Option to Increase Minimum Capacity Commitment Following the Initial Period. At the end of the Initial Period and once-a-year thereafter during the Term, HFRM shall have the option to increase (but not decrease) the Minimum Capacity Commitment applicable to the remainder of the Term, which option may be exercised as follows: (A) HFRM may initiate the process by which it will exercise its option by delivering to HEP Operating a written request for a statement of HEP Operating’s good faith estimate of the total uncommitted pipeline capacity for the Pipeline System that will be available for the remaining Term (a “Capacity Estimate”), which request must be made, (i) in the case of the election available at the end of the Initial Term, no later than the one hundred twentieth (120th) day before the end of the Initial Period, and (ii) in the case of the election available at the end of each twelve (12) month period following the end of the Initial Term (each a “Subsequent Year”), the one-hundred twentieth (120) day before the end of such Subsequent Year. (B) HEP Operating must respond to each request with a written Capacity Estimate within ten (10) days of HEP’s receipt of such request. (C) To exercise its option, HFRM must provide HEP Operating a written notice of exercise (an “Exercise Notice”) no later than ninety (90) days prior to the end of the Initial Period or Subsequent Year (as applicable), which Exercise Notice must contain the amount (stated in bpd) by which HFRM desires to increase the Minimum Capacity Commitment for the next occurring Subsequent Year and the remainder of the Term. The amount of increase for which HFRM may exercise this option may not exceed the available uncommitted pipeline capacity for the Pipeline System as stated in the Capacity Estimate. If no written Exercise Notice is received by such ninetieth (90th) day, then HFRM will be deemed to have waived its option, though such waiver shall not preclude HFRM from exercising its option in Subsequent Years according the process set forth in this Section 3(a)(iv). (D) If HFRM timely exercises its option at the end of the Initial Period or a Subsequent Year in accordance with this Section 3(a)(iv), then, with respect to the next Subsequent Year and the remainder of the Term thereafter: (1) the Minimum Capacity Commitment shall be increased by the amount specified in the Exercise Notice; and (2) the Minimum Pipeline Throughput shall be increased by an amount equal to the increase in the Minimum Capacity Commitment. For Example, if HFRM exercises its option at the end of the Initial Period to increase the Minimum Capacity Commitment from 40,000 bpd to 50,000 bpd (a 25% increase), then the Minimum Pipeline Throughput shall be increased to equal 50,000 bpd (a 25% increase). This will have the effect of increasing the Minimum Pipeline Revenue Commitment by the operation of Section 3(a)(i).
Appears in 1 contract
Sources: Transportation Services Agreement (HollyFrontier Corp)
Option to Increase Minimum Capacity Commitment Following the Initial Period. At the end of the Initial Period and once-a-year thereafter during the Term, HFRM shall have the option to increase (but not decrease) the Minimum Capacity Commitment applicable to the remainder of the Term, which option may be exercised as follows:
(A) HFRM may initiate the process by which it will exercise its option by delivering to HEP Operating a written request for a statement of HEP Operating’s good faith estimate of the total uncommitted pipeline capacity for the Pipeline System that will be available for the remaining Term (a “Capacity Estimate”), which request must be made, (i) in the case of the election available at the end of the Initial Term, no later than the one hundred twentieth (120th) day before the end of the Initial Period, and (ii) in the case of the election available at the end of each twelve (12) month period following the end of the Initial Term (each a “Subsequent Year”), the one-hundred twentieth (120) day before the end of such Subsequent Year.
(B) HEP Operating must respond to each request with a written Capacity Estimate within ten (10) days of HEP’s receipt of such request.
(C) To exercise its option, HFRM must provide HEP Operating a written notice of exercise (an “Exercise Notice”) no later than ninety (90) days prior to the end of the Initial Period or Subsequent Year (as applicable), which Exercise Notice must contain the amount (stated in bpd) by which HFRM desires to increase the Minimum Capacity Commitment for the next occurring Subsequent Year and the remainder of the Term. The amount of increase for which HFRM may exercise this option may not exceed the available uncommitted pipeline capacity for the Pipeline System as stated in the Capacity Estimate. If no written Exercise Notice is received by such ninetieth (90th) day, then HFRM will be deemed to have waived its option, though such waiver shall not preclude HFRM from exercising its option in Subsequent Years according the process set forth in this Section 3(a)(iv).
(D) If HFRM timely exercises its option at the end of the Initial Period or a Subsequent Year in accordance with this Section 3(a)(iv), then, with respect to the next Subsequent Year and the remainder of the Term thereafter:
(1) the Minimum Capacity Commitment shall be increased by the amount specified in the Exercise Notice; and
(2) the Minimum Pipeline Throughput shall be increased by an amount equal to the increase in the Minimum Capacity Commitment. For Example, if HFRM exercises its option at the end of the Initial Period to increase the Minimum Capacity Commitment from 40,000 bpd to 50,000 bpd (a 25% increase), then the Minimum Pipeline Throughput shall be increased to equal 50,000 bpd (a 25% increase). This will have the effect of increasing the Minimum Pipeline Revenue Commitment by the operation of Section 3(a)(i).this
Appears in 1 contract
Sources: Transportation Services Agreement (HollyFrontier Corp)