8-K

__________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):

July 12, 2012 (July 12, 2012)

HOLLY ENERGY PARTNERS, L.P. (Exact name of registrant as specified in its charter)
Delaware	001-32225	20-0833098
(State of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

2828 N. Harwood, Suite 1300, Dallas, Texas 75201

(Address of Principal Executive Offices)

(214) 871-3555

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR

240.14d-2(b))

[ ]    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR

240.13e-4(c))

__________________

Item 1.01 Entry into a Material Definitive Agreement.

LLC Interest Purchase Agreement

On July 12, 2012, HollyFrontier Corporation (“HollyFrontier”), Holly Energy Partners, L.P. (the “Partnership”), and its subsidiary, HEP UNEV Holdings LLC (“Buyer”), entered into an LLC Interest Purchase Agreement (the “Purchase Agreement”), pursuant to which (i) Buyer acquired all of the issued and outstanding limited liability company interests (the “LLC Interests”) of HEP UNEV Pipeline LLC (f/k/a Holly UNEV Pipeline Company) (the “Company”) from HollyFrontier, thereby indirectly acquiring 75% of all of the issued and outstanding membership interests in UNEV Pipeline, LLC (“UNEV Pipeline”), the owner of an approximately 400 mile, 12-inch refined products pipeline currently running from Woods Cross, Utah, to Las Vegas, Nevada, related products terminals in or near Cedar City, Utah and Las Vegas, Nevada, and other related assets (collectively, the “Pipeline”), and (ii) the general partner of the Partnership waived certain incentive distribution rights granted under the First Amended and Restated Agreement of Limited Partnership of the Partnership, as amended (the “Partnership Agreement”), in exchange for aggregate consideration of (a) the issuance of an interest in Buyer to a subsidiary of HollyFrontier that entitles that subsidiary to payments based upon UNEV Pipeline’s EBITDA for a specified period of time, as described below in this Item 1.01 under “Amended and Restated Limited Liability Company Agreement of HEP UNEV Holdings LLC,” and (b) $315 million, which was satisfied by (x) a cash payment to HollyFrontier of $260 million and (y) the issuance of 1,029,900 common units of the Partnership valued at approximately $55 million (the “Common Unit Consideration”), to a subsidiary of HollyFrontier (collectively, the “Acquisition”). The value of the Common Unit Consideration was based on the volume-weighted average price of the common units for the ten trading days prior to announcement of the Acquisition on June 28, 2012. The Acquisition was closed simultaneously with the signing of the Purchase Agreement. HollyFrontier controls the general partner of the Partnership.

Limited Partial Waiver of Incentive Distribution Rights under the Partnership Agreement

On July 12, 2012, in connection with the closing of the Acquisition, the Partnership’s general partner, which is owned indirectly by HollyFrontier, executed a Limited Partial Waiver of Incentive Distribution Rights under the Partnership Agreement (the “Waiver”). Pursuant to the Waiver, the Partnership’s general partner agreed to forego its right to $1.25 million per quarter of incentive distributions from the Partnership that the general partner would otherwise be entitled to receive over the 12 consecutive quarters following the closing of the Acquisition and up to an additional 4 quarters in certain circumstances, with certain limited exceptions.

The description of the Waiver herein is qualified by reference to the Waiver, filed as Exhibit 3.1 to this report, which is incorporated by reference into this report in its entirety.

Seventh Amended and Restated Omnibus Agreement

On July 12, 2012, in connection with the closing of the Acquisition, HollyFrontier, the Partnership and certain of their respective subsidiaries entered into a Seventh Amended and Restated Omnibus Agreement (the “Seventh Restated Omnibus Agreement”). The Seventh Restated Omnibus Agreement amends and restates the Sixth Amended and Restated Omnibus Agreement, effective as of November 1, 2012 (which was previously filed as an exhibit to the Partnership’s Current Report on Form 8-K dated November 10, 2011), to, among other things, subject the equity interests of UNEV Pipeline to HollyFrontier’s right of first refusal to purchase the Partnership’s assets and extend certain indemnification (other than environmental indemnification) provided under the Sixth Amended and Restated Omnibus Agreement to cover the Pipeline.

Amended and Restated Limited Liability Company Agreement of HEP UNEV Holdings LLC

On July 12, 2012, in connection with the closing of the Acquisition, Buyer, the Partnership and a subsidiary of HollyFrontier entered into an Amended and Restated Limited Liability Company Agreement of Buyer (the “Amended LLC Agreement”). Pursuant to the Amended LLC Agreement, the subsidiary received Class B Common Units of Buyer (the “Profits Interest”). The Profits Interest entitles the holder in certain circumstances to receive distributions equal to 50% of Buyer’s portion of UNEV Pipeline’s EBITDA over $30 million (subject to adjustment in certain circumstances). The payments for the Profits Interest, if any, begin in the fifth year after the closing of the Acquisition based on UNEV Pipeline’s EBITDA for the fourth year following the closing of the Acquisition, and continue until the earlier of reaching a cap (the “Cap”) or 20 years following the closing of the Acquisition. The amount of the Cap is based primarily upon the total amount of incentive distributions waived under the Waiver and increases at a rate of 7% per annum with regard to the amount remaining to be paid towards the Cap. Upon a direct or indirect sale of Buyer, Buyer’s interest in UNEV Pipeline or a sale of material assets of UNEV Pipeline and other certain events, Buyer or the Partnership is required to purchase the Profits Interest for a price based upon the total amount remaining to be paid towards the Cap or, after July 1, 2016 and at the election of Buyer or the Partnership, as applicable, based upon the fair market value of the Profits Interest, except that in the case of certain partial sales, only a proportionate amount of the Profits Interest is required to be purchased at the time of such sale.

Termination of Option Agreement

On July 12, 2012, in connection with the closing of the Acquisition, HollyFrontier, the Company, and Holly Energy Partners – Operating, L.P., a subsidiary of the Partnership (“HEP Operating”), and certain of HollyFrontier’s and the Partnership’s subsidiaries entered into a Termination of Option Agreement (the “Termination”). The Termination terminates that certain Option Agreement, dated as of January 31, 2008, as amended by that certain First Amendment to Option Agreement, dated as of February 11, 2010, pursuant to which the Company granted to HEP Operating an irrevocable option to purchase all the equity interests owned by the Company in UNEV Pipeline.

The Partnership intends to file a copy of the Purchase Agreement, Seventh Restated Omnibus Agreement, Amended LLC Agreement and Termination as exhibits to its Quarterly Report on Form 10-Q for the quarter ending June 30, 2012.

Item 1.02 Termination of a Material Definitive Agreement.

The information set forth in Item 1.01 regarding the Termination is incorporated into this Item 1.02 by reference.

Item 2.01 Completion of Acquisition or Disposition of Assets

On July 12, 2012, the Partnership completed the Acquisition pursuant to the terms of the Purchase Agreement and the documents related thereto as described in Item 1.01 above, which description is incorporated by reference in this Item 2.01.

The consideration for the Acquisition was determined pursuant to negotiations between HollyFrontier and the conflicts committee of the Partnership, which is comprised solely of independent outside directors.

In addition to the relationship between the Partnership and HollyFrontier created under the Waiver,

Seventh Restated Omnibus Agreement, and Amended LLC Agreement, with the closing of the Acquisition, HollyFrontier indirectly owns 12,127,515 common units of the Partnership, representing a 44% ownership interest in the Partnership, including the 2% general partner interest by which HollyFrontier indirectly owns and controls the general partner of the Partnership. Additionally, the Partnership and HollyFrontier have certain commercial relationships as further described in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2011 and the Partnership’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

Item 3.02 Unregistered Sales of Equity Securities

Upon the Closing of the Acquisition described in Item 1.01 above, which description is incorporated herein by reference, the Partnership will issue the Common Unit Consideration. The Partnership’s issuance of the Common Unit Consideration will be exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(2) of the Securities Act.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The information set forth in Item 1.01 regarding the Waiver is incorporated into this Item 5.03 by reference.

Item 7.01    Regulation FD Disclosure.

On July 12, 2012, the Partnership and HollyFrontier issued a joint press release announcing the completion of the Acquisition. A copy of the press release is furnished hereto as Exhibit 99.1 to this Form 8-K.

The information contained in, or incorporated into, this Item 7.01 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference to such filing.

Item 9.01    Financial Statements and Exhibits.

(a)    Financial Statements of Business Acquired

Financial statements relating to the Acquisition will be filed as an amendment on Form 8-K/A to this report within 71 calendar days from the date that this Current Report on Form 8-K is required to be filed.

(b)    Pro Forma Financial Information

Pro forma financial information relating to the Acquisition will be filed as an amendment on Form 8-K/A to this report within 71 calendar days from the date that this Current Report on Form 8-K is required to be filed.

(d)    Exhibits

Exhibit No.	Description
3.1*	Limited Partial Waiver of Incentive Distribution Rights under the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated as of July 12, 2012
99.1**	Press Release of Holly Energy Partners, L.P. and HollyFrontier Corporation, issued July 12, 2012
* Filed herewith. ** Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HOLLY ENERGY PARTNERS, L.P.
By:	HEP Logistics Holdings, L.P.,
	its General Partner
By:	Holly Logistic Services, L.L.C.
	its General Partner
	By:	/s/ Bruce R. Shaw
	Title:	Senior Vice President and
		Chief Financial Officer

Date:    July 12, 2012

EXHIBIT INDEX

Exhibit No.	Description
3.1*	Limited Partial Waiver of Incentive Distribution Rights under the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated as of July 12, 2012
99.1**	Press Release of Holly Energy Partners, L.P. and HollyFrontier Corporation, issued July 12, 2012
* Filed herewith. ** Furnished herewith.

EX-3.1

LIMITED PARTIAL WAIVER OF INCENTIVE DISTRIBUTION RIGHTS

UNDER THE FIRST AMENDED AND RESTATED AGREEMENT

OF LIMITED PARTNERSHIP OF

HOLLY ENERGY PARTNERS, L.P.

This Limited Partial Waiver of Incentive Distribution Rights (this “Waiver”) under the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P. (the “Partnership”), dated as of July 13, 2004 (and as amended to the date hereof, the “Partnership Agreement”), is hereby adopted on July 12, 2012, by HEP Logistics Holdings, L.P., a Delaware limited partnership (the “General Partner”), in its capacity as general partner of the Partnership and as the holder of all of the Outstanding Incentive Distribution Rights. Capitalized terms used but not defined herein are used as defined in the Partnership Agreement.

WHEREAS, this Waiver shall become effective only upon and after the closing of the transactions contemplated by that certain LLC Interest Purchase Agreement, dated as of July 12, 2012 (the “Purchase Agreement”), pursuant to which HEP UNEV Holdings LLC, a subsidiary of the Partnership (the “Buyer”), will purchase and acquire all of the issued and outstanding membership interests in HEP UNEV Pipeline LLC (f/k/a Holly UNEV Pipeline Company) held by HollyFrontier Corporation (“HollyFrontier”); and

WHEREAS, in exchange for a portion of the cash consideration to be paid by or on behalf of Buyer pursuant to the Purchase Agreement, this Waiver shall be delivered by HollyFrontier at the closing of the transactions contemplated by the Purchase Agreement.

NOW, THEREFORE, the General Partner does hereby agree as follows:

1.Defined Terms.

“Buyer LLC Agreement” means the “LLC Agreement” as such term is defined in the Purchase Agreement.

“Woods Cross Expansion Completion Date” means the first date on which both: (a) mechanical completion of the installation of new equipment at the HollyFrontier Woods Cross facility is completed according to its design and permitted basis, as described by HollyFrontier management as the Woods Cross Phase I expansion, and (b) achievement by the HollyFrontier Woods Cross refinery of an average actual crude charge rate over a period of 15 consecutive days of at least 40,000 barrels per day, shall have occurred.

“UNEV Acquisition Closing Date” means the “Closing Date” as such term is defined in the Purchase Agreement.

2.Limited Partial Waiver of Incentive Distribution Rights.

a. Notwithstanding anything to the contrary in Section 6.4 of the Partnership Agreement, the General Partner hereby waives its rights to its distributions as a holder of the Incentive Distribution Rights in the manner provided for in this Section 2. Any distributions to the holders of the Incentive Distribution Rights (the “IDR Holders”) provided for in clauses (iii), (iv) and (v) of Subsection 6.4(b) of the Partnership Agreement, as applicable, shall be adjusted commencing with the payment date of the first quarterly distribution declared and paid after the UNEV Acquisition Closing Date (such payment date, the “First IDR Reduction Date”) as follows: for the quarterly distribution paid on the First IDR Reduction Date and each of the eleven successive quarterly distributions declared and paid following the First IDR Reduction Date, any distributions to the IDR Holders shall be reduced by $1,250,000 (but, for the avoidance of doubt, not below zero); provided, however, that if the Woods Cross Expansion Completion Date has not occurred by the third anniversary of the UNEV Acquisition Closing Date, then each of such quarterly distributions declared and paid thereafter shall be reduced by $1,250,000 (but, for the avoidance of doubt, not below zero) until the earlier of (A) the calendar quarter immediately preceding the Woods Cross Expansion Completion Date (for the avoidance of doubt, this Waiver shall not apply to the quarterly distribution declared and paid with respect to the calendar quarter in which the Woods Cross Expansion Completion Date occurs) and (B) the date at which the cumulative amount of the reductions provided for in this Section 2 totals $20,000,000.

b. Notwithstanding anything to the contrary in the Partnership Agreement, the Partnership shall not allocate any income to the IDR Holders with respect to the distributions waived in this Section 2.

c. For the avoidance of doubt, in the event the Partnership is liquidated prior to that point in time by which there has been a completion of the waiver of distributions with respect to the Incentive Distribution Rights contemplated by this Section 2, the distributions with respect to the Incentive Distribution Rights to be received by the IDR Holders in connection with such liquidation, if any, shall not be reduced by the amount of any distributions to be waived in accordance with this Section 2 but not yet declared and paid at the time of such liquidation.

3.Partnership Agreement. To the extent that this Waiver amends any provision of the Partnership Agreement, this Waiver shall constitute an amendment to the Partnership Agreement. Section 13.1(d)(i) of the Partnership Agreement provides that the General Partner, without the approval of any Limited Partner, may amend any provision of the Partnership Agreement to reflect a change that, in the discretion of the General Partner, does not adversely affect the Limited Partners (including any particular class of Partnership Interest as compared to other classes of Partnership

Interests) in any material respect. The General Partner has determined, in its discretion, that this Waiver does not adversely affect the Limited Partners in any material respect, except the holder of the Incentive Distribution Rights as compared to holders of the other classes of Partnership Interests. In accordance with Section 13.3(c) of the Partnership Agreement, the General Partner, in its capacity as the holder of all of the Outstanding Incentive Distribution Rights, hereby consents to and approves this Waiver in all respects. Except as specifically provided in this Waiver, the Partnership Agreement shall remain in full force and effect.

4.Termination. This Waiver shall terminate in accordance with Section 12.4 of the Buyer LLC Agreement effective on any Optional Buy-Out Date or Mandatory Buyout Date (in each case, as defined in the Buyer LLC Agreement). For the avoidance of doubt, upon such termination of this Waiver, no further distributions with respect to the Incentive Distribution Rights shall be reduced pursuant to Section 2 of this Waiver, and the IDR Holders shall be entitled to receive distributions with respect to the Incentive Distribution Rights pursuant to the terms and conditions of the Partnership Agreement unadjusted by this Waiver.

5.Governing Law. This Waiver shall be governed by, and interpreted in accordance with, the laws of the State of Delaware, all rights and remedies being governed by such laws without regard to principles of conflicts of laws.

6.Binding on Successors. This Waiver shall be binding upon all successors and assigns of the holder of the Incentive Distribution Rights and any and all transferees of the Incentive Distribution Rights, and the General Partner hereby agrees to notify any transferees of the Incentive Distribution Rights of this Waiver.

IN WITNESS WHEREOF, the General Partner has executed this Waiver as of the date first set forth above.

GENERAL PARTNER
HEP LOGISTICS HOLDINGS, L.P.
By:	Holly Logistic Services, L.L.C., its general partner
By:	/s/ Matthew P. Clifton
Name:	Matthew P. Clifton
Title:	Chief Executive Officer and President

[Signature page to Limited Partial Waiver]

EX-99.1

HollyFrontier Corporation and Holly Energy Partners Announce Completion of Acquisition of Interest in UNEV Pipeline

Holly Energy Partners to Hold Webcast at 4:00 p.m., Eastern time, on July 12, 2012

7/12/2012

DALLAS, TX — HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier”) and Holly Energy Partners, L.P. (NYSE:HEP) (“Holly Energy”) today announced that they have completed the acquisition of HollyFrontier’s 75% interest in UNEV Pipeline, LLC (“UNEV”) by Holly Energy for $315 million, subject to certain post-closing purchase price adjustments. UNEV is the owner of an approximate 400 mile, 12-inch refined products pipeline currently running from Woods Cross, Utah to Las Vegas, Nevada, related products terminals near Cedar City, Utah and Las Vegas, Nevada and other related assets. The purchase price of $315 million was paid with $260 million in cash and approximately 1.0 million Holly Energy common units valued at $55 million, issued to a subsidiary of HollyFrontier.

In connection with the closing of the transaction, HollyFrontier, the owner of Holly Energy’s general partner, agreed to forego its right to $1.25 million per quarter of incentive distributions from Holly Energy that the general partner would otherwise be entitled to receive over the 12 consecutive quarters following the closing of the transaction and up to an additional 4 quarters in certain circumstances. HollyFrontier also received a profits interest that will be paid beginning the fifth year after the closing based on UNEV’s EBITDA for the fourth year following the closing, by which it would be entitled in certain circumstances to receive 50% of Holly Energy’s portion of UNEV’s EBITDA over $30 million (subject to adjustment in certain circumstances), until the earlier of reaching a cap or 20 years following the closing.

Holly Energy Partners has scheduled a webcast for Thursday July 12, 2012 at 4:00 p.m., Eastern time, to discuss the transaction: This webcast may be accessed at: https://event.webcasts.com/starthere.jsp?ei=1007250

About Holly Energy Partners, L.P.:

Holly Energy, headquartered in Dallas, Texas, provides petroleum product and crude oil transportation, tankage and terminal services to the petroleum industry, including HollyFrontier, a subsidiary of which, giving effect to the transaction described above, owns a 44% interest (which includes a 2% general partner interest) in Holly Energy. Holly Energy owns and operates petroleum product and crude pipelines, tankage, terminals and loading facilities located in Texas, New Mexico, Arizona, Oklahoma, Washington, Idaho, Utah, Kansas and Wyoming. In addition, Holly Energy owns a 25% interest in SLC Pipeline LLC, a transporter of crude oil in the Salt Lake City area, and a 75% interest in UNEV Pipeline, LLC, the owner of a Holly Energy operated refined products pipeline running from Utah to Las Vegas, Nevada, and related products terminals.

Information about Holly Energy Partners L.P. may be found on its website at http://www.hollyenergy.com.

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 Corporation operates through its subsidiaries a 135,000 barrels per stream day (“bpsd”) refinery located in El Dorado, Kansas, a 125,000 bpsd refinery in Tulsa, Oklahoma, a 100,000 bpsd refinery located in Artesia, New Mexico, a 52,000 bpsd refinery located in Cheyenne, Wyoming and a 31,000 bpsd refinery in Woods Cross, Utah. HollyFrontier markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. Giving effect to the transactions described above, subsidiaries of HollyFrontier also own a 44% interest (including a 2% general partner interest) in Holly Energy.

Information about HollyFrontier Corporation may be found on its website at http://www.hollyfrontier.com.

The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: References in this statement to “we” or “our” refer collectively to HollyFrontier and Holly Energy. The statements in this press release relating to matters that are not historical facts are “forward-looking statements” within the meaning of the federal securities laws. Forward looking statements use words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “will,” “intend,” “could,” “believe,” “may,” and similar expressions and statements regarding our plans and objectives for future operations. These statements are based on our beliefs and assumptions and those of Holly Energy’s general partner using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties. Although we and Holly Energy’s general partner believe that such expectations reflected in such forward-looking statements are reasonable, neither we nor Holly Energy’s general partner can give assurance that our expectations will prove to be correct. Such statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected. Certain factors could cause actual results to differ materially from results anticipated in the forward-looking statements. These factors include, but are not limited to:

• risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on Holly Energy’s pipelines and/or terminalled in Holly Energy’s terminals;

• the economic viability of HollyFrontier, Alon USA, Inc. and Holly Energy’s other customers;

• the demand for refined petroleum products in markets HollyFrontier and Holly Energy serve; and

• other risks and uncertainties detailed from time to time in HollyFrontier’s and Holly Energy’s Securities and Exchange Commission filings.

The forward-looking statements speak only as of the date made and, other than as required by law,

we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

FOR FURTHER INFORMATION, Contact:

M. Neale Hickerson,

Julia Heidenreich

Investor Relations

HollyFrontier Corporation / Holly Energy Partners

214-871-3555