and when required by Law. Each Sinclair Party
shall provide the Company and its counsel a reasonable opportunity to review and comment on any amendment to a Schedule 13D prior to such filing, which comments shall be considered in good faith, provided, however, that a Sinclair
Party will not be required to provide amendments to such Schedule 13D for review by the Company and its counsel to the extent any such amendment solely relates to the disposition of Common Stock.
(e) Notwithstanding the standstill restrictions in Section 6(a) or the restrictions set forth
in Section 3 or Section 4, at any time during which the Company has executed and delivered a definitive agreement or during which there shall be pending a tender offer or exchange offer for Common
Stock from a third party that has been approved or recommended by the Board, in each case with respect to a Change of Control (each, a Pending Transaction), the Sinclair Parties shall be free to Transfer Subject Shares without
regard to the restrictions set forth in Section 3 or Section 4 and shall be entitled to take any Prohibited Actions solely to the extent relating to, or taken with respect to, the Pending
Transaction, or any alternative transaction to the Pending Transaction. If the Pending Transaction and any other Change of Control transactions are abandoned prior to consummation, the standstill restrictions in
Section 6(a) will be restored until they otherwise terminate on the Standstill Termination Date and the restrictions of Section 3 and Section 4 shall thereafter be applicable to
future Transfers of Subject Shares by the Sinclair Parties until such restrictions terminate at the end of the Lock-up Period (with respect to Section 3) or the Sunset Date (with
respect to Section 4).
Section 7. Voting.
(a) Subject to Section 6(a), each Sinclair Party may vote, grant a proxy to vote, or execute a
written consent with respect to, any or all of the voting securities of the Company as to which they are entitled to vote, grant a proxy to vote, or execute a written consent, as they may determine in their sole discretion, except with respect to
the following matters:
(i) with respect to each nominee for election to the Board, each Sinclair
Party shall vote either (in such Sinclair Partys sole discretion) (A) in accordance with the Boards recommendation or (B) in the same proportion as the votes cast by stockholders of the Company who are not Sinclair Parties; and
(ii) with respect to (A) the ratification of the appointment of the Companys independent
registered public accounting firm, (B) any say-on-pay
30
proposal of the Company, (C) any stockholder proposal, or (D) any proposal related to an incentive compensation plan or material amendment thereof, in each case that is submitted to the
Companys stockholders for approval, each Sinclair Party shall vote, in each case, in accordance with the Boards recommendation.
(b) In furtherance of Section 7(a), each Sinclair Party shall be present in person or
represented by execution and submission to the Company of the proxy card or voting instruction form solicited by the Company or the Board at all meetings of stockholders to the extent necessary so that all voting securities of the Company as to
which they are entitled to vote shall be counted as present for the purpose of determining the presence of a quorum at such meeting.
(c) A Sinclair Party shall be subject to the voting restrictions in Sections 7(a)(i) and (ii) until the
date the Sinclair Parties are no longer entitled to designate any Sinclair Designee under Section 2(a).
(d) For the avoidance of doubt, except for the voting restrictions applicable to Company proposals and specifically set
forth above (excluding Section 7(a)(ii) that relates to stockholder proposals rather than Company proposals), the Sinclair Parties shall not be restricted, and shall be entitled to vote in their sole and absolute discretion, with respect to any
proposal submitted by the Company to holders of voting securities of the Company, including matters related to amendments to the Companys certificate of incorporation or bylaws; equity issuances requiring stockholder approval under applicable
securities exchange listing requirements; mergers involving the Company; or a sale of all or substantially all of the Companys assets.
Section 8. Representations and Warranties.
(a) The Company hereby represents and warrants to the other parties hereto as follows:
(i) The Company is a corporation duly incorporated, validly existing and in good standing under the Laws
of the State of Delaware and has the corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted.
(ii) The Company has the power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement has been duly authorized, executed and delivered by the Company and, when duly executed by the other parties hereto and delivered by such parties, shall constitute the legal, valid and binding obligations of the
Company, enforceable against the Company, in accordance with its terms, subject to Equitable Exceptions.
(iii) The execution, delivery and performance of this Agreement by the Company will not
(a) conflict with or result in any breach of any provision of the Organizational Documents of the Company, (b) require any filing with, or the obtaining of any permit, authorization, consent or approval of, any Governmental Authority
(other than any filings required to be made with the Commission), (c) violate, conflict with or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) under, or give rise to any right of
31
termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license, agreement, lease or other
contract, instrument or obligation to which the Company or any of its assets may be bound, (d) violate any Law applicable to the Company or (e) result in the creation or imposition of any Lien upon or with respect to any of the assets
owned, leased or licensed by the Company, excluding from the foregoing clauses (b), (c), (d) and (e) such requirements, violations, conflicts, defaults or rights which would not, or would not be reasonably likely to, have a material and adverse
effect on the Company.
(b) Each Sinclair Party hereby represents and warrants to the Company as follows:
(i) Such party, if a corporation, limited liability company or other legal entity, is duly organized or
formed, validly existing and in good standing under the Laws of its jurisdiction of incorporation or formation and has the corporate, limited liability company or other legal power and authority to own, lease and operate its properties and assets
and to carry on its business as now being conducted.
(ii) Such party has the power and authority to
execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by such party and, when duly executed by the other parties hereto and delivered by such parties, shall
constitute the legal, valid and binding obligations of such party, enforceable against such party, in accordance with its terms, subject to Equitable Exceptions.
(iii) The execution, delivery and performance of this Agreement by such party will not (a) conflict
with or result in any breach of any provision of the Organizational Documents of such party, (b) require any filing with, or the obtaining of any permit, authorization, consent or approval of, any Governmental Authority (other than any filings
required to be made with the Commission), (c) violate, conflict with or result in a default (or any event which, with notice or lapse of time or both, would constitute a default) under, or give rise to any right of termination, cancellation or
acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license, agreement, lease or other contract, instrument or obligation to which such party or any of its assets may be
bound, (d) violate any Law applicable to such party or (e), result in the creation or imposition of any Lien upon or with respect to any of the assets owned, leased or licensed by such party, excluding from the foregoing clauses (b), (c), (d)
and (e) such requirements, violations, conflicts, defaults or rights which would not, or would not be reasonably likely to, have a material and adverse effect on such party.
(iv) Such party, when taken together with the other Sinclair Parties and their Affiliates, has the
ability to cause Sinclair HoldCo to take, or refrain from taking, the applicable actions as set forth herein.
32
Section 9. Miscellaneous.
(a) Term. This Agreement shall be effective upon the Closing and shall continue in effect until 11:59 p.m.,
Central time, on the date that the Sinclair Parties cease to Beneficially Own any Registrable Securities, except for those Sections of this Agreement that expire earlier in accordance with their respective terms; provided however, that
notwithstanding any such termination, the terms of Sections 5(k) and 5(l) and this Section 9 (other than Section 9(q)) shall continue in full force and effect thereafter for a period
of seven (7) years.
(b) Confidentiality.
(i) Each Sinclair Party agrees, and will require each of its Representatives including each Sinclair
Designee, to agree, to hold in confidence and not use or disclose to any third party any non-public information provided by the Company or its Representatives to such Person in connection with its direct or
indirect investment in the Company or the exercise of such Persons rights under this Agreement (the Confidential Information); provided, however, Confidential Information does not include
information or data that: (i) is or was independently developed by such Person or its Representatives without breaching this Agreement; (ii) was or is publicly available prior to the Closing Date or is or subsequently becomes publicly
available other than as a result of a disclosure by such Person in breach of this Agreement; (iii) is or becomes available to such Person or its Representatives from a source other than the Company, provided that the source of such
information was not known by such Person to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the Company or any other party with respect to such information; or (iv) was
already in the possession of such Person or its Representatives at the time disclosed by the Company to such Person, provided that the source of such information was not known by such Person to be bound by a confidentiality agreement with, or
other contractual, legal or fiduciary obligation of confidentiality to, the Company or any other party with respect to such information.
(ii) Notwithstanding the foregoing, in the event that any Sinclair Party or any of their respective
Representatives are required by Law or legal or judicial process (including by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) to disclose any of the Confidential Information, each such
party may disclose such Confidential Information, and only the portion of such Confidential Information, that, based on the advice of such partys counsel, is required by Law to be disclosed, but only after providing the Company, to the extent
practicable and not prohibited by Law, with prompt prior written notice to the Company so that the Company at the Companys expense may seek to limit or eliminate such disclosure, including through the procurement of a protective order or other
judicial remedy. Prior to disclosure of any Confidential Information in accordance with the preceding sentence, such party shall, at the Companys request and sole expense, use commercially reasonable efforts to provide such cooperation to the
Company as the Company shall reasonably request in order to limit or eliminate disclosure of any Confidential Information and shall,
33
at the Companys request and sole expense, use commercially reasonable efforts to obtain assurances from the Persons to whom such Confidential Information is disclosed that such Persons will
afford such information confidential treatment.
(iii) Nothing in this Agreement, including
Section 9(b)(i), shall limit or restrict any Sinclair Designee in acting in his or her capacity as a director of the Company and exercising his or her fiduciary duties and responsibilities.
(iv) The parties to this Agreement recognize that, in connection with their participation in any public
offering of Registrable Securities, such parties and their authorized representatives have obligations and defenses under federal and state securities Laws, including with respect to complete and correct disclosure and obligations imposed by Law and
by applicable standards of professional conduct. Accordingly, no party shall take any action, omit to take an action, or withhold a consent under this Section 9(b) that would prevent, limit or impair the ability of any
other party to comply in full with such obligations or to demonstrate efforts undertaken for such defenses in connection with any claim, action or proceeding. Nothing in this Agreement, including this Section 9(b), shall be
construed to require any party to commit or be subject to a violation of Law or to impede such partys right or ability to report violations of Law, subject to the procedures in Section 9(b)(ii) if applicable.
(c) Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall
be in writing and shall be deemed to have been given (i) when personally delivered, (ii) the day after being sent by nationally recognized overnight courier, (iii) on the date sent by email if sent during normal business hours of the
recipient, and on the next Business Day if sent after normal business hours of the recipient; or (iv) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must
be sent to the respective parties at the following addresses or emails (or at such other address for a party as shall be specified in a notice given in accordance with this Section 9(c)):
(i) if to the Company or Sinclair HoldCo, at the address set forth in Section 10.1 of the BCA; and
(ii) if to any other Stockholder or Holder, to the address or email of such Stockholder or Holder
as is on file with the Company or as may be designated in writing by such Stockholder or Holder.
(d) Entire
Agreement. This Agreement, the BCA, and the other documents delivered at the Closing pursuant hereto or thereto (including the Exhibits and Schedules attached hereto and thereto), contain the entire understanding of the parties in respect of
their subject matter and supersede all prior agreements and understandings (oral or written) between the parties with respect to such subject matter.
34
(e) Expenses. Except as otherwise expressly provided in
Section 5(k), the parties shall pay their own fees and expenses, including their own counsel fees, incurred in connection with this Agreement.
(f) Amendment; Waiver. This Agreement may not be modified, amended, supplemented, canceled or discharged, except
by written instrument executed by the Company and Sinclair HoldCo; provided, however, that this Agreement may not be modified, amended, supplemented, canceled or discharged in a manner that is (i) disproportionately adverse to the
rights of a Stockholder or Holder under this Agreement as compared to the other Stockholders or Holders or (ii) imposes an additional obligation upon any Stockholder or Holder, in either case, without the prior written consent of such
Stockholder or Holder. No failure to exercise, and no delay in exercising, any right, power or privilege under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right, power or privilege hereunder preclude the
exercise of any other right, power or privilege.
(g) Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns. Except as provided in Section 3(b) and this
Section 9(g), this Agreement, the rights or obligations hereunder may not be assigned by any party hereto without the prior written consent of the other parties hereto. Notwithstanding anything in the foregoing to the
contrary and subject to the restrictions in Section 3 and Section 4, the rights of a Holder pursuant to Section 5 with respect to all or any portion of its Registrable
Securities may be assigned without such consent (but only with all related obligations as specified in Section 5) with respect to such Registrable Securities (and any Registrable Securities issued as a dividend or other
distribution with respect to, in exchange for or in replacement of such Registrable Securities) by such Holder to a transferee, including any Permitted Transferee, of such Registrable Securities; provided, that (i) the Company is, within
a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the Registrable Securities with respect to which such registration rights are being assigned and (ii) such
transferee or assignee agrees in writing to be bound by and subject to the terms set forth in this Agreement relating to Registrable Securities.
(h) Counterparts. This Agreement may be executed in any number of counterparts (including by means of facsimile
and electronically transmitted portable document format (pdf) signature pages), each of which shall be an original but all of which together shall constitute one and the same instrument.
(i) Interpretation; Schedules.
(i) Unless the context of this Agreement otherwise clearly requires, (i) references to the plural include the
singular, and references to the singular include the plural, (ii) references to one gender include the other gender, (iii) the words include, includes and including do not limit the preceding terms or
words and shall be deemed to be followed by the words without limitation or but not limited to, (iv) the terms hereof, herein, hereunder, hereto and similar terms in this
Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, (v) the terms day and days mean and refer to calendar day(s), (vi) the terms year and years
mean and refer to calendar year(s), and (vii) all references to $ in this Agreement shall be deemed references to United States dollars.
35
(ii) Unless otherwise set forth in this Agreement, references in
this Agreement to (i) any document, instrument or agreement (including this Agreement) (A) includes and incorporates all Exhibits, Schedules and other attachments thereto, (B) includes all documents, instruments or agreements issued
or executed in replacement thereof and (C) means such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified or supplemented from time to time in accordance with its terms and in effect at any given time,
and (ii) a particular Law means such Law, as amended, modified, supplemented or succeeded from time to time. All Article, Section, Exhibit and Schedule references herein are to Articles, Sections, Exhibits and Schedules of this
Agreement, unless otherwise specified.
(iii) The headings contained herein, and on the Schedules are for
reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or the Schedules.
(iv) This Agreement shall not be construed as if prepared by one of the parties hereto, but rather according to its
fair meaning as a whole, as if all parties hereto had prepared it.
(j) Governing Law; Interpretation. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
(k) Forum Selection and Consent
to Jurisdiction; Waiver of Jury Trial.
(i) EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
(A) COURT OF CHANCERY OF THE STATE OF DELAWARE AND (B) ANY UNITED STATES DISTRICT COURT FOR THE STATE OF DELAWARE (FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE NEGOTIATION,
EXECUTION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY AND AGREES THAT ALL CLAIMS IN RESPECT OF THE SUIT, ACTION OR OTHER PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT). EACH PARTY HERETO AGREES TO
COMMENCE ANY SUCH SUIT, ACTION OR OTHER PROCEEDING EITHER IN ANY UNITED STATES DISTRICT COURT FOR THE STATE OF DELAWARE OR IN THE COURT OF CHANCERY FOR THE STATE OF DELAWARE. EACH PARTY HERETO WAIVES ANY DEFENSE OF IMPROPER VENUE OR INCONVENIENT
FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING SO BROUGHT AND WAIVES ANY BOND, SURETY, OR OTHER SECURITY THAT MIGHT BE REQUIRED OF ANY OTHER PARTY WITH RESPECT THERETO. ANY PARTY HERETO MAY MAKE SERVICE ON ANY OTHER PARTY BY SENDING OR
DELIVERING A COPY OF THE PROCESS TO THE
36
PARTY TO BE SERVED AT THE ADDRESS AND IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES IN SECTION 9(C), HOWEVER, NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR AT EQUITY. EACH PARTY AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW OR AT EQUITY.
(ii) EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE HEREUNDER IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER
OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EACH OF THE PARTIES HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY HERETO WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (II) UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) MAKES THIS WAIVER VOLUNTARILY, AND (IV) ACKNOWLEDGES THAT SUCH OTHER PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
(l) Specific Performance.
(i) The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed
in accordance with the terms hereof, that any breach of this Agreement would not be adequately compensated by monetary damages and that, accordingly, the parties hereto shall be entitled to specific performance of the terms hereof, in addition to
any other remedy to which they are entitled at Law or in equity. Each party hereto hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance when available pursuant to the terms of this Agreement
to prevent or restrain breaches of this Agreement by such party and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and agreements of such
party under this Agreement in accordance with the terms of this Section 9(l). The parties hereto further agree to waive any requirement for the securing or posting of any bond in connection with the obtaining of any
specific performance or other equitable relief, this being in addition to any other remedy to which they are entitled at Law or in equity. The parties hereto have specifically bargained for the right to specific performance of the obligations
hereunder, in accordance with the terms and conditions of this Section 9(l).
(ii) All
remedies hereunder are cumulative and are not exclusive of any other remedies provided by Law or equity. Each party hereto further agrees that (A) by seeking the remedies provided for in this Section 9(l), a party
shall not in any respect waive its right to seek any other form of relief that may be available to such party under this Agreement or in the event that the remedies provided for in this Section 9(l) are not available or
otherwise are not
37
granted, and (B) the commencement of any Proceeding pursuant to this Section 9(l) or anything set forth in this Section 9(l) restrict or
limit any partys right to pursue any other remedies under this Agreement that may be available then or thereafter.
(iii) Each party hereto further agrees that the only permitted objection that it may raise in response to any action
for equitable relief is that it contests the existence of a breach or threatened breach of this Agreement.
(m) Time. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the
essence.
(n) Third Party Beneficiaries. Except as otherwise specifically set forth herein, no provision of
this Agreement is intended to confer upon any Person other than the parties hereto any rights or remedies, legal or equitable, hereunder, and no other Person other than the parties hereto shall be entitled to rely thereon.
(o) Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of Law or public policy (including any applicable rules of the NYSE or the Commission), all other terms, conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be
consummated as originally contemplated to the fullest extent possible.
(p) Assurances of Performance. Each
of the Sinclair Parties shall use its commercially reasonable efforts to cause any Person it controls (as distinguished from the ability to influence) to comply with the terms of this Agreement applicable thereto (it being understood that such
Sinclair Party shall be responsible to the Company for any breach of such terms by any such controlled Person).
(q) Fully Diluted Basis. Upon the request of Sinclair HoldCo, the Company will provide an updated calculation
of the Companys outstanding shares of Common Stock on a Fully Diluted Basis as of the most recent practicable date. The Companys obligation pursuant to this Section 9(q) shall terminate on the date that the
Sinclair Parties cease to Beneficially Own any Registrable Securities.
(r) Independent Nature of Sinclair
Parties Obligations and Rights. The obligations of each Sinclair Party under this Agreement are several and not joint with the obligations of any other Sinclair Party, and no Sinclair Party shall be responsible in any way for the
performance of the obligations of any other Sinclair Party under this Agreement. The waiver by the Company of performance under this Agreement by any Sinclair Party does not excuse performance by any other Sinclair Party. Nothing contained herein,
and no action taken by any Sinclair Party pursuant hereto, shall be deemed to constitute the Sinclair Parties as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Sinclair
38
Parties are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Agreement. Each Sinclair Party shall be entitled to independently
protect and enforce its rights, including without limitation, its rights arising out of this Agreement, and it shall not be necessary for any other Sinclair Party to be joined as an additional party in any proceeding for such purpose.
[Signature Page Follows]
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IN WITNESS WHEREOF, the duly authorized representative of the undersigned has caused
this Stockholders Agreement to be duly executed and delivered as of the day and year first above written.
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HIPPO PARENT CORPORATION
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By:
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/s/ Michael C. Jennings
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Name: Michael C. Jennings
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Title: Chief Executive Officer and President
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[SIGNATURE
PAGE TO STOCKHOLDERS AGREEMENT]
IN WITNESS WHEREOF, the duly authorized representative of the undersigned has caused
this Stockholders Agreement to be duly executed and delivered as of the day and year first above written.
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By:
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/s/ Ross B. Matthews
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Name: Ross B. Matthews
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Title: Chief Operating Officer
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By:
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/s/ Carol Orme Holding
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Name: Carol Orme Holding
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Title: Trustee
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ARTICLE VI EXEMPT MARITAL TRUST
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By:
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/s/ Carol Orme Holding
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Name: Carol Orme Holding
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Title: Trustee
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ARTICLE VIII EXEMPT BYPASS TRUST
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By:
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/s/ Carol Orme Holding
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Name: Carol Orme Holding
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Title: Trustee
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THE ANNE CAROL HOLDING 101 TRUST
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By:
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/s/ Anne Carol Holding
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Name: Anne Carol Holding
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Title: Trustee
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[SIGNATURE
PAGE TO STOCKHOLDERS AGREEMENT]
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THE ANNE CAROL HOLDING TRUST
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By:
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/s/ Anne Carol Holding
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Name: Anne Carol Holding
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Title: Trustee
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By:
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/s/ Kathleen Marie Holding
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Name: Kathleen Marie Holding
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Title: Co-Trustee
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By:
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/s/ Ross Butler Matthews
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Name: Ross Butler Matthews
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Title: Co-Trustee
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By:
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/s/ Kathleen Marie Holding
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Name: Kathleen Marie Holding
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Title: Co-Trustee
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By:
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/s/ Ross Butler Matthews
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Name: Ross Butler Matthews
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Title: Co-Trustee
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By:
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/s/ Ross Butler Matthews
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Name: Ross Butler Matthews
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Title: Co-Trustee
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By:
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/s/ Meagan Kathleen Matthews
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Name: Meagan Kathleen Matthews
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Title: Co-Trustee
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[SIGNATURE
PAGE TO STOCKHOLDERS AGREEMENT]
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By:
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/s/ Ross Butler Matthews
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Name: Ross Butler Matthews
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Title: Co-Trustee
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By:
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/s/ Daniel Ross Matthews
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Name: Daniel Ross Matthews
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Title: Co-Trustee
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THE HOLDING FAMILY IRREVOCABLE TRUST
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By:
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/s/ Christine S. Holding
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Name: Christine S. Holding
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Title: Trustee
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By:
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/s/ Kathleen Marie Holding
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Name: Kathleen Marie Holding
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By:
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/s/ Christian E. Peterson
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Name: Christian E. Peterson
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By:
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/s/ Lara Anne Martinez
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Name: Lara Anne Martinez
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By:
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/s/ Carol Chase Giroux
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Name: Carol Chase Giroux
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By:
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/s/ Jennie Peterson
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Name: Jennie Peterson
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[SIGNATURE
PAGE TO STOCKHOLDERS AGREEMENT]
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By:
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/s/ Lauren Christine Holding
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Name: Lauren Christine Holding
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By:
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/s/ Dallin Richards Holding
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Name: Dallin Richards Holding
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By:
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/s/ Catherine Lucille Holding Didier
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Name: Catherine Lucille Holding Didier
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By:
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/s/ Clayton Stephen Holding
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Name: Clayton Stephen Holding
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By:
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/s/ David Earl Holding
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Name: David Earl Holding
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[SIGNATURE
PAGE TO STOCKHOLDERS AGREEMENT]
SCHEDULE I
2.
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Article VI Exempt Marital Trust
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3.
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Article VIII Exempt Bypass Trust
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4.
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The Anne Carol Holding 101 Trust
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5.
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The Anne Carol Holding Trust
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8.
|
Little Montecito Trust
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10.
|
The Holding Family Irrevocable Trust
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11.
|
Kathleen Marie Holding
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12.
|
Christian E. Peterson
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16.
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Lauren Christine Holding
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17.
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Dallin Richards Holding
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18.
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Catherine Lucille Holding Didier
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19.
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Clayton Stephen Holding
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EXHIBIT A
Fully Diluted Basis
Hippo
Parent Corporation Diluted Share Count
as of July 31, 2021
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|
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|
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Common Outstanding
|
|
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162,490,166
|
|
RSUs
|
|
|
1,831,007
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PSUs
|
|
|
600,106
|
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Vested Yet to be Awarded
|
|
|
7,697
|
|
|
|
|
|
|
Total Diluted Share Count
|
|
|
164,928,976
|
|
EXHIBIT B
Prohibited Transferees
Omitted pursuant to Item 601(a)(5) of Regulation S-K.
EXHIBIT C
Director Qualifications
Characteristics
expected of all directors include integrity, exceptional talent and judgment, and the ability and willingness to commit adequate time to the Board. In evaluating the suitability of individual board members, the Nominating Committee takes into
account many factors, including the candidates independence, the skills enumerated in the Director Skills and Experience Matrix (as further described below), knowledge of the communities in which the Company does business, the Companys
industry, or other industries relevant to the Companys business or other organizations of comparable size; and personal qualities, such as background and reputation.
The experience, skills and qualifications included in the Companys Director Skills and Experience Matrix as of the date of this Agreement are as
follows:
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|
|
Executive / CEO Leadership
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|
|
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Public company board service / governance
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|
|
|
M&A and capital markets expertise
|
|
|
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Industry background and operations management
|
|
|
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Marketing and sales experience
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|
|
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International experience
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|
|
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Human Resources and compensation
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|
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Health, safety and environmental
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EXHIBIT D
Form of Joinder Agreement
This JOINDER AGREEMENT (Joinder), dated
[ ], is executed by
[ ] (the Transferee) and by
[ ] (the Transferor) pursuant to the terms of the Stockholders Agreement, dated as of
[ ], 2021 (the Stockholders Agreement), by and among Hippo Parent Corporation, a Delaware corporation
(the Company), The Sinclair Companies, a Wyoming corporation (Sinclair HoldCo), and each other stockholder set forth on Schedule I thereto, as may be amended from time to time (each, together with
Sinclair HoldCo, a Stockholder and collectively, the Stockholders). Capitalized terms used but not otherwise defined herein have the meanings set forth in the Stockholders Agreement.
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1.
|
Acknowledgements. Transferee and Transferor each acknowledge that Transferee is acquiring Subject Shares
(the Transferred Shares) from Transferor and that it is a condition precedent to such Transfer that the Transferee execute a Joinder to the Stockholders Agreement.
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|
2.
|
Permitted Transferee. Transferor and Transferee each confirm to the Company that Transferee is a
Permitted Transferee.
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|
3.
|
Agreement. Transferee acknowledges receipt of a copy of the Stockholders Agreement and agrees that it
shall be fully bound by and subject to the terms of this Joinder and the Stockholders Agreement as a [Stockholder/Holder] thereunder.
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4.
|
Notice. Any notice required or permitted to be given by the Stockholders Agreement shall be given to
Transferee at the address listed beside Transferees signature below.
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Name:
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Title:
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Address for notices:
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EXHIBIT E
Underwriters
Omitted
pursuant to Item 601(a)(5) of Regulation S-K.
EXHIBIT F
Form of Representation Letter
Omitted pursuant to Item 601(a)(5) of Regulation S-K.
Exhibit 10.2
August 2, 2021
Holly Energy Partners, L.P.
2828 N. Harwood Street, Suite 1300
Dallas, Texas 75201
Attention: President
Email address: president-HEP@hollyenergy.com
Re: Project Safari
Ladies and Gentlemen:
Reference is made to (a) the
Business Combination Agreement dated of even date herewith by and among The Sinclair Companies, a corporation organized under the laws of the State of Wyoming (Sinclair), HollyFrontier Corporation, a corporation organized under
the laws of the State of Delaware (HFC), and the other parties thereto (as the same may be amended, supplemented or otherwise modified, the HFC Sinclair Agreement), (b) the Contribution Agreement dated of even
date herewith by and among Sinclair, Holly Energy Partners, L.P., a limited partnership organized under the laws of the State of Delaware (HEP and, together with HFC, the Parties, and each of HFC and HEP,
individually, a Party), and the other parties thereto (as the same may be amended, supplemented or otherwise modified, the HEP Sinclair Agreement and, together with the HFC Sinclair Agreement, the
Sinclair Agreements), and (c) the Twenty-First Amended and Restated Omnibus Agreement, dated February 8, 2021, by and among HEP, HFC and the other parties thereto (as may be amended from time to time, the
Omnibus Agreement).
Consummation of the transactions contemplated by each Sinclair Agreement is conditioned upon consummation of the
transactions contemplated by the other Sinclair Agreement. As a material inducement to each Party to enter into its respective Sinclair Agreement, the Parties are entering into this letter agreement (this Letter Agreement) to
memorialize certain agreements between HEP and its subsidiaries (the HEP Group) and HFC and its subsidiaries (other than members of the HEP Group) (the HFC Group). As used in this Letter Agreement, an
Affiliate of HEP or HFC means members of the HEP Group or the HFC Group, respectively.
The Parties, each intending to be legally
bound, hereby agree to the following:
1. Intercompany Agreements. Contemporaneously with Closing (as
defined in the HEP Sinclair Agreement) (the HEP Closing), each Party hereby agrees that it shall, and shall cause each of its applicable Affiliates to, execute and deliver amendments to the intercompany agreements by and among
members of the HEP Group and the HFC Group (each an Intercompany Agreement) identified on Exhibit A hereto to include within the scope thereof the assets to be acquired by HEP pursuant to the HEP Sinclair Agreement (such
assets, the Sinclair Midstream Assets), in each case, on the terms identified on Exhibit A hereto.
2. Woods Cross.
(a) WX Purchase Agreement. If HFC commits to a Woods Cross Refinery Divestiture Action (as
defined in the HFC Sinclair Agreement), each Party hereby agrees that it shall, and shall cause each of its applicable Affiliates to, execute and deliver the purchase agreement in substantially the form attached hereto as Exhibit B-1 (the WX Purchase Agreement); provided, however, that HEPs obligation in respect of this Section 2(a) shall be conditioned upon (a) the prior or
contemporaneous execution of a definitive agreement with respect to the Woods Cross Refinery Divestiture Action and (b) the closing conditions under the HEP Sinclair Agreement and the HFC Sinclair Agreement having been satisfied or waived. HFC
shall cause any Woods Cross Refinery Divestiture Action to be conditioned on, and become effective at or after, the Closing (as defined in the HFC Sinclair Agreement) (the HFC Closing). Prior to the execution of the WX Purchase
Agreement, HEP shall identify all assets of HEP Woods Cross, L.L.C. (HEP WX) which are unrelated to the Woods Cross Refinery (such assets, the Non-WX Assets). The Non-WX Assets shall include, without limitation, HEPs refined products terminal located in Spokane, WA. HEP shall transfer the Non-WX Assets (and all associated
liabilities) to an Affiliate of HEP prior to the execution of the WX Purchase Agreement.
(b) Intercompany Agreement Amendments. Each Party hereby agrees that if the transactions
contemplated by the WX Purchase Agreement are consummated (the WX Closing), then contemporaneously with the WX Closing, it shall, and shall cause each of its applicable Affiliates to, execute and deliver amendments to the
Intercompany Agreements identified on Exhibit B-2 hereto to exclude from the scope thereof the assets that are the subject of the WX Purchase Agreement (the HEP WX Assets), in each
case, on the terms identified on Exhibit B-2 hereto.
(c) Intercompany Agreement Terminations. If the conditions in
Section 2(b) are met and the Parties and their applicable Affiliates enter into the WX Purchase Agreement, then effective as of the Effective Time (as defined in the WX Purchase Agreement), the Second Amended and Restated
Operating Agreement (Woods Cross), dated as of October 29, 2018, HollyFrontier Woods Cross Refining LLC and Holly Energy Partners Operating, L.P., is hereby terminated and shall be of no further force effect, except to the extent
expressly provided otherwise therein.
3. Omnibus Agreement - Business Opportunities.
(a) Permitted Assets. Each Party hereby acknowledges and agrees that although certain assets
acquired by HFC pursuant to the HFC Sinclair Agreement, including the assets identified on Exhibit C-1 hereto, constitute Permitted Assets (as defined in the Omnibus Agreement) (the Sinclair
Permitted Assets) HFC shall have no obligation to offer the Sinclair Permitted Assets to HEP pursuant to Article II of the Omnibus Agreement.
(b) Restricted Business Exception. Each Party hereby acknowledges and agrees that the
assets identified on Exhibit C-2 hereto, shall not constitute a Restricted Business (as defined in the Omnibus Agreement) and, therefore, shall not be subject to HEPs rights under Article II of
the Omnibus Agreement.
2
4. UNEV Class B. Each Party hereby waives,
and shall cause its applicable Affiliates to waive, application of Section 12.3 of the Amended and Restated Limited Liability Company Agreement of HEP UNEV Holdings LLC dated July 12, 2012 (the UNEV LLCA) in respect of
any UNEV Pipeline Divestiture Action (as defined in the HEP Sinclair Agreement). For the avoidance of doubt, this Section 4 shall not act as a waiver of the application of Section 12.3 of the UNEV LLCA to any future
UNEV Sale Event (as defined in the UNEV LLCA).
5. Wrong Pockets.
(a) Misdirected Funds. If, following the HFC Closing, any member of the HEP Group (including any
entity acquired by the HEP Group in connection with the HEP Sinclair Agreement, such entity a Sinclair Midstream Entity) receives or collects any funds relating to (i) the Downstream Business (as defined in the HFC Sinclair
Agreement) or (ii) any asset of any Sinclair Downstream Entity (as defined below), then HEP shall, or shall cause its applicable Affiliates to, promptly remit such funds to HFC. If, following the HFC Closing, any member of the HFC Group
(including any entity acquired by the HFC Group in connection with the HFC Sinclair Agreement but excluding any Sinclair Midstream Entity, such entity a Sinclair Downstream Entity) receives or collects any funds relating to
(y) the Midstream Business (as defined in the HFC Sinclair Agreement) or (z) any asset of any Sinclair Midstream Entity, then HFC shall, or shall cause its applicable Affiliates to, promptly remit such funds to HEP.
(b) Misdirected Assets. If, following the HFC Closing, either Party determines that an asset
purportedly acquired by HFC pursuant to the HFC Sinclair Agreement (such asset, a Sinclair Downstream Asset) is owned by a Sinclair Midstream Entity, then HEP shall, or shall cause its applicable Affiliates to, promptly transfer,
on an as is, where is basis, such Sinclair Downstream Asset to HFC or its applicable Affiliates without any consideration therefor. If, following the HFC Closing, either Party determines that a Sinclair Midstream Asset is owned by a
Sinclair Downstream Entity, then HFC shall, or shall cause its applicable Affiliates to, promptly transfer, on an as is, where is basis, such Sinclair Midstream Asset to HEP or its applicable Affiliates without any consideration
therefor.
(a) Amendments and Waivers. No amendment or modification of this Letter Agreement shall be valid
unless it is in writing and signed by each of the Parties. No waiver of any provision of this Letter Agreement shall be valid unless it is in writing and signed by the Party against whom the waiver is sought to be enforced.
(b) Choice of Law; Disputes. This Letter Agreement shall be subject to and governed by the laws
of the State of Delaware, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Letter Agreement to the laws of
3
another state. Any dispute, claim or controversy arising under this Letter Agreement shall be treated as an Arbitrable Dispute (as defined in the Omnibus Agreement) and resolved in the manner
provided in Article VIII of the Omnibus Agreement.
(c) Entire Agreement. This Letter
Agreement (including the Exhibits attached hereto), the Sinclair Agreements and the Omnibus Agreement comprise the entire agreement between the Parties with respect to the subject matter contained herein and therein and supersedes all prior and
contemporaneous agreements and understandings, oral or written, with respect to such subject matters.
(d) Further Assurances. In connection with this Letter Agreement and all transactions
contemplated by this Letter Agreement, each Party 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 Letter Agreement and all such transactions.
(e) Counterparts. This Letter Agreement may be executed in any number of counterparts with the
same effect as if each of the Parties hereto had signed the same document. All counterparts shall be construed together and shall constitute one agreement. This Letter Agreement, to the extent signed and delivered by means of a facsimile machine or
via e-mail in .pdf file format, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original
signed version thereof delivered in person.
[Signature Page Follows]
4
IN WITNESS WHEREOF, the undersigned Parties have executed this Letter Agreement as of the
date first written above to be effective as of such date.
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HFC:
|
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HollyFrontier Corporation
|
|
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By:
|
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/s/ Michael C. Jennings
|
|
|
Name: Michael C. Jennings
|
|
|
Title: Chief Executive Officer and President
|
|
Acknowledged and Agreed:
|
|
HEP:
|
|
Holly Energy Partners, L.P.
|
By: HEP Logistics Holdings, L.P., its General Partner
|
By: Holly Logistic Services, L.L.C., its General Partner
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|
|
|
By:
|
|
/s/ Richard L. Voliva III
|
|
|
Name: Richard L. Voliva III
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|
|
Title: President
|
[Signature Page to Letter Agreement Regarding Project Safari]
5
Exhibit A
Intercompany Agreements in Connection with Project Safari
HEP Revenue Contract
The following Intercompany
Agreement is referred to in this Letter Agreement as the Revenue Contract:
A.
|
Seventh Amended and Restated Master Throughput Agreement, dated February 8, 2021, by and among the members
of the HEP Group and HFC Group party thereto (as may be amended from time to time, the Throughput Agreement)
|
The
Revenue Contract shall be amended only to the extent necessary to include therein the Sinclair Midstream Assets specified below with terms no less favorable to the HEP Group than as specified below:
|
1.
|
Volume and Rate Terms.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
|
|
Service
|
|
Minimum
Volume
Commitment
(barrels
per day)
|
|
|
Incentive
Tariff
Threshold
(barrels
per day)
|
|
|
Base
Tariff
($
per
bbl) (1)
|
|
|
Incentive
Tariff
($ per
bbl) (1)
|
|
Pathfinder and 10
|
|
Crude oil between Casper and Sinclair
|
|
|
50,000
|
|
|
|
55,000
|
|
|
$
|
0.72
|
|
|
$
|
0.36
|
|
Pathfinder Pumpover
|
|
Crude oil
|
|
|
35,000
|
|
|
|
N/A
|
|
|
|
0.15
|
|
|
|
N/A
|
|
Guernsey to Casper
|
|
Crude oil
|
|
|
18,000
|
|
|
|
30,000
|
|
|
|
0.85
|
|
|
|
0.43
|
|
Guernsey to Sinclair Refinery
|
|
Crude oil
|
|
|
6,500
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|
|
|
10,000
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|
|
|
1.57
|
|
|
|
0.79
|
|
Medicine Bow
|
|
Refined products
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
1.53
|
|
|
|
0.50
|
|
Olathe
|
|
Refined products
|
|
|
3,750
|
|
|
|
N/A
|
|
|
|
0.95
|
|
|
|
N/A
|
|
Montrose
|
|
Refined products
|
|
|
3,000
|
|
|
|
N/A
|
|
|
|
1.55
|
|
|
|
N/A
|
|
Chase Connection
|
|
Refined products
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
125,000
per year lease
|
|
|
|
N/A
|
|
Crude Terminal Offloading
|
|
Crude unloading by truck at Casper Refinery, Sinclair Refinery and Guernsey Terminal
|
|
|
15,000
|
|
|
|
N/A
|
|
|
|
0.25
|
|
|
|
N/A
|
|
A-1
|
|
|
|
|
|
|
|
|
|
|
Asset
|
|
Service
|
|
Minimum
Volume
Commitment
(barrels
per day)
|
|
Incentive
Tariff
Threshold
(barrels
per day)
|
|
Base
Tariff
($
per
bbl) (1)
|
|
Incentive
Tariff
($ per
bbl) (1)
|
Crude Terminal Storage
|
|
Crude terminal revenue at Casper and Guernsey terminals
|
|
75,000
|
|
75,000
|
|
0.40
|
|
0.05
|
Casper Refinery Refined Product Truck Rack
|
|
Refined products
|
|
9,000
|
|
Applicable Refined Product Terminal Fees (2)
|
Sinclair Refinery Refined Product Rack
|
|
Refined products
|
|
7,500
|
|
Applicable Refined Product Terminal Fees (2)
|
Denver Terminal
|
|
Refined products
|
|
30,000
|
|
Applicable Refined Product Terminal Fees (2)
|
Boise Terminal
|
|
Refined products
|
|
5,000
|
|
Applicable Refined Product Terminal Fees (2)
|
Burley Terminal
|
|
Refined products
|
|
2,000
|
|
Applicable Refined Product Terminal Fees (2)
|
Carrollton Terminal
|
|
Refined products
|
|
3,750
|
|
Applicable Refined Product Terminal Fees (2)
|
Ft Madison Terminal
|
|
Refined products
|
|
3,000
|
|
Applicable Refined Product Terminal Fees (2)
|
Kansas City Terminal
|
|
Refined products
|
|
7,000
|
|
Applicable Refined Product Terminal Fees (2)
|
(1)
|
Base Tariff and Incentive Tariff. If a base tariff or incentive tariff cannot be achieved as set forth
above as a result of federal or state regulatory limitations on ratemaking, HFC and HEP shall implement alternative tariff structures and/or minimum throughput commitments that produce the same overall commercial result.
|
(2)
|
Refined Product Terminal Fees. HEP or its applicable Affiliate will charge the following fees for
services at the Refined Product Terminals, as applicable.
|
A-2
|
|
|
Service
|
|
Throughput Fee ($/bbl)
|
Rack Delivery of Gasolines and Diesel
|
|
$0.4000
|
Rack Delivery of Jet Fuel
|
|
$0.5000
|
Handling Fees for Products Provided by Shipper (Ethanol, Biodiesel, Isobutane, etc.)
|
|
$1.50
|
Gasoline and Diesel Additives (lubricity, red dye, generic and proprietary gasoline additives, etc.)
|
|
$0.18 + Cost of Additive
per additized barrel
|
Top Tier Gasoline and Diesel Additives
|
|
$0.35 + Cost of Additive
per additized barrel
|
Red Dye
|
|
$0.17
|
|
2.
|
Deficiency Assessment Period: Deficiency assessment period shall be quarterly. Any deficiency owed to
HEP or its applicable Affiliate due to HFCs or its applicable Affiliates failure to meet any applicable minimum throughput commitment for a given quarter will be paid upon the later of: (a) ten (10) days after HFCs or its
applicable Affiliates receipt of a deficiency notice from HEP or its applicable Affiliate and (b) thirty (30) days following the end of the related contract quarter.
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|
(i)
|
The terminalling fees for the Sinclair Midstream Assets that are terminals will be adjusted each year,
commencing July 1, 2023, by PPI-FG; provided, there will be no downward adjustment of the fees if the change in PPI-FG is negative.
|
|
(ii)
|
The tariffs for the Sinclair Midstream Assets that are pipelines will be adjusted each year, commencing
July 1, 2023, by the FERC Oil Index; provided, there will be no downward adjustment of the tariffs if the change in the FERC Oil Index is negative.
|
|
(b)
|
Product Gains and Losses
|
|
(i)
|
With respect to the Sinclair Midstream Assets that are terminals, HEP or its applicable Affiliate is
responsible for all losses, determined quarterly, greater than 0.25% of the product terminalled (on a terminal by terminal basis), which shall be offset by any product gains during the same quarter (on a terminal by terminal basis), including any
unused product gains in the immediately preceding quarter; all gains, after applying offsetting losses, are the property of HFC or its applicable Affiliate.
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A-3
|
(ii)
|
With respect to the Sinclair Midstream Assets that are pipelines (A) with a published tariff, all product
gains and losses will be addressed as provided in such tariff Pipelines or (B) without a published tariff, (1) HFC or its applicable Affiliate will absorb all volumetric gains and is responsible for all volumetric losses up to a maximum of
0.5% (on a pipeline by pipeline basis), in each case, determined quarterly and (2) HEP or its applicable Affiliate is responsible for all volumetric losses in excess of 0.5% (on a pipeline by pipeline basis), determined quarterly; provided,
that gains and losses pursuant to foregoing clause (B) will be calculated for each calendar quarter and offset against each other (on a pipeline by pipeline basis).
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|
(c)
|
Change in Applicable Laws
|
|
(i)
|
With respect to the Sinclair Midstream Assets that are terminals, if new applicable laws or regulations require
HEP or its applicable Affiliate to make capital expenditures with respect to such terminals, HEP or its applicable Affiliate may impose a monthly surcharge to cover HFCs or its applicable Affiliates pro rata share of such cost of
complying; provided, however, that HEP or its applicable Affiliate may not increase the applicable tariffs until it has made capital expenditures in respect of all such terminals of $5 million in the aggregate in order to comply with such new
applicable laws or regulations.
|
|
(ii)
|
With respect to the Sinclair Midstream Assets that are pipelines, if new applicable laws or regulations require
HEP or its applicable Affiliate to make capital expenditures with respect to such pipelines, HEP or its applicable Affiliate may file new tariff rates to recover cost of complying (including a reasonable return); provided, however, that HEP or its
applicable Affiliate may not increase the applicable tariffs until it has made capital expenditures in respect of all such pipelines of $5 million in the aggregate in order to comply with such new applicable laws or regulations.
|
|
(d)
|
Clawback: Deficiency payments will be credited against any payments owed by HFC or its applicable
Affiliate in the following four Contract Quarters (as defined in the Throughput Agreement) in excess of the minimum commitment specified in Section 1 of this Exhibit A for such Contract Quarters; provided, however, that HFC
or its applicable Affiliate will not receive credit for any such deficiency payment in any of the following four Contract Quarters until HFC or its applicable Affiliate has met the minimum commitment specified in Section 1
of this Exhibit A in the succeeding Contract Quarter.
|
|
4.
|
Term: The minimum volume commitments specified in Section 1 of this Exhibit A
shall be for 15 years.
|
|
5.
|
Refinery Shut-Down or Reconfiguration: Article 4 of the Throughput Agreement shall not apply to the
Refineries (as defined in the HFC Sinclair Agreement) in respect of the minimum commitments specified in Section 1 of this Exhibit A until the fifth anniversary of the HFC Closing.
|
A-4
|
6.
|
Miscellaneous: Any commercial terms applicable to the Sinclair Midstream Assets that are not specified
above shall be consistent with those of comparable assets covered by the Revenue Contract on the date of this Letter Agreement.
|
HEP Expense Contracts
The following Intercompany
Agreements are referred to in this Letter Agreement as the Expense Contracts:
|
A.
|
Fourth Amended and Restated Services and Secondment Agreement, dated February 8, 2021, by and among the
members of the HEP Group and HFC Group party thereto (the Services and Secondment Agreement).
|
|
B.
|
Sixth Amended and Restated Master Lease and Access Agreement, dated February 8, 2021, by and among the
members of the HEP Group and HFC Group party thereto (the Lease and Access Agreement).
|
|
C.
|
Fourth Amended and Restated Master Site Services Agreement, dated February 8, 2021, by and among the
members of the HEP Group and HFC Group party thereto (the Site Services Agreement).
|
The Expense Contracts shall be
amended only to the extent necessary to include therein the Sinclair Midstream Assets and to provide the HEP Group with personnel and access to properties and services that are sufficient to allow the HEP Group (i) in the case of Sinclair
Midstream Assets that will be subject to the Revenue Contract, to deliver the services contemplated in the Revenue Contract in the manner and for the full term contemplated therein, and (ii) in the case of Sinclair Midstream Assets that will
not be subject to the Revenue Contract, to own, operate, maintain, manage and market such Sinclair Midstream Assets; provided, that:
(a) in respect of the:
(i) Services and Secondment Agreement, the Allocation Methodology (as defined in the Services and Secondment Agreement) shall
be applied in respect of the Sinclair Midstream Assets without material modification to the Allocation Methodology; provided, however, that severance, bonus, change of control and similar payments paid by HFC or its Affiliates to Sinclair employees
whose primary function is servicing the Sinclair Midstream Assets and the business associated therewith shall be allocated to HEP or its applicable Affiliates;
(ii) Lease and Access Agreement, (A) the Applicable Term (as defined in the Lease and Access Agreement) shall be 50 years
from the HEP Closing and (B) the Rent (as defined in the Lease and Access Agreement) shall be $100;
A-5
(iii) Site Services Agreement, the aggregate initial Annual Service Fee (as
defined in the Site Services Agreement) in respect of the Sinclair Midstream Assets located at or near the Refineries shall be determined based on good faith discussions between the Parties prior to the HEP Closing and shall be substantially
consistent with the Annual Service Fee for substantially similar assets that are subject to the Site Services Agreement; and
(b) such amendments shall be without any consideration to the members of the HFC Group; provided, however, that such amendments
shall not relieve the members of the HEP Group from amounts due and payable under the Expense Contracts prior to such amendments; and
(c) any commercial terms applicable to the Sinclair Midstream Assets that are not specified above shall be consistent with
those of comparable assets covered by the Expense Contracts on the date of this Letter Agreement.
Omnibus Agreement
The Omnibus Agreement shall be amended to provide that the Sinclair Midstream Assets:
(a) shall constitute Assets (as defined in the Omnibus Agreement); provided, however, that the Sinclair Midstream Assets that
are equity investments in joint ventures shall first be subject to whatever restrictions on transfer are present in the documents governing such equity investment; and
(b) shall be subject to the indemnification provisions contained therein that are applicable to Other Assets (as defined in the
Omnibus Agreement); provided, however, that solely with respect to the refined products terminal located in Kansas City, KS (the Kansas City Terminal) and included within the Sinclair Midstream Assets, the indemnification
provisions in the Omnibus Agreement will provide that HEP will be responsible for all pre-closing liabilities in respect of the Kansas City Terminal, including those caused by historical refinery operations at
or near the Kansas City Terminal.
A-6
Exhibit B-1
Woods Cross Purchase Agreement
Attached.
Exhibit B-1 Form of Woods Cross Purchase
Agreement
PURCHASE AGREEMENT
by and among
HOLLYFRONTIER WOODS CROSS REFINING LLC,
as Buyer, with
HOLLYFRONTIER CORPORATION,
as Guarantor,
and each
of
HOLLY ENERGY HOLDINGS LLC
and
HEP PIPELINE,
L.L.C.,
as Sellers, with
HOLLY ENERGY PARTNERS, L.P.,
as Guarantor
Effective
as of [●]
TABLE OF CONTENTS
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Page
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ARTICLE I
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DEFINED TERMS
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1
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1.1
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Definitions
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1
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1.2
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Interpretation
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2
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ARTICLE II
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PURCHASE OF LLC INTEREST
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2
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2.1
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Transfer of Acquired Interests
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2
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2.2
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Consideration
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2
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ARTICLE III
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CLOSING
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2
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3.1
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Closing
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2
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3.2
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Deliveries by Sellers
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2
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3.3
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Deliveries by Buyer
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3
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3.4
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Closing Costs; Transfer Taxes and Fees
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3
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ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF SELLERS
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4
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4.1
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Organization
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4
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4.2
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Authorization
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4
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4.3
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Company Status
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4
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4.4
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No Conflicts or Violations; No Consents or Approvals Required
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5
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4.5
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Title to LLC Interests; Capitalization
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5
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4.6
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Taxes
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6
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4.7
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Brokers and Finders
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6
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4.8
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Title to Assets
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6
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4.9
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WAIVERS AND DISCLAIMERS
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6
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ARTICLE V
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REPRESENTATIONS AND WARRANTIES OF BUYER
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7
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5.1
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Organization
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7
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5.2
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Authorization
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7
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5.3
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No Conflicts or Violations; No Consents or Approvals Required
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8
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5.4
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Brokers and Finders
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8
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ARTICLE VI
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REPRESENTATIONS AND WARRANTIES OF HFC
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8
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6.1
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Organization
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8
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6.2
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Authorization
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8
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6.3
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No Conflicts or Violations; No Consents or Approvals Required
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8
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6.4
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Brokers and Finders
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9
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ARTICLE VII
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REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
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9
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7.1
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Organization
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9
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7.2
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Authorization
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9
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7.3
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No Conflicts or Violations; No Consents or Approvals Required
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9
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7.4
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Brokers and Finders
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9
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ARTICLE VIII
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COVENANTS
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9
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8.1
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Cooperation
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9
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8.2
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Additional Agreements
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10
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ARTICLE IX
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INDEMNIFICATION
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10
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9.1
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Indemnification of Buyer and Seller
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10
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9.2
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Defense of Third-Party Claims
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10
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9.3
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Direct Claims
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11
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9.4
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Limitations
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11
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9.5
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Tax Related Adjustments
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12
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ARTICLE X
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MISCELLANEOUS
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12
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10.1
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Expenses
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12
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10.2
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Notices
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12
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10.3
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Severability
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14
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10.4
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Governing Law; Jurisdiction; Waiver of Jury Trial
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14
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10.5
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Arbitration Provision
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14
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10.6
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Parties in Interest
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15
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10.7
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Assignment of Agreement
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15
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10.8
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Captions
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15
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10.9
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Counterparts
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15
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10.10
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Director and Officer Liability
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15
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10.11
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Integration
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15
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10.12
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Effect of Agreement
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16
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10.13
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Amendment; Waiver
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16
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10.14
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Survival of Representations and Warranties
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16
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ARTICLE XI
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GUARANTEE BY HFC
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16
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11.1
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Payment and Performance Guaranty
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16
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11.2
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Guaranty Absolute
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16
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11.3
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Waiver
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17
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11.4
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Subrogation Waiver
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17
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11.5
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Reinstatement
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17
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11.6
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Continuing Guaranty
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17
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11.7
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No Duty to Pursue Others
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17
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ARTICLE XII
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GUARANTEE BY THE PARTNERSHIP
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18
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12.1
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Payment and Performance Guaranty
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18
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12.2
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Guaranty Absolute
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18
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12.3
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Waiver
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19
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12.4
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Subrogation Waiver
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19
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12.5
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Reinstatement
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19
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12.6
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Continuing Guaranty
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19
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12.7
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No Duty to Pursue Others
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19
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-ii-
Exhibits and Schedules
Exhibit A - Definitions
Exhibit B - Interpretation
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Schedule 1.1(a)
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Crude Unit 2 Assets
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Schedule 1.1(b)
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FCC Unit 2 Assets
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Schedule 1.1(c)
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Polymerization Unit Assets
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Schedule 1.1(d)
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HEP Pipeline Assets
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Schedule 1.1(e)
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Refined Product Pipelines
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Schedule 1.1(f)
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Truck and Tank Assets
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Schedule 4.3
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Jurisdictions
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Schedule 4.4
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Required Consents Seller
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Schedule 5.3
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Required Consents Buyer
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Schedule 6.3
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Required Consents HFC
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Schedule 7.3
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Required Consents Partnership
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-iii-
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this Agreement) dated as of [●], to be effective as of the Effective Time (as defined
below), is made and entered into by and among HollyFrontier Woods Cross Refining LLC, a Delaware limited liability company (Buyer), HollyFrontier Corporation, a Delaware corporation (HFC), Holly
Energy Holdings LLC, a Delaware limited liability company (HEH), HEP Pipeline, L.L.C., a Delaware limited liability company (HEP Pipeline, and together with HEH, the Sellers), and
Holly Energy Partners, L.P., a Delaware limited partnership (the Partnership). Sellers and Buyer are sometimes referred to in this Agreement each as a Party and collectively as the
Parties. HFC joins this Agreement solely for the purpose of ARTICLE VI and ARTICLE XI of this Agreement. The Partnership joins this Agreement solely for the purposes of ARTICLE VII and ARTICLE XII of
this Agreement.
WHEREAS, HEH is the sole member of each of (a) Woods Cross Operating LLC, a Delaware limited liability
company, (WX Operating) (b) HEP Woods Cross, L.L.C., a Delaware limited liability company (HEP WX, and together with WX Operating, the Acquired Companies), and
(c) HEP Pipeline;
WHEREAS, WX Operating is the owner of the Refining Unit Assets (as defined below), HEP WX is the owner of
the Truck and Tank Assets (as defined below) and HEP Pipeline is the owner of the Pipeline Assets (as defined below);
WHEREAS, HFC and the Partnership are party to that certain Letter Agreement regarding Project Safari, dated as of August 2, 2021
(as the same may be amended from time to time, the Letter Agreement), pursuant to which HFC and the Partnership agreed to cause the Sellers and Buyer to execute, deliver and perform the transactions contemplated by this Agreement
in the event certain conditions set forth in the Letter Agreement are satisfied, including the transfer by the Partnership of all Non-WX Assets (as defined in the Letter Agreement) from HEP WX to an affiliate
of the Partnership prior to the execution of this Agreement; and
WHEREAS, such conditions set forth in the Letter Agreement have
been satisfied and, accordingly, Buyer desires to purchase from the applicable Sellers, and the applicable Sellers desire to sell to Buyer, (a) all of the issued and outstanding limited liability company interests of each of the Acquired
Companies (the LLC Interests) and (b) the Pipeline Assets (together with the LLC Interests, the Acquired Interests), as applicable, in exchange for the consideration set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the covenants set forth herein and in the Letter Agreement and Omnibus Agreement,
and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1 Definitions. Capitalized terms used throughout this Agreement and not otherwise defined herein
shall have the meanings set forth on Exhibit A.
1.2 Interpretation. Matters relating to the interpretation of
this Agreement are set forth on Exhibit B.
ARTICLE II
PURCHASE OF LLC INTEREST
2.1 Transfer of Acquired Interests. Subject to all of the terms and conditions of this Agreement, (a) HEH
hereby sells, transfers and conveys to Buyer, and Buyer hereby purchases and acquires from HEH, the LLC Interests free and clear of all Encumbrances, except for restrictions imposed by applicable securities Laws and except for Permitted
Encumbrances, and (b) HEP Pipeline hereby sells, transfers and conveys to Buyer, and Buyer hereby purchases and acquires from HEP Pipeline, the Pipeline Assets, in each case, free and clear of all Encumbrances, except for Permitted
Encumbrances.
2.2 Consideration.
(a) The aggregate consideration to be paid by Buyer for the Acquired Interests shall be the sum of (i) Two Hundred
Thirty Two Million Five Hundred Thousand Dollars ($232,500,000.00) and (ii) the AR Adjustment Amount (the Purchase Price).
(b) The Purchase Price shall be delivered by the Buyer to HEH (or its designee) at the Closing by wire transfer of
immediately available funds.
ARTICLE III
CLOSING
3.1 Closing. The closing of the transactions contemplated hereby (the Closing) shall take
place simultaneously with the execution of this Agreement. The date of the Closing is referred to herein as the Closing Date and the Closing is deemed to be effective as of 12:01 a.m., Dallas, Texas time, on [●] (the
Effective Time).
3.2 Deliveries by Sellers. At the Closing, Sellers shall deliver, or
cause to be delivered, to Buyer the following:
(a) A counterpart to the assignment of limited liability company
interests transferring the LLC Interests to Buyer, in form and substance mutually acceptable to the Parties (the Assignment), duly executed by HEH.
(b) A counterpart to the assignment, assumption and bill of sale transferring the Pipeline Assets to Buyer, in form and
substance mutually acceptable to the Parties (the Bill of Sale), duly executed by HEP Pipeline.
(c) A counterpart to a right of way assignment agreement transferring the easements, rights of way and licenses within
the Assets to Buyer, including all information and formatting required to be accepted by the appropriate Governmental Authority, in form and substance mutually acceptable to the Parties (the ROW Assignment).
-2-
(d) The original minute books, company books and membership registers
for each Acquired Company.
(e) Counterparts to each of the agreements contemplated by Section 2 of the Letter
Agreement, duly executed by HEP or its applicable subsidiaries.
(f) Evidence in form and substance reasonably
satisfactory to Buyer of the release and termination of all Encumbrances (other than Permitted Encumbrances and restrictions imposed by applicable securities Laws) on the Acquired Interests.
(g) To the extent applicable, assignment documents, duly executed by the applicable Seller, assigning each of the
Permits held by such Seller which are assignable by such Seller to Buyer in accordance with Applicable Law.
(h) A
certificate, executed by an officer of HEP, in the form prescribed by Treasury regulations under Section 1445 of the Code, stating that HEP (the Person from whom Seller is disregarded as an entity for U.S. federal income tax purposes) is not a
foreign person within the meaning of Section 1445 of the Code.
3.3 Deliveries by Buyer. At
the Closing (or such later date as may be set forth below), Buyer shall deliver, or cause to be delivered, to HEH the Purchase Price, by wire transfer of immediately available funds, and the following:
(a) A counterpart of the Assignment duly executed by Buyer.
(b) A counterpart of the Bill of Sale duly executed by Buyer.
(c) A counterpart of the ROW Assignment duly executed by Buyer.
(d) Counterparts to each of the agreements contemplated by Section 2 of the Letter Agreement, duly executed by HFC
or its applicable subsidiaries.
3.4 Closing Costs; Transfer Taxes and Fees.
(a) AR Adjustment Amount. Prior to the date hereof, Seller has delivered a statement to Buyer setting forth
Sellers calculation of all of accounts receivable due to Seller in respect of the Acquired Interests as of the date hereof (the AR Adjustment Amount). Buyer has had an opportunity to review and comment on such calculation
and Seller has considered Buyers comments in good faith.
(b) Allocation of Costs. Buyer shall pay the
cost of all sales, transfer and use taxes arising out of the transfer of the Acquired Interests.
(c) Prorations. On the Closing Date, or as promptly as practicable following the Closing Date, but in no event
later than sixty (60) calendar days thereafter, the real, if any, and personal property taxes, water, gas, electricity and other utilities with respect to the Assets and the real estate interests and rights associated with the Assets, the
premiums on any insurance policies with respect to the Assets and of the Acquired Companies, and the local business or other license
-3-
fees to the extent assigned and other similar periodic charges payable with respect to the Assets or the Acquired Companies shall be prorated between Buyer, on the one hand, and Seller, on the
other hand, effective as of the Effective Time, with Seller being responsible for amounts related to the period prior to but excluding the Effective Time and Buyer being responsible for amounts related to the period at and after the Effective Time.
If the final property tax rate or final assessed value for the current tax year is not established by the Closing Date, the prorations shall be made on the basis of the rate or assessed value in effect for the preceding tax year and shall be
adjusted when the exact amounts are determined. All such prorations shall be based upon the most recent available assessed value available prior to the Closing Date.
(d) Reimbursement. If a Party pays any tax agreed to be borne by the other Party under this Agreement, such
other Party shall promptly reimburse the paying Party for the amounts so paid. If any Party receives any tax refund or credit applicable to a tax paid by another Party hereunder, the receiving Party shall promptly pay such amounts to the Party
entitled thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller hereby jointly and severally represents and warrants to Buyer, that as of the Effective Time:
4.1 Organization. Such Seller is an entity duly organized, validly existing and in good standing under the
Applicable Laws of the State of Delaware.
4.2 Authorization. Such Seller has full limited liability company
power and authority to execute, deliver, and perform this Agreement and any Seller Ancillary Documents. The execution, delivery, and performance by such Seller of this Agreement and the Seller Ancillary Documents and the consummation by such Seller
of the transactions contemplated hereby and thereby, have been duly authorized by all necessary limited liability company action of such Seller, as applicable. This Agreement has been duly executed and delivered by Seller and constitutes, and each
Seller Ancillary Document executed or to be executed by such Seller has been, or when executed will be, duly executed and delivered by such Seller and constitutes, or when executed and delivered will constitute, a valid and legally binding
obligation of such Seller, enforceable against it in accordance with their terms, except to the extent that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other
similar Applicable Laws affecting creditors rights and remedies generally and (ii) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.
4.3 Company Status.
Each Acquired Company is duly organized, validly existing and in good standing under the laws of the State of Delaware and (i) has all
requisite limited liability company power and authority to own, operate, use or lease its properties and assets and to carry on its business as it is now being conducted, and (ii) is duly qualified to do business and is in good standing in each
of the jurisdictions in which the ownership, operation or leasing of its properties and assets and the conduct of its business requires it to be so qualified, licensed or authorized, except, in the case
-4-
of clause (ii), where the failure to have such power and authority or to be so qualified, licensed or authorized would not, individually or in the aggregate, be reasonably likely to cause a
Material Adverse Effect on the applicable Acquired Company. Schedule 4.3 lists all jurisdictions in which each Acquired Company is qualified to do business.
4.4 No Conflicts or Violations; No Consents or Approvals Required.
The execution, delivery and performance by such Seller of this Agreement and the other Seller Ancillary Documents does not, and the
consummation of the transactions contemplated hereby and thereby will not, (i) violate, conflict with, or result in any breach of any provision of such Sellers organizational documents or (ii) subject to obtaining the Consents or
making the registrations, declarations or filings set forth in the next sentence, violate in any material respect any Applicable Law or material Contract binding upon such Seller. Except as set forth on Schedule 4.4, no Consent of any
Governmental Authority or any other person is required for such Seller in connection with such Sellers execution, delivery or performance of this Agreement or the Seller Ancillary Documents or consummation of the transactions contemplated
hereby or thereby.
4.5 Title to LLC Interests; Capitalization.
(a) Immediately prior to the Effective Time, HEH is the sole member of each of the Acquired Companies and is record
owner of and has good and valid title to the LLC Interests, free and clear of all Encumbrances, and sole and unrestricted voting power and power of disposition with respect to all of the LLC Interests. Except for any Claims arising under this
Agreement and any other agreement entered into by either Seller in connection with this Agreement, neither Seller nor their respective Affiliates have any Claims of any kind against either Acquired Company, or any of their respective officers,
managers, directors or employees. The LLC Interests have been duly authorized and validly issued in accordance with Applicable Laws and the organizational documents of the applicable Acquired Company, including their respective limited liability
company agreements, and are fully paid (to the extent required by the limited liability company agreement of the applicable Acquired Company) and nonassessable (except to the extent such nonassessability may be affected by Sections 18-607 and 18-804 of DLLCA).
(b) There
are no options or rights to purchase or acquire, or agreements, arrangements, commitments or understandings relating to, the LLC Interests or any of the Assets except pursuant to this Agreement and the Omnibus Agreement. There are no
(i) authorized or outstanding securities of or equity interests in either Acquired Company of any kind other than the LLC Interests, (ii) there are no outstanding options, warrants, subscriptions, puts, calls or other rights, agreements,
arrangements or commitments (preemptive, contingent or otherwise) obligating any Seller or Acquired Company to offer, issue, sell, redeem, repurchase, otherwise acquire or transfer, pledge or encumber any securities of or equity interest in either
Acquired Company; and (iii) there are no outstanding securities or obligations of any kind of any of the Acquired Companies that are convertible into or exercisable or exchangeable for any equity interest in either Acquired Company.
(c) At the Effective Time, Buyer will have the entire record and beneficial ownership of the LLC Interests, free and
clear of all Encumbrances, HEH will cease to be a member of either Acquired Company, and Buyer will be admitted as the sole member of each Acquired Company.
-5-
4.6 Taxes. Each Acquired Company has filed, on or before the
applicable due date (including any extensions thereof), all material tax returns that it was required to file, and all such tax returns were accurate, correct, and complete in all material respects. All taxes due and owing by each Acquired Company
have been paid in full or are being properly contested. Each Acquired Company is, and at all times since its formation has been, disregarded as an entity separate from HEH for U.S. federal income tax purposes, and no election has been filed on or
before the Closing Date that would change such classification on or after the Closing Date.
4.7 Brokers and
Finders. No investment banker, broker, finder, financial advisor or other intermediary has been retained by or is authorized to act on behalf of either Seller who is entitled to receive from Buyer any fee or commission in connection with the
transactions contemplated by this Agreement.
4.8 Title to Assets. Each Acquired Company and HEP Pipeline
owns, leases or has the legal right to use all the properties and assets used by the applicable Acquired Company in the operation of its business or the Pipeline Assets, respectively, in each case subject to no Encumbrances, except Permitted
Encumbrances. All of (a) WX Operatings assets consist of the Refining Unit Assets and (b) HEP WXs assets consist of the Truck and Tank Assets. Except as disclosed in Schedule 4.8, (i) each Acquired Company owns their
respective Assets and (ii) HEP Pipeline owns the Pipeline Assets, in each case, free and clear of all Encumbrances other than Permitted Encumbrances.
4.9 WAIVERS AND DISCLAIMERS. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EXCEPT FOR
THE EXPRESS REPRESENTATIONS AND WARRANTIES AND OTHER COVENANTS AND AGREEMENTS MADE BY THE PARTIES IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS AND THE OMNIBUS AGREEMENT, THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT NONE OF THE PARTIES HAS MADE, DOES
NOT MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES AND DISCLAIMS, ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR
PRESENT, REGARDING (I) THE VALUE, NATURE, QUALITY OR CONDITION OF THE ASSETS INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, GEOLOGY OR ENVIRONMENTAL CONDITION OF THE ASSETS GENERALLY, INCLUDING THE PRESENCE OR LACK OF HAZARDOUS SUBSTANCES OR
OTHER MATTERS IN THE ASSETS AND THE LAND ON WHICH THE ASSETS ARE SITUATED, (II) THE INCOME TO BE DERIVED FROM THE ASSETS, (III) THE SUITABILITY OF THE ASSETS FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON, (IV) THE
COMPLIANCE OF OR BY THE ASSETS OR THEIR OPERATION WITH ANY APPLICABLE LAWS (INCLUDING WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS), OR (V) THE HABITABILITY,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE ASSETS. EXCEPT TO THE EXTENT
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PROVIDED IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE OMNIBUS AGREEMENT, NONE OF THE PARTIES IS LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE LLC INTERESTS, THE ACQUIRED COMPANIES OR ANY OF THE ASSETS THAT IS FURNISHED BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD PARTY. EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE OMNIBUS
AGREEMENT, EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE TRANSFER AND CONVEYANCE OF THE ACQUIRED COMPANIES, THEIR RESPECTIVE ASSETS AND THE PIPELINE ASSETS SHALL BE MADE IN AN AS IS, WHERE
IS CONDITION WITH ALL FAULTS, AND THE ACQUIRED COMPANIES, THEIR RESPECTIVE ASSETS AND THE PIPELINE ASSETS ARE TRANSFERRED AND CONVEYED SUBJECT TO ALL OF THE MATTERS CONTAINED IN THIS SECTION. THIS SECTION SHALL SURVIVE THE TRANSFER AND
CONVEYANCE OF THE LLC INTERESTS AND THE PIPELINE ASSETS OR THE TERMINATION OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE LLC INTERESTS, THE ACQUIRED COMPANIES, THEIR RESPECTIVE ASSETS AND THE PIPELINE ASSETS THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR
OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE OMNIBUS AGREEMENT.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that as of the Effective Time:
5.1 Organization. Buyer is an entity duly organized, validly existing and in good standing under the Applicable
Laws of the State of Delaware.
5.2 Authorization. Buyer has full limited liability company power and
authority to execute, deliver, and perform this Agreement and any Buyer Ancillary Documents. The execution, delivery, and performance by Buyer of this Agreement and the Buyer Ancillary Documents and the consummation by Buyer of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary partnership action of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes, and each such Buyer Ancillary Document executed or to be executed
Buyer has been, or when executed will be, duly executed and delivered by Buyer and constitutes, or when executed and delivered will constitute, a valid and legally binding obligation of Buyer, enforceable against it in accordance with their terms,
except to the extent that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Applicable Laws affecting creditors rights and remedies generally
and (ii) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.
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5.3 No Conflicts or Violations; No Consents or Approvals
Required. The execution, delivery and performance by Buyer of this Agreement and the Buyer Ancillary Documents does not, and consummation of the transactions contemplated hereby and thereby will not, (i) violate, conflict with, or result in
any breach of any provisions of Buyers organizational documents or (ii) subject to obtaining the Consents or making the registrations, declarations or filings set forth in the next sentence, violate any Applicable Law or material contract
binding upon Buyer. Except as set forth on Schedule 5.3, no Consent of any Governmental Authority or any other person is required for Buyer in connection with the Buyers execution, delivery or performance of this Agreement or the
Buyer Ancillary Documents or the consummation of the transactions contemplated hereby and thereby.
5.4 Brokers
and Finders. No investment banker, broker, finder, financial advisor or other intermediary has been retained by or is authorized to act on behalf of Buyer who is entitled to receive from Seller any fee or commission in connection with the
transactions contemplated by this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF HFC
HFC
hereby represents and warrants to Buyer and Seller that as of the date of this Agreement:
6.1 Organization.
HFC is an entity duly organized, validly existing and in good standing under the Applicable Laws of the State of Delaware.
6.2 Authorization. HFC has full corporate power and authority to execute, deliver, and perform its obligations
under ARTICLE VI and ARTICLE XI. The execution, delivery, and performance by HFC of its obligations under this Agreement and the consummation by HFC of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action of HFC. This Agreement has been duly executed and delivered by HFC and constitutes a valid and legally binding obligation of HFC with respect to ARTICLE VI and ARTICLE XI, enforceable against it
in accordance with their terms, except to the extent that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Applicable Laws affecting creditors
rights and remedies generally and (ii) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.
6.3 No Conflicts or Violations; No Consents or Approvals Required. The execution, delivery and performance by
HFC of its obligations under this Agreement does not, and consummation of the transactions contemplated hereby will not, (i) violate, conflict with, or result in any breach of any provisions of HFCs organizational documents or
(ii) subject to obtaining the Consents or making the registrations, declarations or filings set forth in the next sentence, violate any Applicable Law or material contract binding upon HFC. Except as set forth on Schedule 6.3, no
Consent of any Governmental Authority or any other person is required for HFC in connection with the execution, delivery and performance of its obligations this Agreement or the consummation by HFC of the transactions contemplated hereby.
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6.4 Brokers and Finders. No investment banker, broker, finder,
financial advisor or other intermediary has been retained by or is authorized to act on behalf of HFC who is entitled to receive from Buyer any fee or commission in connection with the transactions contemplated by this Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
The Partnership hereby represents and warrants to Buyer and Seller that as of the date of this Agreement:
7.1 Organization. The Partnership is an entity duly organized, validly existing and in good standing under the
Applicable Laws of the State of Delaware.
7.2 Authorization. The Partnership has full partnership power and
authority to execute, deliver, and perform its obligations under ARTICLE VII and ARTICLE XII. The execution, delivery, and performance by the Partnership of its obligations under this Agreement and the consummation by the
Partnership of the transactions contemplated hereby, have been duly authorized by all necessary partnership action of the Partnership. This Agreement has been duly executed and delivered by the Partnership and constitutes a valid and legally binding
obligation of the Partnership with respect to ARTICLE VII and ARTICLE XII, enforceable against it in accordance with their terms, except to the extent that such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar Applicable Laws affecting creditors rights and remedies generally and (ii) equitable principles which may limit the availability of certain equitable remedies
(such as specific performance) in certain instances.
7.3 No Conflicts or Violations; No Consents or Approvals
Required. The execution, delivery and performance by the Partnership of its obligations under this Agreement does not, and consummation of the transactions contemplated hereby will not, (i) violate, conflict with, or result in any breach of
any provisions of the Partnerships organizational documents or (ii) subject to obtaining the Consents or making the registrations, declarations or filings set forth in the next sentence, violate any Applicable Law or material contract
binding upon the Partnership. Except as set forth on Schedule 7.3, no Consent of any Governmental Authority or any other person is required for the Partnership in connection with the execution, delivery and performance of its
obligations this Agreement or the consummation by the Partnership of the transactions contemplated hereby.
7.4 Brokers and Finders. No investment banker, broker, finder, financial advisor or other intermediary has been
retained by or is authorized to act on behalf of the Partnership who is entitled to receive from Buyer any fee or commission in connection with the transactions contemplated by this Agreement.
ARTICLE VIII
COVENANTS
8.1 Cooperation. Sellers shall cooperate with Buyer and assist Buyer in identifying all licenses,
authorizations, permissions or Permits necessary for the Acquired Companies operations
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from and after the Closing Date and, where permissible, transfer existing Permits to Buyer, or, where not permissible and if needed, assist Buyer in obtaining new Permits at no cost, fee or
liability to Sellers.
8.2 Additional Agreements. Subject to the terms and conditions of this Agreement, the
Ancillary Documents and the Omnibus Agreement, each of the Parties shall use its commercially reasonable efforts to do, or cause to be taken all action and to do, or cause to be done, all things necessary, proper, or advisable under Applicable Laws
to consummate and make effective the transactions contemplated by this Agreement. If at any time after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement, subject to the terms and conditions of
this Agreement and the Ancillary Documents, the Parties and their duly authorized representatives shall use commercially reasonable efforts to take all such action.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification of Buyer and Seller. From and after the Closing and subject to the provisions of this
ARTICLE IX, (i) Seller agrees to indemnify and hold harmless the Buyer Indemnified Parties from and against any and all Buyer Indemnified Costs and (ii) Buyer and the Partnership agree to indemnify and hold harmless the Seller
Indemnified Parties from and against any and all Seller Indemnified Costs.
9.2 Defense of Third-Party
Claims. An Indemnified Party shall give prompt written notice to Sellers or Buyer, as applicable (the Indemnifying Party), of the commencement or assertion of any action, proceeding, demand, or claim by a third party
(collectively, a third- party action) in respect of which such Indemnified Party seeks indemnification hereunder. Any failure so to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it,
he, or she may have to such Indemnified Party under this ARTICLE IX unless the failure to give such notice materially and adversely prejudices the Indemnifying Party. The Indemnifying Party shall have the right to assume control of the
defense of, settle, or otherwise dispose of such third-party action on such terms as it deems appropriate; provided, however, that:
(a) The Indemnified Party shall be entitled, at its own expense, to participate in the defense of such third-party
action (provided, however, that the Indemnifying Party shall pay the attorneys fees of the Indemnified Party if (i) the employment of separate counsel shall have been authorized in writing by the Indemnifying Party in
connection with the defense of such third-party action, (ii) the Indemnifying Party shall not have employed counsel reasonably satisfactory to the Indemnified Party to have charge of such third-party action, (iii) the Indemnified Party
shall have reasonably concluded that there may be defenses available to such Indemnified Party that are different from or additional to those available to the Indemnifying Party, or (iv) the Indemnified Partys counsel shall have advised
the Indemnified Party in writing, with a copy delivered to the Indemnifying Party, that there is a material conflict of interest that could violate applicable standards of professional conduct to have common counsel);
(b) The Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into or
making any settlement, compromise, admission, or acknowledgment of the validity of such third-party action or any liability in respect thereof if,
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pursuant to or as a result of such settlement, compromise, admission, or acknowledgment, injunctive or other equitable relief would be imposed against the Indemnified Party or if, in the opinion
of the Indemnified Party, such settlement, compromise, admission, or acknowledgment could have a Material Adverse Effect on its business;
(c) The Indemnifying Party shall not consent to the entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by each claimant or plaintiff to each Indemnified Party of a release from all liability in respect of such third-party action; and
(d) The Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in
the defense of), and the Indemnified Party shall be entitled to have sole control over, the defense or settlement, compromise, admission, or acknowledgment of any third-party action (i) as to which the Indemnifying Party fails to assume the
defense within a reasonable length of time or (ii) to the extent the third-party action seeks an order, injunction, or other equitable relief against the Indemnified Party which, if successful, would materially adversely affect the business,
operations, assets, or financial condition of the Indemnified Party; provided, however, that the Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of any Indemnifying
Party without the prior written consent of such Indemnifying Party.
The Parties shall extend reasonable cooperation in connection with the defense of any
third-party action pursuant to this ARTICLE IX and, in connection therewith, shall furnish such records, information, and testimony and attend such conferences, discovery proceedings, hearings, trials, and appeals as may be reasonably
requested.
9.3 Direct Claims. In any case in which an Indemnified Party seeks indemnification hereunder
which is not subject to Section 9.2 because no third-party action is involved, the Indemnified Party shall notify the Indemnifying Party in writing of any Indemnified Costs which such Indemnified Party claims are subject to
indemnification under the terms hereof. Subject to the limitations set forth in Section 9.4(a), the failure of the Indemnified Party to exercise promptness in such notification shall not amount to a waiver of such claim
unless the resulting delay materially prejudices the position of the Indemnifying Party with respect to such claim.
9.4 Limitations. The following provisions of this Section 9.4 shall limit the
indemnification obligations hereunder:
(a) Limitation as to Time. The Indemnifying Party shall not be
liable for any Indemnified Costs pursuant to this ARTICLE IX unless a written claim for indemnification in accordance with Section 9.2 or Section 9.3 is given by the
Indemnified Party to the Indemnifying Party with respect thereto at any time prior to the expiration of the applicable statute of limitations.
(b) Sole and Exclusive Remedy. Each Party acknowledges and agrees that, after the Closing Date, notwithstanding
any other provision of this Agreement to the contrary, Buyers and the other Buyer Indemnified Parties and each Seller and the other Seller Indemnified Parties sole and exclusive remedy with respect to the Indemnified Costs shall be
in accordance with, and limited by, the provisions set forth in this ARTICLE IX. The Parties further acknowledge and agree that the foregoing is not the remedy for and does not limit the Parties remedies for matters covered by the
indemnification provisions contained in the Omnibus Agreement.
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9.5 Tax Related Adjustments. Each Seller and Buyer agree that
any payment of Indemnified Costs made hereunder will be treated by the Parties on their tax returns as an adjustment to the Purchase Price.
ARTICLE X
MISCELLANEOUS
10.1 Expenses. Except as provided in Section 3.4 of this Agreement, or
as provided in the Ancillary Documents or the Omnibus Agreement, all costs and expenses incurred by the Parties in connection with the consummation of the transactions contemplated hereby shall be borne solely and entirely by the Party which has
incurred such expense.
10.2 Notices.
(a) Any notice or other communication given under this Agreement shall be in writing and shall be (i) delivered
personally, (ii) sent by documented overnight delivery service, (iii) sent by email transmission, or (iv) sent by first class mail, postage prepaid (certified or registered mail, return receipt requested). Such notice shall be deemed
to have been duly given (x) if received, on the date of the delivery, with a receipt for delivery, (y) if refused, on the date of the refused delivery, with a receipt for refusal, or (z) with respect to email transmissions, on the
date the recipient confirms receipt. Notices or other communications shall be directed to the following addresses:
Notices to HFC:
HollyFrontier Corporation
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attention:
President
Email address: president@hollyfrontier.com
with a copy, which shall not constitute notice, but is required in order to give proper notice, to:
HollyFrontier Corporation
2828
N. Harwood, Suite 1300
Dallas, Texas 75201
Attention: General Counsel
Email
address: generalcounsel@hollyfrontier.com
Notices to Buyer:
HollyFrontier Woods Cross Refining LLC
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attention:
President
Email address: president@hollyfrontier.com
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with a copy, which shall not constitute notice, but is required in order to give proper
notice, to:
HollyFrontier Woods Cross Refining LLC
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attention:
General Counsel
Email address: generalcounsel@hollyfrontier.com
Notices to Sellers:
Holly Energy Partners Operating, L.P.
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attention:
President
Email address: president-hep@hollyenergy.com
with a copy, which shall not constitute notice, but is required in order to give proper notice, to:
Holly Energy Partners-Operating, L.P.
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attention:
General Counsel
Email address: generalcounsel@hollyenergy.com
Notices to the Partnership:
Holly Energy Partners, L.P.
c/o
Holly Logistic Services, L.L.C.
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attention:
President
Email address: president-HEP@hollyenergy.com
with a copy, which shall not constitute notice, but is required in order to give proper notice, to:
Holly Energy Partners, L.P.
c/o
Holly Logistic Services, L.L.C.
2828 N. Harwood, Suite 1300
Dallas, Texas 75201
Attention:
General Counsel
Email address: general.counsel@hollyenergy.com
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(b) Any Party may at any time change its address for service from
time to time by giving notice to the other Parties in accordance with this Section 10.2.
10.3 Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being
enforced under Applicable Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not
affected in any manner adverse to any Party. Upon such determination that any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated herein are consummated as originally contemplated to the fullest extent possible.
10.4 Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be subject to and governed by the
laws of the State of Delaware, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of
another state. Each Party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to venue in Dallas, Texas. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.5 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 10.5 and the Commercial Arbitration
Rules or the Federal Arbitration Act, the terms of this Section 10.5 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. Claimants notice initiating binding arbitration must identify the arbitrator Claimant has appointed. The Respondent shall respond
to Claimant within thirty (30) days after receipt of Claimants 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 Respondents account. The two arbitrators so chosen shall select a third arbitrator within
thirty (30) days after the second arbitrator has been appointed. The Claimant will pay the compensation and expenses of the arbitrator named by it, and the Respondent will pay the compensation and expenses of the arbitrator named by or for it.
The costs of petitioning for the appointment of an arbitrator, if any, shall be paid by Respondent. The Claimant and Respondent will each pay one-half of the compensation and expenses of the third arbitrator.
All arbitrators must (i) be neutral parties who have never been officers, directors or employees of either Seller, Buyer or any of their respective Affiliates and (ii) have not less than seven (7) years experience in the
petroleum transportation industry. The hearing will be conducted in Dallas, Texas and commence within thirty (30) days after the selection of the third arbitrator. Sellers, Buyer and the
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arbitrators shall proceed diligently and in good faith in order that the award may be made as promptly as possible. Except as provided in the Federal Arbitration Act, the decision of the
arbitrators will be binding on and non-appealable by the Parties hereto. The arbitrators shall have no right to grant or award indirect, consequential, punitive or exemplary damages of any kind. The Arbitrable
Disputes may be arbitrated in a common proceeding along with disputes under other agreements between Sellers, Buyer or their respective Affiliates to the extent that the issues raised in such disputes are related. Without the written consent of the
Parties, no unrelated disputes or third party disputes may be joined to an arbitration pursuant to this Agreement.
10.6 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party and
their successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement.
10.7 Assignment of Agreement. At any time, the Parties may make a collateral assignment of their rights under
this Agreement to any of their bona fide lenders or debt holders, or a trustee or a representative for any of them, and the non-assigning Parties shall execute an acknowledgment of such collateral assignment
in such form as may from time to time be reasonably requested; provided, however, that unless written notice is given to the non-assigning Parties that any such collateral assignment has been foreclosed
upon, such non-assigning Parties shall be entitled to deal exclusively with Sellers or the Partnership, as the case may be, as to any matters arising under this Agreement, the Ancillary Documents or the
Omnibus Agreement (other than for delivery of notices required by any such collateral assignment). Except as otherwise provided in this Section 10.7, neither this Agreement nor any of the rights, interests, or obligations
hereunder may be assigned by any Party without the prior written consent of the other Parties.
10.8 Captions. The captions in this Agreement are for purposes of reference only and shall not limit or
otherwise affect the interpretation hereof.
10.9 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
10.10 Director and Officer Liability. The directors, managers, officers, partners and stockholders of the
Partnership, Buyer, Sellers and their respective Affiliates shall not have any personal liability or obligation arising under this Agreement (including any claims that another party may assert) other than, if applicable, as a direct party to or as
an assignee of this Agreement or pursuant to a written guarantee.
10.11 Integration. This Agreement,
the Ancillary Documents, the Letter Agreement and the Omnibus Agreement supersede any previous understandings or agreements among the Parties, whether oral or written, with respect to their subject matter. This Agreement, the Ancillary Documents,
the Letter Agreement and the Omnibus Agreement contain the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be
or shall be included in or form part of this Agreement, the Ancillary Documents, the Letter Agreement or the Omnibus Agreement unless it is contained in a written amendment hereto or thereto and executed by the
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Parties hereto or thereto after the date of this Agreement, the Ancillary Documents, the Letter Agreement or the Omnibus Agreement. To the extent that there is any conflict between the Ancillary
Documents (other than the Omnibus Agreement) and this Agreement, this Agreement shall prevail.
10.12 Effect of
Agreement. The Parties ratify and confirm that except as otherwise expressly provided herein, in the event this Agreement conflicts in any way with the Omnibus Agreement or the Letter Agreement, the applicable terms and provisions of the Omnibus
Agreement or the Letter Agreement shall control.
10.13 Amendment; Waiver. This Agreement may be amended
only in a writing signed by all parties hereto. Any waiver of rights hereunder must be set forth in writing. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive
any partys rights at any time to enforce strict compliance thereafter with every term or condition of this Agreement.
10.14 Survival of Representations and Warranties. The representations and warranties set forth in this Agreement
shall survive the Closing until the expiration of the applicable statute of limitations; provided, however, that any representation that is the subject of a claim for indemnification hereunder which claim was timely made pursuant to
Section 9.4(a) shall survive with respect to such claim until such claim is finally paid or adjudicated.
ARTICLE XI
GUARANTEE BY
HFC
11.1 Payment and Performance Guaranty. HFC unconditionally, absolutely, continually and irrevocably
guarantees, as principal and not as surety, to Sellers the punctual and complete performance and payment in full when due of all Seller Indemnified Costs by the Indemnifying Party under the Agreement (collectively, the HFC Guaranty
Obligations). HFC agrees that Sellers shall be entitled to enforce directly against HFC any of the HFC Guaranty Obligations.
11.2 Guaranty Absolute. HFC hereby guarantees that the HFC Guaranty Obligations will be performed and paid
strictly in accordance with the terms of the Agreement. The obligations of HFC under this Agreement constitute a present and continuing guaranty of performance and payment, and not of collection or collectability. The liability of HFC under this
Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of:
(a) any
assignment or other transfer of the Agreement or any of the rights thereunder of Sellers;
(b) any amendment,
waiver, renewal, extension or release of or any consent to or departure from or other action or inaction related to the Agreement;
(c) any acceptance by Sellers of partial payment or performance from the Indemnifying Party;
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(d) any bankruptcy, insolvency, reorganization, arrangement,
composition, adjustment, dissolution, liquidation or other like proceeding relating to the Indemnifying Party, or any action taken with respect to the Agreements by any trustee or receiver, or by any court, in any such proceeding;
(e) any absence of any notice to, or Knowledge of, HFC, of the existence or occurrence of any of the matters or events
set forth in the foregoing subsections (a) through (d); or
(f) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, a guarantor.
The obligations of HFC hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the HFC Guaranty Obligations or otherwise.
11.3 Waiver. HFC hereby waives promptness, diligence, all setoffs, presentments, protests and notice of
acceptance and any other notice relating to any of the HFC Guaranty Obligations and any requirement for Sellers to protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any
action against the Indemnifying Party, any other entity or any collateral.
11.4 Subrogation Waiver. HFC
agrees that it shall not have any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from the Indemnifying Party for any payments made by HFC under this ARTICLE
XI until all HFC Guaranty Obligations have been indefeasibly paid, and HFC hereby irrevocably waives and releases, absolutely and unconditionally, any such rights of subrogation, contribution, reimbursement, indemnification and other
rights of payment or recovery it may now have or hereafter acquire against the Indemnifying Party until all HFC Guaranty Obligations have been indefeasibly paid.
11.5 Reinstatement. The obligations of HFC under this ARTICLE XI shall continue to be effective or
shall be reinstated, as the case may be, if at any time any payment of any of the HFC Guaranty Obligations is rescinded or must otherwise be returned to the Indemnifying Party or any other entity, upon the insolvency, bankruptcy, arrangement,
adjustment, composition, liquidation or reorganization of the Indemnifying Party or such other entity, or for any other reason, all as though such payment had not been made.
11.6 Continuing Guaranty. This ARTICLE XI is a continuing guaranty and shall (i) remain in
full force and effect until the first to occur of the indefeasible performance and payment in full of all of the HFC Guaranty Obligations, (ii) be binding upon HFC, its successors and assigns and (iii) inure to the benefit of and be
enforceable by Sellers and their respective successors, transferees and assigns.
11.7 No Duty to Pursue
Others. It shall not be necessary for Sellers (and HFC hereby waives any rights which HFC may have to require Sellers), in order to enforce such payment by HFC, first to (i) institute suit or exhaust its remedies against the Indemnifying
Party or others liable
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on the HFC Guaranty Obligations or any other person, (ii) enforce Sellers rights against any other guarantors of the HFC Guaranty Obligations, (iii) join the Indemnifying Party or
any others liable on the HFC Guaranty Obligations in any action seeking to enforce this ARTICLE XI, (iv) exhaust any remedies available to Sellers against any security which shall ever have been given to secure the HFC Guaranty
Obligations, or (v) resort to any other means of obtaining payment of the HFC Guaranty Obligations.
ARTICLE XII
GUARANTEE BY THE PARTNERSHIP
12.1 Payment and Performance Guaranty. The Partnership unconditionally, absolutely, continually and irrevocably
guarantees, as principal and not as surety, to Buyer the punctual and complete performance and payment in full when due of all Buyer Indemnified Costs by the Indemnifying Party under the Agreement (collectively, the HEP Guaranty
Obligations). The Partnership agrees that Buyer shall be entitled to enforce directly against the Partnership any of the HEP Guaranty Obligations.
12.2 Guaranty Absolute. The Partnership hereby guarantees that the HEP Guaranty Obligations will be performed
and paid strictly in accordance with the terms of the Agreement. The obligations of the Partnership under this Agreement constitute a present and continuing guaranty of performance and payment, and not of collection or collectability. The liability
of the Partnership under this Agreement shall be absolute, unconditional, present, continuing and irrevocable irrespective of:
(a) any assignment or other transfer of the Agreement or any of the rights thereunder of Buyer;
(b) any amendment, waiver, renewal, extension or release of or any consent to or departure from or other action or
inaction related to the Agreement;
(c) any acceptance by Buyer of partial payment or performance from the
Indemnifying Party;
(d) any bankruptcy, insolvency, reorganization, arrangement, composition, adjustment,
dissolution, liquidation or other like proceeding relating to the Indemnifying Party, or any action taken with respect to the Agreements by any trustee or receiver, or by any court, in any such proceeding;
(e) any absence of any notice to, or Knowledge of, the Partnership, of the existence or occurrence of any of the
matters or events set forth in the foregoing subsections (a) through (d); or
(f) any other circumstance which
might otherwise constitute a defense available to, or a discharge of, a guarantor.
The obligations of the Partnership hereunder shall not
be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or unenforceability of the HEP Guaranty Obligations or otherwise.
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12.3 Waiver. The Partnership hereby waives promptness,
diligence, all setoffs, presentments, protests and notice of acceptance and any other notice relating to any of the HEP Guaranty Obligations and any requirement for Buyer to protect, secure, perfect or insure any security interest or lien or any
property subject thereto or exhaust any right or take any action against the Indemnifying Party, any other entity or any collateral.
12.4 Subrogation Waiver. The Partnership agrees that it shall not have any rights (direct or indirect) of
subrogation, contribution, reimbursement, indemnification or other rights of payment or recovery from the Indemnifying Party for any payments made by the Partnership under this ARTICLE XII until all HEP Guaranty Obligations have been
indefeasibly paid, and the Partnership hereby irrevocably waives and releases, absolutely and unconditionally, any such rights of subrogation, contribution, reimbursement, indemnification and other rights of payment or recovery it may now have or
hereafter acquire against the Indemnifying Party until all HEP Guaranty Obligations have been indefeasibly paid.
12.5 Reinstatement. The obligations of the Partnership under this ARTICLE XII shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment of any of the HEP Guaranty Obligations is rescinded or must otherwise be returned to the Indemnifying Party or any other entity, upon the insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation or reorganization of the Indemnifying Party or such other entity, or for any other reason, all as though such payment had not been made.
12.6 Continuing Guaranty. This ARTICLE XII is a continuing guaranty and shall (i) remain in
full force and effect until the first to occur of the indefeasible performance and payment in full of all of the HEP Guaranty Obligations, (ii) be binding upon the Partnership, its successors and assigns and (iii) inure to the benefit of
and be enforceable by Buyer and its successors, transferees and assigns.
12.7 No Duty to Pursue Others. It
shall not be necessary for Buyer (and the Partnership hereby waives any rights which the Partnership may have to require Buyer), in order to enforce such payment by the Partnership, first to (i) institute suit or exhaust its remedies against
the Indemnifying Party or others liable on the HEP Guaranty Obligations or any other person, (ii) enforce Buyers rights against any other guarantors of the HEP Guaranty Obligations, (iii) join the Indemnifying Party or any others
liable on the HEP Guaranty Obligations in any action seeking to enforce this ARTICLE XII, (iv) exhaust any remedies available to Buyer against any security which shall ever have been given to secure the HEP Guaranty Obligations, or
(v) resort to any other means of obtaining payment of the HEP Guaranty Obligations.
[The Remainder of this Page is Intentionally
Left Blank]
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IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the
Effective Time.
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BUYER:
HOLLYFRONTIER WOODS CROSS REFINING LLC
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By:
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Tim Go
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Executive Vice President,
Chief
Operating Officer
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SELLERS:
HEH
HOLLY ENERGY HOLDINGS, LLC
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By:
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Name:
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Richard L. Voliva III
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Title:
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President
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HEP PIPELINE
HEP PIPELINE, L.L.C.
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By:
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Name:
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Richard L. Voliva III
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Title:
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President
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[Signature Page to Purchase Agreement]
ACKNOWLEDGED AND AGREED FOR
THE PURPOSES ONLY OF ARTICLE VI and XI:
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HFC:
HOLLYFRONTIER CORPORATION
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By:
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Michael C. Jennings
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Chief Executive Officer and President
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ACKNOWLEDGED AND AGREED FOR
THE PURPOSES ONLY OF ARTICLE VII and XII:
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PARTNERSHIP:
HOLLY ENERGY PARTNERS, L.P.
By: HEP Logistics Holdings, L.P., its General Partner
By: Holly Logistic Services, L.L.C., its General Partner
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By:
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John Harrison
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Senior Vice President, Chief Financial Officer and Treasurer
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[Signature Page to Purchase Agreement]
EXHIBIT A
to
LLC INTEREST
PURCHASE AGREEMENT
Definitions
Action means any claim, action, suit, investigation, inquiry, proceeding, condemnation or audit by or before any court or
other Governmental Authority or any arbitration proceeding.
Acquired Companies has the meaning set forth in the
Preamble.
Acquired Interests has the meaning set forth in the Preamble.
Affiliate means, with respect to a specified Person, any other person controlling, controlled by or under common control
with that first Person. As used in this definition, the term control includes (i) with respect to any person having voting securities or the equivalent and elected directors, managers or Persons performing similar functions, the
ownership of or power to vote, directly or indirectly, voting securities or the equivalent representing 50% or more of the power to vote in the election of directors, managers or Persons performing similar functions, (ii) ownership of 50% or
more of the equity or equivalent interest in any person and (iii) the ability to direct the business and affairs of any person by acting as a general partner, manager or otherwise. Notwithstanding the foregoing, no HFC Entity will be considered
an Affiliate of an HEP Entity, and no HEP Entity will be considered an Affiliate of a HFC Entity.
Agreement has the
meaning set forth in the Preamble.
Ancillary Documents means, collectively, the Buyer Ancillary Documents and the
Seller Ancillary Documents.
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.
AR Adjustment Amount has the meaning set forth in Section 3.4(a).
Arbitrable Dispute means any and all disputes, Claims, controversies and other matters in question between Sellers, on the
one hand, and Buyer, 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.
Exhibit A-1
Assets means the Refining Unit Assets, the Truck and Tank Assets, and the
Pipeline Assets.
Assignment has the meaning set forth in Section 3.2(a).
Business Day means any day other than Saturday, Sunday or other day upon which commercial banks in Dallas, Texas are
authorized by law to close.
Buyer has the meaning set forth in the Preamble.
Buyer Ancillary Documents means each agreement, document, instrument or certificate to be delivered by Buyer, or its
Affiliates, at the Closing pursuant to Section 3.3 and each other document or Contract entered into by Buyer, or HFC, or their Affiliates, in connection with this Agreement or the Closing.
Buyer Indemnified Costs means, subject to ARTICLE IX, any and all damages, losses, Claims, assessments, judgments,
liabilities, demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable attorneys fees and expenses incurred in investigating and preparing for any litigation or proceeding) that any of the Buyer Indemnified
Parties incurs and that arise out of or relate to any breach of a representation, warranty or covenant of either Seller under this Agreement; provided, however, that Buyer Indemnified Costs shall not include any of the foregoing for which a Seller
would be entitled to indemnity pursuant to Section 3.2 of the Omnibus Agreement. Notwithstanding anything in the foregoing to the contrary, Buyer Indemnified Costs shall exclude any and all indirect, consequential, punitive, or exemplary
damages (other than those that are a result of (A) the third-party action for such indirect, consequential, punitive or exemplary damages, or (B) the gross negligence or willful misconduct of Sellers or, to the extent occurring before the
Closing Date, the Acquired Companies).
Buyer Indemnified Parties means Buyer and the Partnership and each officer,
director, partner, manager, employee, consultant, stockholder, and Affiliate of Buyer and the Partnership, including, without limitation, the Acquired Companies.
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 10.5.
Closing has the meaning set forth in
Section 3.1.
Closing Date has the meaning set forth in
Section 3.1.
Code means the Internal Revenue Code of 1986, as amended.
Company has the meaning set forth in the Recitals.
Exhibit A-2
Consents means all notices to, authorizations, consents, Orders or
approvals of, or registrations, declarations or filings with, or expiration of waiting periods imposed by, any Governmental Authority, and any notices to, consents or approvals of any other third party, in each case that are required by Applicable
Law or by Contract in order to consummate the transactions contemplated by this Agreement and the Ancillary Documents.
Contract means any written or oral contract, agreement, indenture, instrument, note, bond, loan, lease, mortgage,
franchise, license agreement, purchase order, binding bid or offer, binding term sheet or letter of intent or memorandum, commitment, letter of credit or any other legally binding arrangement, including any amendments or modifications thereof and
waivers relating thereto.
Crude Unit 2 Assets means those assets identified as Crude Unit 2 Assets on
Schedule 1.1(a).
DLLCA means the Delaware Limited Liability Company Act, 6 Del.C. §18-101 et seq., as amended from time to time.
Effective Time has the
meaning set forth in Section 3.1.
Encumbrance means any mortgage, pledge, charge,
hypothecation, claim, easement, right of purchase, security interest, deed of trust, conditional sales agreement, encumbrance, option, lien, right of first refusal, right of way, defect in title, encroachments or other restriction, whether or not
imposed by operation of Law, any voting trust or voting agreement, stockholder agreement or proxy.
FCC Unit 2 Assets
means those assets identified as the FCC Unit 2 Assets on Schedule 1.1(b).
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.
HEH has the meaning set forth in the Preamble.
HEP Entities means Holly Logistic Services, L.L.C., HEP Logistics Holdings, L.P. and the Partnership and its direct and
indirect subsidiaries.
HEP Guaranty Obligations has the meanings set forth in Section 12.1.
HEP Pipeline has the meaning set forth in the Preamble.
HEP WX has the meaning set forth in the Preamble.
HFC has the meaning set forth in the Preamble.
Exhibit A-3
HFC Entities means HFC and its direct and indirect subsidiaries other
than the HEP Entities.
HFC Guaranty Obligations has the meanings set forth in Section 11.1.
Indemnified Costs means Buyer Indemnified Costs and Seller Indemnified Costs, as applicable.
Indemnified Party means Buyer Indemnified Parties and Seller Indemnified Parties.
Indemnifying Party has the meaning set forth in Section 9.2.
Knowledge and any variations thereof, or words to the same effect, means (i) with respect to Buyer and HFC, actual
knowledge after reasonable inquiry of Tim Go; and (ii) with respect to Sellers, actual knowledge after reasonable inquiry of Mark Cunningham.
Laws means all statutes, laws, rules, regulations, Orders, ordinances, writs, injunctions, judgments and decrees of all
Governmental Authorities.
Letter Agreement has the meaning set forth in the Preamble.
LLC Interests has the meaning set forth in the Preamble.
Material Adverse Effect means any adverse change, circumstance, effect or condition in or relating to the assets, financial
condition, results of operations, or business of any person that materially affects the business of such Person or that materially impedes the ability of any person to consummate the transactions contemplated hereby, other than any change,
circumstance, effect or condition in the refining or pipelines industries generally (including any change in the prices of crude oil, natural gas, natural gas liquids, feedstocks or refined products or other hydrocarbon products, industry margins or
any regulatory changes or changes in Law) or in United States or global economic conditions or financial markets in general. Any determination as to whether any change, circumstance, effect or condition has a Material Adverse Effect shall be made
only after taking into account all effective insurance coverages and effective third-party indemnifications with respect to such change, circumstance, effect or condition.
Omnibus Agreement means that certain Twenty-First Amended and Restated Omnibus Agreement entered into as of
February 8, 2021 and effective as of January 1, 2021 by and among HFC, Holly Logistic Services, L.L.C., a Delaware limited liability company, the Partnership, Sellers, HEP Logistics GP, L.L.C., a Delaware limited liability company and HEP
Logistics Holdings, L.P., a Delaware limited partnership, and the other HFC Affiliates and Partnership Affiliates signatory thereto, as may be amended, amended and restated or otherwise modified from time to time.
Order means any order, writ, injunction, decree, compliance or consent order or decree, settlement agreement, schedule and
similar binding legal agreement issued by or entered into with a Governmental Authority.
Partnership means Holly
Energy Partners, L.P., a Delaware limited partnership.
Exhibit A-4
Party and Parties have the meanings set forth in the
Preamble.
Permits means all material permits, licenses, variances, exemptions, Orders, franchises and approvals of all
Governmental Authorities necessary for the lawful ownership and operation of the Acquired Companies business, including the Assets.
Permitted Encumbrances means (i) statutory liens for current taxes or assessments not yet due or delinquent or the
validity of which are being contested in good faith by appropriate proceedings; (ii) mechanics, carriers, workers, repairmens, landlords and other similar liens imposed by law arising or incurred in the ordinary
course of business with respect to charges not yet due and payable; and (iii) such other Encumbrances, if any, which were not incurred in connection with the borrowing of money or the advance of credit and which do not materially detract from
the value of or interfere with the present use, or any use presently anticipated by the Acquired Companies, of the property subject thereto or affected thereby, and including without limitation finance leases.
Person means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated
organization, association, Governmental Authority or other entity.
Pipeline Assets means the Refined Products
Pipelines and those assets identified as HEP Pipeline Assets on Schedule 1.1(d).
Polymerization Unit
Assets means those assets identified as Polymerization Unit Assets on Schedule 1.1(c).
Purchase
Price has the meaning set forth in Section 2.2(a).
Refined Product Pipelines means
the pipelines identified on Schedule 1.1(e).
Refining Unit Assets means the Crude Unit 2 Assets, FCC
Unit 2 Assets and the Polymerization Unit Assets.
Respondent has the meaning set forth in
Section 10.5.
ROW Assignment has the meaning set forth in
Section 3.2(c).
Sellers has the meaning set forth in the Preamble.
Seller Ancillary Documents means each agreement, document, instrument or certificate to be delivered by either Seller, or
their respective Affiliates, at the Closing pursuant to Section 3.2 and each other document or Contract entered into by Sellers, or their respective Affiliates, in connection with this Agreement or the Closing.
Exhibit A-5
Seller Indemnified Costs means any and all damages, losses, Claims,
liabilities, demands, charges, suits, penalties, costs, and expenses (including court costs and reasonable attorneys fees and expenses incurred in investigating and preparing for any litigation or proceeding) that any of the Seller Indemnified
Parties incurs and that arise out of or relate to any breach of a representation, warranty or covenant of Buyer or HFC under this Agreement. Notwithstanding anything in the foregoing to the contrary, Seller Indemnified Costs shall exclude any and
all indirect, consequential, punitive or exemplary damages (other than those that are a result of (x) a third-party claim for such indirect, consequential, punitive or exemplary damages or (y) the gross negligence or willful misconduct of
Buyer).
Seller Indemnified Parties means Sellers and each officer, director, partner, manager, employee, consultant,
stockholder, and Affiliates of either Seller, including, without limitation, the Partnership.
Truck and Tank Assets
means the assets identified as the Truck Rack and Tanks on Schedule 1.1(f).
third-party
action has the meaning set forth in Section 9.2.
WX Operating has the meaning set
forth in the Preamble.
Exhibit A-6
Exhibit B-2
Intercompany Agreements in Connection with Woods Cross
HEP Revenue Contracts
Each of (i) the Revenue
Contract, (ii) the Third Amended and Restated Crude Pipelines and Tankage Agreement, dated March 12, 2015, as amended April 22, 2019, May 26, 2020 and February 8, 2021, by and among the members of the HEP Group and HFC Group party thereto, and (iii)
the Fourth Amended and Restated Master Systems Operating Agreement, dated February 8, 2021, by and among the members of the HEP Group and HFC Group party thereto, and (iv) the Amended and Restated Master Tolling Agreement (Operating Assets) dated
effective as of October 1, 2016, as amended January 1, 2017 and October 29, 2018, by and among the members of the HEP Group and HFC Group party thereto shall be amended only to the extent necessary to exclude therefrom the HEP WX Assets (including
the economics attributable thereto) without any consideration to the members of the HEP Group other than the consideration contemplated in the WX Purchase Agreement; provided, such amendment shall be deemed a termination of the applicable agreement
solely to the extent it relates to the HEP WX Assets with the effect of termination specified therein.
HEP Expense Contracts
The Expense Contracts shall be amended only to the extent necessary to exclude therefrom the HEP WX Assets (including the economics attributable thereto)
without any consideration to the members of the HFC Group; provided, however, that such amendments shall not relieve the members of the HEP Group from amounts due and payable under the Expense Contracts prior to such amendments; provided, such
amendment shall be deemed a termination of the applicable agreement solely to the extent it relates to the HEP WX Assets with the effect of termination specified therein.
Exhibit C-1
Sinclair Permitted Assets
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1.
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Logistics assets that are within the fence line of the Sinclair refineries
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Exhibit C-2
Non-Restricted Business
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Equity interest in and assets and operations of Sinclair Trucking Company
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2.
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Sinclairs interest in Prairie Field Services LLC
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Exhibit 99.1
HollyFrontier Corporation and Holly Energy Partners Announce Combination with Sinclair Oil and
Formation of HF Sinclair Corporation
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Creates leading integrated downstream petroleum and renewable fuels company to be named HF Sinclair
Corporation
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Provides growth to Holly Energy Partners through Sinclairs integrated crude and refined products
midstream business
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HollyFrontier and HEP announce new plans for capital return to shareholders
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HollyFrontier and HEP to Host Investor Conference Call Today at 7:30 AM CT / 8:30 AM ET
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DALLAS August 3, 2021 HollyFrontier Corporation (NYSE: HFC) (HollyFrontier) and Holly Energy Partners,
L.P. (NYSE: HEP) (HEP), today announced they have entered into definitive agreements under which HollyFrontier and HEP will acquire Sinclair Oil Corporation and Sinclair Transportation Company from The Sinclair Companies
(Sinclair).
HollyFrontier Transaction
Under the terms of HollyFrontiers definitive agreement, HollyFrontier will acquire Sinclairs:
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Branded marketing business and all commercial activities, which build on an iconic brand with exceptional
customer loyalty;
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Renewable diesel business, which made Sinclair a first-mover in the space; and
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Two premier Rocky Mountain-based refineries.
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As part of the transaction, HollyFrontier will form a new parent company, named HF Sinclair Corporation (HF Sinclair), which will
replace HollyFrontier as the public company trading on the NYSE. At the closing, existing shares of HollyFrontier will automatically convert on a one-for-one basis into
shares of common stock of HF Sinclair, and HF Sinclair will issue approximately 60.2 million shares of common stock to Sinclair, representing 26.75% of the pro forma equity of HF Sinclair with a transaction value of approximately
$1.8 billion based on HollyFrontiers fully diluted shares of common stock outstanding and closing stock price on July 30, 2021. HollyFrontier expects to seek the approval of its stockholders under applicable rules of the New York
Stock Exchange for the issuance of the HF Sinclair shares to Sinclair.
The transaction will transform HollyFrontier by accelerating its growth while
increasing scale and diversification; it also allows HollyFrontier to integrate downstream into branded wholesale distribution. HF Sinclair will drive incremental free cash flow growth through its expanded refining business, integrated distribution
network, leading renewable diesel position and growing lubricants and specialties business. The transaction is expected to be accretive to HF Sinclairs earnings, cash flow and free cash flow within the first full year, and to enable the
combined company to increase its commitment to return cash to stockholders.
Upon closing of the transaction, HollyFrontiers existing senior
management team will operate the combined company. Under the definitive agreements, Sinclair will be granted the right to nominate two directors to the HF Sinclair Board of Directors at the closing. The Sinclair stockholders have also agreed to
certain customary lock up, voting and standstill restrictions, as well as customary registration rights, for the HF Sinclair shares to be issued to the stockholders of Sinclair. The new company will be headquartered in Dallas, Texas, with combined
business offices in Salt Lake City, Utah.
HEP Transaction
Under the terms of the HEP transaction, HEP will acquire Sinclairs integrated crude and refined products pipelines and terminal assets, including
approximately 1,200 miles of pipelines, eight product terminals and two crude terminals with approximately 4.5 MMbbl of operated storage. In addition, HEP will acquire Sinclairs interests in three pipeline joint ventures including: Powder
Flats Pipeline (32.5% non-operated interest), Pioneer Pipeline (49.9% non-operated interest) and UNEV Pipeline (25% non-operated
interest; HEP operates the pipeline and owns the remaining 75% interest). The purchase price for the HEP transaction will consist of an equity issuance of 21 million HEP common units and the payment of $325 million of cash, subject to
customary closing adjustments, representing a transaction value of approximately $758 million based on the closing price of HEP units on July 30, 2021. Upon closing of the HEP transaction, HEPs existing senior management team will
continue to operate HEP. Under the definitive agreements, Sinclair will be granted the right to nominate one director to the HEP Board of Directors at the closing. The Sinclair stockholders have also agreed to certain customary lock up restrictions
and registration rights for the HEP common units to be issued to the stockholders of Sinclair. HEP will continue to operate under the name Holly Energy Partners, L.P.
The transactions have been unanimously approved by both HollyFrontiers and HEPs Board of Directors and are expected to close in mid-2022, subject to customary closing conditions and regulatory clearance, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. In addition, the HFC
transaction and the HEP transaction are cross-conditioned on each other.
HollyFrontier was formed through a transformational merger that
facilitated a decade of significant stockholder returns along with growth and diversification into lubricants and renewables. We believe these transactions with Sinclair represent a similar inflection point, marking the beginning of our next chapter
as HF Sinclair, said Mike Jennings, Chief Executive Officer of HollyFrontier and HEP. With this accretive transaction, we are adding an integrated marketing business with an iconic brand while building on the strength of our expanded
refining network, increasing our scale and accelerating the growth of our renewables business. Together, with Sinclair and the dedicated employees who make it successful, we will be positioned to further build this business, capture synergies, and
generate cash that will facilitate both capital return to stockholders and further investment in the business.
Mr. Jennings continued,
At the same time, this transaction will significantly extend the reach of HEP. Strengthened by an integrated network of Sinclair pipelines and storage facilities, HEP will have the scale and incremental earnings power to capture new organic
growth opportunities and increase cash returns to unitholders.
Ross Matthews, Chairman and Chief Executive Officer of Sinclair commented, As
the oil and gas industry has evolved in recent years, we have carefully considered how best to position Sinclairs refinery and logistics assets and their related operations for the future. Were confident these businessesand the
dedicated employees who operate themwill continue to thrive under this new ownership structure. We expect these businesses will benefit significantly from HollyFrontiers and HEPs operational expertise,
their network of refineries and midstream assets in the Western U.S., and the flexibilities that come with being part of a larger organization. Sinclairs employees bring a wealth of talent
and capability, including in the production of renewable diesel, which will be an important and growing line of business for HF Sinclair. Sinclair also adds to HF Sinclair an outstanding and extremely successful brand marketing team. The transaction
will help accelerate the ongoing rapid expansion of our Sinclair branded retail sites and the iconic DINO brand.
We also believe that
HollyFrontier and HEP are an excellent cultural fit, with a shared commitment to integrity and respect for our employees, our communities and the environment, Mr. Matthews explained. We anticipate a seamless transition for our
employees, distributors and other stakeholders following the closing of the transactions.
Strategic and Financial Benefits
HollyFrontiers acquisition of Sinclairs branded marketing business, refineries and its renewable diesel business is expected to:
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Diversify HollyFrontiers Business with the Addition of Sinclairs Iconic Brand and Integrated
Distribution Network. By adding a branded wholesale business, the combined company will have the opportunity to grow an iconic brand across a range of HollyFrontier products and geographies. HollyFrontier will add a footprint of over 300
distributors and 1,500 branded locations across 30 states, with over 2 billion gallons of annual branded fuel sales.
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Increase the Size and Scale of HollyFrontiers Renewables Business. Sinclairs renewable diesel
unit (RDU), co-located at its Sinclair, Wyoming refinery, processes soybean oil and tallow into renewable diesel that is sold into California. The RDU has recently been expanded to produce 10,000
barrels per day and Sinclair is currently in the process of constructing a pre-treatment unit, allowing for further feedstock advantage and flexibility. Once the transaction is complete, the combined
renewables business is expected to produce approximately 380 million gallons of renewable diesel per year and will be a leading renewable diesel producer in the U.S. with the size and scale to support logistical, procurement, feedstock and
operational synergies.
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Add Complementary Rocky Mountain Refineries to HollyFrontiers Network. The Sinclair and Casper
Refineries are complementary to HollyFrontiers existing refinery network and will expand the combined companys footprint in the Rocky Mountain region. Like HollyFrontiers existing refineries, the Sinclair refineries are feedstock
advantaged, given their Northern Tier access to Canadian and Rocky Mountain crudes.
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The combined refining network will
feature seven complex refineries in the Rocky Mountains, Mid-Continent, Southwest and Pacific Northwest regions and will have a combined crude oil processing capacity of 678,000 barrels per stream day. Each
refinery has the complexity to convert crude oils into a high percentage of gasoline, diesel and other high-value refined products.
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Deliver Financial Benefits Through Accretion and Cost Savings. The transaction is expected to be accretive
to HF Sinclairs earnings, cash flow and free cash flow within the first full year. The transaction is expected to generate $100 million in run-rate synergies, as well as another $100-200 million in one-time savings during the first two years post close through working capital optimization.
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Enable the Combined Company to Generate Significant Free Cash Flow, Maintain Strong Balance Sheet and
Facilitate the Return of Capital to Stockholders. HollyFrontiers credit profile is expected to be enhanced through reduced leverage, increased scale and diversification of businesses. We expect the combined company to maintain a strong
balance sheet and investment grade credit rating. Fueled by significant free cash flow generation, the combined company expects to return capital to stockholders through both dividends and share repurchases.
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Deepen HollyFrontiers and Sinclairs Commitment to ESG and Sustainability. HollyFrontier and
Sinclair share a common philosophy on commitments to environmental stewardship, sustainability and strong corporate governance. The combined business will build on each companys ongoing ESG efforts with increased renewables scale, a shared
commitment to health and safety practices that best serve employees and communities, and a focus on risk management.
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HEPs
acquisition of Sinclairs integrated crude and refined product pipeline and terminal assets, including interests in three midstream joint ventures, is expected to:
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Expand HEPs Scale and Earnings. HEPs acquisition of Sinclairs expansive network of crude
and product assets provides an integrated system with connectivity to key crude hubs in the Rockies, including Casper, Guernsey and Cheyenne. The acquired assets are expected to produce stable revenues supported by long-term minimum volume
commitments from HF Sinclair.
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Extend HEPs Access to Growing Geographies through Finished Product Pipelines and Storage through
Additional Joint Ventures. The assets in the acquired joint ventures serve multiple regions and are strategically located to meet increasing demand for finished product pipelines and storage.
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Financial Targets and New Plan to Return Capital
HF
Sinclair will focus on maintaining its investment grade balance sheet and delivering significant free cash flow while utilizing a balanced approach to capital investment and cash return to stockholders. As part of its commitment to cash return, HF
Sinclair intends to focus on the following strategy:
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Near-term: Reinstate the regular dividend of $0.35/share no later than the second quarter of 2022.
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Mid-term (next 18 months): Return $1 billion of cash to
stockholders through regular dividends and share repurchases by the first quarter of 2023.
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Long-term (2023 and beyond): Implement a target payout ratio of 50% of adjusted net income in the form of
regular dividends and share repurchases.
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HEPs acquisition of Sinclairs logistics assets is expected to provide enhanced earnings power,
allowing for further deleveraging and incremental cash return to unitholders. For its commitment to cash return, HEP intends to incorporate the following strategy:
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Near-term: Continue to reduce leverage while paying a quarterly distribution of $0.35/unit.
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Mid-term (next 18 months): Reduce leverage ratio to 3.5 times
EBITDA while targeting a distribution coverage ratio of 1.5 times. HEP also expects to increase its quarterly distribution with the option of repurchasing units with excess free cash flow.
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Long-term (2023 and beyond): Maintain leverage ratio below 3.0 times EBITDA while targeting a distribution
coverage ratio of 1.3 times. HEP expects to continue increasing the quarterly distribution with the option of repurchasing units with excess free cash flow.
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Advisors
Citi is serving as financial advisor to
HollyFrontier, and Morgan, Lewis & Bockius is serving as HollyFrontiers legal counsel. Bank of America Merrill Lynch is serving as financial advisor to the HEP Conflicts Committee, Bracewell is serving as HEPs legal counsel and
Morris, Nichols, Arsht & Tunnell LLP is serving as the HEP Conflicts Committees legal counsel. Wachtell, Lipton, Rosen & Katz is serving as legal counsel to both HollyFrontier and HEP.
Conference Call and Webcast
HollyFrontier and HEP will
host a conference call today at 7:30 AM CT / 8:30 AM ET to discuss the acquisition, along with their second quarter 2021 financial results.
A live
internet broadcast of the call will be available through the following link:
https://event.on24.com/wcc/r/3347467/55757B35D3CCD93D54C9366AD04CA5C5
About HollyFrontier Corporation:
HollyFrontier
Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier owns and operates refineries
located in Kansas, Oklahoma, New Mexico, and Utah and markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, HollyFrontier
produces base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and exports products to more than 80 countries. HollyFrontier also owns a 57% limited partner interest and a
non-economic general partner interest in Holly Energy Partners, L.P., a master limited partnership that provides petroleum product and crude oil transportation, terminalling, storage and throughput services to
the petroleum industry, including HollyFrontier Corporation subsidiaries.
About Holly Energy Partners, L.P.:
Holly Energy Partners, L.P., headquartered in Dallas, Texas, provides petroleum product and crude oil transportation, terminalling, storage and throughput
services to the petroleum industry, including HollyFrontier Corporation subsidiaries. HEP, through its subsidiaries and joint ventures, owns and/or operates petroleum product and crude gathering pipelines, tankage and terminals in Texas, New Mexico,
Washington, Idaho, Oklahoma, Utah, Nevada, Wyoming and Kansas as well as refinery processing units in Kansas and Utah.
Forward-Looking Statements
Statements contained herein that are not historical facts are forward-looking statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Words such as anticipate, project, expect, plan, goal, forecast, strategy, intend, should, would,
could, believe, may, and similar expressions and statements regarding our plans and objectives for future operations are intended to identify forward-looking statements. However, the absence of these words does
not mean that the statements are not forward-looking. These forward-looking statements include, but are not limited to, statements regarding the acquisition by HollyFrontier and HEP of Sinclair Oil Corporation and Sinclair Transportation Company
(collectively, Sinclair, and such transactions, the Sinclair Transactions), pro forma descriptions of the combined companies and their operations, integration and transition plans, synergies, opportunities and anticipated
future performance. Forward-looking statements are inherently uncertain and necessarily involve risks that may affect the business prospects and performance of HollyFrontier and/or HEP, and they are not guarantees of future performance. These
forward-looking statements are based on assumptions using currently available information and expectations as of the date thereof that HollyFrontier and HEP management believe are reasonable, but that involve certain risks and uncertainties and may
prove inaccurate. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in these statements. Any differences could be caused by a number of factors including, but not limited to (i) the
failure of HollyFrontier and HEP to successfully close the Sinclair Transactions or, once closed, integrate the operations of Sinclair with their existing operations and fully realize the expected synergies of the Sinclair Transactions or on the
expected timeline; (ii) the satisfaction or waiver of the conditions precedent to the proposed Sinclair Transactions, including, without limitation, the receipt of the HollyFrontier stockholder approval for the issuance of HF Sinclair common
stock at closing and regulatory approvals (including clearance by antitrust authorities necessary to complete the Sinclair Transactions) on the terms and timeline desired, (iii) risks relating to the value of the shares of HF Sinclairs
common stock and the value of HEPs common units to be issued at the closing of the Sinclair Transactions from sales in anticipation of closing and from sales by the Sinclair holders following the closing, (iv) legal proceedings that may
be instituted against HollyFrontier or HEP following the announcement of the proposed Sinclair Transactions, (v) HollyFrontiers failure to successfully close its recently announced Puget Sound Refinery transaction or, once closed,
integrate the operations of the Puget Sound Refinery with its existing operations and fully realize the expected synergies of the Puget Sound Refinery Transaction or on the expected timeline; (vi) disruption the Sinclair Transaction may cause
to customers, vendors, business partners and HollyFrontiers and HEPs ongoing business, (vii) the extraordinary market environment and effects of the COVID-19 pandemic, including a significant
decline in demand for refined petroleum products in the markets we serve, risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum or lubricant and specialty products in
HollyFrontiers and HEPs markets, the spread between market prices for refined products and market prices for crude oil, the possibility of constraints on the transportation of refined products or lubricant and specialty products, the
possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, whether due to infection in the work force or in response to reductions in demand, effects of current and future governmental and environmental regulations
and policies, including the effects of current and future restrictions on various commercial and economic
activities in response to the COVID-19 pandemic, and (viii) other factors, including those listed in the most recent annual, quarterly and periodic
reports of HollyFrontier and HEP filed with the Securities and Exchange Commission (SEC), whether or not related to either proposed transaction. All forward-looking statements included in this presentation are expressly qualified in
their entirety by the foregoing cautionary statements. The forward-looking statements speak only as of the date made and, other than as required by law, HollyFrontier and HEP undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Additional Information and Where to Find It
The issuance of shares of HF Sinclair common stock to Sinclair in the proposed transactions (the Sinclair Stock Consideration) will be submitted to
HollyFrontiers stockholders for their consideration. In connection with the issuance of the Sinclair Stock Consideration, HollyFrontier will (i) prepare a proxy statement for HollyFrontiers stockholders to be filed with the SEC,
(ii) mail the proxy statement to its stockholders, and (iii) file other documents regarding the issuance of the Sinclair Stock Consideration and the proposed transactions with the SEC. This communication is not intended to be, and is not,
a substitute for such filings or for any other document that HollyFrontier may file with the SEC in connection with the issuance of the Sinclair Stock Consideration or the proposed transactions. SECURITY HOLDERS ARE URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT, CAREFULLY WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The proxy statement and other relevant materials (when they become available) and any other documents
filed or furnished by HollyFrontier with the SEC may be obtained free of charge at the SECs web site at www.sec.gov. In addition, security holders will be able to obtain free copies of the proxy statement from HollyFrontier by going to its
investor relations page on its corporate web site at www.hollyfrontier.com.
Participants in Solicitation
HollyFrontier and its directors and certain of its executive officers and employees may be deemed to be participants in the solicitation of proxies in
connection with the issuance of the Sinclair Stock Consideration. Information about HollyFrontiers directors and executive officers is set forth in its definitive proxy statement filed with the SEC on March 25, 2021. The proxy statement
is available free of charge from the sources indicated above and from HollyFrontier by going to its investor relations page on its corporate web site at www.hollyfrontier.com. Additional information regarding the interests of participants in the
solicitation of proxies in connection with the issuance of the Sinclair Stock Consideration will be included in the proxy statement and other relevant materials HollyFrontier files with the SEC in connection with the proposed transactions.
Contacts
HollyFrontier Corporation
Craig Biery, 214-954-6510
Vice President, Investor Relations
or
Trey Schonter, 214-954-6510
Investor Relations
Media Contact
media@hollyfrontier.com
AUGUST 3, 2021 HollyFrontier
Corporation & Holly Energy Partners, L.P. Combination with Sinclair Oil Corporation & Sinclair Transportation Company Exhibit 99.2
Disclosure Statement FORWARD LOOKING
STATEMENTS: Statements contained herein that are not historical facts are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,”
“project,” “expect,” “plan,” “goal,” “forecast,” “strategy”, “intend,” “should,” “would,” “could,” “believe,”
“may,” and similar expressions and statements regarding our plans and objectives for future operations are intended to identify forward-looking statements. However, the absence of these words does not mean that the statements are not
forward-looking. These forward-looking statements include, but are not limited to, statements regarding the acquisition by HollyFrontier and HEP of Sinclair Oil Corporation and Sinclair Transportation Company (collectively, “Sinclair”,
and such transactions, the “Sinclair Transactions”), pro forma descriptions of the combined companies and their operations, integration and transition plans, synergies, opportunities and anticipated future performance. Forward-looking
statements are inherently uncertain and necessarily involve risks that may affect the business prospects and performance of HollyFrontier and/or HEP, and they are not guarantees of future performance. These forward-looking statements are based on
assumptions using currently available information and expectations as of the date thereof that HollyFrontier and HEP management believe are reasonable, but that involve certain risks and uncertainties and may prove inaccurate. Therefore, actual
outcomes and results could materially differ from what is expressed, implied or forecast in these statements. Any differences could be caused by a number of factors including, but not limited to (i) the failure of HollyFrontier and HEP to
successfully close the Sinclair Transactions or, once closed, integrate the operations of Sinclair with their existing operations and fully realize the expected synergies of the Sinclair Transactions or on the expected timeline; (ii) the
satisfaction or waiver of the conditions precedent to the proposed Sinclair Transactions, including, without limitation, the receipt of the HollyFrontier stockholder approval for the issuance of HF Sinclair common stock at closing and regulatory
approvals (including clearance by antitrust authorities necessary to complete the Sinclair Transactions) on the terms and timeline desired, (iii) risks relating to the value of the shares of HF Sinclair’s common stock and the value of
HEP’s common units to be issued at the closing of the Sinclair Transactions from sales in anticipation of closing and from sales by the Sinclair holders following the closing, (iv) legal proceedings that may be instituted against HollyFrontier
or HEP following the announcement of the proposed Sinclair Transactions, (v) HollyFrontier’s failure to successfully close its recently announced Puget Sound Refinery transaction or, once closed, integrate the operations of the Puget Sound
Refinery with its existing operations and fully realize the expected synergies of the Puget Sound Refinery Transaction or on the expected timeline; (vi) disruption the Sinclair Transaction may cause to customers, vendors, business partners and
HollyFrontier’s and HEP’s ongoing business, (vii) the extraordinary market environment and effects of the COVID-19 pandemic, including a significant decline in demand for refined petroleum products in the markets we serve, risks and
uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum or lubricant and specialty products in HollyFrontier’s and HEP’s markets, the spread between market prices for
refined products and market prices for crude oil, the possibility of constraints on the transportation of refined products or lubricant and specialty products, the possibility of inefficiencies, curtailments or shutdowns in refinery operations or
pipelines, whether due to infection in the work force or in response to reductions in demand, effects of current and future governmental and environmental regulations and policies, including the effects of current and future restrictions on various
commercial and economic activities in response to the COVID-19 pandemic, and (viii) other factors, including those listed in the most recent annual, quarterly and periodic reports of HollyFrontier and HEP filed with the Securities and Exchange
Commission (“SEC”), whether or not related to either proposed transaction. All forward-looking statements included in this presentation are expressly qualified in their entirety by the foregoing cautionary statements. The forward-looking
statements speak only as of the date made and, other than as required by law, HollyFrontier and HEP undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise. ADDITIONAL INFORMATION AND WHERE TO FIND IT: The issuance of shares of HF Sinclair common stock to Sinclair in the proposed transactions (the “Sinclair Stock Consideration”) will be submitted to HollyFrontier’s
stockholders for their consideration. In connection with the issuance of the Sinclair Stock Consideration, HollyFrontier will (i) prepare a proxy statement for HollyFrontier’s stockholders to be filed with the SEC, (ii) mail the proxy
statement to its stockholders, and (iii) file other documents regarding the issuance of the Sinclair Stock Consideration and the proposed transactions with the SEC. This communication is not intended to be, and is not, a substitute for such filings
or for any other document that HollyFrontier may file with the SEC in connection with the issuance of the Sinclair Stock Consideration or the proposed transactions. SECURITY HOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC,
INCLUDING THE PROXY STATEMENT, CAREFULLY WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The proxy statement and other relevant materials (when they become available) and any other documents filed or furnished by
HollyFrontier with the SEC may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, security holders will be able to obtain free copies of the proxy statement from HollyFrontier by going to its investor relations page
on its corporate web site at www.hollyfrontier.com. PARTICIPANTS IN THE SOLICITATION: HollyFrontier and its directors and certain of its executive officers and employees may be deemed to be participants in the solicitation of proxies in connection
with the issuance of the Sinclair Stock Consideration. Information about HollyFrontier’s directors and executive officers is set forth in its definitive proxy statement filed with the SEC on March 25, 2021. The proxy statement is available
free of charge from the sources indicated above and from HollyFrontier by going to its investor relations page on its corporate web site at www.hollyfrontier.com. Additional information regarding the interests of participants in the solicitation of
proxies in connection with the issuance of the Sinclair Stock Consideration will be included in the proxy statement and other relevant materials HollyFrontier files with the SEC in connection with the proposed transactions.
ACCRETIVE Accretive to earnings, cash
flow and free cash flow within the first year FREE CASH FLOW GENERATION Underpins strong financial position and capital returns to shareholders EXPANDS MIDSTREAM PLATFORM Extends reach of Holly Energy Partners’ integrated network of pipelines
and storage facilities, increasing scale and earnings power ELEVATES ESG PROFILE Strengthens commitment to ESG and sustainability DIVERSIFICATION & INTEGRATION Diversifies HollyFrontier’s business with the addition of Sinclair’s
iconic brand and integrated distribution network SIZE & SCALE Achieves material size and scale with diversified and balanced portfolio COMPLEMENTARY ASSETS Adds complementary Rocky Mountain refineries to HollyFrontier’s refining network
RENEWABLES GROWTH Accelerates the growth of HollyFrontier’s renewables business Compelling Strategic and Financial Benefits of Transformative Transaction1 Based on management’s current estimates and expectations
HollyFrontier: A Decade of Growth and
Value Creation Returned over $3.6 billion through special and regular dividends Returned over $2.3 billion through share repurchases Delivered Significant Value to Shareholders2 Expanding refining business Emerging renewables business 5 complex
refineries with 554,000 BPD of crude oil processing capacity inclusive of our recently announced acquisition of the 149,000 BPD Puget Sound Refinery1 Addition of renewable diesel unit (RDU) and pre-treatment unit (PTU) at Artesia refinery, and
conversion of the Cheyenne refinery into an RDU facility in progress Growing lubricants business built through key acquisitions Benefiting from Interest in HEP 2017: Petro-Canada Lubricants 2018: Sonneborn 34,000 barrels per day of lubricant
production capacity Facilitating the growth of midstream MLP partner through drop-downs and external acquisitions Puget Sound Refinery (“PSR”) acquisition expected to close in 4Q2021 Since the merger of Holly Oil Corporation (HOC) &
Frontier Oil Corporation (FTO) on 7/1/2011
HollyFrontier Transaction: Creating a
More Diverse, Downward Integrated Business with Scale Two Rocky Mountain based refineries Iconic brand with exceptional customer loyalty Renewable Diesel business–first mover in RD space STRUCTURE & PURCHASE PRICE All-stock transaction,
with a transaction value of ~$1.8 billion based on HFC closing stock price on July 30, 2021 Includes the creation of a new public holding company: HF Sinclair Corporation (“HF Sinclair”) Existing HFC shareholders to own 73.25% equity of
HF Sinclair (~164.9mm shares) Sinclair owners to receive 26.75% of HF Sinclair equity (~60.2mm shares) Expected to close mid-2022 LEADERSHIP & OPERATIONS HollyFrontier senior management to lead combined company HQ in Dallas, TX, combined
business offices in Salt Lake City, UT GOVERNANCE Sinclair has right to nominate 2 directors to HF Sinclair Board at the closing Customary lock up, voting and standstill restrictions and registration rights for Sinclair’s owners’ equity
Marketing Renewables Refining ACQUIRED SINCLAIR BUSINESSES
Holly Energy Partners Transaction:
Enhancing Scale and Earnings Power Expected $70-80 million of annual EBITDA 75% of revenues to be supported by long-term minimum volume commitments 1,200 miles of integrated crude and refined product pipeline Terminal assets including 8 product
terminals and 2 crude terminals Interests in 3 midstream JVs for crude gathering and product offtake STRUCTURE & PURCHASE PRICE Sinclair to contribute stock of Sinclair Transportation Company with logistics assets to HEP in exchange for cash and
stock, representing a transaction value of ~$758 million based on the closing price of HEP units on July 30, 2021 HEP will fund the transaction with an equity issuance of 21 million common units and $325 million of cash Expected to close in
mid-2022, simultaneous with the HollyFrontier transaction LEADERSHIP & OPERATIONS HEP to continue operating as Holly Energy Partners, L.P. under existing senior management GOVERNANCE Sinclair has right to nominate 1 director to HEP Board at the
closing Customary lock up restrictions and registration rights for Sinclair’s owners’ equity Logistics ACQUIRED SINCLAIR BUSINESSES
HF Sinclair: Positioned for the Next
Decade and Beyond Strong free cash flow generation Accretive to HFC’s earnings, cash flow and free cash flow; accretive to HEP’s DCF Commitment to capital returns to shareholders Synergy realization Well positioned for future growth
Creating Shareholder Value1 Based on management’s current estimates and expectations HF Sinclair Marketing Renewables Logistics Refining Lubricants
Combination Strengthens our Commitment
to ESG Environmental, Social and Governance (ESG) Environmental Social Governance Transaction increases renewable diesel scale Will become a leading Renewable Diesel producer in the U.S. with expected production of ~380 million gallons per year
Renewable diesel production diversifies our business for a low-carbon future Board leadership provides significant industry expertise, alongside diverse business, financial and EHS expertise Environmental, Health, Safety, and Public Policy Committee
at Board level Executive compensation strongly aligned with shareholders and long-term performance SASB-and TCFD-aligned reporting1 Annual Sustainability Report highlighting ESG efforts Highly aligned cultures focused on safety and putting our
people first Committed to attracting, retaining and developing a diverse and inclusive workforce Active volunteering and philanthropic involvement in communities where we operate SASB (Sustainable Accounting Standards Board) and TCFD (Task Force on
Climate-related Financial Disclosures). Please see HFC 2020 Sustainability Report for additional ESG related information
HF Sinclair: Pro-Forma Asset Footprint1
Creating scale, increasing diversification and building an integrated business with strong marketing presence 1. Puget Sound Refinery acquisition expected to close in 4Q2021
MARKETING Diversifying HollyFrontier
with Sinclair’s Iconic Brand and Integrated Distribution Network ACQUISITION HIGHLIGHTS Footprint: Iconic brand 300+ distributors and 1,500+ wholesale branded sites located across 30 states Over 2B gallons per year of branded fuel sales ~300
sites branded under a license program outside supply footprint Financial Highlights: Provides further advantage through RIN generation Additional margin from branded credit card program Sinclair branded wholesale business generates an uplift versus
unbranded sales COMBINED COMPANY Driving growth and leveraging increased distribution network Downward integration of existing HollyFrontier products Opportunities with accelerated brand growth across HollyFrontier products and geographies
Significant RIN generation through distribution network Provides a consistent sales channel for produced fuels with stable margins as well as additional earnings from brand licensing and credit card programs
ACQUISITION HIGHLIGHTS Sinclair is a
First Mover in Renewables 10,000 BPD Renewable Diesel Unit co-located at Sinclair, WY refinery Renewable Diesel Unit operational since 2018 LCFS program pathways in California and British Columbia Feedstock Pretreatment Unit Construction of
pre-treatment unit in progress, expected completion mid-2022 Pre-treatment mitigates single feedstock risk Target the processing of lower CI distillers corn oil, tallow and lower priced degummed soybean oil Feedstock flexibly generates higher LCFS
value through lower CI feedstock COMBINED COMPANY Combination creates large scale renewables business A leading U.S. producer of Renewable Diesel with 3 production facilities Expect to produce ~380 million gallons of renewable diesel annually 2
pre-treatment units providing significant feedstock flexibility Size and scale support operational synergies RENEWABLES Growing the Size and Scale of HollyFrontier’s Renewables Business Creating a leading renewable diesel business
Adding Complementary Rocky Mountain
Refineries to HollyFrontier’s Footprint ACQUISITION HIGHLIGHTS Sinclair Refinery: 94,000 BPD operating capacity with 3.74mmbbl of storage Crude slate: Canadian heavy and Rockies sweet crudes Product yield: diesel, gasoline, asphalt, jet fuel,
LPG Products primarily distributed by pipelines to Denver and Salt Lake City Casper Refinery: 30,000 BPD operating capacity with 1.45 mmbbl of storage Crude slate: Rockies sweet crudes Product yield: diesel, gasoline and heavy oil Products primarily
distributed by pipelines serving the Rocky Mountain region and South Dakota COMBINED COMPANY1 Opportunity to create value through increased reliability and improved cost structure Expanded footprint centered around Mid-Continent, Southwest, Rocky
Mountain and Pacific Northwest 7 complex refineries that convert discounted, heavy and sour crudes into a high percentage of gasoline, diesel and other high-value products 678,000 BPD: oil processing capacity REFINING Expanding geographically
through feedstock advantaged assets with access to Canadian and Rocky Mountain crudes 1. Includes the 149KBPD Puget Sound Refinery, acquisition expected to close in 4Q2021
Expansive Network of Crude and
Product Assets ACQUISITION HIGHLIGHTS Pipelines: 1,200 miles of pipelines Regional crude gathering system for Sinclair’s refineries and 3rd parties Refined product outlets for Sinclair’s refineries Terminals: 8 product terminals and 2
crude terminals with 4.5 mmbbl of operated storage Product distribution and crude gathering for Sinclair and 3rd parties Joint Ventures: Powder Flats Pipeline (32.5% Sinclair non-operated interest) Pioneer Pipeline (49.9% Sinclair non-operated
interest) UNEV Pipeline (25% Sinclair non-operated interest) COMBINED COMPANY Expansive network of crude and product assets in key demand centers Expected annual EBITDA $400-$450 million 75% of revenues tied to long-term MVCs Enhanced scale and
earnings power Combined ~4,600 miles of pipeline and 19 terminals Increased ownership in UNEV pipeline, interests in other strategic joint ventures Integrated system with expansive logistics network connecting key Rockies crude and product regions
expected to enhance flexibility LOGISTICS
Capturing Synergy Opportunities:
Transaction to Drive Cost Savings & Efficiencies $100 million $40 million $40 million $20 million Expected annual synergies to be realized within 2 years SG&A Operating expense reductions Commercial improvements Annual Synergies Expected
within 2 years: Downward integration of Branded Wholesale business Improved cost profile from Renewable Diesel offtake and feedstock advantages Renewable diesel logistics optimization Improved procurement activities Corporate savings ~$100 - $200
million of one-time estimated Working Capital benefits
Pro-Forma Mid-Cycle Earnings
Uplift1: ($mm's) HFC PSR2 Sinclair HF Sinclair REFINING $1,000 $175 $175 $1,350 LOGISTICS $350 $75 $425 RENEWABLES $250 $150 $400 MARKETING $50 $50 LUBRICANTS $250 $250 EXPECTED ANNUAL SYNERGIES $100 TOTAL EBITDA $1,850 $175 $450
$2,575 (CAPEX) $ (375) $(40) $(175) $(590) FREE CASH FLOW (after tax)3 $1,125 100 200 $1,500 Driving Significant Uplift to Free Cash Flow Mid-cycle EBITDA and Capex based on management’s current estimates and expectations. Please see appendix
for Non-GAAP definitions Puget Sound Refinery acquisition expected to close in 4Q2021 Based on a 24% corporate tax rate
50% Payout Ratio (dividends +
repurchases) of adjusted Net Income Reinstate $0.35 regular quarterly dividend (no later than 2Q22) Expect to close on Puget Sound Refinery acquisition (4Q21) and complete Renewables projects (1H22) $1 Billion of cash return (both dividends and
repurchases) over next 18 months (1Q23) Expect to close on Sinclair acquisition (mid-2022) Near-term Long-term Mid-term by 2Q22 2023 and Beyond by 1Q23 HF Sinclair Capital Allocation Strategy1 Free Cash Flow Drives Capital Returns and Balanced
Capital Allocation Strengthened Balance Sheet Reinstate Capital Returns Sustainable Free Cash Flow Transaction Delivers: Based on management’s current estimates and expectations
Holly Energy Partners Capital
Allocation Strategy1 Near-term Long-term Mid-term by 2Q22 2024 and Beyond 2023 Maintain leverage below 3.0x Increase distribution with a target coverage ratio of 1.3x Option to repurchase units Continue to reduce leverage Pay sustainable quarterly
distribution of $0.35/unit Reduce leverage to 3.5x Increase distribution with a target coverage ratio of 1.5x Option to repurchase units Expect to close on Sinclair acquisition (mid-2022) Visible Deleveraging Pathway Increase unitholder returns
Sustainable Free Cash Flow Transaction Delivers: Based on management’s current estimates and expectations
Pathway to Completion Expected to
close mid-2022 Subject to customary closing conditions including regulatory clearance Proxy filings & shareholder vote Transaction agreements reached by both parties 8/2021
ACCRETIVE Accretive to earnings,
cash flow and free cash flow within the first year FREE CASH FLOW GENERATION Underpins strong financial position and capital returns to shareholders EXPANDS MIDSTREAM PLATFORM Extends reach of Holly Energy Partners’ integrated network of
pipelines and storage facilities, increasing scale and earnings power ELEVATES ESG PROFILE Strengthens commitment to ESG and sustainability DIVERSIFICATION & INTEGRATION Diversifies HollyFrontier’s business with the addition of
Sinclair’s iconic brand and integrated distribution network SIZE & SCALE Achieves material size and scale with diversified and balanced portfolio COMPLEMENTARY ASSETS Adds complementary Rocky Mountain refineries to HollyFrontier’s
refining network RENEWABLES GROWTH Accelerates the growth of HollyFrontier’s renewables business Compelling Strategic and Financial Benefits of Transformative Transaction1 Based on management’s current estimates and
expectations
Appendix
Expected future note issuance
to fund cash portion of HEP transaction Pro-forma stockholders equity assumes equity issuance of 60.2mm HFC shares at a $29.40 stock price and 21mm HEP LP units at a $20.60 unit price as of the close on July 30, 2021 Includes availability from
$1.35B HFC revolving credit facility and $1.2B HEP revolving credit facility ($mm's) HFC Sinclair HF Sinclair Pro-Forma Cash and Cash Equivalents $1,398 $1,398 HOLLYFRONTIER CORPORATION HFC 2.625% Senior Notes due 2023 $350 $350 HFC 5.875%
Senior Notes due 2026 $1,000 $1,000 HFC 4.500% Senior Notes due 2030 $400 $400 HFC LONG TERM DEBT $1,750 $1,750 HOLLY ENERGY PARTNERS HEP 5.000% Senior Notes due 2028 $500 $500 HEP Credit Agreement (matures 7/2025) $870 $870 HEP
Note Issuance1 - $325 $325 HEP LONG TERM DEBT $1,370 $325 $1,695 Consolidated Debt (excludes unamortized discount) $3,120 $3,445 Stockholders Equity (includes NCI)2 $6,040 $2,202 $8,242 Total Capitalization $9,160 $11,687 Consolidated Debt /
Capitalization 34% 29% Consolidated Net Debt / Capitalization 19% 18% CONSOLIDATED TOTAL LIQUIDITY3 $3,078 $3,078 HF Sinclair Pro-Forma Capital Structure Strengthening Credit Profile through Reduced Leverage, Increased Scale and Portfolio
Diversification HFC Consolidated Capital Structure: As of 6/30/2021
Expected future note issuance to
fund cash portion of HEP transaction Pro-forma stockholders equity assumes equity issuance of 21mm HEP LP units at a $20.60 unit price as of the close on July 30, 2021 Includes availability from $1.2B HEP revolving credit facility ($mm's) HEP
Sinclair HEP Pro-Forma Cash and Cash Equivalents $20 $20 HEP LONG TERM DEBT HEP 5.000% Senior Notes due 2028 $500 $500 HEP Credit Agreement (matures 7/2025) $870 $870 HEP Note Issuance1 - $325 $325 HEP TOTAL DEBT $1,370 $1,695 Stockholders Equity
(includes NCI)2 $597 $433 $1,030 Total Capitalization $1,967 $2,725 Consolidated Debt / Capitalization 70% 62% Consolidated Net Debt / Capitalization 69% 61% CONSOLIDATED TOTAL LIQUIDITY3 $350 $350 Holly Energy Partners Pro-Forma Capital Structure
Strengthening Credit Profile through Reduced Leverage, Increased Scale and Portfolio Diversification HEP Capital Structure: As of 6/30/2021
JV’s Provide Significant
Access to Finished Product Pipelines and Storage Powder Flats Pipeline Joint Venture Powder River Basin crude gathering joint venture with Saddle Butte (32.5% Sinclair non-operated interest) Provides efficient access to un-blended Power River
Basin crude for Sinclair Refineries 220 mile system of 4”-12” diameter pipeline delivers crude from the Power River Basin to Casper/Guernsey Current capacity: 60,000 bbl/d Highland Flats Terminal with one 150,000 barrel tank and one
10,000 barrel tank Pioneer Pipeline Joint Venture Product logistics joint venture with Phillips 66 (49.9% Sinclair non-operated interest) 310 miles of operated pipeline stretching from Sinclair, WY to Salt Lake City, UT market 8” and 12”
diameter pipelines with gross capacity of 63,000 bbl/d1 Connects to the Pioneer North Salt Lake Terminal with 16 storage tanks with 655,000 barrel capacity UNEV Pipeline Joint Venture Product logistics joint venture with Holly Energy Partners (25%
Sinclair non-operated interest) 427 mile pipeline from Woods Cross, UT to Las Vegas Valley, NV 8” diameter pipeline that is ~10 miles long and 12” pipeline that is 417 miles long with gross capacity of 60,000 bbl/d Connects to 2 HEP
terminals: North Las Vegas, NV terminal with gross capacity of 330,000 barrel and Cedar City, UT terminal with storage capacity of 200,000 barrel LOGISTICS Per Phillips 66 public filings
Adjusted Net Income: A non-GAAP
financial measure that excludes non-cash lower of cost or market inventory valuation adjustments, long-lived asset impairments, HEP’s gain on sales-type leases, HEP’s loss on early extinguishment of debt, severance costs, restructuring
charges, LIFO inventory liquidation costs, decommissioning costs, acquisition integration and regulatory costs and gain on tariff settlement. BPD: The number of barrels per calendar day of crude oil or petroleum products. Carbon Intensity (CI): The
amount of carbon emitted per unit of energy consumed, under LCFS it is a “well-to-wheels” analysis of green house gas emissions in transportation fuel, meaning emissions are quantified from feedstock cultivation through combustion.
Coverage Ratio: Coverage ratio is calculated as distributable cash flow divided by total cash distributions and is used to indicate Holly Energy Partners' ability to pay cash distributions from current earnings. Debt-To-Capitalization: A measurement
of a company's financial leverage, calculated as the company's long term debt divided by its total capital. Debt includes all long-term obligations. Total capitalization includes the company's debt and shareholders' equity. Distributable Cash Flow
(DCF): Distributable Cash Flow is not a calculation based upon U.S. generally accepted accounting principles (“GAAP”). However, the amounts included in the calculation are derived from amounts separately presented in our consolidated
financial statements. Distributable cash flow should not be considered in isolation or as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of
liquidity. Distributable cash flow is not necessarily comparable to similarly titled measures of other companies. Distributable cash flow is presented here because it is a widely accepted financial indicator used by investors to compare partnership
performance. We believe that this measure provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating. Earnings Per Share (EPS): Earnings per share is calculated as net income (loss)
attributable to stockholders divided by the average number of shares of common stock outstanding. EBITDA: Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income plus (i) interest
expense net of interest income, (ii) income tax provision, and (iii) depreciation, depletion and amortization. EBITDA is not a calculation provided for under GAAP; however, the amounts included in the EBITDA calculation are derived from amounts
included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of
liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by
our management for internal analysis and as a basis for financial covenants. Our historical EBITDA is reconciled to net income under the section entitled “Reconciliation to Amounts Reported Under Generally Accepted Accounting Principles”
in HollyFrontier Corporation’s 2020 10-K filed February 24, 2021, and the associated earnings releases furnished on Form 8-K, each of which are available on our website, www.hollyfrontier.com. Enterprise Value: Enterprise Value is calculated
as market capitalization plus minority interest, plus preferred shares, plus net-debt, less MLP debt. Free Cash Flow (FCF): Calculated by taking operating cash flow and subtracting capital expenditures. Liquidity: Liquidity includes cash, cash
equivalents, short-term investments and available borrowing capacity under the company’s revolving credit facility. Low Carbon Fuel Standard (LCFS): California program that mandates the reduction in the carbon intensity of transportation fuels
by 20% by 2030. Lubricant: A solvent neutral paraffinic product used in commercial heavy duty engine oils, passenger car oils and specialty products for industrial applications such as heat transfer, metalworking, rubber and other general process
oil. Definitions
Net Debt: Net debt is total balance
sheet debt net of cash, cash equivalents and short-term investments. Non GAAP measurements: We report certain financial measures that are not prescribed or authorized by U. S. generally accepted accounting principles ("GAAP"). We discuss
management's reasons for reporting these non-GAAP measures below. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures are not alternatives to revenue,
operating income, income from continuing operations, net income, or any other comparable operating measure prescribed by GAAP. In addition, these non-GAAP financial measures may be calculated and/or presented differently than measures with the same
or similar names that are reported by other companies, and as a result, the non-GAAP measures we report may not be comparable to those reported by others. Also, we have not reconciled to non-GAAP forward-looking measures or guidance to their
corresponding GAAP measures because certain items that impact these measures are unavailable or cannot be reasonably predicted without unreasonable effort. Renewable Diesel (RD): A fuel derived from vegetable oils or animal fats that meets the
requirements of ASTM 975. Renewable diesel is distinct from biodiesel. It is produced through various processes, most commonly through hydro-treating, reacting the feedstock with hydrogen under temperatures and pressure in the presence of a
catalyst. Renewable Diesel is chemically identical to petroleum based diesel and therefore has no blend limit. Renewable Identification Number (RIN): A serial number assigned to each batch of biofuel produced until that gallon is blended with
gasoline or diesel resulting in the separation of the RIN to be used for compliance. RIN category (D-code) is assigned for each renewable fuel pathway determined by feedstock, production process and fuel type. Sour Crude: Crude oil containing
quantities of sulfur greater than 0.4 percent by weight, while “sweet crude oil” means crude oil containing quantities of sulfur equal to or less than 0.4 percent by weight. Definitions (continued)
HollyFrontier Corporation (NYSE:
HFC) 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 (214) 954-6510 www.hollyfrontier.com Craig Biery | Vice President, Investor Relations Trey Schonter | Investor Relations investors@hollyfrontier.com 214-954-6510 Media Inquiries:
media@hollyfrontier.com Holly Energy Partners, L.P. (NYSE: HEP) 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 (214) 954-6510 www.hollyenergy.com