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•	risks and uncertainties with respect to the actual quantities of petroleum products and crude oil shipped on our pipelines and/or terminalled, stored or throughput in our terminals;

•	the economic viability of HollyFrontier Corporation, Alon USA, Inc. and our other customers;

•	the demand for refined petroleum products in markets we serve;

•	our ability to purchase and integrate future acquired operations;

•	our ability to complete previously announced or contemplated acquisitions;

•	the availability and cost of additional debt and equity financing;

•	the possibility of reductions in production or shutdowns at refineries utilizing our pipeline and terminal facilities;

•	the effects of current and future government regulations and policies;

•	our operational efficiency in carrying out routine operations and capital construction projects;

•	the possibility of terrorist attacks and the consequences of any such attacks;

•	general economic conditions; and

•	other financial, operational and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings.

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Item 1.	Business

•	approximately 810 miles of refined product pipelines, including 340 miles of leased pipelines, that transport gasoline, diesel and jet fuel principally from HFC’s Navajo refinery in New Mexico to its customers in the metropolitan and rural areas of Texas, New Mexico, Arizona, Utah and northern Mexico;

•	approximately 510 miles of refined product pipelines that transport refined products from Alon’s Big Spring refinery in Texas to its customers in Texas and Oklahoma;

•	two 65-mile intermediate pipelines that transport intermediate feedstocks and crude oil from HFC’s Navajo refinery crude oil distillation and vacuum facilities in Lovington, New Mexico to its petroleum refinery facilities in Artesia, New Mexico;

•	one 65-mile pipeline that is used for the shipment of crude oil from the gathering systems in Barnsdall and Beeson, New Mexico to the Navajo refinery Artesia and Lovington facilities;

•	approximately 940 miles of crude oil trunk, gathering and connection pipelines located in West Texas, New Mexico and Oklahoma that primarily deliver crude oil to HFC’s Navajo refinery;

•	approximately 8 miles of refined product pipelines that support HFC’s Woods Cross refinery located near Salt Lake City, Utah;

•	gasoline and diesel connecting pipelines located at HFC’s Tulsa East refinery facility;

•	five intermediate product and gas pipelines between HFC’s Tulsa East and West refinery facilities;

•	crude receiving assets located at HFC’s Cheyenne refinery;

•	a 75% interest in the UNEV Pipeline, a 427-mile, 12-inch refined products pipeline running from Woods Cross, Utah to Las Vegas, Nevada;

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•	a 50% interest in the Osage Pipeline, a 135-mile crude oil pipeline running from Cushing, Oklahoma to El Dorado, Kansas;

•	a 50% interest in Frontier Pipeline, a 289-mile crude oil pipeline running from Casper, Wyoming to Frontier Station, Utah through a connection to the SLC Pipeline; and

•	a 25% interest in the SLC Pipeline, a 95-mile intrastate crude oil pipeline system that transports crude oil into the Salt Lake City, Utah area from the Utah terminus of the Frontier Pipeline, as well as crude oil flowing from Wyoming and Utah via Plains All American Pipeline, L. P.’s (“Plains”) Rocky Mountain Pipeline.

•	three refined product terminals located in Moriarty and Bloomfield, New Mexico; and Tucson, Arizona, with an aggregate capacity of approximately 600,000 barrels, that are integrated with our refined product pipeline system that serves HFC’s Navajo refinery;

•	one refined product terminal located in Spokane, Washington, with a capacity of approximately 400,000 barrels, that serves third-party common carrier pipelines;

•	one refined product terminal near Mountain Home, Idaho with a capacity of approximately 120,000 barrels, that serves a nearby United States Air Force Base;

•	two refined product terminals, located in Wichita Falls and Abilene, Texas, and one tank farm in Orla, Texas with aggregate capacity of approximately 500,000 barrels, that are integrated with our refined product pipelines that serve Alon’s Big Spring refinery;

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a refined product loading rack facility at each of HFC’s refineries, heavy product / asphalt loading rack facilities at HFC’s Navajo refinery Lovington facility, Tulsa refinery East facility and the Cheyenne refinery, liquefied petroleum gas (“LPG”) loading rack facilities at HFC’s Tulsa refinery West facility, Cheyenne refinery and El Dorado refinery, lube oil loading racks at HFC’s Tulsa refinery West facility and crude oil Leased Automatic Custody Transfer (“LACT”) units located at HFC’s Cheyenne refinery;

•	on-site crude oil tankage at HFC’s Navajo, Woods Cross, Tulsa, and Cheyenne refineries having an aggregate storage capacity of approximately 1,350,000 barrels;

•	on-site refined and intermediate product tankage at HFC’s Tulsa, Cheyenne and El Dorado refineries having an aggregate storage capacity of approximately 8,800,000 barrels;

•	eleven crude oil tanks adjacent to HFC's El Dorado refinery with a capacity of approximately 1,200,000 barrels, that primarily serve the HFC El Dorado refinery; and

•	a 75% interest in UNEV Pipeline's product terminals near Cedar City, Utah and Las Vegas, Nevada with an aggregate capacity of approximately 615,000 barrels.

•	a newly completed naphtha fractionation tower at HFC's El Dorado refinery, with a capacity of 50,000 barrels per day of desulfurized naphtha; and

•	a newly completed hydrogen generation unit at HFC's El Dorado refinery, with a capacity of 6,100 thousand standard cubic feet per day of natural gas.

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Item 1A.	Risk Factors

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•	competition from other refineries and pipelines that may be able to supply the refinery's end-user markets on a more cost-effective basis;

•	operational problems such as catastrophic events at the refinery, labor difficulties, environmental proceedings or other litigation that cause a stoppage of all or a portion of the operations at the refinery;

•	planned maintenance or capital projects;

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increasingly stringent environmental laws and regulations, such as the U.S. Environmental Protection Agency's gasoline and diesel sulfur control requirements that limit the concentration of sulfur in motor gasoline and diesel fuel for both on-road and non-road usage as well as various state and federal emission requirements that may affect the refinery itself and potential future climate change regulations;

•	an inability to obtain crude oil for the refinery at competitive prices; or

•	a general reduction in demand for refined products in the area due to:

◦	a local or national recession or other adverse economic condition that results in lower spending by businesses and consumers on gasoline and diesel fuel;

◦	higher gasoline prices due to higher crude oil costs, higher taxes or stricter environmental laws or regulations; or

◦	a shift by consumers to more fuel-efficient or alternative fuel vehicles or an increase in fuel economy, whether as a result of technological advances by manufacturers, legislation either mandating or encouraging higher fuel economy or the use of alternative fuel or otherwise.

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•	meet our obligations as they come due;

•	execute our growth strategy;

•	complete future acquisitions or construction projects;

•	take advantage of other business opportunities; or

•	respond to competitive pressures.

•	the accuracy of our assumptions about growth in the markets that we currently serve or have plans to serve in the Southwestern, Rocky Mountain and Mid-Continent regions of the United States;

•	HFC's willingness and ability to capture a share of additional demand in its existing markets; and

•	HFC's willingness and ability to identify and penetrate new markets in the Southwestern, Rocky Mountain and Mid-Continent regions of the United States.

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•	certain pre-closing environmental liabilities discovered within specified time periods after the date of the applicable acquisition;

•	certain matters arising from the pre-closing ownership and operation of assets; and

•	ongoing remediation related to the assets.

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•	denial or delay in issuing requisite regulatory approvals and/or permits;

•	unplanned increases in the cost of construction materials or labor;

•	disruptions in transportation of modular components and/or construction materials;

•	severe adverse weather conditions, natural disasters, or other events (such as equipment malfunctions explosions, fires or spills) affecting our facilities, or those of vendors and suppliers;

•	shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages;

•	market-related increases in a project's debt or equity financing costs; and/or

•	nonperformance by, or disputes with, vendors, suppliers, contractors, or sub-contractors involved with a project.

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•	HFC, as a shipper on our pipelines, has an economic incentive not to cause us to seek higher tariff rates or terminalling fees, even if such higher rates or terminalling fees would reflect rates that could be obtained in arm's-length, third-party transactions;

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neither our partnership agreement nor any other agreement requires HFC to pursue a business strategy that favors us or utilizes our assets, including whether to increase or decrease refinery production, whether to shut down or reconfigure a refinery, or what markets to pursue or grow. HFC's directors and officers have a fiduciary duty to make these decisions in the best interests of the stockholders of HFC;

•	our general partner is allowed to take into account the interests of parties other than us, such as HFC, in resolving conflicts of interest;

•	our partnership agreement provides for modified or reduced fiduciary duties for our general partner, and also restricts the remedies available to our unitholders for actions that, without the limitations, might constitute breaches of fiduciary duty;

•	our general partner determines which costs incurred by HFC and its affiliates are reimbursable by us;

•	our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf;

•	our general partner may, in some circumstances, cause us to borrow funds to make cash distributions, even where the purpose or effect of the borrowing benefits our general partner or affiliates;

•	our general partner determines the amount and timing of our asset purchases and sales, capital expenditures and borrowings, each of which can affect the amount of cash available to us; and

•	our general partner controls the enforcement of obligations owed to us by our general partner and its affiliates, including the pipelines and terminals agreement with HFC.

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•	our unitholders' proportionate ownership interest in us will decrease;

•	the amount of cash available for distribution on each unit may decrease;

•	the relative voting strength of each previously outstanding unit may be diminished; and

•	the market price of the common units may decline.

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•	any business operated by HFC or any of its subsidiaries at the closing of our initial public offering;

•	any business or asset that HFC or any of its subsidiaries acquires or constructs that has a fair market value or construction cost of less than $5 million; and

•	any business or asset that HFC or any of its subsidiaries acquires or constructs that has a fair market value or construction cost of $5 million or more if we have been offered the opportunity to purchase the business or asset at fair market value, and we decline to do so.

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Item 1B.	Unresolved Staff Comments

Item 2.	Properties

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(1)	Includes 15,000 bpd of capacity on the Orla to El Paso segment of this pipeline that is leased to Alon under capacity lease agreements.

(2)	The White Lakes Junction to Moriarty segment of our Artesia to Moriarty pipeline and the Moriarty to Bloomfield pipeline is leased from Mid-America Pipeline Company, LLC (“Mid-America”) under a long-term lease agreement.

(3)	Capacity for this pipeline is reflected in the information for the Artesia to Moriarty pipeline.

(4)	Tulsa gasoline and diesel fuel connections to Magellan’s pipeline are less than one mile.

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(5)	The capacities of the three gas pipelines are 10 million standard cubic feet per day (“MMSCFD”), 22 MMSCFD, and 10 MMSCFD and the two liquid pipelines are 45,000 BPD and 60,000 BPD.

•	an 8-inch and a 12-inch, 82-mile segment from the Navajo refinery to Orla, Texas;

•	a 12-inch, 126-mile segment from Orla to outside El Paso, Texas; and

•	an 8-inch, 7-mile segment from outside El Paso to our El Paso terminal.

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•	distribution;

•	blending to achieve specified grades of gasoline;

•	other ancillary services that include the injection of additives and filtering of jet fuel; and

•	storage and inventory management.

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(1)	Inactive

(2)	The underlying ground at the Tucson terminal is leased.

(3)	Handles only jet fuel.

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Item 3.	Legal Proceedings

Item 4.	Mine Safety Disclosures

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Item 5.	Market for the Registrant’s Common Units, Related Unitholder Matters and Issuer Purchases of Common Units

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Item 6.	Selected Financial Data

(1)	Retrospectively adjusted as described in Note 2 and Note 7 of Consolidated Financial Statements.

(2)	Net income attributable to HEP is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. HEP net income allocated to the general partner includes incentive distributions that are declared subsequent to quarter end. After the amount of incentive distributions is allocated to the

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(3)

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income attributable to Holly Energy Partners plus (i) interest expense net of interest income and loss on early extinguishment of debt, (ii) state income tax and (iii) depreciation and amortization excluding amounts related to previous owners (“Predecessor”). EBITDA is not a calculation based upon generally accepted accounting principles (“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 attributable to HEP 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 compliance with financial covenants.

(4)

Distributable cash flow is not a calculation based upon GAAP. However, the amounts included in the calculation are derived from amounts presented in our consolidated financial statements, with the general exceptions of a billed crude revenue settlement and maintenance capital expenditures. 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. It is also used by management for internal analysis and for our performance units. We believe that this measure provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating.

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(5)	Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. Maintenance capital expenditures include expenditures required to maintain equipment reliability, tankage and pipeline integrity, safety and to address environmental regulations.

(6)	Prior period total assets and debt have been recast to reflect the early adoption of an April 2015 accounting standard update requiring debt issuance costs to be presented as a direct deduction from the carrying amount of the debt liability. See Note 7 "Debt" in the Notes to Consolidated Financial Statements.

(7)	Includes $712 million, $571 million, $363 million, $200 million and $159 million in Credit Agreement advances that were classified as long-term debt at December 31, 2015, 2014, 2013, 2012 and 2011, respectively.

(8)

As a master limited partnership, we distribute our available cash, which historically has exceeded our net income attributable to HEP because depreciation and amortization expense represents a non-cash charge against income. The result is a decline in partners’ equity since our regular quarterly distributions have exceeded our quarterly net income attributable to HEP. Additionally, if the assets contributed and acquired from HFC while we were a consolidated variable interest entity of HFC had been acquired from third parties, our acquisition cost in excess of HFC’s basis in the transferred assets would have been recorded in our financial statements as increases to our properties and equipment and intangible assets at the time of acquisition instead of decreases to partners’ equity.

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Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

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(1)

Net income attributable to HEP is allocated between limited partners and the general partner interest in accordance with the provisions of the partnership agreement. HEP net income allocated to the general partner includes incentive distributions that are declared subsequent to quarter end. After the amount of incentive distributions is allocated to the general partner, the remaining net income attributable to HEP is allocated to the partners based on their weighted average ownership percentage during the period.

(2)

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is calculated as net income attributable to Holly Energy Partners plus (i) interest expense, net of interest income and loss on early extinguishment of debt, (ii) state income tax and (iii) depreciation and amortization. EBITDA is not a calculation based upon generally accepted accounting principles (“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 attributable to Holly Energy Partners 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 compliance with financial covenants. See our calculation of EBITDA under Item 6, “Selected Financial Data.”

(3)

Distributable cash flow is not a calculation based upon GAAP. However, the amounts included in the calculation are derived from amounts presented in our consolidated financial statements, with the general exceptions of a billed crude revenue settlement and maintenance capital expenditures. 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. It is also used by management for internal analysis and for our performance units. We believe that this measure provides investors an enhanced perspective of the operating performance of our assets and the cash our business is generating. See our calculation of distributable cash flow under Item 6, “Selected Financial Data.”

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•	the customer receiving the future services provided by these billings,

•	the period in which the customer is contractually allowed to receive the services expires, or

•	our determination that we will not be required to provide services within the allowed period.

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Item 7A.	Quantitative and Qualitative Disclosures about Market Risk

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Item 8.	Financial Statements and Supplementary Data

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Note 1:	Description of Business and Summary of Significant Accounting Policies

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•	the customer receiving the future services provided by these billings,

•	the period in which the customer is contractually allowed to receive the services expires, or

•	our determination that we will not be required to provide services within the allowed period.

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Note 2:	Acquisitions

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Note 3:	Financial Instruments

•	(Level 1) Quoted prices in active markets for identical assets or liabilities.

•	(Level 2) Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data.

•	(Level 3) Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes valuation techniques that involve significant unobservable inputs.

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Note 4:	Properties and Equipment

Note 5:	Transportation Agreements

Note 6:	Employees, Retirement and Incentive Plans

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Note 7:	Debt

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Note 8:	Commitments and Contingencies

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Note 9:	Significant Customers

Note 10:	Related Party Transactions

•	Revenues received from HFC were $292.2 million, $275.2 million and $252.4 million for the years ended December 31, 2015, 2014 and 2013, respectively.

•	HFC charged us general and administrative services under the Omnibus Agreement of $2.4 million for the year ended December 31, 2015, and $2.3 million for each of the years ended December 31, 2014 and 2013.

•	We reimbursed HFC for costs of employees supporting our operations of $34.5 million, $38.9 million and $34.6 million for the years ended December 31, 2015, 2014 and 2013, respectively. Netted against the cost of employees for the year ended December 31, 2013, is a $3.5 million refund from HFC related to refunds of taxes covering a multi-year period.

•	HFC reimbursed us $13.5 million, $16.8 million and $21.6 million for the years ended December 31, 2015, 2014 and 2013, respectively, for certain reimbursable costs and capital projects.

•	We distributed $90.4 million, $80.5 million and $71.4 million, for the years ended December 31, 2015, 2014 and 2013, respectively, to HFC as regular distributions on its common units and general partner interest, including general partner incentive distributions.

•	Accounts receivable from HFC were $32.5 million and $33.4 million at December 31, 2015 and 2014, respectively.

•	Accounts payable to HFC were $11.6 million and $5.2 million at December 31, 2015 and 2014, respectively.

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Revenues for the years ended December 31, 2015, 2014 and 2013 include $7.3 million, $10.1 million and $5.1 million, respectively, of shortfall payments billed in 2014, 2013 and 2012, respectively, as HFC did not exceed its minimum volume commitment in any of the subsequent four quarters. Deferred revenue in the consolidated balance sheets at December 31, 2015 and 2014, includes $6.4 million and $7.3 million, respectively, relating to certain shortfall billings.

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•	In November 2015, we acquired from HFC all the outstanding membership interests in El Dorado Operating which owns the newly constructed naphtha fractionation and hydrogen generation units at HFC’s El Dorado refinery. See Note 2 for a description of this transaction.

Note 11:	Partners’ Equity, Income Allocations and Cash Distributions

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Note 12:	Environmental

Note 13:	Quarterly Financial Data (Unaudited)

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Note 14:	Supplemental Guarantor/Non-Guarantor Financial Information

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Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.	Controls and Procedures

Item 9B.	Other Information

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Item 10.	Directors, Executive Officers and Corporate Governance

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•	presiding at all executive sessions of the non-employee directors of the Board;

•	consulting with management on Board and committee meeting agendas;

•	acting as a liaison in appropriate instances between management and the non-employee directors, including advising the Chairman and the Chief Executive Officer on the efficiency of the Board meetings; and

•	facilitating teamwork and communication between the non-employee directors and management.

•	The Compensation Committee oversees the management of risks relating to HLS’s executive compensation plans and arrangements.

•	The Audit Committee oversees management of financial reporting and controls risks.

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•	The Conflicts Committee oversees specific matters that the Board or the Conflicts Committee believes may involve conflicts of interest with HFC.

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Matthew P. Clifton	Director since July 2004. Age 64.

Principal Occupation:	Chairman of the Board of HLS

Business Experience:

Mr. Clifton has served as Chairman of the Board of HLS, in a non-employee capacity, since February 2014. Mr. Clifton served as a consultant for HFC from June 2014 to October 2014. Mr. Clifton previously served as Executive Chairman of HLS from January 2014 until his retirement in February 2014, as Chairman of the Board and Chief Executive Officer of HLS from March 2004 through December 2013 and as President of HLS from July 2011 to November 2012. Mr. Clifton joined Holly Corporation in 1980 and served as the Executive Chairman of HFC from July 2011 through December 2012. Mr. Clifton previously served as Chief Executive Officer of Holly Corporation from 2006 until the merger with Frontier Oil Corporation in July 2011, as Chairman of the Board of Holly Corporation from April 2007 until the merger with Frontier Oil Corporation in July 2011 and as President of Holly Corporation from 1995 until 2006.

Additional Directorships:	Mr. Clifton served as a director of HFC from 1995 through December 2012.

Qualifications:	Mr. Clifton has extensive knowledge of the operations of HLS and HEP, the refining industry and macro-economic conditions, as well as valuable industry relationships throughout the country. Mr. Clifton brings a unique and valuable perspective as well as an understanding of HLS’s and HEP’s history, culture, vision and strategy to the Board.

Michael C. Jennings	Director since October 2011. Age 50.

Principal Occupation:	Executive Chairman of HFC and Chief Executive Officer of HLS

Business Experience:

Mr. Jennings was appointed as Chief Executive Officer of HLS in January 2014. Mr. Jennings served as President of HLS from October 2015 to February 2016. Mr. Jennings has served as Executive Chairman of HFC since January 2016. Mr. Jennings served as the Chief Executive Officer and President of HFC from the merger of Holly Corporation and Frontier Oil Corporation in July 2011 until his appointment as Executive Chairman and as Chairman of the Board of HFC from January 2013 until his appointment as Executive Chairman. Mr. Jennings previously served as the President and Chief Executive Officer of Frontier Oil Corporation from 2009 until the merger in July 2011 and as the Executive Vice President and Chief Financial Officer of Frontier Oil Corporation from 2005 until 2009.

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Additional Directorships:	Mr. Jennings currently serves as the Executive Chairman and a director of HFC and a director of ION Geophysical Corporation. Mr. Jennings served as a director of Frontier Oil Corporation from 2008 until the merger in July 2011 and as Chairman of the board of directors of Frontier Oil Corporation from 2010 until the merger in July 2011.

Qualifications:	Mr. Jennings provides valuable and extensive industry knowledge and experience. His knowledge of the day-to-day operations of HFC provides a significant resource for the Board and facilitates discussions between the Board and HFC management.

George J. Damiris	Director since February 2016. Age 55.

Principal Occupation:	Chief Executive Officer and President of HFC

Business Experience:

Mr. Damiris has served as Chief Executive Officer and President of HFC since January 2016. He previously served as Executive Vice President and Chief Operating Officer of HFC from September 2014 until January 2016 and as Senior Vice President, Supply and Marketing of HFC from January 2008 until September 2014. Mr. Damiris joined HFC in 2007 as Vice President, Corporate Development after an 18-year career with Koch Industries, where he was responsible for managing various refining, chemical, trading, and financial businesses.

Qualifications:	Mr. Damiris has extensive industry experience and significant insight into issues facing the industry. His knowledge of the day-to-day operations of HFC provides a significant resource for the Board and facilitates discussions between the Board and HFC management.

Charles M. Darling, IV	Director since July 2004. Age 67.

Principal Occupation:	President of DQ Holdings, L.L.C.

Business Experience:

Mr. Darling has served as President of DQ Holdings, L.L.C., a venture capital investment and consulting firm focused primarily on opportunities in the energy industry and on the development and sale of medical devices and other manufactured products, since August 1998. Mr. Darling was previously the General Manager of Desert Power, LP and of its general partner, Desert Power, LLC, which was an indirect affiliate of DQ Holdings, L.L.C. In late 2006, Desert Power, LLC and Desert Power, LP, along with certain of their subsidiaries, filed for bankruptcy in Nevada. In late 2007, the bankruptcy court approved the plan of reorganization, which became final in accordance with its terms in early 2008. Mr. Darling also previously practiced law at the law firm of Baker Botts, L.L.P. for over 20 years.

Qualifications:

Mr. Darling has significant experience addressing financial, legal, regulatory and risk matters affecting HLS and HEP. His service as a partner of a major international law firm practicing energy law, as President and General Counsel of a publicly traded energy company with a publicly traded pipelines master limited partnership and his subsequent endeavors in the energy industry as President of an investment and development firm provide him with valuable insight into our industry. Mr. Darling’s leadership skills, management and legal experience make him particularly well suited to be our Presiding Director.

William J. Gray	Director since April 2008. Age 75.

Principal Occupation:	Private Consultant

Business Experience:	Mr. Gray is a private consultant. He served as a member of the New Mexico House of Representatives from November 2006 until January 2015. Mr. Gray has served as a governmental affairs consultant for HFC since January 2003. He also served as a consultant to Holly Corporation from October 1999 through September 2001. Mr. Gray served as a director of Holly Corporation from September 1996

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Qualifications:	Mr. Gray brings to the Board forty years of experience in pipeline, refining, and marketing and supply. Mr. Gray also brings business and management expertise and extensive knowledge of, and a unique perspective on, regulatory matters affecting our industry as a result of his government experience.

Jerry W. Pinkerton	Director since July 2004. Age 75.

Principal Occupation:	Retired

Business Experience:

Mr. Pinkerton retired in December 2003. From December 2000 to December 2003, Mr. Pinkerton served as a consultant to TXU Corp. (now Energy Future Holdings Corp.), and from August 1997 to December 2000, Mr. Pinkerton served as Controller of TXU Corp. and its U.S. subsidiaries. Mr. Pinkerton previously served as the Vice President and Chief Accounting Officer of ENSERCH Corporation and was employed for 26 years as an auditor by Deloitte Haskins & Sells, a predecessor firm of Deloitte & Touche, LLP, including 15 years as an audit partner.

Additional Directorships:

Since April 2012, Mr. Pinkerton has served on the board of directors of Southcross Energy Partners GP, LLC, the general partner of Southcross Energy Partners, L.P., and serves as the chair of the audit and conflicts committees of the board of directors of Southcross Energy Partners GP, LLC. Mr. Pinkerton served on the board of directors of Animal Health International, Inc., and served as chair of its audit committee, from May 2008 to June 2011.

Qualifications:

Mr. Pinkerton brings to the Board his audit, accounting and financial reporting expertise and a level of financial sophistication that qualifies him as an audit committee financial expert. Due to his executive management experience with public companies and public accounting firms, Mr. Pinkerton possesses business and management expertise that provide an invaluable insight into HLS’s and HEP’s business.

P. Dean Ridenour	Director since August 2004. Age 74.

Principal Occupation:	Retired

Business Experience:

Mr. Ridenour retired in February 2010. Mr. Ridenour provided consulting services to Holly Corporation from January 2008 until February 2010, and served as Vice President and Chief Accounting Officer of Holly Corporation and HLS from January 2005 to January 2008. Mr. Ridenour served as Vice President, Special Projects of Holly Corporation from August 2004 to December 2004 and prior to becoming a full-time employee, provided full-time consulting services to Holly Corporation beginning in October 2002. Mr. Ridenour was employed for 34 years by Ernst & Young LLP, including 20 years as an audit partner, prior to retiring from such position in 1997.

Qualifications:	Mr. Ridenour’s management experience and his accounting and financial reporting expertise qualify him as an audit committee financial expert and make him a valuable member of the Board. In addition, Mr. Ridenour’s prior experience at HLS and Holly Corporation provide him with a deep understanding of our business and industry.

Principal Occupation:	Retired

Business Experience:	Mr. Stengel retired from Citigroup/Citibank, N.A. in May 2003. From 1997 to May 2003, Mr. Stengel served as Managing Director and Senior Credit Officer of the global energy and mining group at Citigroup/Citibank, N.A.

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Qualifications:	Mr. Stengel’s executive management experience in public companies, banking and financial expertise, and general business and management expertise provides him with significant insight into our operations, management and finance.

James G. Townsend	Director since January 2012. Age 61.

Principal Occupation:	Member of the New Mexico House of Representatives

Business Experience:

Mr. Townsend has served as a member of the New Mexico House of Representatives since January 2015. Mr. Townsend retired from HFC in December 2011. He was employed by Holly Corporation (and HFC) and/or HLS for more than 25 years. From 2008 until his retirement, Mr. Townsend served as Senior Vice President of UNEV Pipeline, LLC, a joint venture between Sinclair Oil Corporation and a subsidiary of HEP. Mr. Townsend served as Vice President, Operations for HLS from 2004 to 2007 and was responsible for all pipeline and terminal operations for Holly Corporation prior to the formation of HEP. Prior to such time, Mr. Townsend served in positions of increasing seniority at Holly Corporation.

Qualifications:	Mr. Townsend brings to the Board his knowledge of the operations of HFC, HLS and their subsidiaries, his 25 years of experience in the industry, and his business expertise.

•	an Audit Committee;

•	a Compensation Committee;

•	a Conflicts Committee; and

•	an Executive Committee.

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(1)	Mr. Darling serves as the chairman of the subcommittee of the Compensation Committee.

•	selecting, compensating, retaining and overseeing our independent registered public accounting firm and conducting an annual review of the independence and performance of that firm;

•	reviewing the scope and the planning of the annual audit performed by the independent registered public accounting firm;

•	overseeing matters related to the internal audit function;

•	reviewing the audit report issued by the independent registered public accounting firm;

•	reviewing HEP’s annual and quarterly financial statements with management and the independent registered public accounting firm;

•	discussing with management HEP’s significant financial risk exposures and the actions management has taken to monitor and control such exposures;

•	reviewing and, if appropriate, approving transactions involving conflicts of interest, including related party transactions, when required by HEP’s Code of Business Conduct and Ethics;

•	reviewing and discussing HEP’s internal controls over financial reporting with management and the independent registered public accounting firm;

•	establishing procedures for the receipt, retention and treatment of complaints received by HEP regarding accounting, internal accounting controls or accounting matters, potential violations of applicable laws, rules and regulations or of our codes, policies and procedures;

•	reviewing the type and extent of any non-audit work to be performed by the independent registered public accounting firm and its compatibility with their continued objectivity and independence, and to the extent consistent, pre-approving all non-audit services to be performed;

•	reviewing and approving the Audit Committee Report to be included in the Annual Report of Form 10-K; and

•	reviewing the adequacy of the Audit Committee charter on an annual basis.

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•	reviewing and approving the goals and objectives of HLS and HEP relevant to the compensation of the officers of HLS for whom the Compensation Committee determines compensation;

•	determining compensation for the officers of HLS for whom the Compensation Committee determines compensation;

•	reviewing director compensation and making recommendations to the Board regarding the same;

•	overseeing the preparation of the Compensation Discussion and Analysis to be included in the Annual Report and preparing the Compensation Committee Report to be included in the Annual Report;

•	administering and making recommendations to the Board with respect to HEP’s equity plan and HLS’s annual incentive plan; and

•	reviewing the adequacy of the Compensation Committee charter on an annual basis

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•

reviewed and discussed Holly Energy Partners, L.P.’s quarterly unaudited consolidated financial statements and its audited annual consolidated financial statements for the year ended December 31, 2015 with management and Ernst & Young LLP, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements, including those in management’s discussion and analysis thereof;

•	discussed with Ernst & Young LLP the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board;

•	discussed with Ernst & Young LLP matters relating to its independence and received the written disclosures and letter from Ernst & Young required by applicable requirements of PCAOB regarding the independent accountant’s communications with the Audit Committee concerning the firm’s independence;

•

discussed with Holly Energy Partners, L.P.’s internal auditors and Ernst & Young LLP the overall scope and plans for their respective audits and met with the internal auditors and Ernst & Young LLP, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls and the overall quality of Holly Energy Partners, L.P.’s financial reporting) and

•	considered whether Ernst & Young LLP’s provision of non-audit services to Holly Energy Partners, L.P. is compatible with the auditor’s independence

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(1)

Mr. Jennings is not included in this table because he received no additional compensation for his service on the Board since, during 2015, Mr. Jennings was also an executive officer of HFC and HLS. The compensation paid by HFC to Mr. Jennings in 2015 will be shown in HFC’s 2016 Proxy Statement. A portion of the compensation paid to Mr. Jennings by HFC is allocated to the services he performs for us in his capacity as an executive officer of HLS and is disclosed in the “Summary Compensation Table” below. Mr. Damiris is not included in this table because he did not serve on the Board during 2015, and he is an executive officer of HFC.

(2)

Reflects the aggregate grant date fair value of restricted units granted to non-employee directors on October 29, 2015, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”), determined without regard to forfeitures. See Note 6 to our consolidated financial statements for the fiscal year ended December 31, 2015, for a discussion of the assumptions used in determining the FASB ASC Topic 718 grant date fair value of these awards.

(3)	Represents fees for consulting services provided by Mr. Gray to HFC during 2015. None of the consulting fees were paid by us.

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Item 11.	Executive Compensation

(1)	Effective October 29, 2015, (a) Mr. Jennings was appointed as President of HLS, (b) Mr. Voliva was appointed as Vice President and Chief Financial Officer of HLS, (c) Mr. Aron resigned as Chief Financial Officer of HLS, and (d) Mr. Shaw resigned as President of HLS and ceased to be an executive officer of HLS. Mr. Shaw's separation of employment was effective November 2, 2015.

(2)	Effective February 15, 2016, Mr. Jennings resigned as President of HLS, and Mr. Plake was appointed to that position.

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(1)	Assumes Mr. Jennings spent 15% of his professional time on our business and affairs until his appointment as President of HLS on October 29, 2015 and 20% of his professional time on our business and affairs thereafter.

(2)	Assumes Mr. Aron spent 20% of his professional time on our business and affairs until his resignation from the position of Chief Financial Officer of HLS on October 29, 2015 and 5% of his professional time on our business and affairs thereafter.

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•	base salary;

•	annual incentive cash bonus compensation;

•	long-term equity incentive compensation;

•	severance and change in control benefits;

•	health and retirement benefits; and

•	perquisites.

•

Actual Distributable Cash Flow vs. Budget: Half of the award is equal to a pre-established percentage of the employee’s base salary and is earned based upon our actual distributable cash flow during the performance period compared to the budgeted distributable cash flow for the performance period, adjusted for differences in estimated and actual PPI adjustments and differences in the timing of known acquisitions.

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(1)	The percentages are interpolated between percentage points and rounded to the nearest hundredth percent.

•

Individual Performance: The other half of the award is equal to a pre-established percentage of the employee’s base salary and is earned based on the employee’s individual performance during the performance period, as determined in the discretion of the employee’s immediate supervisor. The employee’s individual performance is evaluated through a performance review by the employee’s immediate supervisor, which includes a written assessment. The assessment reviews several criteria, including how well the employee performed his or her pre-established individual goals during the performance period and the employee’s interpersonal effectiveness, integrity, and business conduct.

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(1)	In connection with Mr. Shaw’s separation of employment, Mr. Shaw vested in 3,228 restricted units granted to him in October 2014 and forfeited the remaining 6,456 restricted units granted to him in October 2014.

(1)	In connection with Mr. Shaw’s separation of employment, Mr. Shaw forfeited the 9,684 performance units granted to him in October 2014.

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(1)	The percentages above are interpolated between points up to a maximum of 150% but no less than 50%. The result is rounded to the nearest whole percentage, but not to a number in excess of 150%.

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•	a lump sum cash payment of $574,124; and

•	accelerated vesting of 9,036 restricted units and 9,020 performance units (which is the target number of performance units awarded multiplied by a performance percentage of 134% (the then-current probable payout percentage for the March 2013 performance units)).

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(1)	As a result of changes to our grant timing practices adopted by the Compensation Committee during the fourth quarter of 2013, Messrs. Shaw and Cunningham received two grants of long-term equity incentive awards during 2013-(a) one for the

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(2)	Effective October 29, 2015, (a) Mr. Jennings was appointed as President of HLS, (b) Mr. Voliva was appointed as Vice President and Chief Financial Officer of HLS, (c) Mr. Aron resigned as Chief Financial Officer of HLS, and (d) Mr. Shaw resigned as President of HLS and ceased to be an executive officer of HLS. Mr. Shaw's separation of employment was effective on November 2, 2015.

(3)	Represents the discretionary bonus amount, if any, paid pursuant to the individual performance metric under our Annual Incentive Plan and any other bonus paid outside our Annual Incentive Plan. Other payments made under our Annual Incentive Plan are included in the “Non-Equity Incentive Plan Compensation” column.

(4)

Represents the aggregate grant date fair value of awards of restricted units and performance units made in the year indicated computed in accordance with FASB ASC Topic 718, determined without regard to forfeitures, and does not reflect the actual value that may be recognized by the executive. See Note 6 to our consolidated financial statements for the fiscal year ended December 31, 2015 for a discussion of the assumptions used in determining the FASB ASC Topic 718 grant date fair value of these awards.

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(7)	For 2015, includes the compensation as described under “All Other Compensation” below.

(9)

Reflects the total amount of compensation received by Mr. Voliva during 2015, both prior to and following October 29, 2015, the date he was promoted to Vice President and Chief Financial Officer and became an executive officer of HLS, including grants of long-term equity incentive awards for 2016 made in October 2015. Prior to his promotion, the Compensation Committee did not make any 2015 compensation decisions for Mr. Voliva (other than the authorization of a grant of restricted units under the Long-Term Incentive Plan for 2015, which was made in 2014 prior to his promotion to executive officer). In connection with his promotion to executive officer, the Compensation Committee approved an increase in Mr. Voliva’s annual base salary rate to $255,000, effective October 29, 2015.

(10)	Represents the salary paid to Mr. Shaw for his services prior to his separation of employment on November 2, 2015.

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(1)

Reflects (a) the $574,124 lump sum cash payment paid to him in connection with his separation of employment pursuant to the Separation Agreement and Release of Claims, and (b) $8,333 in consulting fees paid to him by HFC pursuant to his consulting agreement (none of the consulting fees were paid by us). Mr. Shaw also received accelerated vesting of 9,036 restricted units and 9,020 performance units (which is the target number of performance units awarded multiplied by a performance percentage of 134% (the then-current probable payout percentage for the March 2013 performance units)) in connection with his separation. See “Compensation Discussion and Analysis-Overview of 2015 Executive Compensation Components and Decisions-Resignation of Mr. Shaw” and “Executive Compensation Tables-Option Exercises and Units Vested” for additional information.

(1)

Represents the potential payouts for the awards under our Annual Incentive Plan, which were subject to the achievement of certain performance metrics. The performance metrics and awards are described under “Compensation Discussion and Analysis - Overview of 2015 Executive Compensation Components and Decisions - Annual Incentive Cash Bonus Compensation.” Amounts reported do not include amounts potentially payable pursuant to the discretionary individual performance portion of the award. The amount actually paid with respect to the individual performance portion of the award is reported in the “Bonus” column of the Summary Compensation Table for 2015, and the amount actually paid with respect to the portion of the award reported in this table is reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for 2015. Mr. Voliva did not receive any non-equity incentive plan compensation for 2015 under the Annual Incentive Plan or otherwise.

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(2)

Represents the potential number of performance units payable under the Long-Term Incentive Plan. The number of units paid at the end of the performance period may vary from the target amount, based on our achievement of specified performance measures. The terms of the performance unit awards granted in October 2015 for the 2016 year are described above under “Compensation Discussion and Analysis - 2016 Compensation Decisions - Long-Term Equity Incentive Compensation - Performance Unit Awards.”

(3)	Represents awards of restricted units. The terms of the restricted unit awards granted in October 2015 for the 2016 year are described above under “Compensation Discussion and Analysis - 2016 Compensation Decisions - Long-Term Equity Incentive Compensation - Restricted Unit Awards.”

(4)	Represents the grant date fair value determined pursuant to FASB ASC Topic 718, based on a closing price of our common units of $34.21 on October 28, 2015. The value of performance units granted on October 28, 2015 reflects a probable payout percentage of 100%.

(1)	Includes the following restricted unit awards granted by us:

•	in November 2013 to Mr. Cunningham (6,786), of which one third vested on December 15, 2014, one third vested on December 15, 2015 and the remaining one third vests on December 15, 2016;

•	in April 2014 to Mr. Voliva (3,081), of which one third vested on December 15, 2014, one third vested on December 15, 2015 and the remaining one third vests on December 15, 2016;

•	in October 2014 to Mr. Voliva (2,979) and Mr. Cunningham (6,705), of which one third vested on December 15, 2015, one third vests on December 15, 2016 and the remaining one third vests on December 15, 2017; and

•	in October 2015 to Mr. Voliva (4,020) and Mr. Cunningham (4,752), of which one third vests on December 15, 2016, one third vests on December 15, 2017 and the remaining one third vests on December 15, 2018.

(2)	Includes the following performance unit awards granted by us (the amounts included in the parentheticals reflect the target number of performance units subject to each award):

•	in November 2013 to Mr. Cunningham (2,262), with a performance period that ends on December 31, 2016;

•	in October 2014 to Mr. Cunningham (2,235), with a performance period that ends on December 31, 2017; and

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•	in October 2015 to Mr. Voliva (4,020) and Mr. Cunningham (4,752), in each case, with a performance period that ends on December 31, 2018.

(3)

In connection with Mr. Shaw’s resignation, Mr. Shaw entered into a Separation Agreement with HLS and HFC, whereby Mr. Shaw agreed to release HLS, HFC and their parents, subsidiaries and affiliates from all claims and, in turn, received, among other things, accelerated vesting of 9,036 restricted units and 9,020 performance units (which is the target number of performance units awarded multiplied by a performance percentage of 134% (the then-current probable payout percentage for the March 2013 performance units)). Mr. Shaw forfeited all other restricted units and performance units he held at the time of his separation of employment on November 2, 2015. As a result, Mr. Shaw did not hold any restricted units or performance units as of December 31, 2015.

(1)

Includes 2,474 units that became payable to Mr. Cunningham on February 3, 2016 upon the determination by the subcommittee of the Compensation Committee that the performance percentage applicable to the target number of 1,683 performance units granted to Mr. Cunningham in March 2013 with a performance period that ended on December 31, 2015 was 147%, which performance units are treated, in accordance with SEC rules, as vesting during 2015. The value realized with respect to such award is calculated based on the closing price of our common units on the date of payment.

(2)	Pursuant to the terms of Mr. Shaw’s Separation Agreement and Release of Claims, includes the vesting of the following restricted units held by Mr. Shaw:

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(1)	Mr. Shaw’s separation of employment was effective on November 2, 2015. He is expected to receive his accumulated benefit as a lump sum payment in May 2016.

Discount Rate	Lump Sum Interest Rate using a look back period of two months and a stability period of one year. Interest rates shown are the rates for November 2015:

Mortality Table	2016 Unisex Mortality Table

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(1)	The amounts reported were deferred at the election of the Named Executive Officer and are also included in the amounts reported in the “Salary,” “Bonus” and/or “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table for 2015.

(2)	These amounts are also included in the “All Other Compensation” column of the Summary Compensation Table for 2015.

(3)

The aggregate balance for each Named Executive Officer reflects the cumulative value, as of December 31, 2015, of the employee and employer-provided contributions to the NQDC Plan for the Named Executive Officer’s account, and any earnings on these amounts, since the Named Executive Officer began participating in the NQDC Plan in 2012. We previously reported executive and company contributions for Messrs. Cunningham and Shaw in the Summary Compensation Table in the following aggregate amounts: (a) Mr. Shaw - $90,762 (for 2013) and $87,181 (for 2014), and (b) Mr. Cunningham -$113,145 (for 2013) and $118,881 (for 2014).

(4)	Mr. Shaw’s separation of employment was effective on November 2, 2015. He is expected to receive his accumulated benefit as a lump sum payment in May 2016.

•	an amount equal to his accrued and unpaid salary, unreimbursed expenses and accrued vacation pay, and

•	a lump sum amount equal to a designated multiplier times (i) the executive’s annual base salary as of the date of termination or the date immediately prior to the “Change in Control,” whichever is greater, and (ii) the executive’s annual bonus

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•	a person or group of persons (other than HFC or any of its wholly-owned subsidiaries or HLS, HEP, HEP Logistics or any of their subsidiaries) becomes the beneficial owner of more than 50% of the combined voting power of the then outstanding securities of HFC, HLS, HEP or HEP Logistics or more than 50% of the outstanding common stock or membership interests, as applicable or HFC or HLS;

•	a majority of HFC’s Board of Directors is replaced during a 12-month period by directors who were not endorsed by a majority of the previous board members;

•

the consummation of a merger, consolidation or recapitalization of HFC, HLS, HEP or HEP Logistics resulting in the holders of voting securities of HFC, HLS, HEP or HEP Logistics, as applicable, prior to the merger or consolidation owning less than 50% of the combined voting power of the voting securities of HFC, HLS, HEP or HEP Logistics, as applicable, or a recapitalization of HFC, HLS, HEP or HEP Logistics in which a person or group becomes the beneficial owner of securities of HFC, HLS, HEP or HEP Logistics, as applicable, representing more than 50% of the combined voting power of the then outstanding securities of HFC, HLS, HEP or HEP Logistics, as applicable;

•	the holders of voting securities of HFC or HEP approve a plan of complete liquidation or dissolution of HFC or HEP, as applicable; or

•	the holders of voting securities of HFC or HEP approve the sale or disposition of all or substantially all of the assets of HFC or HEP, as applicable, other than to an entity holding at least 60% of the combined voting power of the voting securities immediately prior to such sale or disposition.

•	the engagement in any act of willful gross negligence or willful misconduct on a matter that is not inconsequential; or

•	conviction of a felony.

•	a material reduction in the executive’s (or his supervisor’s) authority, duties or responsibilities;

•	a material reduction in the executive’s base compensation; or

•	the relocation of the executive to an office or location more than 50 miles from the location at which the executive normally performed the executive’s services, except for travel reasonably required in the performance of the executive’s responsibilities.

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•	the executive’s employment is terminated, other than for “Cause,” or

•	the executive resigns within 90 days following an “Adverse Change.”

•	Restricted Units: The executive will vest with respect to a pro rata number of units attributable to the period of service completed during the applicable vesting period and will forfeit any unvested units.

•

Performance Units: The executive will remain eligible to vest with respect to a pro rata number of units attributable to the period of service completed during the applicable performance period (rounded up to include the month of termination) and will forfeit any unvested units. The Compensation Committee will determine the number of remaining performance units earned and the amount to be paid to the executive as soon as administratively possible after the end of the performance period based upon the performance actually attained for the entire performance period (provided that executives will earn and receive payment with respect to no less than 50% of the performance units awarded). The foregoing also applies if the executive separates from employment for any other reason other than a voluntary separation, Special Involuntary Separation or for “Cause.”

•	a person or group of persons (other than HFC or any of its wholly-owned subsidiaries or HLS, HEP, HEP Logistics or any of their subsidiaries) becomes the beneficial owner of more than 40% of the combined voting power of the then outstanding securities of HFC, HLS, HEP or HEP Logistics;

•	the individuals who as of the date of grant constituted a majority of HFC’s Board of Directors cease for any reason to constitute a majority of HFC’s Board of Directors;

•

the consummation of a merger, consolidation or recapitalization of HFC, HLS, HEP or HEP Logistics resulting in the holders of voting securities of HFC, HLS, HEP or HEP Logistics, as applicable, prior to the merger or consolidation owning less than 60% of the combined voting power of the voting securities of HFC, HLS, HEP or HEP Logistics, as applicable, or a recapitalization of HFC, HLS, HEP, or HEP Logistics in which a person or group becomes the beneficial owner of securities of HFC, HLS, HEP or HEP Logistics, as applicable, representing more than 40% of the combined voting power of the then outstanding securities of HFC, HLS, HEP or HEP Logistics, as applicable;

•	the holders of voting securities of HFC, HLS, HEP or HEP Logistics approve a plan of complete liquidation or dissolution of HFC, HLS, HEP or HEP Logistics, as applicable; or

•	the holders of voting securities of HFC, HLS, HEP or HEP Logistics approve the sale or disposition of all or substantially all of the assets of HFC, HLS, HEP or HEP Logistics, as applicable, other than to an entity holding at least 60% of the combined voting power of the voting securities immediately prior to such sale or disposition.

•	a change in the city in which the executive is required to work;

•	a substantial increase in travel requirements of employment;

•	a substantial reduction in the duties of the type previously performed by the executive; or

•	a significant reduction in compensation or benefits (other than bonuses and other discretionary items of compensation) that does not apply generally to executives.

•	a change in the executive’s principal office of employment of more than 25 miles from the executive’s work address at the time of grant of the award;

•	a material increase (without adequate consideration) or material reduction in the duties to be performed by the executive; or

•	a material reduction in the executive’s base compensation (other than bonuses and other discretionary items of compensation) that does not apply generally to employees.

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•	an act of dishonesty constituting a felony or serious misdemeanor and resulting (or intended to result in) gain or personal enrichment to the executive at the expense of HLS;

•	gross or willful and wanton negligence in the performance of the executive’s material and substantial duties; or

•	conviction of a felony involving moral turpitude.

•	Accrued vacation for a specific year is not allowed to be carried over to a subsequent year, so we assumed all accrued vacation for the 2015 year was taken prior to December 31, 2015. Because we accrue vacation in any given year for the following year, amounts reported as “Cash Payments” include vacation amounts accrued in 2015 for the 2016 year.

•

For amounts payable to the Named Executive Officers with respect to performance units upon a termination due to death, disability, retirement, or other separation (other than a voluntary separation, a for “Cause” separation or a Special Involuntary Termination), we assumed the performance units would be settled at the maximum level based on performance through December 31, 2015. The number of units paid at the end of the performance period may vary from the amounts reflected in the following tables, based on our actual achievement compared to the performance targets. Due to the change in vesting dates of outstanding restricted unit awards to December 15 of a given year, no amounts are reported for accelerated vesting of restricted unit awards upon termination due to death, disability or retirement because units attributable to fiscal year 2015 vested on December 15, 2015.

•

The amount shown for “Value of Welfare Benefits” represents amounts equal to the monthly premium payable pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for medical and dental premiums, multiplied by 12 months for Mr. Cunningham. Mr. Voliva did not participate in our medical and dental programs during 2015, so no amounts are reported for him in the “Value of Welfare Benefits” column.

•

In calculating whether any tax reimbursements were owed to the Named Executive Officers, we used the following assumptions: (a)  no amounts will be discounted as attributable to reasonable compensation, (b) all cash severance payments are contingent upon a change in control, and (c) the presumption required under applicable regulations that the equity awards granted in 2015 were contingent upon a change in control could be rebutted. Based on these assumptions, none of the Named Executive Officers would receive any tax reimbursement or “gross-up” payments with respect to any amounts reported in the table below.

•	No amounts potentially payable pursuant to the NQDC Plan are included in the table below since neither the form nor amount of any such benefits would be enhanced nor vesting or other provisions accelerated in connection with any of the triggering events disclosed below. Please refer to the section titled “Nonqualified Deferred Compensation” for additional information regarding these benefits.

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(1)	No amounts are reported for Mr. Shaw since his separation of employment and resignation as President of HLS occurred prior to December 31, 2015.

•	a lump sum cash payment of $574,124; and

•

accelerated vesting of 9,036 restricted units and 9,020 performance units (which is the target number of performance units awarded multiplied by a performance percentage of 134% (the then-current probable payout percentage for the March 2013 performance units)). The aggregate value realized on vesting of these awards is $614,626, which is calculated based on the closing price of our common units on November 9, 2015 (the date the Separation Agreement and Release of Claims became irrevocable), which was $34.04 per unit.

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•	each person known to us to be a beneficial owner of 5% or more of the common units;

•	directors of HLS, the general partner of our general partner;

•	each Named Executive Officer of HLS; and

•	all directors and executive officers of HLS as a group.

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(1)

HollyFrontier Corporation directly holds 5,006 common units over which it has sole voting and dispositive power and 22,375,024 common units over which it has shared voting and dispositive power. HollyFrontier Corporation is the record holder of 140,000 common units as nominee for Navajo Pipeline Co., L.P. The 22,375,024 common units over which HollyFrontier Corporation has shared voting and dispositive power are held as follows: Holly Logistics Limited LLC directly holds 21,615,230 common units; HollyFrontier Holdings LLC directly holds 184,800 common units; Navajo Pipeline Co., L.P. directly holds 254,880 common units; and other wholly-owned subsidiaries of HollyFrontier Corporation directly own 180,114 common units. HollyFrontier Corporation is the ultimate parent company of each such entity and may therefore be deemed to beneficially own the units held by each such entity. HollyFrontier Corporation files information with or furnishes information to, the Securities and Exchange Commission pursuant to the information requirements of the Exchange Act. This percentage, which represents HollyFrontier Corporation's percentage ownership of HEP as a whole, not limited to its ownership of outstanding common units, includes a 2% general partner interest held by HEP Logistics Holdings, L.P. which is HEP’s general partner and an indirect wholly-owned subsidiary of HollyFrontier Corporation. The address of HollyFrontier Corporation is 2828 N. Harwood, Suite 1300, Dallas, Texas 75201-1507.

(2)	Oppenheimer Funds, Inc. filed with the SEC a Schedule 13G/A, dated February 4, 2016. Based on this Schedule 13G/A, Oppenheimer Funds, Inc. has shared voting power and shared dispositive power with respect to 6,659,581 units. The address of Oppenheimer Funds, Inc. is Two World Financial Center, 225 Liberty Street, New York, NY 10281.

(3)

Based on the Schedule 13G/A filed with the Securities and Exchange Commission on February 16, 2016 by Energy Income Partners, LLC, James J. Murchie, Eva Pao, Linda A. Longville and Saul Ballesteros. James J. Murchie and Eva Pao are the Portfolio Managers with respect to the portfolios managed by Energy Income Partners, LLC. Linda A. Longville and Saul Ballesteros are control persons of Energy Income Partners, LLC. Each of the foregoing report shared voting and dispositive power over 4,369,601 common units. The address of each of the foregoing is 49 Riverside Avenue, Westport, Connecticut 06880.

(4)	The number reported includes 2,353 restricted units for which the non-employee director has sole voting power but no dispositive power.

(5)	Messrs. Jennings, Aron, Damiris, Clifton, Townsend, Voliva, Darling, Gray and Plake and Ms. McWatters each own common stock of HFC. Each of these individuals own common stock of HFC as set forth in the following table:

(a)	The number reported includes shares of HFC restricted stock for which the individual has sole voting power but no dispositive power, as follows: Mr. Jennings (87,562 shares), Mr. Aron (35,287 shares), Mr. Damiris (75,417), Ms. McWatters (14,658 shares) and Mr. Plake (4,366 shares). The number does not include unvested performance share units.

(b)	The number reported represents shares of HFC common stock owned by a trust whose beneficiaries are Mr. Townsend’s children and grandchildren and for which Mr. Townsend and his spouse serve as trustees.

(c)	The number reported includes 3,891 shares of HFC restricted stock held by Mr. Voliva's wife for which Mr. Voliva disclaims beneficial ownership except to the extent of his pecuniary interest therein.

(d)	Mr. Darling is an owner and general manager of DQ Holdings, L.L.C. The number reported represents shares of HFC common stock owned by DQ Holdings, L.L.C. for which Mr. Darling has shared voting and dispositive power. Mr. Darling disclaims beneficial ownership as to the shares of HFC common stock held by DQ Holdings, L.L.C. except to the extent of his pecuniary interest therein.

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(6)	Mr. Darling is an owner and general manager of DQ Holdings, L.L.C. The number reported includes 22,400 common units owned by DQ Holdings, L.L.C. for which Mr. Darling has shared voting and dispositive power. Mr. Darling disclaims beneficial ownership as to the common units held by DQ Holdings, L.L.C. except to the extent of his pecuniary interest therein.

(7)	Reflects the number of units beneficially owned as of January 13, 2016 as reported by Mr. Shaw in his Director and Officer Questionnaire.

(8)	The number reported includes restricted units for which the executive has sole voting power but no dispositive power, as follows: Mr. Plake (10,725 units), Mr. Voliva (7,033 units) and Mr. Cunningham (11,484 units). The number does not include performance units held by the executive.

(9)	The number reported includes 1,000 common units owned by Mr. Stengel’s spouse for which Mr. Stengel shares voting and disposition power. Mr. Stengel disclaims beneficial ownership as to the common units owned by his spouse.

(10)	Includes 420 common units held by Mr. Aron as custodian for his son in an account under the Uniform Transfer to Minors Act and 420 common units held by Mr. Aron as custodian for his daughter in an account under the Uniform Transfer to Minors Act. Mr. Aron disclaims beneficial ownership of these common units.

(11)

The number reported includes 29,242 restricted units held by executive officers for which they have sole voting power but no dispositive power and 16,471 restricted units held by non-employee directors for which they have sole voting power but no dispositive power. The number reported also includes 22,400 common units as to which Mr. Darling disclaims beneficial ownership, except to the extent of his pecuniary interest therein, 1,000 common units for which Mr. Stengel disclaims beneficial ownership, and 840 common units for which Mr. Aron disclaims beneficial ownership.

(1)	All stock-based compensation plans are described in Note 6 to our consolidated financial statements for the fiscal year ended December 31, 2015.

(2)

On April 25, 2012, at a Special Meeting of the Unitholders of the Partnership, the unitholders approved the Amended and Restated Long-Term Incentive Plan, which, among other things, provided for an increase in the maximum number of common units reserved for delivery with respect to awards under the Long-Term Incentive Plan to 2,500,000 common units (as adjusted to reflect the two-for-one common unit split that occurred on January 16, 2013). All securities reported as available for future issuances are available from the additional common units approved by unitholders under the Amended and Restated Long-Term Incentive Plan. At the time the Long-Term Incentive Plan was originally adopted in 2004, it was not required to be approved by the Partnership’s unitholders.

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(3)

Represents units subject to performance units granted to (a) Mr. Voliva in October 2015, (b) Mr. Cunningham in November 2013, October 2014 and October 2015, and (c) Mr. Kenneth Norwood, our Vice President and Controller, in October 2014 and October 2015, in each case, assuming a maximum payout level of 150% at the time of vesting. If the performance units granted to Messrs. Voliva, Cunningham and Norwood in 2013, 2014 and 2015, as applicable, are paid at target, 19,337 units would be issued upon the vesting of such performance units. Performance units granted in March 2013 with a performance period that ended on December 31, 2015 were not settled until certification by the subcommittee of the Compensation Committee in February 2016 that a performance percentage of 147% was attained for performance units granted to Mr. Cunningham and 167% was attained for the performance units granted to Mr. Clifton; however, such awards are not included in this column as outstanding since they are treated for purposes of the preceding executive compensation tables as vesting during 2015 in accordance with SEC rules.

Item 13.	Certain Relationships and Related Transactions, and Director Independence

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•	our obligation to pay HFC an annual administrative fee, in the amount of $2.4 million in 2015 and $2.5 currently, for the provision by HFC of certain general and administrative services;

•	HFC’s and its affiliates’ agreement not to compete with us under certain circumstances and our right to notice of, and right of first offer to purchase, certain logistics assets constructed by HFC and acquired as part of an acquisition by HFC of refining assets;

•	an indemnity by HFC for certain potential environmental liabilities;

•	our obligation to indemnify HFC for environmental liabilities related to our assets existing on the date of our initial public offering to the extent HFC is not required to indemnify us; and

•	HFC’s right of first refusal to purchase our assets that serve HFC’s refineries.

•	any business operated by HFC or any of its affiliates at the time of the closing of our initial public offering;

•	any business conducted by HFC with the approval of our general partner;

•	any business or asset that HFC or any of its affiliates acquires or constructs that has a fair market value or construction cost of less than $5 million; and

•	any business or asset that HFC or any of its affiliates acquires or constructs that has a fair market value or construction cost of $5 million or more if we have been offered the opportunity to purchase the business or asset at fair market value, and we decline to do so.

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•	On November 1, 2015, we acquired from a wholly owned subsidiary of HFC, all the outstanding membership interests in El Dorado Operating LLC ("El Dorado Operating"), which owns the newly constructed naphtha fractionation and hydrogen generation units at HFC’s El Dorado refinery for cash consideration of $62.0 million

•	See “Acquisitions” under Item 1, “Business” of this Annual Report on Form 10-K for additional information on this acquisition from HFC.

•	Revenues received from HFC were $292.2 million, $275.2 million and $252.4 million for the years ended December 31, 2015, 2014 and 2013, respectively.

•	HFC charged us for general and administrative services under the Omnibus Agreement of $2.4 million for the year ended December 31, 2015, and $2.3 million for the years ended December 31, 2014 and 2013, respectively.

•	We reimbursed HFC for costs of employees supporting our operations of $34.5 million, $38.9 million and $34.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.

•	HFC reimbursed us $13.5 million, $16.8 million and $21.6 million for certain reimbursable costs and capital projects for the years ended December 31, 2015, 2014 and 2013, respectively.

•	We distributed $90.4 million, $80.5 million and $71.4 million for the years ended December 31, 2015, 2014 and 2013, respectively, to HFC as regular distributions on its common units, subordinated units and general partner interest, including general partner incentive distributions.

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Item 14.	Principal Accounting Fees and Services

(1)	Represents fees for professional services provided in connection with the audit of our annual financial statements and internal controls over financial reporting, review of our quarterly financial statements, and procedures performed as part of our securities filings.

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Item 15.	Exhibits and Financial Statement Schedules

(a)	Documents filed as part of this report

(1)	Index to Consolidated Financial Statements

(2)	Index to Consolidated Financial Statement Schedules

(3)	Exhibits

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