UNITED STATES SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 6, 2005
HOLLY ENERGY PARTNERS, L.P.
| Delaware | 001-32225 | 20-0833098 | ||
|
(State or other
jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer
Identification Number) |
|
100 Crescent Court,
Suite 1600 Dallas, Texas (Address of principal executive offices) |
75201-6927
(Zip code) |
Registrant’s telephone number, including area code: (214) 871-3555
Not applicable
(Former name or former address, if changed since last report)
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o 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.
Purchase and Sale Agreement
On July 6, 2005, Holly Energy Partners, L.P. (the “
Partnership
”) entered into a definitive
purchase agreement (the “
Purchase Agreement
”) with Holly Corporation (“
Holly
,” and, together the
Partnership, the “
Parties
”) to acquire Holly’s intermediate feedstock pipelines (the “
Intermediate
Pipelines
”) which connect its Lovington, NM and Artesia, NM refining facilities (the
“
Acquisition
”). On July 8, 2005, the Parties closed the Acquisition for $81.5 million, which
consisted of approximately $77.7 million in cash, 70,000 in common units of the Partnership and a
capital account credit to maintain Holly’s existing general partner interest in the Partnership.
The Partnership financed the approximately $77.7 million cash portion of the consideration for the
Intermediate Pipelines with the proceeds raised from (i) the private sale of 1.1 million of its
common units (the “
Private Placement Common Units
”) for $45.1 million to a limited number of
institutional investors (the “
Institutional Investors
”) which closed simultaneously with the
Acquisition (the “
Common Unit Private Placement
”) and (ii) the recently completed offering of an
additional $35.0 million in principal amount of its 6.25% senior notes due 2015. Pursuant to the
terms of the Purchase Agreement, at the closing of the Acquisition the Parties entered into a
15-year pipelines agreement and a mortgage and deed of trust for the benefit of Holly to secure the
Partnership’s performance under the Pipelines Agreement.
The description of the Purchase Agreement herein is qualified by reference to the copy of the
Purchase Agreement, including exhibits, filed as Exhibit 2.1 to this report, which is incorporated
by reference into this report in its entirety.
Pipelines Agreement
On July 8, 2005 in connection with the closing of the Acquisition, the Parties entered into a
15-year pipelines agreement (the “
Pipelines Agreement
”). The Pipelines Agreement may be extended
by the mutual agreement of the Parties, provided that the Party desiring to extend the Pipelines
Agreement provides the other Party with at least 12 months written notice of its request to extend
the Pipelines Agreement. In the event the Pipelines Agreement is terminated without renewal, Holly
will have a limited right of first refusal for one year following such termination to enter into a
new pipelines agreement with the Partnership on commercial terms that substantially match the terms
offered to the Partnership by a third-party. Holly will also have a right of first refusal to
purchase the Intermediate Pipelines should the Partnership decide to sell them in the future.
Under the Pipelines Agreement, Holly agrees to transport on the Intermediate Pipelines 72,000
barrels per day (bpd) of intermediate products that, at the agreed tariff rates, will result in
minimum revenues to the Partnership of approximately $3.0 million per calendar quarter. This
minimum commitment will increase each year at a rate equal to the percentage change in the producer
price index, but will not decrease as a result of a decrease in the producer price index. For all
barrels shipped in excess of 72,000 bpd up to and including 95,000 bpd, the tariff Holly will pay
per barrel will be reduced from the full base tariff of $0.45 per barrel to $0.25 per barrel,
except that for any non-Holly owned barrels shipped on the Intermediate Pipelines the full base
tariff will be due. The full base tariff will be adjusted each year at a rate equal to the
percentage change in the producer price index. Holly’s minimum revenue commitment will apply only
to the Intermediate Pipelines, and Holly will not be able to spread its minimum revenue commitment
among pipeline assets the Partnership already owns or subsequently acquires. If Holly fails to meet
its minimum revenue commitment in any quarter, it will be required to pay the Partnership in cash
the amount of any shortfall by the last day of the month following the end of the quarter. A
shortfall payment would be applied as a credit in the following four quarters after Holly’s minimum
obligations are met.
At Holly’s request, the Partnership will be required to use its commercially reasonable
efforts to transport on the Intermediate Pipelines each month during the term of the Pipelines
Agreement up to 72,000 bpd, subject to the Partnership’s common carrier duty to pro-ration
capacity, where applicable.
If new laws or regulations are enacted that require the Partnership to make substantial and
unanticipated capital expenditures with regard to the Intermediate Pipelines, the Partnership will
have the right to amend the tariff rates to recover its costs of complying with these new laws or
regulations (including a reasonable rate of return). The Parties will be required to negotiate in
good faith to mitigate the economic costs associated with any such new laws and to determine the
amount of the new tariff rate.
Either Party may temporarily suspend its obligations under the Pipelines Agreement during the
occurrence of an event that is outside its control and renders its performance impossible for at
least 30 days. An event with a duration of longer than one year will allow either of the Parties to
terminate the Pipelines Agreement.
Pursuant to the Pipelines Agreement, Holly will not challenge, or cause others to challenge or
assist others in challenging, the Partnership’s tariff rates for the term of the agreement. At the
termination of the Pipelines Agreement, Holly will be free to challenge, or to cause others to
challenge or assist others in challenging, the Partnership’s tariff rates.
During the term of the Pipelines Agreement, the Partnership will not reverse the direction of
the Intermediate Pipelines or connect any other pipelines to the Intermediate Pipelines without
Holly’s consent. Holly has the right to reverse the direction of the Intermediate Pipelines, so
long as it reimburses the Partnership for the additional costs and expenses the Partnership incurs
as a result of changing the direction of the Intermediate Pipelines and pays a flow reversal rate
of $0.45 per barrel for any product shipped in a reversed direction on the Intermediate Pipelines.
Such flow reversal rates will be adjusted each year at a rate equal to the percentage change in the
producer price index.
Holly’s obligations under the Pipelines Agreement will not terminate if Holly and its
affiliates no longer own the Partnership’s general partner. The Pipelines Agreement may be assigned
to a third party with the prior written consent of the non-assigning Party, provided such consent
will not be unreasonably withheld. The Parties may also assign the Pipelines Agreement to an
affiliate or a third party lender or debt holder without the prior written consent of the
non-assigning Party.
The description of the Pipelines Agreement herein is qualified by reference to the copy of the
Pipelines Agreement, filed as Exhibit 10.1 to this report, which is incorporated by reference into
this report in its entirety.
Mortgage and Deed of Trust
On July 8, 2005 in connection with the closing of the Acquisition, the Partnership’s
wholly-owned subsidiary, HEP Pipeline, L.L.C. (“
HEP Pipeline
”), which owns the Intermediate
Pipelines following the Acquisition, entered into a mortgage and deed of trust (the “
Mortgage
”) for
the benefit of Holly. The Mortgage grants Holly a second priority lien on the Intermediate
Pipelines to secure the Partnership’s performance under the Pipelines Agreement. In the event that
HEP Pipeline defaults on its obligations under the Mortgage, Holly has the right to take possession
of and/or operate the Intermediate Pipelines and to appoint a receiver for the Intermediate
Pipelines. Events of default under the Mortgage include (i) the failure of HEP Pipeline to perform
its obligations under the Mortgage, (ii) the Partnership’s failure to perform specified obligations
under the Pipelines Agreement and (iii) certain bankruptcy-related events. The Partnership also
agreed to protect the lien status of the Mortgage and not to further encumber
the Intermediate Pipelines except for certain customary permitted encumbrances, which include
liens in favor of the Partnership’s senior lenders.
The description of the Mortgage herein is qualified by reference to the copy of the Mortgage,
filed as Exhibit 10.2 to this report, which is incorporated by reference into this report in its
entirety.
Amendment to Revolving Credit Agreement
On July 8, 2005 in connection with the closing of the Acquisition, the Partnership’s
wholly-owned subsidiary Holly Energy Partners — Operating, L.P. (“
OLP
”), Union Bank of California,
N.A., as administrative agent, and certain other lending institutions identified therein, entered
into a Consent and Amendment No. 4 (the “
Credit Agreement Amendment
”) to OLP’s revolving credit
agreement. Pursuant to the Credit Agreement Amendment, the lending institutions party to the
revolving credit agreement expressly consented to the Acquisition. Additionally, the Credit
Agreement Amendment amended the revolving credit agreement to, among other things, permit HEP
Pipeline to enter into the Mortgage with Holly, eliminate the tangible net worth covenant and
provide that it is an event of default if the Pipelines Agreement is terminated. Promptly following
the closing of the Acquisition, HEP Pipeline granted the lenders under the revolving credit
agreement a lien on the Intermediate Pipelines to secure OLP’s obligations under the revolving
credit agreement.
The description of the Credit Agreement Amendment herein is qualified by reference to the copy
of the Credit Agreement Amendment, filed as Exhibit 10.3 to this report, which is incorporated by
reference into this report in its entirety.
Amendment to Partnership Agreement
On July 6, 2005, the general partner of the Partnership entered into Amendment No. 2 (the
“
Treasury Unit Amendment
”) to the First Amended and Restated Agreement of Limited Partnership of
the Partnership, as amended (the “
Partnership Agreement
”) which provides for the existence of
treasury units of the Partnership. Pursuant to the Treasury Unit Amendment, the general partner of
the Partnership may, subject to certain restrictions, cause the Partnership to purchase outstanding
equity interests in the Partnership and hold such equity interests as treasury securities unless
they are expressly cancelled by the general partner of the Partnership. As long as such equity
interests are held by the Partnership or a subsidiary of the Partnership, the equity interests will
not be reflected as outstanding on the Partnership’s books and records, except as expressly
provided in the Partnership Agreement.
The description of the Treasury Unit Amendment herein is qualified by reference to the copy of
the Treasury Unit Amendment, filed as Exhibit 3.1 to this report, which is incorporated by
reference into this report in its entirety.
Registration Rights Agreement
On July 8, 2005 simultaneously with the closing of the Acquisition, the Partnership closed the
Common Unit Private Placement. In connection with the Common Unit Private Placement, the
Partnership entered into a registration rights agreement (the “
Registration Rights Agreement
”) with
the Institutional Investors pursuant to which the Partnership agreed to (i) file a shelf
registration statement (the “
Registration Statement
”) for the Private Placement Common Units within
90 days after the closing of the Common Unit Private Placement and (ii) use its commercially
reasonable efforts to cause such Registration Statement to become effective within 180 days after
the closing of the Common Unit Private Placement. If the Partnership fails to comply with certain
obligations under the Registration Rights
Agreement, it will be required to pay liquidated damages in the form of cash payments to the
holders of the Private Placement Common Units.
The description of the Registration Rights Agreement herein is qualified by reference to the
copy of the Registration Rights Agreement, filed as Exhibit 4.1 to this report, which is
incorporated by reference into this report in its entirety.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On July 8, 2005, the Partnership completed the Acquisition of the Intermediate Pipelines from
Holly pursuant to the terms of the Purchase Agreement and the documents related thereto. The
Intermediate Pipelines consist of two 65-mile parallel pipelines which originate in Lovington, New
Mexico and terminate at Holly’s Artesia refining facility and have a current aggregate throughput
capacity of 84,000 bpd. The Acquisition was made pursuant to an option to purchase the Intermediate
Pipelines granted by Holly to the Partnership at the time of the Partnership’s initial public
offering in July 2004. The consideration for the Acquisition was determined pursuant to
negotiations between Holly and the conflicts committee of the Partnership, which is comprised
solely of independent outside directors. For additional description of the Intermediate Pipelines
and the Acquisition, see items 1.01 and 3.02 of this report which are incorporated by reference
into this item.
Item 3.02 Unregistered Sale of Equity Securities.
On July 8, 2005 in connection with the closing of the Acquisition and the Common Unit Private
Placement, the Partnership issued, respectively, (i) the Private Placement Common Units to the
Institutional Investors for $45.1 million in cash and (ii) 70,000 of its common units to Holly as
partial consideration for the Intermediate Pipelines acquired in the Acquisition. The Common Unit
Private Placement and the Partnership’s issuance of its 70,000 common units to Holly were 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.
On July 6, 2005, the general partner of the Partnership entered into the Treasury Unit
Amendment. The material terms of the Treasury Unit Amendment are described above under Item 1.01
and this description is incorporated by reference into this item in its entirety.
Item 7.01 Regulation FD Disclosure.
The following information is furnished pursuant to Item 7.01, “Regulation FD Disclosure.”
Furnished as Exhibit 99.1 and incorporated herein by reference in its entirety is a copy of a
press release issued by the Parties on July 8, 2005, announcing (1) that they have completed the
Acquisition, and (2) that the Partnership has completed the Common Unit Private Placement.
In accordance with General Instruction B.2. of Form 8-K, the information furnished in this
report on Form 8-K pursuant to Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed”
for the purposes of Section 18 of the Securities Exchange Act of 1934 (“
Exchange Act
”), or
otherwise subject to the liabilities of that section, unless the Partnership specifically
incorporates it by reference in a document filed under the Exchange Act or the Securities Act of
1933.
The information furnished in this report on Form 8-K pursuant to Item 7.01, including Exhibit
99.1, is summary information that is intended to be considered in the context of the Partnership’s
Securities and Exchange Commission’s (“
SEC
”) filings and other public announcements that the
Partnership may make, by press release or otherwise, from time to time. The Partnership disclaims
any current intention to revise or update the information furnished in this report on Form 8-K
pursuant to Item 7.01, including Exhibit 99.1, although the Partnership may do so from time to time
as its management believes is warranted. Any such updating may be made through the furnishing or
filing of other reports or documents with the SEC, through press releases or through other public
disclosure.
Item 9.01 Financial Statements and Exhibits.
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 thereunto duly authorized.
Date: July 12, 2005
EXHIBIT INDEX
—
Purchase and Sale Agreement, dated July 6, 2005 by and among Holly
Corporation, Navajo Pipeline Co., L.P., Navajo Refining Company, L.P., Holly Energy
Partners, L.P., Holly Energy Partners — Operating, L.P. and HEP Pipeline, L.L.C.
—
Amendment No 2. to the First Amended and Restated Agreement of Limited
Partnership of Holly Energy Partners, L.P., as amended, dated July 6, 2005.
—
Registration Rights Agreement, dated July 8, 2005, among Holly Energy
Partners, L.P., Fiduciary/Claymore MLP Opportunity Fund, Perry Partners, L.P.,
Structured Finance Americas, LLC, Kayne Anderson MLP Investment Company and Kayne
Anderson Energy Total Return Fund, Inc.
—
Pipelines Agreement, dated July 8, 2005, among Holly Energy Partners, L.P.,
Holly Energy Partners — Operating, L.P., Holly Corporation, HEP Pipeline, L.L.C.,
Navajo Refining Company, L.P., HEP Logistics Holdings, L.P., Holly Logistic Services,
L.L.C. and HEP Logistics GP, L.L.C.
—
Mortgage and Deed of Trust, dated July 8, 2005, by HEP Pipeline, L.L.C. for
the benefit of Holly Corporation.
—
Consent and Amendment No. 4, dated July 8, 2005, among Holly Energy
Partners, L.P., Union Bank of California, N.A., as administrative agent, and certain
other lending institutions identified therein.
—
Joint Press Release of Holly Energy Partners, L.P. and Holly Corporation
issued July 8, 2005.*
*
Furnished pursuant to Regulation FD.
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/ Stephen J. McDonnell
Stephen J. McDonnell
Vice President and Chief
Financial Officer
Exhibit
Number
Exhibit Title
—
Purchase and Sale Agreement, dated July 6, 2005 by and among Holly
Corporation, Navajo Pipeline Co., L.P., Navajo Refining Company, L.P., Holly Energy
Partners, L.P., Holly Energy Partners — Operating, L.P. and HEP Pipeline, L.L.C.
—
Amendment No 2. to the First Amended and Restated Agreement of Limited
Partnership of Holly Energy Partners, L.P., as amended, dated July 6, 2005.
—
Registration Rights Agreement, dated July 8, 2005, among Holly Energy
Partners, L.P., Fiduciary/Claymore MLP Opportunity Fund, Perry Partners, L.P.,
Structured Finance Americas, LLC, Kayne Anderson MLP Investment Company and Kayne
Anderson Energy Total Return Fund, Inc.
—
Pipelines Agreement, dated July 8, 2005, among Holly Energy Partners, L.P.,
Holly Energy Partners — Operating, L.P., Holly Corporation, HEP Pipeline, L.L.C.,
Navajo Refining Company, L.P., HEP Logistics Holdings, L.P., Holly Logistic Services,
L.L.C. and HEP Logistics GP, L.L.C.
—
Mortgage and Deed of Trust, dated July 8, 2005, by HEP Pipeline, L.L.C. for
the benefit of Holly Corporation.
—
Consent and Amendment No. 4, dated July 8, 2005, among Holly Energy
Partners, L.P., Union Bank of California, N.A., as administrative agent, and certain
other lending institutions identified therein.
—
Joint Press Release of Holly Energy Partners, L.P. and Holly Corporation
issued July 8, 2005.*
*
Furnished pursuant to Regulation FD.
EXHIBIT 2.1
EXECUTION VERSION
PURCHASE AND SALE AGREEMENT
BY AND AMONG
HOLLY CORPORATION,
NAVAJO PIPELINE CO., L.P.
AND
NAVAJO REFINING COMPANY, L.P.
AS SELLER PARTIES,
AND
HOLLY ENERGY PARTNERS, L.P.,
HOLLY ENERGY PARTNERS - OPERATING, L.P.
AND
HEP PIPELINE, L.L.C.
AS BUYER PARTIES
DATED AS OF JULY 6, 2005
TABLE OF CONTENTS
Page
ARTICLE I
TRANSFER OF ASSETS, ASSUMPTION OF
LIABILITIES AND AGGREGATE CONSIDERATION
1.1 Contribution of Assets and Assumption of Liabilities................................... 1
1.2 Consideration.......................................................................... 1
ARTICLE II
CLOSING
2.1 Closing................................................................................ 2
2.2 Deliveries by the Seller Parties....................................................... 2
2.3 Deliveries by the Buyer Parties........................................................ 3
2.4 Prorations............................................................................. 3
2.5 Closing Costs; Transfer Taxes and Fees................................................. 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES
3.1 Organization........................................................................... 4
3.2 Authorization.......................................................................... 4
3.3 No Conflicts or Violations; No Consents or Approvals Required.......................... 4
3.4 Absence of Litigation.................................................................. 5
3.5 Title to Intermediate Pipelines........................................................ 5
3.6 Brokers and Finders.................................................................... 5
3.7 Sufficiency and Condition of Assets.................................................... 5
3.8 Representations Relating to the Unit Consideration..................................... 5
3.9 WAIVERS AND DISCLAIMERS................................................................ 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES
4.1 Organization........................................................................... 7
4.2 Authorization.......................................................................... 7
4.3 No Conflicts or Violations; No Consents or Approvals Required.......................... 7
4.4 Absence of Litigation.................................................................. 8
4.5 Brokers and Finders.................................................................... 8
4.6 Validity of Unit Consideration......................................................... 8
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HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
ARTICLE V
COVENANTS
5.1 Conduct of the Operations.............................................................. 8
5.2 Access................................................................................. 8
5.3 Rights................................................................................. 9
5.4 Cooperation............................................................................ 9
5.5 Additional Agreements.................................................................. 9
5.6 HSR Matters............................................................................ 10
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Each Party's Obligation to Close......................................... 10
6.2 Conditions to the Buyer Parties' Obligation to Close................................... 10
6.3 Conditions to the Seller Parties' Obligation to Close.................................. 12
ARTICLE VII
TERMINATION
7.1 Termination............................................................................ 12
7.2 Effect of Termination.................................................................. 13
ARTICLE VIII
INTERPRETATION; DEFINED TERMS
8.1 Interpretation......................................................................... 13
8.2 References, Gender, Number............................................................. 14
8.3 Defined Terms.......................................................................... 15
ARTICLE IX
ADDITIONAL AGREEMENTS
9.1 Further Assurances..................................................................... 19
9.2 Post-Closing Tax Covenants............................................................. 19
ARTICLE X
MISCELLANEOUS
10.1 Expenses............................................................................... 20
10.2 Notices................................................................................ 21
10.3 Severability........................................................................... 22
10.4 Governing Law.......................................................................... 22
10.5 Parties in Interest.................................................................... 22
10.6 Assignment of Agreement................................................................ 22
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HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
10.7 Captions............................................................................... 23 10.8 Counterparts........................................................................... 23 10.9 Director and Officer Liability......................................................... 23 10.10 Integration............................................................................ 23 10.11 Limitations Regarding Environmental Indemnification.................................... 23 10.12 Effect of Agreement; Ratification of Omnibus Agreement................................. 23 10.13 Confirmation of Agreement.............................................................. 24 |
EXHIBITS:
Exhibit A - Contribution Agreement
Exhibit B - Pipeline Conveyance
Exhibit C - Bill of Sale
Exhibit D - Pipelines Agreement
Exhibit E - Assignment and Assumption Agreement
Exhibit F - Mortgage and Deed of Trust
SCHEDULES:
Schedule 3.3 - Seller Parties No Conflicts or Violations
Schedule 3.4 - Seller Parties Litigation
Schedule 3.5(a) - Title to Intermediate Pipelines
Schedule 4.3 - Buyer Parties No Conflicts or Violations
Schedule 4.4 - Buyer Parties Litigation
Schedule 6.2(a) - Seller Parties Consents
Schedule 6.3(a) - Buyer Parties Consents
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
|
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") dated as of July 6, 2005, is made and entered into by and among Holly Corporation, a Delaware corporation ("Holly"), Navajo Pipeline Co., L.P., a Delaware limited partnership ("Navajo Pipeline"), Navajo Refining Company, L.P., a Delaware limited partnership ("Navajo Refining," and, together with Holly and Navajo Pipeline, the "Seller Parties"), Holly Energy Partners, L.P., a Delaware limited partnership (the "Partnership"), Holly Energy Partners - Operating, L.P., a Delaware limited partnership (the "Operating Partnership") and HEP Pipeline, L.L.C., a Delaware limited liability company ("HEP Pipeline," and, together with the Partnership and the Operating Partnership, the "Buyer Parties"). The above-named entities are sometimes referred to in this Agreement each as a "Party" and collectively as the "Parties."
WHEREAS, the Buyer Parties wish to exercise the option to purchase the Intermediate Pipelines (as defined herein) granted pursuant to Section 5.1 of the Omnibus Agreement (as defined herein); and
WHEREAS, the Parties wish to supplement the agreements of the parties contained in the Omnibus Agreement to, among other things, confirm the aggregate consideration to be paid by the Buyer Parties for the Intermediate Pipelines (the "Aggregate Consideration"), provide for certain closing deliveries by the Parties, include certain representations, warranties and covenants by the Parties and describe the conditions necessary to consummate the purchase and sale of the Intermediate Pipelines.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set forth herein and in the Omnibus Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
TRANSFER OF ASSETS, ASSUMPTION OF
LIABILITIES AND AGGREGATE CONSIDERATION
1.1 CONTRIBUTION OF ASSETS AND ASSUMPTION OF LIABILITIES. At the closing of the transactions contemplated hereby (the "Closing"), the Intermediate Pipelines shall be transferred and conveyed, and the Liabilities shall be assumed, as set forth in that certain contribution agreement to be entered into by and among the Parties at the Closing (the "Contribution Agreement") in substantially the form of Exhibit A attached hereto.
1.2 CONSIDERATION.
(a) The Aggregate Consideration shall be $81,500,000 and shall consist of (i) the Cash Consideration, (ii) the Unit Consideration and (iii) the increase in the capital account of HEP Logistics Holdings, L.P., a Delaware limited partnership ("HEP GP") in an amount equal to
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
the contribution made on behalf of HEP GP pursuant to the Contribution Agreement (the "Additional GP Interest").
(b) The Cash Consideration shall be paid by the Partnership at the Closing by wire transfer of immediately available funds to the accounts specified by Holly in or pursuant to the Contribution Agreement.
(c) The Unit Consideration shall be paid by the Partnership at the Closing by delivery of certificates representing the Unit Consideration and issued in the name of Holly or its designees (the "Certificates"), as provided in or pursuant to the Contribution Agreement.
(d) The capital account of HEP GP shall be increased by the amount of the Additional GP Interest.
ARTICLE II
CLOSING
2.1 CLOSING. The Closing shall be held at the offices of Vinson & Elkins L.L.P., 3700 Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas 75201 at 10:00 a.m. on the third business day following the satisfaction or waiver of the conditions set forth in Article VI (other than those conditions relating to the execution of the applicable Ancillary Documents, which will be satisfied at the Closing), or such other place, time or date as may be agreed upon by the Parties. The date on which the Closing takes place is referred to herein as the "Closing Date." The Closing shall be deemed to be effective as of 12:01 a.m. on the Closing Date (the "Effective Time").
2.2 DELIVERIES BY THE SELLER PARTIES. At the Closing, the Seller Parties shall deliver, or cause to be delivered, to the Buyer Parties the following:
(a) A counterpart of the Contribution Agreement, duly executed by each Seller Party.
(b) A counterpart of the conveyance, assignment and bill of sale substantially in the form of Exhibit B attached hereto (the "Pipeline Conveyance"), duly executed by each applicable Seller Party.
(c) A bill of sale and assignment substantially in the form of Exhibit C attached hereto (the "Bill of Sale"), duly executed by each applicable Seller Party.
(d) A counterpart of the pipelines agreement substantially in the form of Exhibit D attached hereto (the "Pipelines Agreement"), duly executed by each applicable Seller Party.
(e) A counterpart of the assignment and assumption agreement substantially in the form of Exhibit E attached hereto (the "Assignment and Assumption Agreement"), duly executed by each applicable Seller Party.
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
(f) The Seller Party Closing Certificate, duly executed by an officer of Holly.
(g) Such other certificates, instruments of conveyance and documents as may be reasonably requested by the Buyer Parties prior to the Closing Date to carry out the intent and purposes of this Agreement and the Omnibus Agreement.
2.3 DELIVERIES BY THE BUYER PARTIES. At the Closing, the Buyer Parties shall deliver, or cause to be delivered, to the Seller Parties the following:
(a) The Cash Consideration as provided in Section 1.2(b).
(b) The Certificates as provided in Section 1.2(c).
(c) A counterpart of the Contribution Agreement, duly executed by each Buyer Party.
(d) A counterpart of the Pipeline Conveyance, duly executed by each applicable Buyer Party.
(e) A counterpart of the Pipelines Agreement, duly executed by each Buyer Party.
(f) A counterpart of the Assignment and Assumption Agreement, duly executed by each applicable Buyer Party.
(g) The Buyer Party Closing Certificate, duly executed by an officer of the Partnership.
(h) A mortgage and deed of trust substantially in the form of Exhibit F attached hereto (the "Mortgage and Deed of Trust"), duly executed by each applicable Buyer Party.
(i) Such other certificates, instruments of conveyance and documents as may be reasonably requested by the Seller Parties prior to the Closing Date to carry out the intent and purposes of this Agreement and the Omnibus Agreement.
2.4 PRORATIONS. On the Closing Date, or as promptly as practicable following the Closing Date, but in no event later than 60 calendar days thereafter, the real and personal property taxes, water, gas, electricity and other utilities, local business or other license fees to the extent assigned and other similar periodic charges payable with respect to the Intermediate Pipelines shall be prorated between the Buyer Parties, on the one hand, and the Seller Parties, on the other hand, effective as of the Effective Time with the Seller Parties being responsible for amounts related to the period prior to but excluding the Effective Time and the Buyer Parties being responsible for amounts related to the period at and after the Effective Time. If the final real property tax rate or final assessed value for the current tax year is not established by the Closing Date, the prorations shall be made on the basis of the rate or assessed value in effect for
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the preceding tax year and shall be adjusted when the exact amounts are determined. All such prorations shall be based upon the most recent available assessed value available prior to the Closing Date.
2.5 CLOSING COSTS; TRANSFER TAXES AND FEES.
(a) Allocation of Costs. The Buyer Parties shall pay the cost of all sales, transfer and use taxes arising out of the transfer of the Intermediate Pipelines and all costs and expenses (including recording fees and real estate transfer taxes and real estate transfer stamps) incurred in connection with obtaining or recording title to the Intermediate Pipelines.
(b) Reimbursement. If any Buyer Party, on the one hand, or any Seller Party, on the other hand, pays any tax agreed to be borne by the other Party under this Agreement, such other Party shall promptly reimburse the paying Party for the amounts so paid. If any Party receives any tax refund or credit applicable to a tax paid by another Party hereunder, the receiving Party shall promptly pay such amounts to the Party entitled thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES
The Seller Parties, jointly and severally, hereby represent and warrant to the Buyer Parties as follows:
3.1 ORGANIZATION. Each Seller Party is an entity duly organized, validly existing and in good standing under the Laws of its state of organization.
3.2 AUTHORIZATION. Each Seller Party has full corporate or partnership
power and authority to execute, deliver, and perform this Agreement and any
Seller Ancillary Documents to which it is a party. The execution, delivery, and
performance by each Seller Party of this Agreement and the Seller Ancillary
Documents and the consummation by such Seller Party of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate or partnership action of the Seller Parties. This Agreement has been
duly executed and delivered by each Seller Party and constitutes, and each such
Seller Ancillary Document executed or to be executed by each Seller Party has
been, or when executed will be, duly executed and delivered by such Seller Party
and constitutes, or when executed and delivered will constitute, a valid and
legally binding obligation of the Seller Party, enforceable against it in
accordance with their terms, except that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar Laws affecting creditors' rights and remedies
generally and (ii) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.
3.3 NO CONFLICTS OR VIOLATIONS; NO CONSENTS OR APPROVALS REQUIRED. Except as set forth in Seller Disclosure Schedule 3.3, the execution, delivery and performance by each Seller Party of this Agreement and the other Seller Ancillary Documents to which it is a party
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does not, and the consummation of the transactions contemplated hereby and
thereby will not, (i) violate, conflict with, or result in any breach of any
provision of such Seller Party's organizational documents or (ii) subject to
obtaining the Consents or making the registrations, declarations or filings set
forth in the next sentence, violate in any material respect any applicable Law
or material contract binding upon any Seller Party or the Intermediate
Pipelines. No Consent of any Governmental Entity or any other person is required
for any Seller Party in connection with the execution, delivery and performance
of this Agreement and the Seller Ancillary Documents to which such Seller Party
is a party or the consummation of the transactions contemplated hereby or
thereby, except as set forth in Seller Disclosure Schedule 3.3 and except for
(a) requirements under the HSR Act and (b) Post-Closing Consents.
3.4 ABSENCE OF LITIGATION. Except as set forth in Seller Disclosure Schedule 3.4, there is no Action pending or, to the knowledge of the Seller Parties, threatened against any Seller Party or any of its affiliates relating to the transactions contemplated by this Agreement or the Intermediate Pipelines or which, if adversely determined, would reasonably be expected to materially impair the ability of the Seller Parties to perform their obligations and agreements under this Agreement or the Seller Ancillary Documents and to consummate the transactions contemplated hereby and thereby.
3.5 TITLE TO INTERMEDIATE PIPELINES.
(a) Except as set forth in Seller Disclosure Schedule 3.5(a), each applicable Seller Party has good and indefeasible title to the Intermediate Pipelines, subject to all recorded and unrecorded matters and all physical conditions and other matters in existence on the Closing Date, plus any other such matters as the Partnership may approve, which approval will not be unreasonably withheld.
(b) There has not been granted to any person and no person possesses, any right of first refusal to purchase the Intermediate Pipelines.
3.6 BROKERS AND FINDERS. No investment banker, broker, finder, financial advisor or other intermediary has been retained by or is authorized to act on behalf of any of the Seller Parties who is entitled to receive from any Buyer Party any fee or commission in connection with the transactions contemplated by this Agreement.
3.7 SUFFICIENCY AND CONDITION OF ASSETS. To the Seller Parties' knowledge, the assets being purchased pursuant to this Agreement are all of the physical assets material to the operation of the Intermediate Pipelines in accordance with the Seller Parties' (and their affiliates') historical practice, are in good operating condition and repair (normal wear and tear excepted), are free from material defects (patent and latent), are suitable for the purposes for which they are currently used and are not in need of material maintenance or repairs except for ordinary routine maintenance and repairs.
3.8 REPRESENTATIONS RELATING TO THE UNIT CONSIDERATION. Each applicable Seller Party is acquiring its portion of the Unit Consideration for its own account for investment, and
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not with a view to any distribution or resale thereof in violation of the Securities Act of 1933, as amended, or any other applicable domestic or foreign securities Law.
3.9 WAIVERS AND DISCLAIMERS. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES AND OTHER COVENANTS AND AGREEMENTS MADE BY THE PARTIES IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS AND THE OMNIBUS AGREEMENT, THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT NONE OF THE PARTIES HAS MADE, DOES NOT MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES AND DISCLAIMS, ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT, REGARDING (I) THE VALUE, NATURE, QUALITY OR CONDITION OF THE INTERMEDIATE PIPELINES INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, GEOLOGY OR ENVIRONMENTAL CONDITION OF THE INTERMEDIATE PIPELINES GENERALLY, INCLUDING THE PRESENCE OR LACK OF HAZARDOUS SUBSTANCES OR OTHER MATTERS ON THE INTERMEDIATE PIPELINES, (II) THE INCOME TO BE DERIVED FROM THE INTERMEDIATE PIPELINES, (III) THE SUITABILITY OF THE INTERMEDIATE PIPELINES FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON, (IV) THE COMPLIANCE OF OR BY THE INTERMEDIATE PIPELINES OR THEIR OPERATION WITH ANY LAWS (INCLUDING WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS), OR (V) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE INTERMEDIATE PIPELINES. EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE OMNIBUS AGREEMENT, NONE OF THE PARTIES IS LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE INTERMEDIATE PIPELINES FURNISHED BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD PARTY. EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE OMNIBUS AGREEMENT, EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE TRANSFER AND CONVEYANCE OF THE INTERMEDIATE PIPELINES SHALL BE MADE IN AN "AS IS," "WHERE IS" CONDITION WITH ALL FAULTS, AND THE INTERMEDIATE PIPELINES ARE TRANSFERRED AND CONVEYED SUBJECT TO ALL OF THE MATTERS CONTAINED IN THIS SECTION. THIS SECTION SHALL SURVIVE SUCH TRANSFER AND CONVEYANCE OR THE TERMINATION OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A
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COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE INTERMEDIATE PIPELINES THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE OMNIBUS AGREEMENT.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES
The Buyer Parties hereby represent and warrant to the Seller Parties as follows:
4.1 ORGANIZATION. Each Buyer Party is an entity duly organized, validly existing and in good standing under the Laws of its state of organization.
4.2 AUTHORIZATION. Each Buyer Party has full partnership or limited liability company power and authority to execute, deliver, and perform this Agreement and any Buyer Ancillary Documents to which it is a party. The execution, delivery, and performance by each Buyer Party of this Agreement and the Buyer Ancillary Documents and the consummation by such Buyer Party of the transactions contemplated hereby and thereby, have been duly authorized by all necessary partnership or limited liability company action of the Buyer Party. This Agreement has been duly executed and delivered by each Buyer Party and constitutes, and each such Buyer Ancillary Document executed or to be executed each Buyer Party has been, or when executed will be, duly executed and delivered by such Buyer Party and constitutes, or when executed and delivered will constitute, a valid and legally binding obligation of the Buyer Party, enforceable against it in accordance with their terms, except that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws affecting creditors' rights and remedies generally and (ii) equitable principles which may limit the availability of certain equitable remedies (such as specific performance) in certain instances.
4.3 NO CONFLICTS OR VIOLATIONS; NO CONSENTS OR APPROVALS REQUIRED. Except as set forth in Buyer Disclosure Schedule 4.3, the execution, delivery and performance by each Buyer Party of this Agreement and the Buyer Ancillary Documents to which it is a party does not, and consummation of the transactions contemplated hereby and thereby will not, (i) violate, conflict with, or result in any breach of any provisions of such Buyer Party's organizational documents or (ii) subject to obtaining the Consents or making the registrations, declarations or filings set forth in the next sentence, violate any applicable Law or material contract binding upon any Buyer Party. No Consent of any Governmental Entity or any other person is required for any Buyer Party in connection with the execution, delivery and performance of this Agreement and the other Buyer Ancillary Documents to which such Buyer Party is a party or the consummation of the transactions contemplated hereby and thereby, except for (a) requirements under the HSR Act and (b) Post-Closing Consents.
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4.4 ABSENCE OF LITIGATION. Except as set forth in Buyer Disclosure Schedule 4.4, there is no Action pending or, to the knowledge of the Buyer Parties, threatened against any Buyer Party or any of its affiliates relating to the transactions contemplated by this Agreement or which, if adversely determined, would reasonably be expected to materially impair the ability of the Buyer Parties to perform their obligations and agreements under this Agreement or the Buyer Ancillary Documents and to consummate the transactions contemplated hereby and thereby.
4.5 BROKERS AND FINDERS. No investment banker, broker, finder, financial advisor or other intermediary has been retained by or is authorized to act on behalf of any of the Buyer Parties who is entitled to receive from any Seller Party any fee or commission in connection with the transactions contemplated by this Agreement.
4.6 VALIDITY OF UNIT CONSIDERATION. The common units comprising the Unit Consideration and the limited partner interests represented thereby have been duly and validly authorized by the Partnership's organizational documents and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid (to the extent required under the Partnership's organizational documents) and nonassessable (except as such nonassessability may be affected by Section 17-607 of the Delaware Revised Uniform Limited Partnership Act).
ARTICLE V
COVENANTS
5.1 CONDUCT OF THE OPERATIONS. Except as specifically provided in this
Agreement, the Seller Ancillary Documents or the Omnibus Agreement, during the
period from the date of this Agreement until the Closing Date, each Seller Party
shall (i) conduct its operations according to its ordinary course of business
and (ii) use reasonable efforts to preserve, maintain, and protect its material
assets, rights, and properties, to the extent each such action in clause (i) or
(ii) would materially affect the Intermediate Pipelines; provided, however, that
any Seller Party shall not, to the extent commercially unreasonable, be required
to make any payments or enter into or amend any contractual agreements,
arrangements, or understandings to satisfy the foregoing obligation.
5.2 ACCESS. From the date of this Agreement until the Closing Date, each Seller Party shall, upon reasonable advance notice by the Partnership, (i) provide each Buyer Party and its representatives reasonable access, during normal business hours, to the Intermediate Pipelines and (ii) furnish to each Buyer Party such documents and information concerning the Intermediate Pipelines as the Partnership from time to time may reasonably request. Following any such request, each Seller Party shall use its reasonable efforts to make such requested information available to the Buyer Parties to the extent the requested information relates to the Intermediate Pipelines.
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5.3 RIGHTS.
(a) If any Consent set forth in Seller Disclosure Schedule 3.3 is not obtained by the Seller Parties on or before the Closing, then, on and after the Closing unless and until such Consent is obtained, as to the rights, assets, benefits or remedies (collectively, the "Rights") not assignable to the Buyer Parties because such Consent has not been obtained:
(i) the applicable Seller Party shall hold the Rights in trust for the benefit of the Buyer Parties;
(ii) subject to clause (iv), the applicable Seller Party shall, at the request and under the direction of the Partnership, take all such actions and do all such things, at such Seller Party's expense, as shall in the opinion of the Partnership, be reasonably necessary or desirable in order that the obligations of the applicable Seller Party under such Rights may be performed in a manner such that the value of the Rights shall be preserved and shall inure to the benefit of the applicable Buyer Party and such that all such Rights may be received by the applicable Buyer Party;
(iii) the applicable Seller Party shall promptly tender over to the applicable Buyer Party all such Rights received by such Seller Party in respect of such Rights; and
(iv) the applicable Buyer Party shall make all payment obligations under such Rights and, unless prohibited by the third party, shall perform the non-payment obligations under such Rights on behalf of the applicable Seller Party.
(b) With respect to any Consent set forth in Seller Disclosure Schedule 3.3 not obtained by the Seller Parties on or before the Closing, the Seller Parties shall use diligent efforts to obtain such Consent following the Closing. The Parties shall reasonably cooperate with each other in obtaining such Consents and shall keep each other reasonably informed of the status of and any developments with respect to obtaining such Consents.
5.4 COOPERATION. Each Seller Party shall cooperate with each Buyer Party and assist such Buyer Party in identifying all licenses, authorizations, permissions or Permits necessary to own and operate the Intermediate Pipelines from and after the Closing Date and, where permissible, transfer existing Permits to such Buyer Party, or, where not permissible, assist the Buyer Party in obtaining new Permits at no cost, fee or liability to such Seller Party.
5.5 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of this Agreement, the Ancillary Documents and the Omnibus Agreement, each of the Parties shall use its commercially reasonable efforts to do, or cause to be taken all action and to do, or cause to be done, all things necessary, proper, or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement, including the fulfillment of the conditions set forth in Article VI, to the extent that the fulfillment of such conditions are within the control of such Party; provided, however, that in no event shall any Party or its affiliates be
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required to divest any interest that they may have in any material assets or business. If at any time after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement, the Parties and their duly authorized representatives shall use commercially reasonable efforts to take all such action.
5.6 HSR MATTERS. The Parties shall use their reasonable efforts to (i) obtain all authorizations or waivers required under the HSR Act to consummate the transactions contemplated hereby, including, without limitation, making all filings with the Antitrust Division of the DOJ and the FTC required in connection therewith and (ii) respond as promptly as practicable to all inquiries received from the DOJ or the FTC for additional information or documentation. The Buyer Parties and the Seller Parties shall pay in equal amounts all filing fees associated with the filing. Each of the Buyer Parties and the Seller Parties shall furnish to the other such necessary information and reasonable assistance as the other may request in connection with its preparation of any filing that is necessary under the HSR Act. The Buyer Parties and the Seller Parties shall keep each other apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC or the DOJ. In no event shall any Party or any of its affiliates, in connection with the consummation of the transactions contemplated by this Agreement, be required to divest itself of any material assets, properties or lines of business in order to comply with the requirements of the HSR Act.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO CLOSE. The obligations of the Parties to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, at or prior to the Closing, of each of the following conditions:
(a) No Restraint. No temporary restraining order, preliminary or permanent injunction or other Order issued by any Governmental Entity or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect.
(b) Legality of Transactions. No Action shall have been taken nor any Law shall have been enacted by any Governmental Entity that makes the consummation of the transactions contemplated by this Agreement illegal.
(c) HSR Waiting Period. The waiting and review period (and any extension thereof) under the HSR Act shall have expired or been terminated.
6.2 CONDITIONS TO THE BUYER PARTIES' OBLIGATION TO CLOSE. The obligation of the Buyer Parties to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction (or waiver by the Partnership), at or prior to the Closing, of each of the following conditions:
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(a) Consents. The authorizations, consents, Orders or approvals described in Schedule 6.2(a) shall have been filed, occurred, or been obtained.
(b) Representations and Warranties. The representations and warranties of the Seller Parties set forth in this Agreement shall be true and correct (without giving effect to any materiality standard or Material Adverse Effect qualification) as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except to the extent that the failure of such representations and warranties to be true and correct would not, in the aggregate, result in a Material Adverse Effect on Holly or the Intermediate Pipelines, and the Buyer Parties shall have received a certificate to such effect signed on behalf of the Seller Parties by an officer of Holly.
(c) Performance of Obligations. The Seller Parties shall have performed in all material respects (provided that any covenant or agreement of the Seller Parties contained herein that is qualified by a materiality standard shall not be further qualified hereby) all obligations required to be performed by the Seller Parties under this Agreement prior to the Closing Date, and the Buyer Parties shall have received a certificate to such effect signed on behalf of the Seller Parties by an officer of Holly (such certificate, together with the certificate described in clause (b) above, the "Seller Party Closing Certificate").
(d) Seller Ancillary Documents. The Seller Parties shall have delivered, or caused to be delivered, to the Buyer Parties the Seller Ancillary Documents pursuant to Section 2.2.
(e) Inspection Results. The results of any searches, surveys, tests or inspections conducted pursuant to Section 5.2(b)(iii) or (iv) of the Omnibus Agreement shall be, in the reasonable opinion of the Buyer Parties, satisfactory.
(f) Permits. Each of the Permits held by the Seller Parties which are assignable by the Seller Parties shall have been assigned to the applicable Buyer Party in accordance with applicable Law, and for Permits held by the Seller Parties which are not so assignable, the applicable Buyer Party shall have been issued a new replacement Permit with terms and conditions reasonably satisfactory to the Buyer Parties except for Permits that, in transactions similar to the transactions contemplated by this Agreement, are normally obtained by the acquirer thereunder after the consummation thereof.
(g) No Material Adverse Effect. Since March 31, 2005, no event or occurrence shall have taken place which has had, or is reasonably likely to have, a Material Adverse Effect on Holly or the Intermediate Pipelines.
(h) Financing. The Partnership shall have received net proceeds in an amount at least equal to the Financing Proceeds from any source of financing acceptable (including with respect to all terms and conditions thereof) to the Conflicts Committee in its sole discretion.
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6.3 CONDITIONS TO THE SELLER PARTIES' OBLIGATION TO CLOSE. The obligation of the Seller Parties to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction (or waiver by Holly), at or prior to the Closing, of each of the following conditions:
(a) Consents. The authorizations, consents, Orders or approvals described in Schedule 6.3(a) shall have been filed, occurred, or been obtained.
(b) Representations and Warranties. The representations and warranties of the Buyer Parties set forth in this Agreement shall be true and correct (without giving effect to any materiality standard or Material Adverse Effect qualification) as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except to the extent that the failure of such representations and warranties to be true and correct would not, in the aggregate, result in a Material Adverse Effect on the Partnership, and the Seller Parties shall have received a certificate to such effect signed on behalf of the Buyer Parties by an officer of the Partnership.
(c) Performance of Obligations. The Buyer Parties shall have performed in all material respects (provided that any covenant or agreement of the Buyer Parties contained herein that is qualified by a materiality standard shall not be further qualified hereby) the obligations required to be performed by the Buyer Parties under this Agreement prior to the Closing Date, and the Seller Parties shall have received a certificate to such effect signed on behalf of the Buyer Parties by an officer of the Partnership (such certificate, together with the certificate described in clause (b) above, the "Buyer Party Closing Certificate").
(d) The Buyer Ancillary Documents. The Buyer Parties shall have
delivered, or caused to be delivered, the Buyer Ancillary Documents pursuant to
Section 2.3.
(e) Cash Consideration. The Buyer Parties shall have delivered the Cash Consideration in accordance with Section 1.2(b).
(f) Certificates. The Buyer Parties shall have delivered the Certificates in accordance with Section 1.2(c).
(g) NYSE Listing. The Unit Consideration shall have been approved for listing by the New York Stock Exchange subject to official notice of issuance.
(h) No Material Adverse Effect. Since March 31, 2005, no event or occurrence shall have taken place which has had, or is reasonably likely to have, a Material Adverse Effect on the Partnership.
ARTICLE VII
TERMINATION
7.1 TERMINATION.
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(a) Right to Terminate. This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:
(i) by mutual written consent of Holly and the Partnership;
(ii) by either Holly or the Partnership if the Closing has not occurred within 90 days of the date of this Agreement (the "Termination Date"), provided, however, that this right to terminate this Agreement shall not be available to any Party whose breach of this Agreement or whose affiliate's breach of this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date;
(iii) by either Holly or the Partnership if a Governmental Entity shall have issued an order or taken any other action, in each case permanently restraining, enjoining, or otherwise prohibiting the transactions contemplated by this Agreement; or
(iv) by either Holly or the Partnership in the event of a
breach by any Buyer Party or Seller Party, as applicable, of any representation,
warranty, covenant or other agreement contained in this Agreement which (A)
would give rise to the failure of a condition set forth in Sections 6.2(b) or
(c) or Sections 6.3(b) or (c), as applicable, and (B) cannot be or has not been
cured within the shorter of (1) 20 days following receipt by the breaching party
of written notice of such breach or (2) the business day immediately preceding
the Termination Date.
(b) Effect of Investigation. The right of any Party to terminate this Agreement pursuant to this Section 7.1 shall remain operative and in full force and effect regardless of the actual or constructive knowledge of such Party regarding the subject matter giving rise to such right of termination.
7.2 EFFECT OF TERMINATION. Upon termination of this Agreement pursuant to
Section 7.1, the undertakings of the Parties set forth in this Agreement shall
forthwith be of no further force and effect.
ARTICLE VIII
INTERPRETATION; DEFINED TERMS
8.1 INTERPRETATION. It is expressly agreed that this Agreement shall not be construed against any Party, and no consideration shall be given or presumption made, on the basis of who drafted this Agreement or any particular provision hereof or who supplied the form of Agreement. Each Party agrees that this Agreement has been purposefully drawn and correctly reflects its understanding of the transaction that this Agreement contemplates. In construing this Agreement:
(a) examples shall not be construed to limit, expressly or by implication, the matter they illustrate;
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(b) the word "includes" and its derivatives means "includes, but is not limited to" and corresponding derivative expressions;
(c) a defined term has its defined meaning throughout this Agreement and each Exhibit, Annex or Schedule to this Agreement, regardless of whether it appears before or after the place where it is defined;
(d) each Exhibit, Annex and Schedule to this Agreement is a part of this Agreement, but if there is any conflict or inconsistency between the main body of this Agreement and any Exhibit, Annex or Schedule, the provisions of the main body of this Agreement shall prevail;
(e) the term "cost" includes expense and the term "expense" includes cost;
(f) the headings and titles herein are for convenience only and shall have no significance in the interpretation hereof;
(g) the inclusion of a matter on a Schedule in relation to a representation or warranty shall not be deemed an indication that such matter necessarily would, or may, breach such representation or warranty absent its inclusion on such Schedule;
(h) any reference to a statute, regulation or Law shall include any amendment thereof or any successor thereto and any rules and regulations promulgated thereunder;
(i) currency amounts referenced herein, unless otherwise specified, are in U.S. Dollars;
(j) unless the context otherwise requires, all references to time shall mean time in Dallas, Texas;
(k) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless business days are specified; and
(l) if a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb).
8.2 REFERENCES, GENDER, NUMBER. All references in this Agreement to an "Article," "Section," "subsection," "Exhibit" or "Schedule" shall be to an Article, Section, subsection, Exhibit or Schedule of this Agreement, unless the context requires otherwise. Unless the context clearly requires otherwise, the words "this Agreement," "hereof," "hereunder," "herein," "hereby," or words of similar import shall refer to this Agreement as a whole and not to a particular Article, Section, subsection, clause or other subdivision hereof. Cross-references in this Agreement to a subsection or a clause within a Section may be made by reference to the number or other subdivision reference of such subsection or clause preceded by the word "Section." Whenever the context requires, the words used herein shall include the masculine, feminine and neuter gender, and the singular and the plural.
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8.3 DEFINED TERMS. Unless the context expressly requires otherwise, the respective terms defined in this Section 8.3 shall, when used in this Agreement, have the respective meanings herein specified, with each such definition to be equally applicable both to the singular and the plural forms of the term so defined.
"Action" shall mean any claim, action, suit, investigation, inquiry, proceeding, condemnation or audit by or before any court or other Governmental Entity or any arbitration proceeding.
"Additional GP Interest" shall have the meaning set forth in Section 1.2(a).
"affiliate" means, with respect to a specified person, any other person controlling, controlled by or under common control with that first person. As used in this definition, the term "control" includes (i) with respect to any person having voting securities or the equivalent and elected directors, managers or persons performing similar functions, the ownership of or power to vote, directly or indirectly, voting securities or the equivalent representing 50% or more of the power to vote in the election of directors, managers or persons performing similar functions, (ii) ownership of 50% or more of the equity or equivalent interest in any person and (iii) the ability to direct the business and affairs of any person by acting as a general partner, manager or otherwise.
"Aggregate Consideration" shall have the meaning set forth in the preamble.
"Agreement" shall have the meaning set forth in the preamble.
"Ancillary Documents" means, collectively, the Buyer Ancillary Documents and the Seller Ancillary Documents.
"Artesia Refinery" means the refining facilities owned by Navajo Refining in Artesia, New Mexico.
"Assignment and Assumption Agreement" shall have the meaning set forth in
Section 2.2(e).
"Bill of Sale" shall have the meaning set forth in Section 2.2(c).
"Board of Directors" means the Board of Directors of HEP GP.
"business day" means any day on which banks are open for business in Texas, other than Saturday or Sunday.
"Buyer Parties" shall have the meaning set forth in the preamble.
"Buyer Ancillary Documents" means each agreement, document, instrument or certificate to be delivered by the Buyer Parties, or their affiliates at the Closing pursuant to Section 2.3 hereof and each other document or Contract entered into by the Buyer Parties, or their affiliates,
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
in connection with this Agreement or the Closing, including the letter agreement dated of even date herewith entered into between Holly and the Partnership.
"Buyer Party Closing Certificate" shall have the meaning given such term in Section 6.3(c).
"Cash Consideration" means an amount in cash equal to $77,651,020.
"Certificates" shall have the meaning given such term in Section 1.2(c).
"Closing" shall have the meaning set forth in Section 1.1.
"Closing Date" shall have the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Conflicts Committee" means the Conflicts Committee of the Board of Directors.
"Consents" means all authorizations, consents, Orders or approvals of, or registrations, declarations or filings with, or expiration of waiting periods imposed by, any Governmental Entity, in each case that are necessary in order to consummate the transactions contemplated by this Agreement and the Ancillary Documents.
"Contract" means any written or oral contract, agreement, indenture, instrument, note, bond, loan, lease, mortgage, franchise, license agreement, purchase order, binding bid or offer, binding term sheet or letter of intent or memorandum, commitment, letter of credit or any other legally binding arrangement, including any amendments or modifications thereof and waivers relating thereto.
"Contribution Agreement" shall have the meaning set forth in Section 1.1.
"DOJ" means the United States Department of Justice.
"Effective Time" shall have the meaning set forth in Section 2.1.
"Financing Proceeds" means an amount in cash equal to $78,962,500.
"FTC" means the United States Federal Trade Commission.
"Governmental Entity" means any Federal, state, local or foreign court or governmental agency, authority or instrumentality or regulatory body.
"HEP GP" shall have the meaning set forth in Section 1.2(a).
"HEP Pipeline" shall have the meaning set forth in the preamble.
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
"Holly" shall have the meaning set forth in the preamble.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
"Indenture" shall have the meaning set forth in Section 9.2(b).
"Intermediate Pipelines" means approximately 65 miles of 8" feedstock pipeline and 10" feedstock pipeline, each of which begins at the inlet flange of the delivery manifold motor operated valves at the Lovington Refinery, near Lovington, New Mexico and ends at the outlet flange of the turbine meter at the Artesia Refinery in Artesia, New Mexico, along with any and all connection facilities, including the Enterprise/MAPL connection, field booster pump stations, spare parts, pipes, valves, motors and miscellaneous equipment directly associated with the 8" inch and 10" feedstock pipelines.
"knowledge" and any variations thereof or words to the same effect shall mean (i) with respect to the Seller Parties, actual knowledge after reasonable inquiry of the following persons: Matthew P. Clifton, Stephen J. McDonnell, W. John Glancy, James D. Townsend and Dean Ridenour; and (ii) with respect to the Buyer Parties, actual knowledge after reasonable inquiry of the following persons: Charles M. Darling, IV, Jerry W. Pinkerton and William P. Stengel.
"Laws" means all statutes, laws, rules, regulations, Orders, ordinances, writs, injunctions, judgments and decrees of all Governmental Entities.
"Liabilities" means, collectively, the Navajo Pipeline Liabilities and the Navajo Refining Liabilities.
"Lovington Refinery" means the refining facilities owned by Navajo Refining near Lovington, New Mexico.
"Material Adverse Effect" means any adverse change, circumstance, effect or condition in or relating to the assets, financial condition, results of operations, or business of any person that materially affects the business of such person or that materially impedes the ability of any person to consummate the transactions contemplated hereby, other than any change, circumstance, effect or condition in the refining or pipelines industries generally (including any change in the prices of crude oil, natural gas, natural gas liquids, feedstocks or refined products or other hydrocarbon products, industry margins or any regulatory changes or changes in Law) or in United States or global economic conditions or financial markets in general. Any determination as to whether any change, circumstance, effect or condition has a Material Adverse Effect shall be made only after taking into account all effective insurance coverages and effective third-party indemnifications with respect to such change, circumstance, effect or condition.
"Mortgage and Deed of Trust" shall have the meaning given such term in
Section 2.3(h).
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
"Navajo Pipeline" shall have the meaning set forth in the preamble.
"Navajo Pipeline Liabilities" shall have the meaning given such term in the Contribution Agreement.
"Navajo Refining" shall have the meaning set forth in the preamble.
"Navajo Refining Liabilities" shall have the meaning given such term in the Contribution Agreement.
"Omnibus Agreement" means that certain agreement entered into and effective as of July 13, 2004, by and among Holly, Navajo Pipeline, Holly Logistic Services, L.L.C., a Delaware limited liability company, the Partnership, the Operating Partnership, HEP Logistics GP, L.L.C., a Delaware limited liability company and HEP Logistics Holdings, L.P., a Delaware limited partnership, and amended as of the date hereof.
"Operating Partnership" shall have the meaning set forth in the preamble.
"Order" means any order, writ, injunction, decree, compliance or consent order or decree, settlement agreement, schedule and similar binding legal agreement issued by or entered into with a Governmental Entity.
"Partnership" shall have the meaning set forth in the preamble.
"Partnership Agreement" means the First Amended and Restated Agreement of Limited Partnership of the Partnership, as amended.
"Party" and "Parties" shall have the meanings set forth in the preamble.
"Permits" means all material permits, licenses, variances, exemptions, Orders, franchises and approvals of all Governmental Entities necessary for the lawful ownership and operation of the Intermediate Pipelines.
"person" means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, Governmental Entity or other entity.
"Pipelines Agreement" shall have the meaning set forth in Section 2.2(d).
"Pipeline Conveyance" shall have the meaning set forth in Section 2.2(b).
"Post-Closing Consents" means (i) any consent, approval or permit of, or filing with or notice to, any Governmental Entity, railroad company or public utility which has issued or granted any permit, license, right-of-way, lease or other authorizations permitting any part of any pipeline included in the Intermediate Pipelines to cross or be placed on land owned or controlled by such Governmental Entity, railroad company or public utility and (ii) any consent, approval or permit of, or filing with or notice to, any Governmental Entity or other third party that, in the
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
case of both clause (i) and (ii), is customarily obtained or made after closing in connection with transactions similar in nature to the transactions contemplated hereby.
"Private Equity Sale" means the private sale of common units of the Partnership for the purpose of financing a portion of the purchase of the Intermediate Pipelines and subject to Section 6.2(h).
"Rights" shall have the meaning set forth in Section 5.3(a).
"Rule 144A Debt" shall have the meaning set forth in Section 9.2(a).
"Seller Ancillary Documents" shall mean each agreement, document, instrument or certificate to be delivered by the Seller Parties at the Closing pursuant to Section 2.2 hereof and each other document or Contract entered into by any Seller Party in connection with this Agreement or the Closing, including the letter agreement dated of even date herewith entered into between Holly and the Partnership.
"Seller Party Closing Certificate" shall have the meaning set forth in
Section 6.2(c).
"Seller Parties" shall have the meaning set forth in the preamble.
"Termination Date" shall have the meaning set forth in Section 7.1(a)(ii).
"Transfer" shall have the meaning set forth in Section 9.2(a).
"Unit Consideration" means 70,000 common units of the Partnership.
ARTICLE IX
ADDITIONAL AGREEMENTS
9.1 FURTHER ASSURANCES. After the Closing, each Party shall take such further actions, including obtaining consents to assignment from third parties, and execute such further documents as may be necessary or reasonably requested by the other Parties in order to effectuate the intent of this Agreement and the Ancillary Documents and to provide such other Parties with the intended benefits of this Agreement and the Ancillary Documents.
9.2 POST-CLOSING TAX COVENANTS.
(a) Restrictions. So long as at least 1% of the Unit Consideration to be issued to the Seller Parties in consideration for the Intermediate Pipelines remains outstanding and held by any Seller Party or any affiliate of any Seller Party, then the Buyer Parties agree (i) not to sell, exchange or otherwise dispose (collectively, a "Transfer") of any ownership interest in and to the Intermediate Pipelines prior to March 1, 2015, and (ii) not to repay prior to March 1, 2015, other than pursuant to its terms, the $35,000,000 of debt issued by the Partnership and certain of its affiliates pursuant to a Rule 144A offering, or any other alternative debt financing in lieu thereof,
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
prior to or contemporaneous with the Closing Date to fund the Cash Consideration (the "Rule 144A Debt").
(b) Exceptions to Restrictions. Notwithstanding the provisions of
Section 9.2(a), a Transfer of any Intermediate Pipeline asset may occur by
reason of (i) a Transfer that constitutes a like-kind exchange under Section
1031 of the Code, (ii) an involuntary sale pursuant to foreclosure of any
mortgage secured by the Intermediate Pipelines or otherwise, (iii) a deed in
lieu of foreclosure (provided that any Buyer Party may not execute any deed in
lieu of foreclosure unless the maturity of the indebtedness secured by the
Intermediate Pipelines has occurred, whether by reason of acceleration or
otherwise), (iv) a proceeding in connection with a bankruptcy or other similar
involuntary debt reorganization of the Buyer Parties, (v) an event described in
Section 1033 of the Code, provided the Intermediate Pipelines are converted into
assets qualifying under Section 1033 of the Code in the period provided
therein), (vi) a condemnation or other taking by a Governmental Entity or a
mandatory conveyance to a Governmental Entity, (vii) a transfer involving (A) a
merger or consolidation of any Buyer Party with or into another entity that is
treated as a partnership for tax purposes, provided such is a tax free
transaction, (B) a "Change of Control" as defined in the indenture governing the
Rule 144A Debt (the "Indenture") in which the successor entity owning the
interests in such Buyer Party is a partnership for tax purposes, or (C) sales of
assets in any calendar year for aggregate consideration which does not exceed
$2,000,000, and (viii) any other Transfer that would not accelerate any Seller
Party's recognition of gain under Section 704(c) of the Code with respect to the
Intermediate Pipelines.
Likewise, a repayment of the Rule 144A Debt may occur (i) if such
repayment is made in connection with a refinancing of the Rule 144A Debt for
indebtedness in an amount not less than the then outstanding principal amount of
the Rule 144A Debt and for which the Partnership is provided the opportunity to
bear the economic risk of loss (as described in Treasury Regulation Section
1.704-2(i)), (ii) if such repayment is made after an event of default and the
acceleration thereof in accordance with the terms of the Indenture, (iii) in an
amount equal to the aggregate income or gain under Section 704(c) of the Code
that has been allocated to any Seller Party in accordance with the "remedial
method" as described in Treasury Regulation Section 1.704-3(d) pursuant to
Section 6.2(b)(iii) of the Partnership's First Amended and Restated Agreement of
Limited Partnership, as amended, (iv) if such repayment would not accelerate any
Seller Party's recognition of gain under Section 704(c) of the Code with respect
to the Intermediate Pipelines, or (v) if such full or partial repayment is made
in connection with a "Change of Control" permitted above and such full or
partial repayment is funded by indebtedness in an amount not less than the
amount of such repayment and for which any Seller Party is provided the
opportunity to bear the economic risk of loss (as described in Treasury
Regulation Section 1.704-2(i)).
ARTICLE X
MISCELLANEOUS
10.1 EXPENSES. Except as provided in Sections 2.5 and 5.6 of this Agreement, or as provided in the Ancillary Documents or the Omnibus Agreement, all costs and expenses incurred
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
by the Parties in connection with the consummation of the transactions contemplated hereby shall be borne solely and entirely by the Party which has incurred such expense.
10.2 NOTICES.
(a) Any notice or other communication given under this Agreement or
the Omnibus Agreement shall be in writing and shall be (i) delivered personally,
(ii) sent by documented overnight delivery service, (iii) sent by facsimile
transmission, or (iv) sent by first class mail, postage prepaid (certified or
registered mail, return receipt requested). Such notice shall be deemed to have
been duly given (w) on the date of the delivery, if delivered personally, (x) on
the business day after dispatch by documented overnight delivery service, if
sent in such manner, (y) on the date of facsimile transmission, if so
transmitted on a business day during normal business hours, otherwise on the
next business day, or (z) on the fifth business day after sent by first class
mail, postage prepaid, if sent in such manner. Notices or other communications
shall be directed to the following addresses:
Notices to any of the Seller Parties:
Holly Corporation
100 Crescent Court, Suite 1600
Dallas, Texas 75201-6927
Attention: General Counsel Facsimile No.: (214) 871-3523
with copies to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
Attention: Alan J. Bogdanow Facsimile No.: (214) 999-7857
Notices to any of the Buyer Parties:
Holly Energy Partners, L.P.
100 Crescent Court, Suite 1600
Dallas, Texas 75201-6927
Attention: Conflicts Committee Facsimile No.: (214) 871-3523
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
with copies to:
Akin Gump Strauss Hauer & Feld LLP
1333 New Hampshire Ave, NW
Washington, D.C. 20036
Attention: Rick Burdick
Facsimile No.: (202) 955-7778
(b) Either Holly or the Partnership may at any time change its address for service from time to time by giving notice to the other Party in accordance with this Section 10.2.
10.3 SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced under applicable Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner adverse to any Party. Upon such determination that any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated herein are consummated as originally contemplated to the fullest extent possible.
10.4 GOVERNING LAW. This Agreement shall be subject to and governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state. Each Party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to venue in Dallas, Texas.
10.5 PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each Party hereto and their successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement.
10.6 ASSIGNMENT OF AGREEMENT. At any time, any of the Buyer Parties or the Seller Parties may make a collateral assignment of their rights under this Agreement to any of their bona fide lenders or debt holders, or a trustee or a representative for any of them, and the non-assigning Parties shall execute an acknowledgment of such collateral assignment in such form as may from time to time be reasonably requested; provided, however, that unless written notice is given to the non-assigning Parties that any such collateral assignment has been foreclosed upon, such non-assigning Parties shall be entitled to deal exclusively with the applicable Buyer Parties or Seller Parties, as the case may be, as to any matters arising under this Agreement, the Ancillary Documents or the Omnibus Agreement (other than for delivery of notices required by any such collateral assignment). Except as otherwise provided in this Section 10.6, neither this Agreement nor any of the rights, interests, or obligations hereunder may be assigned by any Party without the prior written consent of the Seller Parties and the Buyer Parties.
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
10.7 CAPTIONS. The captions in this Agreement are for purposes of reference only and shall not limit or otherwise affect the interpretation hereof.
10.8 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
10.9 DIRECTOR AND OFFICER LIABILITY. Except to the extent that they are a party hereto, the directors, managers, officers, partners and stockholders of the Buyer Parties, the Seller Parties and their respective affiliates shall not have any personal liability or obligation arising under this Agreement (including any claims that another party may assert) other than as an assignee of this Agreement or pursuant to a written guarantee.
10.10 INTEGRATION. This Agreement, the Ancillary Documents and the Omnibus Agreement supersede any previous understandings or agreements among the Parties, whether oral or written, with respect to their subject matter. This Agreement, the Ancillary Documents and the Omnibus Agreement contain the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement, the Ancillary Documents or the Omnibus Agreement unless it is contained in a written amendment hereto or thereto and executed by the Parties hereto or thereto after the date of this Agreement, the Ancillary Documents or the Omnibus Agreement.
10.11 LIMITATIONS REGARDING ENVIRONMENTAL INDEMNIFICATION. The Parties hereby agree that effective upon the consummation of the transactions contemplated hereby, Section 3.2 of the Omnibus Agreement is hereby amended to read as follows:
"The aggregate liability of Holly in respect of all Covered Environmental Losses under Section 3.1(a) shall not exceed $15.0 million plus an additional $2.5 million in the case of Covered Environmental Losses related to the Intermediate Pipelines. For clarity, the first $15,000,000 million limit would apply to Covered Environmental Losses associated with both the Intermediate Pipelines and the assets contributed to the Partnership by Holly at the time of the Partnership's initial public offering, while the limit between $15,000,000 and $17,500,00 would apply only to Covered Environmental Losses associated with the Intermediate Pipelines. Holly will not have any obligation under Section 3.1(a) until the Covered Environmental Losses of the Partnership Group exceed $200,000."
10.12 EFFECT OF AGREEMENT; RATIFICATION OF OMNIBUS AGREEMENT. Except as supplemented hereby, the terms and provisions of the Omnibus Agreement shall remain in full force and effect and are hereby in all respects ratified and confirmed by the Parties. The Parties further ratify and confirm that except as otherwise expressly provided herein, in the event this Agreement conflicts in any way with the Omnibus Agreement, the terms and provisions of the Omnibus Agreement shall control. Without limiting the generality of the foregoing, the Parties confirm that the provisions of Article III of the Omnibus Agreement, except as amended
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
pursuant to Section 10.11 hereof, apply to the Intermediate Pipelines and the Parties as if fully set forth herein.
10.13 CONFIRMATION OF AGREEMENT. Certain parties to the Omnibus Agreement have set forth their signatures on Annex A hereto for the sole purpose of evidencing their agreement to supplement the agreements of the parties contained in the Omnibus Agreement pursuant to the terms and provisions of this Agreement, and confirm the provisions of Section 10.12 hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.
BUYER PARTIES:
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/ Stephen J. McDonnell
------------------------------------------
Stephen J. McDonnell
Vice President and
Chief Financial Officer
|
HOLLY ENERGY PARTNERS -- OPERATING, L.P.
By: HEP LOGISTICS GP, L.L.C.
its General Partner
By: HOLLY ENERGY PARTNERS, L.P.
its Sole Member
By: HEP LOGISTICS HOLDINGS, L.P.
its General Partner
By: HOLLY LOGISTIC SERVICES, L.L.C.
its General Partner
By: /s/ Stephen J. McDonnell
--------------------------------------
Stephen J. McDonnell
Vice President and
Chief Financial Officer
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SIGNATURE PAGE
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
HEP PIPELINE, L.L.C.
By: HOLLY ENERGY PARTNERS -- OPERATING, L.P.
its Sole Member
By: HEP LOGISTICS GP, L.L.C.
its General Partner
By: HOLLY ENERGY PARTNERS, L.P.
its Sole Member
By: HEP LOGISTICS HOLDINGS, L.P.
its General Partner
By: HOLLY LOGISTIC SERVICES, L.L.C.
its General Partner
By: /s/ Stephen J. McDonnell
--------------------------------------------
Stephen J. McDonnell
Vice President and
Chief Financial Officer
|
SELLER PARTIES:
HOLLY CORPORATION
By: /s/ Stephen J. McDonnell
------------------------------------------------
Stephen J. McDonnell
Vice President and Chief Financial Officer
|
NAVAJO PIPELINE CO., L.P.
By: NAVAJO PIPELINE GP, L.L.C.,
Its General Partner
By: /s/ Stephen J. McDonnell
--------------------------------------------
Stephen J. McDonnell
Vice President and Chief Financial Officer
|
SIGNATURE PAGE
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
NAVAJO REFINING COMPANY, L.P.
BY: NAVAJO REFINING GP, L.L.C.,
Its General Partner
By: /s/ Stephen J. McDonnell
--------------------------------------------
Stephen J. McDonnell
Vice President and Chief Financial Officer
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SIGNATURE PAGE
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
PURCHASE AND SALE AGREEMENT
EXHIBIT A
FORM OF CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT
BY AND AMONG
HOLLY CORPORATION,
NAVAJO PIPELINE CO., L.P.
AND
NAVAJO REFINING COMPANY, L.P.
AS TRANSFEROR PARTIES,
AND
HOLLY ENERGY PARTNERS, L.P.,
HOLLY ENERGY PARTNERS - OPERATING, L.P.
AND
HEP PIPELINE, L.L.C.
AS TRANSFEREE PARTIES
DATED AS OF JULY [_____], 2005
INDEX
ARTICLE I DEFINITIONS; RECORDATION.................................................... 2
1.1 Definitions............................................................... 2
ARTICLE II CONCURRENT TRANSACTIONS.................................................... 5
2.1 Contribution and Conveyance by Navajo Pipeline of its Interest in the
Intermediate Pipelines to the Partnership and HEP Pipeline................ 5
2.2 Sale by Navajo Refining of its Interest in the Intermediate Pipelines
to HEP Pipeline........................................................... 6
2.3 Distribution of Unit Consideration........................................ 6
2.4 Distribution of Navajo Pipeline Cash Consideration........................ 6
2.5 Payment of Navajo Refining Cash Consideration............................. 6
2.6 Payment of Transaction Expenses........................................... 6
2.7 Increase in Capital Account of HEP GP..................................... 7
2.8 Mortgage and Deed of Trust................................................ 7
2.9 Indemnification Agreement................................................. 7
ARTICLE III ASSUMPTION OF CERTAIN LIABILITIES......................................... 7
3.1 Assumption of Liabilities by HEP Pipeline................................. 7
3.2 Assumption of Liabilities by HEP Pipeline................................. 7
3.3 General Provisions Relating to Assumption of Liabilities.................. 7
ARTICLE IV TITLE MATTERS.............................................................. 8
4.1 Encumbrances.............................................................. 8
4.2 Disclaimer of Warranties; Subrogation; Waiver of Bulk Sales Laws.......... 8
ARTICLE V POWERS OF ATTORNEY.......................................................... 10
5.1 Navajo Pipeline and Navajo Refining....................................... 10
ARTICLE VI MISCELLANEOUS.............................................................. 10
6.1 Further Assurances........................................................ 10
6.2 Headings; References; Interpretation...................................... 10
6.3 Governing Law............................................................. 11
6.4 Parties in Interest....................................................... 11
6.5 Assignment of Agreement................................................... 11
6.6 Deed; Bill of Sale; Assignment............................................ 11
6.7 Amendment or Modification................................................. 11
6.8 Director and Officer Liability............................................ 11
6.9 Counterparts.............................................................. 12
6.10 Severability.............................................................. 12
6.11 Integration............................................................... 12
6.12 Effect of Agreement....................................................... 12
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SCHEDULES:
Schedule 4.1 - Intermediate Pipelines Encumbrances
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") dated as of July [_____], 2005, is made and entered into by and among Holly Corporation, a Delaware corporation ("Holly"), Navajo Pipeline Co., L.P., a Delaware limited partnership ("Navajo Pipeline"), Navajo Refining Company, L.P., a Delaware limited partnership ("Navajo Refining," and, together with Holly and Navajo Pipeline, the "Transferor Parties"), Holly Energy Partners, L.P., a Delaware limited partnership (the "Partnership"), Holly Energy Partners - Operating, L.P., a Delaware limited partnership (the "Operating Partnership") and HEP Pipeline, L.L.C., a Delaware limited liability company ("HEP Pipeline," and, together with the Partnership and the Operating Partnership, the "Transferee Parties"). The above-named entities are sometimes referred to in this Agreement each as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Transferee Parties have decided to exercise the option to
purchase the Intermediate Pipelines (as defined herein) granted pursuant to
Section 5.1 of the Omnibus Agreement (as defined herein);
WHEREAS, in order to accomplish the objective and purpose in the preceding recital, and to effect the intent of the Parties in connection with the consummation of the transactions contemplated hereby, the following actions have been taken prior to the date hereof:
1. The Parties have entered into that certain Purchase and Sale Agreement (the "Purchase Agreement") dated July [___], 2005, to supplement the agreements of the parties contained in the Omnibus Agreement.
2. The Partnership and certain of its affiliates have issued $35,000,000 of debt pursuant to a Rule 144A offering, the proceeds of which (the "Rule 144A Proceeds") were deposited into a bank account maintained solely by the Operating Partnership (the "Operating Partnership Bank Account").
3. Certain institutional investors have contributed $[___________] in cash to the Partnership in exchange for [____________] common units of the Partnership. Such cash contribution has been deposited into a bank account maintained solely by the Partnership (the "Partnership Bank Account").
WHEREAS, concurrently with the consummation of the transactions contemplated hereby, each of the following shall occur:
4. Navajo Pipeline will convey its interest in the Intermediate Pipelines to HEP Pipeline as a contribution to the capital of the Partnership and an additional capital contribution by the Partnership to HEP Pipeline, with HEP Pipeline assuming the Navajo Pipeline Liabilities (as defined herein). A portion of such contribution in the amount of $[__________] will be made for the benefit of HEP Logistics Holdings, L.P. ("HEP GP") to meet its contribution obligations under
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
CONTRIBUTION AGREEMENT
the Partnership Agreement (as defined herein) (the "GP Contribution Obligation").
5. Navajo Refining will sell its interest in the Intermediate Pipelines to HEP Pipeline, with HEP Pipeline assuming the Navajo Refining Liabilities (as defined herein).
6. The Partnership will issue 70,000 of its common units (the "Unit Consideration") and distribute $76,724,892 in cash (the "Navajo Pipeline Cash Consideration") to Navajo Pipeline as consideration for the contribution by Navajo Pipeline of its interest in the Intermediate Pipelines. The Navajo Pipeline Cash Consideration shall consist of (x) the Rule 144A Proceeds distributed from the Operating Partnership Bank Account and (y) the balance in cash distributed from the Partnership Bank Account.
7. The Partnership will pay $926,128 in cash (the "Navajo Refining Cash Consideration") from the Partnership Bank Account to Navajo Refining in exchange for Navajo Refining's interest in the Intermediate Pipelines.
8. The Partnership will pay expenses related to the transactions contemplated hereby from its existing working capital.
9. The capital account of HEP GP will be increased by $[__________] in respect of the GP Contribution Obligation (the "Additional GP Interest").
10. HEP GP will enter into a mortgage and deed of trust with respect to the Intermediate Pipelines for the benefit of the Transferor Parties.
11. Navajo Pipeline will enter into an indemnification agreement with HEP GP to indemnify HEP GP with respect to the Rule 144A Proceeds.
NOW THEREFORE, in consideration of their mutual undertakings and agreements set forth herein and in any Intermediate Pipelines Transfer Document (as defined herein), the Parties undertake and agree as follows:
ARTICLE I
DEFINITIONS; RECORDATION
1.1 Definitions. The following capitalized terms have the meanings given below.
"Additional GP Interest" has the meaning assigned to such term in the recitals.
"affiliate" means, with respect to a specified person, any other person controlling, controlled by or under common control with that first person. As used in this definition, the term "control" includes (i) with respect to any person having voting securities or the equivalent and elected directors, managers or persons performing similar functions, the ownership of or power
HOLLY CORPORATION
HOLLY ENERGY PARTNERS, L.P.
CONTRIBUTION AGREEMENT
to vote, directly or indirectly, voting securities or the equivalent representing 50% or more of the power to vote in the election of directors, managers or persons performing similar functions, (ii) ownership of 50% or more of the equity or equivalent interest in any person and (iii) the ability to direct the business and affairs of any person by acting as a general partner, manager or otherwise.
"Agreement" has the meaning assigned to such term in the first paragraph of this Agreement.
"Ancillary Documents" means, collectively, the Transferee Ancillary Documents and the Transferor Ancillary Documents.
"Artesia Refinery" means the refining facilities owned by Navajo Refining in Artesia, New Mexico.
"Closing" means the closing of the transactions contemplated by this Agreement.
"Closing Date" means the date on which the Closing takes place.
"Contract" means any written or oral contract, agreement, indenture, instrument, note, bond, loan, lease, mortgage, franchise, license agreement, purchase order, binding bid or offer, binding term sheet or letter of intent or memorandum, commitment, letter of credit or any other legally binding arrangement, including any amendments or modifications thereof and waivers relating thereto.
"Effective Time" means 12:01 a.m. Dallas, Texas time on the Closing Date.
"Governmental Entity" means any federal, state, local or foreign court or governmental agency, authority or instrumentality or regulatory body.
"GP Contribution Obligation" has the meaning assigned to such term in the recitals.
"HEP GP" has the meaning assigned to such term in the recitals.
"HEP Pipeline" has the meaning assigned to such term in the first paragraph of this Agreement.
"Holly" has the meaning assigned to such term in the first paragraph of this Agreement.
"Intermediate Pipelines" means approximately 65 miles of 8" feedstock pipeline and 10" feedstock pipeline, each of which begins at the inlet flange of the delivery manifold motor operated valves at the Lovington Refinery, near Lovington, New Mexico and ends at the outlet flange of the turbine meter at the Artesia Refinery in Artesia, New Mexico, along with any and all connection facilities, including the Enterprise/MAPL connection, field booster pump
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stations, spare parts, pipes, valves, motors and miscellaneous equipment directly associated with the 8" inch and 10" feedstock pipelines.
"Intermediate Pipelines Transfer Documents" means, collectively, the Omnibus Agreement, the Purchase Agreement and any Ancillary Document.
"Laws" means all statutes, laws, rules, regulations, Orders, ordinances, writs, injunctions, judgments and decrees of all Governmental Entities.
"Lovington Refinery" means the refining facilities owned by Navajo Refining near Lovington, New Mexico.
"Navajo Pipeline" has the meaning assigned to such term in the first paragraph of this Agreement.
"Navajo Pipeline Cash Consideration" has the meaning assigned to such term in the recitals.
"Navajo Pipeline Liabilities" means all obligations and liabilities of Navajo Pipeline with respect to its interest in the Intermediate Pipelines.
"Navajo Refining" has the meaning assigned to such term in the first paragraph of this Agreement.
"Navajo Refining Cash Consideration" has the meaning assigned to such term in the recitals.
"Navajo Refining Liabilities" means all obligations and liabilities of Navajo Refining with respect to its interest in the Intermediate Pipelines.
"Omnibus Agreement" means that certain agreement entered into and effective as of July 13, 2004, by and among Holly, Navajo Pipeline, Holly Logistic Services, L.L.C., a Delaware limited liability company, the Partnership, the Operating Partnership, HEP GP and HEP Logistics GP, L.L.C., a Delaware limited liability company.
"Operating Partnership" has the meaning assigned to such term in the first paragraph of this Agreement.
"Operating Partnership Bank Account" has the meaning assigned to such term in the recitals.
"Order" means any order, writ, injunction, decree, compliance or consent order or decree, settlement agreement, schedule and similar binding legal agreement issued by or entered into with a Governmental Entity.
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"Partnership" has the meaning assigned to such term in the first paragraph of this Agreement.
"Partnership Agreement" means the First Amended and Restated Agreement of Limited Partnership of the Partnership, as amended.
"Partnership Bank Account" has the meaning assigned to such term in the recitals.
"Party and Parties" have the meanings assigned to such terms in the first paragraph of this Agreement.
"Purchase Agreement" has the meaning assigned to such term in the recitals.
"Rule 144A Proceeds" has the meaning assigned to such term in the recitals.
"Transferee Ancillary Documents" means each agreement, document, instrument or certificate to be delivered by the Transferee Parties, or their affiliates at the Closing and each other document or Contract entered into by the Transferee Parties, or their affiliates in connection with this Agreement, the Omnibus Agreement, the Purchase Agreement or the Closing, including the letter agreement dated of even date herewith entered into between Holly and the Partnership.
"Transferee Parties" has the meaning assigned to such term in the first paragraph of this Agreement.
"Transferor Ancillary Document" means each agreement, document, instrument or certificate to be delivered by the Transferor Parties, or their affiliates at the Closing and each other document or Contract entered into by the Transferor Parties, or their affiliates in connection with this Agreement, the Omnibus Agreement, the Purchase Agreement or the Closing, including the letter agreement dated of even date herewith entered into between Holly and the Partnership.
"Transferor Parties" has the meaning assigned to such term in the first paragraph of this Agreement.
"Unit Consideration" has the meaning assigned to such term in the recitals.
ARTICLE II
CONCURRENT TRANSACTIONS
2.1 Contribution and Conveyance by Navajo Pipeline of its Interest in the Intermediate Pipelines to the Partnership and HEP Pipeline. Navajo Pipeline hereby grants, contributes, transfers, assigns and conveys to HEP Pipeline, its successors and assigns, for its and their own use forever, all of its right, title and interest in the Intermediate Pipelines, and HEP Pipeline hereby accepts such interest in the Intermediate Pipelines from Navajo Pipeline, as a
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contribution by Navajo Pipeline to the capital of the Partnership and an additional capital contribution by the Partnership to HEP Pipeline, subject to all matters contained in the instruments of conveyance covering the Intermediate Pipelines to evidence such contribution and conveyance. The Parties acknowledge that a portion of such contribution, transfer, assignment and conveyance in the amount of the GP Contribution Obligation has been made for the benefit of HEP GP to meet its obligation under the Partnership Agreement.
TO HAVE AND TO HOLD all such right, title and interest in the Intermediate Pipelines unto HEP Pipeline, its successors and assigns, together with all and singular the rights and appurtenances thereto in anywise belonging, subject, however, to the terms and conditions stated in this Agreement and any Intermediate Pipelines Transfer Document, and in such instruments of conveyance forever.
2.2 Sale by Navajo Refining of its Interest in the Intermediate Pipelines to HEP Pipeline. Navajo Refining hereby sells to HEP Pipeline, its successors and assigns, for its and their own use forever, all of its right, title and interest in the Intermediate Pipelines, and HEP Pipeline hereby purchases such interest in the Intermediate Pipelines from Navajo Refining, subject to all matters contained in the instruments of conveyance covering the Intermediate Pipelines to evidence such contribution and conveyances.
TO HAVE AND TO HOLD all such right, title and interest in the Intermediate Pipelines unto HEP Pipeline, its successors and assigns, together with all and singular the rights and appurtenances thereto in anywise belonging, subject, however, to the terms and conditions stated in this Agreement and any Intermediate Pipelines Transfer Document, and in such instruments of conveyance forever.
2.3 Distribution of Unit Consideration. The Parties acknowledge that the Partnership has issued the Unit Consideration to Navajo Pipeline. Navajo Pipeline hereby acknowledges receipt of the Unit Consideration.
2.4 Distribution of Navajo Pipeline Cash Consideration. The Parties acknowledge that the Partnership has distributed to Navajo Pipeline the Navajo Pipeline Cash Consideration, consisting of (x) the Rule 144A Proceeds maintained in the Operating Partnership Bank Account and (y) the balance in cash maintained in the Partnership Bank Account. Navajo Pipeline hereby acknowledges receipt of the Navajo Pipeline Cash Consideration.
2.5 Payment of Navajo Refining Cash Consideration. The Parties acknowledge that the Partnership has paid on behalf of HEP Pipeline the Navajo Refining Cash Consideration from the Partnership Bank Account to Navajo Refining. Navajo Refining hereby acknowledges receipt of the Navajo Refining Cash Consideration.
2.6 Payment of Transaction Expenses. The Parties acknowledge that the Partnership will pay expenses related to the transactions contemplated hereby from its existing working capital.
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2.7 Increase in Capital Account of HEP GP. The Parties acknowledge that the capital account of HEP GP has been increased by the Additional GP Interest.
2.8 Mortgage and Deed of Trust. The Parties acknowledge that HEP GP has entered into a mortgage and deed of trust with respect to the Intermediate Pipelines for the benefit of the Transferor Parties.
2.9 Indemnification Agreement. The Parties acknowledge that Navajo Pipeline has entered into an indemnification agreement with HEP GP to indemnify HEP GP with respect to the Rule 144A Proceeds.
ARTICLE III
ASSUMPTION OF CERTAIN LIABILITIES
3.1 Assumption of Liabilities by HEP Pipeline. In connection with the contribution by Navajo Pipeline of its interest in the Intermediate Pipelines to the Partnership and HEP Pipeline, as set forth in Section 2.1 above, HEP Pipeline hereby assumes and agrees to duly and timely pay, perform and discharge all of the Navajo Pipeline Liabilities, to the full extent that Navajo Pipeline has been heretofore or would have been in the future obligated to pay, perform and discharge the Navajo Pipeline Liabilities were it not for such contribution and the execution and delivery of this Agreement; provided, however, that said assumption and agreement to duly and timely pay, perform and discharge the Navajo Pipeline Liabilities shall not (i) increase the obligation of HEP Pipeline with respect to the Navajo Pipeline Liabilities beyond that of Navajo Pipeline, (ii) waive any valid defense that was available to Navajo Pipeline with respect to the Navajo Pipeline Liabilities or (iii) enlarge any rights or remedies of any third party under any of the Navajo Pipeline Liabilities.
3.2 Assumption of Liabilities by HEP Pipeline. In connection with the sale
by Navajo Refining of its interest in the Intermediate Pipelines to HEP Pipeline
as set forth in Section 2.2 above, HEP Pipeline hereby assumes and agrees to
duly and timely pay, perform and discharge all of the Navajo Refining
Liabilities, to the full extent that Navajo Refining has been heretofore or
would have been in the future obligated to pay, perform and discharge the Navajo
Refining Liabilities were it not for such sale and the execution and delivery of
this Agreement; provided, however, that said assumption and agreement to duly
and timely pay, perform and discharge the Navajo Refining Liabilities shall not
(i) increase the obligation of HEP Pipeline with respect to the Navajo Refining
Liabilities beyond that of Navajo Refining, (ii) waive any valid defense that
was available to Navajo Refining with respect to the Navajo Refining Liabilities
or (iii) enlarge any rights or remedies of any third party under any of the
Navajo Refining Liabilities.
3.3 General Provisions Relating to Assumption of Liabilities. Notwithstanding anything to the contrary contained in this Agreement including, without limitation, the terms and provisions of this Article III, none of the Parties shall be deemed to have assumed, and none of the Intermediate Pipelines have been or are being contributed, conveyed or sold subject to, (i) any liens or security interests securing consensual indebtedness covering any of the Intermediate
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Pipelines, except to the extent set forth on a schedule to this Agreement or any Intermediate Pipelines Transfer Document, and all such liens and security interests shall be deemed to be excluded from the assumptions of liabilities made under this Article III or (ii) any of the liabilities covered by the indemnities set forth in any Intermediate Pipelines Transfer Document to the extent such liabilities are covered by such indemnities, and all such liabilities shall be deemed to be excluded from the assumptions of liabilities made under this Article III to the extent that such liabilities are covered by such indemnities.
ARTICLE IV
TITLE MATTERS
4.1 Encumbrances.
(a) Except to the extent provided in Section 3.3 of this Agreement or any Intermediate Pipelines Transfer Document, the contribution, conveyance and sale (by operation of law or otherwise) of the Intermediate Pipelines as reflected in this Agreement is made expressly subject to all recorded and unrecorded matters and all physical conditions and other matters in existence on the Closing Date, plus any other such matters as set forth on Schedule 4.1(a).
(b) To the extent that certain jurisdictions in which the Intermediate Pipelines are located may require that documents be recorded in order to evidence the transfers of title reflected in this Agreement, then the provisions set forth in Section 4.1(a) immediately above shall also be applicable to the contributions, conveyances and sales under such documents.
4.2 Disclaimer of Warranties; Subrogation; Waiver of Bulk Sales Laws.
(a) EXCEPT TO THE EXTENT PROVIDED IN ANY INTERMEDIATE PIPELINES TRANSFER DOCUMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT NONE OF THE PARTIES HAS MADE, DOES NOT MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES AND DISCLAIMS, ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT, REGARDING (I) THE VALUE, NATURE, QUALITY OR CONDITION OF THE INTERMEDIATE PIPELINES INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, GEOLOGY OR ENVIRONMENTAL CONDITION OF THE INTERMEDIATE PIPELINES GENERALLY, INCLUDING THE PRESENCE OR LACK OF HAZARDOUS SUBSTANCES OR OTHER MATTERS ON THE INTERMEDIATE PIPELINES, (II) THE INCOME TO BE DERIVED FROM THE INTERMEDIATE PIPELINES, (III) THE SUITABILITY OF THE INTERMEDIATE PIPELINES FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON, (IV) THE COMPLIANCE OF OR BY THE INTERMEDIATE PIPELINES OR THEIR OPERATION WITH ANY LAWS (INCLUDING WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS), OR (V) THE
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HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF THE INTERMEDIATE PIPELINES. EXCEPT TO THE EXTENT PROVIDED
IN ANY INTERMEDIATE PIPELINES TRANSFER DOCUMENT, THE TRANSFEREE PARTIES
ACKNOWLEDGE AND AGREE THAT EACH HAS HAD THE OPPORTUNITY TO INSPECT THE
INTERMEDIATE PIPELINES AND EACH IS RELYING SOLELY ON ITS OWN INVESTIGATION OF
THE INTERMEDIATE PIPELINES AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED
BY ANY OF THE PARTIES. EXCEPT TO THE EXTENT PROVIDED IN ANY INTERMEDIATE
PIPELINES TRANSFER DOCUMENT, NONE OF THE PARTIES IS LIABLE OR BOUND IN ANY
MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE INTERMEDIATE PIPELINES FURNISHED BY ANY AGENT, EMPLOYEE,
SERVANT OR THIRD PARTY. EXCEPT TO THE EXTENT PROVIDED IN ANY INTERMEDIATE
PIPELINES TRANSFER DOCUMENT, EACH OF THE PARTIES ACKNOWLEDGES THAT TO THE
MAXIMUM EXTENT PERMITTED BY LAW, THE CONTRIBUTION, CONVEYANCE AND SALE OF THE
INTERMEDIATE PIPELINES AS PROVIDED FOR HEREIN IS MADE IN AN "AS IS," "WHERE IS"
CONDITION WITH ALL FAULTS, AND THE INTERMEDIATE PIPELINES ARE CONTRIBUTED,
CONVEYED AND SOLD SUBJECT TO ALL OF THE MATTERS CONTAINED IN THIS SECTION. THIS
SECTION SHALL SURVIVE SUCH CONTRIBUTION, CONVEYANCE AND SALE OR THE TERMINATION
OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED BY THE
PARTIES AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND
NEGATION OF ANY REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR
STATUTORY, WITH RESPECT TO THE INTERMEDIATE PIPELINES THAT MAY ARISE PURSUANT TO
ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS SET FORTH IN THIS
AGREEMENT OR ANY INTERMEDIATE PIPELINES TRANSFER DOCUMENT.
(b) To the extent that certain jurisdictions in which the Intermediate Pipelines are located may require that documents be recorded in order to evidence the transfers of title reflected in this Agreement, then the disclaimers set forth in Section 4.2(a) immediately above shall also be applicable to the conveyances under such documents.
(c) The contributions, conveyances and sales of the Intermediate Pipelines made under this Agreement are made with full rights of substitution and subrogation of the respective Parties receiving such contributions, conveyances and sales, and all persons claiming by, through and under such Parties, to the extent assignable, in and to all covenants and warranties by the predecessors-in-title of the Parties contributing, conveying or selling the Intermediate Pipelines, and with full subrogation of all rights accruing under applicable statutes of limitation and all rights of action of warranty against all former owners of the Intermediate Pipelines.
(d) Each of the Parties agrees that the disclaimers contained in this Section 4.2 are "conspicuous" disclaimers. Any covenants implied by statute or Law by the use of the words "grant," "convey," "bargain," "sell," "assign," "transfer," "deliver," or "set over" or any of them
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or any other words used in this Agreement or any schedule hereto are hereby expressly disclaimed, waived or negated.
Each of the Parties hereby waives compliance with any applicable bulk sales law or any similar law in any applicable jurisdiction in respect of the transactions contemplated by this Agreement.
ARTICLE V
POWERS OF ATTORNEY
5.1 Navajo Pipeline and Navajo Refining. Navajo Pipeline and Navajo Refining hereby constitute and appoint HEP Pipeline and its successors and assigns, their true and lawful attorneys-in-fact with full power of substitution for them and in their name, place and stead or otherwise on behalf of Navajo Pipeline, Navajo Refining and their successors and assigns, and for the benefit of HEP Pipeline and its successors and assigns, to demand and receive from time to time the Intermediate Pipelines and to execute in the name of Navajo Pipeline, Navajo Refining and their successors and assigns, instruments of conveyance, instruments of further assurance and to give receipts and releases in respect of the same, and from time to time to institute and prosecute in the name of Navajo Pipeline, Navajo Refining and their successors and assigns for the benefit of HEP Pipeline as may be appropriate, any and all proceedings at Law, in equity or otherwise which HEP Pipeline and its successors and assigns, may deem proper in order (i) to collect, assert or enforce any claims, rights or titles of any kind in and to the Intermediate Pipelines, (ii) to defend and compromise any and all actions, suits or proceedings in respect of any of the Intermediate Pipelines and (iii) to do any and all such acts and things in furtherance of this Agreement as HEP Pipeline or its successors or assigns shall deem advisable. Navajo Pipeline and Navajo Refining hereby declare that the appointments hereby made and the powers hereby granted are coupled with an interest and are and shall be irrevocable and perpetual and shall not be terminated by any act of Navajo Pipeline, Navajo Refining or their successors or assigns or by operation of law.
ARTICLE VI
MISCELLANEOUS
6.1 Further Assurances. After the Closing, each Party shall take such further actions, including obtaining consents to assignment from third parties, and execute such further documents as may be necessary or reasonably requested by the other Parties in order to effectuate the intent of this Agreement and the Intermediate Pipelines Transfer Documents and to provide such other Parties with the intended benefits of this Agreement and the Intermediate Pipelines Transfer Documents.
6.2 Headings; References; Interpretation. All Article and Section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof. The words "hereof," "herein" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including without limitation, all Schedules attached hereto, and not to any particular provision of
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CONTRIBUTION AGREEMENT
this Agreement. All references herein to Articles, Sections, and Schedules shall, unless the context requires a different construction, be deemed to be references to the Articles, Sections and Schedules of this Agreement, respectively, and all such Schedules attached hereto are hereby incorporated herein and made a part hereof for all purposes. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word "including" following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as "without limitation," "but not limited to," or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter.
6.3 Governing Law. This Agreement shall be subject to and governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the Laws of another state. Each Party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to venue in Dallas, Texas.
6.4 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party hereto and their successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement.
6.5 Assignment of Agreement. Neither this Agreement nor any of the rights, interests, or obligations hereunder may be assigned by any Party without the prior written consent of Holly and the Partnership. Except as provided herein, nothing in this Agreement is intended to or shall confer upon any person other than the Parties, and their successors and permitted assigns, any rights, benefits, or remedies of any nature whatsoever under or by reason of this Agreement. Notwithstanding anything in this Agreement or any Intermediate Pipelines Transfer Documents to the contrary, Navajo Pipeline shall have the right, by written notice to the Parties hereto, to assign its rights to receive the Unit Consideration to any of its affiliates.
6.6 Deed; Bill of Sale; Assignment. To the extent required and permitted by applicable Law, this Agreement shall also constitute a "deed," "bill of sale" or "assignment" of the Intermediate Pipelines.
6.7 Amendment or Modification. This Agreement may be amended or modified from time to time only by the written agreement of all the Parties hereto and affected thereby.
6.8 Director and Officer Liability. Except to the extent that they are a party hereto, the directors, managers, officers, partners and stockholders of the Parties and their respective affiliates shall not have any personal liability or obligation arising under this Agreement (including any claims that another party may assert) other than as an assignee of this Agreement or pursuant to a written guarantee.
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6.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
6.10 Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced under applicable Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner adverse to any Party. Upon such determination that any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated herein are consummated as originally contemplated to the fullest extent possible.
6.11 Integration. This Agreement and the Intermediate Pipelines Transfer Documents supersede any previous understandings or agreements among the Parties, whether oral or written, with respect to their subject matter. This Agreement and the Intermediate Pipelines Transfer Documents contain the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement or any Intermediate Pipelines Documents unless it is contained in a written amendment hereto or thereto and executed by the Parties hereto or thereto after the date of this Agreement or such Intermediate Pipelines Transfer Document.
6.12 Effect of Agreement. The Parties ratify and confirm that except as otherwise expressly provided herein, in the event this Agreement conflicts in any way with any instrument of conveyance covering the Intermediate Pipelines, the terms and provisions of this Agreement shall control.
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TRANSFEREE PARTIES:
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:_________________________________________
Stephen J. McDonnell
Vice President and Chief
Financial Officer
HOLLY ENERGY PARTNERS -- OPERATING, L.P.
By: HEP LOGISTICS GP, L.L.C.
its General Partner
By: HOLLY ENERGY PARTNERS, L.P.
its Sole Member
By: HEP LOGISTICS HOLDINGS, L.P.
its General Partner
By: HOLLY LOGISTIC SERVICES, L.L.C.
its General Partner
By:_________________________________________
Stephen J. McDonnell
Vice President and Chief
Financial Officer
Signature Page 1 of 3 to the
Contribution Agreement
HEP PIPELINE, L.L.C.
By: HOLLY ENERGY PARTNERS -- OPERATING, L.P.
its Sole Member
By: HEP LOGISTICS GP, L.L.C.
its General Partner
By: HOLLY ENERGY PARTNERS, L.P.
its Sole Member
By: HEP LOGISTICS HOLDINGS, L.P.
its General Partner
By: HOLLY LOGISTIC SERVICES, L.L.C.
its General Partner
By:_________________________________________
Stephen J. McDonnell
Vice President and Chief
Financial Officer
TRANSFEROR PARTIES:
HOLLY CORPORATION
By:______________________________________________
Stephen J. McDonnell
Vice President and Chief Financial Officer
NAVAJO PIPELINE CO., L.P.
By: NAVAJO PIPELINE GP, L.L.C.,
Its General Partner
By:_________________________________________
Stephen J. McDonnell
Vice President and Chief
Financial Officer
Signature Page 2 of 3 to the
Contribution Agreement
NAVAJO REFINING COMPANY, L.P.
By: NAVAJO REFINING GP, L.L.C.,
Its General Partner
By:_________________________________________
Stephen J. McDonnell
Vice President and Chief
Financial Officer
Signature Page 3 of 3 to the
Contribution Agreement
SCHEDULE 4.1(A)
INTERMEDIATE PIPELINES ENCUMBRANCES
Schedule 4.1(A) - 1
EXHIBIT B
FORM OF PIPELINE CONVEYANCE
Recording Requested by and STATE: New Mexico When Recorded Return to: Vinson & Elkins L.L.P. 2001 Ross Avenue, Suite 3700 COUNTIES: Eddy, Lea Dallas, Texas 75201 Attention: Mark C. Anderson, Jr. |
CONVEYANCE, ASSIGNMENT AND BILL OF SALE
NAVAJO PIPELINE CO., L.P. AND NAVAJO REFINING COMPANY, L.P.
TO
HEP PIPELINE, L.L.C.
This Conveyance, Assignment and Bill of Sale ("Assignment"), dated effective for all purposes as of 12:01 a.m. Eastern Time on _____________, 2005 (the "Effective Time"), is made and entered into by and between Navajo Pipeline Co., L.P., a Delaware limited partnership, doing business in New Mexico as Navajo Pipeline Co., Limited Partnership, successor-by-conversion to Navajo Pipeline Co., a Delaware corporation, formerly known as Midland-Lea Pipeline Company, whose address is 501 East Main, P.O. Drawer 159, Artesia, New Mexico 88210 ("Navajo Pipeline Assignor"), Navajo Refining Company, L.P., a Delaware limited partnership, doing business in New Mexico as Navajo Refining Company, Limited Partnership, successor-by-conversion to Navajo Refining Company, a Delaware corporation, whose address is 501 East Main, P.O. Drawer 159, Artesia, New Mexico 88210 ("Navajo Refinery Assignor"), and HEP Pipeline, L.L.C. a Delaware limited liability company whose address is 100 Crescent Court, Suite 1600, Dallas, Texas 75201 ("Assignee"). Navajo Pipeline Assignor and Navajo Refinery Assignor are herein sometimes referred to individually as an "Assignor" and collectively as "Assignors."
WITNESSETH:
For and in consideration of the amounts paid by Assignee to Assignors and other good and valuable consideration, the receipt and sufficiency of which Assignors hereby acknowledge, each Assignor severally, as to their respective rights, title and interest in the property conveyed and assigned hereby, has transferred, bargained, conveyed, and assigned, and does hereby transfer, bargain, convey, and assign, to Assignee, effective for all purposes as of the Effective Time, the following properties and assets, whether real, personal or mixed, which are owned or held for use by Assignors in connection with the ownership and operation of Assignors' crude oil and intermediate, product pipelines located in New Mexico and described in greater detail in the narrative description contained in Part I of Exhibit A and depicted with bolded black lines on the map depicted on Part II of Exhibit A (herein referred to as the "Pipelines," such properties and assets being hereinafter called the "Navajo Property"):
(a) Assignors' interest in the lease or leases as listed and designated as such in Exhibit B (such lease or leases, whether one or more, shall collectively be referred to as the "Navajo Leases");
(b) The fee acreage described and designated as such in Exhibit B hereto, if any (such fee acreage shall be collectively referred to as the "Navajo Fee Acreage") together with all improvements owned by Assignors and located on the Navajo Fee Acreage;
1 Empire Line
(c) The right of way easements, permits, property use agreements, and licenses associated with or used in connection with the Navajo Property, as listed and designated as such in Exhibit B (such right of way easements, permits, property use agreements, and licenses shall collectively be referred to hereinafter as the "Navajo Easements");
(d) All rights of Assignors that relate to the foregoing properties and assets and which consist of rights to occupy real property, whether by adverse possession, prescriptive rights or otherwise.
TO HAVE AND TO HOLD the Navajo Property, subject to the terms, exceptions and other provisions herein stated and to the Permitted Encumbrances (as defined below), together with all and singular the rights and appurtenances thereunto and in anywise belonging, unto Assignee; each Assignor does hereby bind itself, and its successors and assigns, as to its respective interest in the Navajo Property as described on Exhibit B hereto, to warrant and defend title to the Navajo Property subject only to the Permitted Encumbrances, unto Assignee, against every person or entity whomsoever or whatsoever, as the case may be, lawfully claiming or to claim the same or any part thereof, by, through or under the Assignor specified in Exhibit B hereto, but not otherwise.
As used herein, the term "Permitted Encumbrances" shall mean:
(i) All legal requirements that govern or apply to the ownership, operation or transfer of such property;
(ii) Any lien for taxes that are not yet due and payable;
(iii) Materialmen's, mechanic's, repairmen's, employees', contractors', tax and other similar liens or charges arising in the ordinary course of business for obligations that are not delinquent or that will be paid and discharged in the ordinary course of business or, if delinquent, that are being contested in good faith by appropriate action;
(iv) Preferential rights to purchase and required third-party consents to assignments and similar agreements with respect to which waivers or consents are obtained from the appropriate parties;
(v) All rights reserved to or vested in any governmental, statutorial or public authority to control or regulate any of the real property interests constituting a part of the Navajo Property;
(vi) All easements, restrictions, reservations and covenants now of record affecting the Navajo Property;
(vii) Any matters that are waived without reservation in writing by Assignee or otherwise released or satisfied by Assignor on or prior to the Effective Time; and
(viii) Any encumbrances that do not materially impair the continued use and operation of the Navajo Property to which they relate and do not materially affect the value of the Navajo Property to which they relate.
Effective as of the Effective Time and in consideration of the conveyances made by Assignors hereunder, Assignee hereby agrees to be bound by the terms, conditions, and covenants of
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the Navajo Leases and the Navajo Easements. Assignee assumes all of the obligations and duties of Assignors under or in respect of the Navajo Leases and the Navajo Easements that arise from and after the Effective Time.
Assignors and Assignee agree to execute, acknowledge and deliver to each other such additional instruments, notices and documents, and to do all such other and further acts and things, as may be reasonably necessary or useful to more fully and effectively evidence and effect the sale, conveyance, assignment, transfer and delivery by Assignors to Assignee of the Navajo Property conveyed hereunder or intended to be so conveyed.
This Assignment shall bind and inure to the benefit of Assignors and Assignee and, except as otherwise provided herein, their respective successors and assigns. This Assignment shall be governed by and interpreted in accordance with the laws of the State of Texas without regard to any conflicts of law rule that would direct application of the laws of another jurisdiction, except to the extent that it is mandatory that the law of some other jurisdiction, wherein the Navajo Property is located, shall apply. All Exhibits attached hereto are hereby made a part hereof and incorporated herein by this reference. References in such Exhibits to instruments on file in the public records are made for all purposes. Unless provided otherwise, all recording references in such Exhibits are to the appropriate records of the counties in which the Navajo Property is located. This Assignment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Separate assignments of certain parts of the Navajo Property may be executed on officially approved forms by Assignors to Assignee in sufficient counterparts to satisfy applicable statutory and regulatory requirements. In addition, to facilitate recording or filing of this Assignment in the appropriate real property records, the counterpart to be recorded in a specific county may contain only those portions of the Exhibits that describe real property located in such county. Any such separate assignments or counterparts shall be deemed to contain all of the exceptions, reservations, rights, titles, powers and privileges set forth herein as fully as though they were set forth in each such assignment or counterpart. The interests conveyed by such separate assignments or counterparts are the same, and not in addition to, the Navajo Property conveyed herein.
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EXECUTED effective for all purposes as of the Effective Time.
ASSIGNORS:
NAVAJO PIPELINE CO., L.P., a Delaware limited partnership, successor-by-conversion to Navajo Pipeline Co., a Delaware corporation
By: Navajo Pipeline GP, L.L.C., a Delaware limited liability company, its general partner
By: ____________________________________________ Stephen J. McDonnell Vice President and Chief Financial Officer
NAVAJO REFINING COMPANY, L.P., a Delaware limited partnership, successor-by-conversion to Navajo Refining Company, a Delaware corporation
By: Navajo Refining GP, L.L.C., a Delaware limited liability company, its general partner
By: ____________________________________________ Stephen J. McDonnell Vice President and Chief Financial Officer
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ASSIGNEE:
HEP PIPELINE, L.L.C., a Delaware limited liability
company
By: Holly Energy Partners - Operating, L.P., a
Delaware limited partnership, its sole member
By: HEP Logistics GP, L.L.C., a Delaware
limited liability company, its general
partner
By: Holly Energy Partners, L.P., a Delaware
limited partnership, its sole member
By: HEP Logistics Holdings, L.P., a
Delaware limited partnership, its
general partner
By: Holly Logistic Services, L.L.C.,
a Delaware limited liability
company, its general partner
By: ________________________________
Stephen J. McDonnell
Vice President and Chief
Financial Officer
5 Empire Line
STATE OF TEXAS
COUNTY OF DALLAS
On this ___ day of ______________, 2005, before me, the undersigned, a Notary Public, in and for said State, personally appeared Stephen J. McDonnell, Vice President and Chief Financial Officer of Navajo Pipeline GP, L.L.C., a Delaware limited liability company, general partner of Navajo Pipeline Co., L.P., a Delaware limited partnership, known to me, or identified to me on the basis of satisfactory evidence, to be the Vice President and Chief Financial Officer of the limited liability company that executed the instrument and that the foregoing instrument was signed on behalf of said limited liability company by authority of a resolution of its members and acknowledged to me that such limited liability company executed the same.
STATE OF TEXAS
COUNTY OF DALLAS
On this _____ day of _______, 2005, before me, the undersigned, a Notary Public, in and for said State, personally appeared Stephen J. McDonnell, Vice President and Chief Financial Officer of Navajo Refining GP, L.L.C., a Delaware limited liability company, general partner of Navajo Refining Company, L.P., a Delaware limited partnership, known to me, or identified to me on the basis of satisfactory evidence, to be the Vice President and Chief Financial Officer of the limited liability company that executed the instrument and that the foregoing instrument was signed on behalf of said limited liability company by authority of a resolution of its members and acknowledged to me that such limited liability company executed the same.
STATE OF TEXAS
COUNTY OF DALLAS
On this _____ day of _______, 2005, before me, the undersigned, a Notary Public, in and for said State, personally appeared Stephen J. McDonnell, Vice President and Chief Financial Officer of Holly Logistic Services, L.L.C., a Delaware limited liability company, general partner of HEP Logistics Holdings, L.P., a Delaware limited partnership, general partner of Holly Energy Partners, L.P., a Delaware limited partnership, sole member of HEP Logistics GP, L.L.C., a Delaware limited liability company, general partner of Holly Energy Partners - Operating, L.P., a Delaware limited partnership, sole member of HEP Pipeline, L.L.C., a Delaware limited liability company, known to me, or identified to me on the basis of satisfactory evidence, to be the Vice President and Chief Financial Officer of the limited liability company that executed the instrument and that the foregoing instrument was signed on behalf of said limited liability company by authority of a resolution of its members and acknowledged to me that such limited liability company executed the same.
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List Of Exhibits:
Exhibit A - Pipelines
Part I - Narrative description of Pipelines
Part II - Map of Pipelines
Exhibit B - Navajo Leases, Fee Acreage, and Easements
7 Empire Line
EXHIBIT C
FORM OF BILL OF SALE
BILL OF SALE AND ASSIGNMENT
STATE OF NEW MEXICO
KNOW ALL MEN BY THESE PRESENTS:
COUNTIES OF EDDY, LEA
THAT Navajo Pipeline Co., L.P., a Delaware limited partnership ("Navajo
Pipeline Grantor") and Navajo Refining Company, L.P., a Delaware limited
partnership ("Navajo Refining Grantor," and, together with Navajo Pipeline
Grantor, the "Grantors"), in consideration of the deliveries by the various
parties to the Purchase Agreement (as hereinafter defined) as provided for
therein, the receipt and sufficiency of which are hereby acknowledged, do hereby
sell, convey, transfer, assign and deliver unto HEP Pipeline, L.L.C., a Delaware
limited liability company ("Grantee"), pursuant to that certain Purchase and
Sale Agreement, dated as of July [___], 2005 (the "Purchase Agreement"), by and
among the Grantors, Grantee, Holly Corporation, a Delaware corporation, Holly
Energy Partners, L.P., a Delaware limited partnership and Holly Energy Partners
- Operating, L.P., a Delaware limited partnership, all of their right, title and
interest in and to those certain pipelines, personal property, inventory and
equipment (the "Intermediate Pipelines"), more particularly described in Exhibit
A attached hereto and incorporated herein by reference. Capitalized terms used
herein but not defined shall have the meanings assigned to them in the Purchase
Agreement.
This Bill of Sale and Assignment shall be subject to the terms and conditions set forth in the Purchase Agreement, the Ancillary Documents and the Omnibus Agreement and nothing contained in this Bill of Sale and Assignment shall be construed to limit, terminate or expand the representations, warranties and covenants set forth in the Purchase Agreement, the Ancillary Documents and the Omnibus Agreement.
Nothing in this Bill of Sale and Assignment, express or implied, is intended or shall be construed to confer upon, or to give to, any person, firm, corporation or other entity other than the Grantors, Grantee, and their respective successors and assigns, any right or remedy under or by reason of this Bill of Sale and Assignment or any term, covenant or condition hereof, and all the terms, covenants, conditions, promises and agreements contained in this Bill of Sale and Assignment shall be for the sole and exclusive benefit of the Grantors, Grantee and their respective successors and assigns.
The terms and conditions of this Bill of Sale and Assignment shall be governed and construed in accordance with the laws of the State of Texas, without reference to its conflict of law provisions.
[The Remainder of this Page is Intentionally Blank]
IN WITNESS WHEREOF, the undersigned have executed this Bill of Sale and Assignment as of this [__] day of [_________], 2005.
NAVAJO PIPELINE CO., L.P.
By: NAVAJO PIPELINE GP, L.L.C.,
Its General Partner
By:__________________________________________
Stephen J. McDonnell
Vice President and Chief Financial Officer
NAVAJO REFINING COMPANY, L.P.
BY NAVAJO REFINING GP, L.L.C.,
Its General Partner
By:__________________________________________
Stephen J. McDonnell
Vice President and Chief Financial Officer
EXHIBIT A
INTERMEDIATE PIPELINES
"Intermediate Pipelines" means approximately 65 miles of 8" feedstock pipeline and 10" feedstock pipeline, each of which begins at the inlet flange of the delivery manifold motor operated valves at Navajo Refining Grantor's Lovington Refinery, near Lovington, New Mexico and ends at the outlet flange of the turbine meter at Navajo Refining Grantor's Artesia Refinery in Artesia, New Mexico, along with any and all connection facilities, including the Enterprise/MAPL connection, field booster pump stations, spare parts, pipes, valves, motors and miscellaneous equipment directly associated with the 8" inch and 10" feedstock pipelines.
EXHIBIT A
EXHIBIT D
FORM OF PIPELINES AGREEMENT
See Exhibit 10.1 attached to Holly Energy Partners, L.P.'s Form 8-K, filed with the Securities and Exchange Commission July 12, 2005.
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement") is made and entered into as of this [__] day of [____________], 2005, by and among Navajo Pipeline Co., L.P., a Delaware limited partnership ("Navajo Pipeline Transferor") and Navajo Refining Company, L.P., a Delaware limited partnership ("Navajo Refining Transferor," and, together with Navajo Pipeline Transferor, the "Transferors") and HEP Pipeline, L.L.C., a Delaware limited liability company ("Transferee"). Capitalized terms used herein by not defined shall have the meanings assigned to them in the Purchase Agreement (as defined herein).
WITNESSETH:
WHEREAS, concurrently with the execution and delivery hereof, Transferors have transferred and conveyed to Transferee the Intermediate Pipelines pursuant to the terms and conditions of that certain Purchase and Sale Agreement, dated as of July [___], 2005 (the "Purchase Agreement"), by and among the Transferors, Transferee, Holly Corporation, a Delaware corporation, Holly Energy Partners, L.P., a Delaware limited partnership and Holly Energy Partners - Operating, L.P., a Delaware limited partnership; and
WHEREAS, pursuant to the Purchase Agreement, Transferee has agreed to assume certain liabilities and obligations of Transferors.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Transferee hereby covenants and agrees with Transferors as follows:
1. Effective as of the date hereof, Transferee hereby agrees to assume and be solely responsible for the payment, performance and discharge of all of the Liabilities.
2. This Agreement shall be subject to the terms and conditions set forth in the Purchase Agreement, the Ancillary Documents and the Omnibus Agreement, and nothing contained in this Agreement shall be construed to limit, terminate or expand the representations, warranties and covenants set forth in the Purchase Agreement, the Ancillary Documents and the Omnibus Agreement.
3. The undertakings, covenants, and agreements set forth herein shall be binding upon and inure to the benefit of Transferee and Transferors and their respective successors and assigns.
4. The terms and conditions of this Agreement shall be governed and construed in accordance with the laws of the State of Texas, without reference to its conflict of law provisions.
IN WITNESS WHEREOF, Transferee and Transferors have executed this Agreement as of the date first set forth above.
TRANSFERORS:
NAVAJO PIPELINE CO., L.P.
By: NAVAJO PIPELINE GP, L.L.C.,
Its General Partner
By: _______________________________________
Stephen J. McDonnell
Vice President and Chief
Financial Officer
NAVAJO REFINING COMPANY, L.P.
BY: NAVAJO REFINING GP, L.L.C.,
Its General Partner
By: _______________________________________
Stephen J. McDonnell
Vice President and Chief
Financial Officer
TRANSFEREE:
HEP PIPELINE, L.L.C.
By: HOLLY ENERGY PARTNERS --OPERATING, L.P.
its Sole Member
By: HEP LOGISTICS GP, LLC.
its General Partner
By: HOLLY ENERGY PARTNERS, L.P.
its General Partner
By: HEP LOGISTICS HOLDINGS, L.P.
its General Partner
By: HOLLY LOGISTIC SERVICES, L.L.C.
its General Partner
By: __________________________________
Stephen J. McDonnell
Vice President and
Chief Financial Officer
EXHIBIT F
FORM OF MORTGAGE AND DEED OF TRUST
See Exhibit 10.2 attached to Holly Energy Partners, L.P.'s Form 8-K, filed with the Securities and Exchange Commission July 12, 2005.
ANNEX A
As evidenced by their signatures below, the following parties to the Omnibus Agreement hereby confirm their desire to supplement the agreements contained in the Omnibus Agreement pursuant to the terms and provisions contained in this Agreement.
HOLLY LOGISTIC SERVICES, L.L.C.
By: /s/ Stephen J. McDonnell
------------------------------------------
Stephen J. McDonnell
Vice President and Chief Financial Officer
|
HEP LOGISTICS HOLDINGS, L.P.
By: HOLLY LOGISTIC SERVICES, L.L.C.,
Its General Partner
By: /s/ Stephen J. McDonnell
--------------------------------------
Stephen J. McDonnell
Vice President and Chief Financial Officer
|
HEP LOGISTICS GP, L.L.C.
By: HOLLY ENERGY PARTNERS, L.P.
its Sole Member
By: HEP LOGISTICS HOLDINGS, L.P.
its General Partner
By: HOLLY LOGISTIC SERVICES, L.L.C.
its General Partner
By: /s/ Stephen J. McDonnell
--------------------------------------
Stephen J. McDonnell
Vice President and Chief Financial Officer
|
Annex A - 1
DISCLOSURE SCHEDULES
TO PURCHASE AND SALE AGREEMENT
Each Disclosure Schedule attached to the Purchase and Sale Agreement (the "Agreement") is qualified in its entirety by reference to the specific provisions of the Agreement to which such Disclosure Schedule is attached, and is not intended to constitute, and shall not be construed as constituting, representations or warranties except as and to the extent provided in the Agreement.
Matters referred to in each Disclosure Schedule are not necessarily limited to matters required by the Agreement to be reflected in such Disclosure Schedule. Such additional matters are set forth for informational purposes only and do not necessarily include other matters of a similar nature. The inclusion of such matters in any Disclosure Schedules does not constitute an admission of materiality by any party to the Agreement.
A disclosure made by any party to the Agreement in any Disclosure Schedule that is sufficient on its face to reasonably inform another party to the Agreement of information required to be disclosed in another Disclosure Schedule in order to avoid a misrepresentation thereunder shall be deemed, for all purposes of the Agreement, to have been made with respect to such other Disclosure Schedule.
Headings have been inserted for convenience of reference only and shall to no extent have the effect of amending or changing the express description of the sections as set forth in the Agreement. All capitalized terms in any Disclosure Schedule that are defined in the Agreement that are not otherwise defined in such Disclosure Schedule shall have the meanings assigned to them in the Agreement.
SCHEDULE 3.3
SELLER PARTIES NO CONFLICTS OR VIOLATIONS
1. Violations of Seller Parties Organizational Documents.
None.
2. Violations or conflicts with material contracts.
None.
3. Consents of Governmental Entities.
Navajo Refining Consents:
1. Right of Way from the State of New Mexico, dated September 9, 1900, Permit Number RW-20698.
2. Right of Way from the Bureau of Land Management, U.S. Department of the Interior, dated January 15, 1981, Permit Number NM-40864.
Navajo Pipeline Consents:
1. Right of Way from the State of New Mexico, dated January 28, 1999, Permit Number RW-26822.
2. Right of Way from the Bureau of Land Management, U.S. Department of the Interior, dated February 2, 1999, Permit Number 101324.
Schedule 3.3 - 1
SCHEDULE 3.4
SELLER PARTIES LITIGATION
None
Schedule 3.4 - 1
SCHEDULE 3.5(a)
TITLE TO INTERMEDIATE PIPELINES
1. Any break in the chain of title or gaps in the easements or permits resulting from the failure of any predecessor of the Seller Parties to obtain any consent to assignment required by such easement or permit.
2. Any break in the chain of title or gaps in the easements or permits resulting from the failure to properly document or record assignments (by operation of law or otherwise) of easements or permits from Midland Lea Pipeline Company to the applicable Seller Party.
Schedule 3.5(a) - 1
SCHEDULE 4.3
BUYER PARTIES NO CONFLICTS OR VIOLATIONS
None.
Schedule 4.3 - 1
SCHEDULE 4.4
BUYER PARTIES LITIGATION
None.
Schedule 4.4 - 1
SCHEDULE 6.2(a)
SELLER PARTIES CONSENTS
None.
Schedule 6.2(a) - 1
SCHEDULE 6.3(a)
BUYER PARTIES CONSENTS
Consent with respect to the Credit Agreement dated as of July 7, 2004 (as extended, amended, supplemented, restated, replaced or refinanced in whole or in part, from time to time) among Holly Energy Partners - Operating, L.P., a Delaware limited partnership, the banks party thereto from time to time, and Union Bank of California, N.A., in its capacity as administrative agent, and all related contracts or agreements.
Schedule 6.3(a) - 1
EXHIBIT 3.1
EXECUTION VERSION
AMENDMENT NO. 2 TO FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
HOLLY ENERGY PARTNERS, L.P.
THIS AMENDMENT NO. 2 TO THE FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF HOLLY ENERGY PARTNERS, L.P. (this "Amendment"), dated as of July 6, 2005, is entered into and effectuated by HEP Logistics Holdings, L.P., a Delaware limited partnership, as the General Partner, pursuant to authority granted to it in Section 13.1(d)(i) of the First Amended and Restated Agreement of Limited Partnership of Holly Energy Partners, L.P., dated as of July 13, 2004, as amended (the "Partnership Agreement"). Capitalized terms used but not defined herein are used as defined in the Partnership Agreement.
WHEREAS, Section 13.1(d)(i) of the Partnership Agreement provides that the General Partner, without the approval of any Limited Partners, may amend any provision of the Partnership Agreement to reflect a change that the General Partner determines does not adversely affect the Limited Partners (including any particular class of Partnership Interests as compared to other classes of Partnership Interests) in any material respect; and
WHEREAS, acting pursuant to the power and authority granted to it under
Section 13.1(d)(i) of the Partnership Agreement, the General Partner has
determined that the following amendment to the Partnership Agreement does not
adversely affect the Limited Partners (including any particular class of
Partnership Interests) in any material respect.
NOW, THEREFORE, it is hereby agreed as follows:
A. Amendment. The Partnership Agreement is hereby amended as follows:
Section 7.11 is hereby amended and restated in its entirety as follows:
7.11 Purchase or Sale of Partnership Securities. The General Partner may cause the Partnership to purchase or otherwise acquire Partnership Securities; provided that, except as permitted pursuant to Section 4.10, the General Partner may not cause any Group Member to purchase Subordinated Units during the Subordination Period. Such Partnership Securities shall be held by the Partnership as treasury securities unless they are expressly cancelled by action of an appropriate officer of the General Partner. As long as Partnership Securities are held by any Group Member, such Partnership Securities shall not be considered Outstanding for any purpose, except as otherwise provided herein. The General Partner or any Affiliate of the General Partner may also purchase or otherwise acquire and sell or otherwise dispose of Partnership Securities for its own account, subject to the provisions of Articles IV and X.
B. Agreement in Effect. Except as hereby amended, the Partnership Agreement shall remain in full force and effect.
AMENDMENT NO. 2 TO FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
HOLLY ENERGY PARTNERS, L.P.
C. Governing Law. This Amendment 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.
D. Severability. Each provision of this Amendment shall be considered severable and if for any reason any provision or provisions herein are determined to be invalid, unenforceable or illegal under any existing or future law, such invalidity, unenforceability or illegality shall not impair the operation of or affect those portions of this Amendment that are valid, enforceable and legal.
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AMENDMENT NO. 2 TO FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
HOLLY ENERGY PARTNERS, L.P.
IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above.
HEP LOGISTICS HOLDINGS, L.P.
By: HOLLY LOGISTIC SERVICES, L.L.C.,
its General Partner
By: /s/ Stephen J. McDonnell
------------------------------------------
Name: Stephen J. McDonnell
Title: Vice President and Chief Financial Officer
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SIGNATURE PAGE
AMENDMENT NO. 2 TO FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
HOLLY ENERGY PARTNERS, L.P.
EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into as of July 8, 2005, by and among Holly Energy Partners, L.P., a Delaware limited partnership ("HEP"), and FIDUCIARY/CLAYMORE MLP OPPORTUNITY FUND, a Delaware closed-end management investment company, PERRY PARTNERS, L.P., a Delaware limited partnership, STRUCTURED FINANCE AMERICAS, LLC, a Delaware limited liability company, Kayne anderson MLP INVESTMENT COMPANY, a Maryland closed-end management investment company, and KAYNE ANDERSON ENERGY TOTAL RETURN FUND, INC., a Maryland closed-end management investment company (each a "Purchaser, and collectively, the "Purchasers").
WHEREAS, this Agreement is made in connection with the Closing of the issuance and sale of the Purchased Units pursuant to the Common Unit Purchase Agreement, dated as of July 6, 2005, by and among HEP and the Purchasers (the "Purchase Agreement");
WHEREAS, HEP has agreed to provide the registration and other rights set forth in this Agreement for the benefit of the Purchasers pursuant to the Purchase Agreement; and
WHEREAS, it is a condition to the obligations of each Purchaser and HEP under the Purchase Agreement that this Agreement be executed and delivered.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party hereto, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions.
Capitalized terms used herein without definition shall have the meanings given to them in the Purchase Agreement. The terms set forth below are used herein as so defined:
"Effectiveness Period" has the meaning specified therefor in Section 2.01 of this Agreement.
"Holder" means the record holder of any Registrable Securities.
"Holly" means Holly Corporation, a Delaware corporation.
"Included Registrable Securities" has the meaning specified therefor in Section 2.02(a) of this Agreement.
"Liquidated Damages" has the meaning specified therefor in Section 2.01(a) of this Agreement.
"Losses" has the meaning specified therefor in Section 2.08(a) of this Agreement.
"Managing Underwriter" means, with respect to any Underwritten Offering, the book-running lead manager of such Underwritten Offering.
"Purchase Agreement" has the meaning specified therefor in the Recitals of this Agreement.
"Purchaser" and "Purchasers" have the meanings specified therefor in the introductory paragraph of this Agreement.
"Registrable Securities" means the Purchased Units, all of which are subject to the rights provided herein until such rights terminate pursuant to the provisions hereof.
"Registration Expenses" has the meaning specified therefor in
Section 2.07(a) of this Agreement.
"Selling Expenses" has the meaning specified therefor in Section 2.07(a) of this Agreement.
"Selling Holder" means a Holder who is selling Registrable Securities pursuant to a registration statement.
"Shelf Registration Statement" means a registration statement under the Securities Act to permit the resale of the Registrable Securities from time to time, including as permitted by Rule 415 of the Securities Act (or any similar provision then in force under the Securities Act).
"Underwritten Offering" means an offering (including an offering pursuant to a Shelf Registration Statement) in which Common Units are sold to an underwriter on a firm commitment basis for reoffering to the public or an offering that is a "bought deal" with one or more investment banks.
Section 1.02. Registrable Securities. Any Registrable Security will cease to be a Registrable Security when (a) a registration statement covering such Registrable Security has been declared effective by the Commission and such Registrable Security has been sold or disposed of pursuant to such effective registration statement; (b) such Registrable Security has been disposed of pursuant to any section of Rule 144 (or any similar provision then in force under the Securities Act); (c) such Registrable Security is held by HEP or one of its subsidiaries; or (d) such Registrable Security has been sold in a private transaction in which the transferor's rights under this Agreement are not assigned to the transferee of such securities.
ARTICLE II.
REGISTRATION RIGHTS
Section 2.01. Shelf Registration.
(a) Shelf Registration. As soon as practicable following the Closing, but in any event within 90 days of the Closing, HEP shall prepare and file a Shelf Registration Statement under the Act with respect to all of the Registrable Securities. HEP shall use its commercially reasonable efforts to cause the Shelf Registration Statement to become effective no
later than 180 days after the date of the Closing. A Shelf Registration Statement filed pursuant to this Section 2.01 shall be on such appropriate registration form of the Commission as shall be selected by HEP; provided, however, that if a prospectus supplement will be used in connection with the marketing of an Underwritten Offering from the Shelf Registration Statement and the Managing Underwriter at any time shall notify HEP in writing that, in the sole judgment of such Managing Underwriter, inclusion of detailed information to be used in such prospectus supplement is of material importance to the success of the Underwritten Offering of such Registrable Securities, HEP shall use its commercially reasonable efforts to include such information in the prospectus. HEP will use its commercially reasonable efforts to cause the Shelf Registration Statement filed pursuant to this Section 2.01 to be continuously effective under the Securities Act until the earlier of (i) when all such Registrable Securities are sold by the Purchasers or (ii) two years from the date the Shelf Registration Statement is declared effective by the Commission (the "Effectiveness Period"). The Shelf Registration Statement when declared effective (including the documents incorporated therein by reference) will comply as to form with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. If the Shelf Registration Statement is not declared effective within 180 days after Closing, then each Purchaser shall be entitled to a payment (with respect to each of such Purchaser's Purchased Units), as liquidated damages and not as a penalty, of 1/30th of .25% of the aggregate Purchase Price for such Purchaser's Purchased Units per day for the first 60 days following the 180th day, increasing by an additional 1/30th of .25% of the aggregate Purchase Price for such Purchaser's Purchased Units per day for each subsequent 60 days, up to a maximum of 1/30th of 1.00% of the aggregate Purchase Price for such Purchaser's Purchased Units per day (the "Liquidated Damages"), which shall be payable in cash within 10 Business Days of the end of each 30-day period during which Liquidated Damages are payable.
(b) Delay Rights. Notwithstanding anything to the contrary contained
herein, HEP may, upon written notice to any Selling Holder whose Registrable
Securities are included in the Shelf Registration Statement, suspend such
Selling Holder's use of any prospectus which is a part of the Shelf Registration
Statement (in which event the Selling Holder shall discontinue sales of the
Registrable Securities pursuant to the Shelf Registration Statement) if (i) HEP
is pursuing an acquisition, merger, reorganization, disposition or other similar
transaction and HEP determines in good faith that HEP's ability to pursue or
consummate such a transaction would be materially adversely affected by any
required disclosure of such transaction in the Shelf Registration Statement or
(ii) HEP has experienced some other material non-public event the disclosure of
which at such time, in the good faith judgment of HEP, would materially
adversely affect HEP; provided, however, in no event shall the Purchasers be
suspended for a period exceeding an aggregate of 90 days (exclusive of days
covered by any lock-up agreement executed by a Purchaser in connection with any
Underwritten Offering by HEP or a Purchaser) in any 365-day period. Upon
disclosure of such information or the termination of the condition described
above, HEP shall provide prompt notice to the Selling Holders whose Registrable
Securities are included in the Shelf Registration Statement, and shall promptly
terminate any suspension of sales it has put into effect and shall take such
other actions to permit registered sales of Registrable Securities as
contemplated in this Agreement.
Section 2.02. Piggyback Rights.
(a) Participation. If at any time HEP proposes to file (i) a
prospectus supplement to an effective shelf registration statement, including
the Shelf Registration Statement contemplated by Section 2.01, or (ii) a
registration statement, other than a shelf registration statement, in either
case, for the sale of Common Units in an Underwritten Offering for its own
account and/or another Person, then as soon as practicable but not less than
three (3) Business Days prior to the filing of (x) any preliminary prospectus
supplement relating to such Underwritten Offering pursuant to Rule 424(b), (y)
the prospectus supplement relating to such Underwritten Offering pursuant to
Rule 424(b) (if no preliminary prospectus supplement is used) or (z) such
registration statement as the case may be, then, HEP shall give notice of such
proposed Underwritten Offering to the Holders and such notice shall offer the
Holders the opportunity to include in such Underwritten Offering such number of
Registrable Securities (the "Included Registrable Securities") as each such
Holder may request in writing; provided, however, that if HEP has been advised
by the Managing Underwriter that the inclusion of Registrable Securities for
sale for the benefit of the Holders will have an adverse effect on the price,
timing or distribution of the Common Units, then the amount of Registrable
Securities to be offered for the accounts of Holders shall be determined based
on the provisions of Section 2.02(b). The notice required to be provided in this
Section 2.02(a) to Holders shall be provided on a Business Day pursuant to
Section 3.01 hereof and receipt of such notice shall be confirmed by Holder.
Holder shall then have twenty-four hours after such Holder confirms receipt of
the notice to request inclusion of Registrable Securities in the Underwritten
Offering. If no request for inclusion from a Holder is received within the
specified time, such Holder shall have no further right to participate in such
Underwritten Offering. If, at any time after giving written notice of its
intention to undertake an Underwritten Offering and prior to the closing of such
Underwritten Offering, HEP shall determine for any reason not to undertake or to
delay such Underwritten Offering, HEP may, at its election, give written notice
of such determination to the Selling Holders and, (x) in the case of a
determination not to undertake such Underwritten Offering, shall be relieved of
its obligation to sell any Included Registrable Securities in connection with
such terminated Underwritten Offering, and (y) in the case of a determination to
delay such Underwritten Offering, shall be permitted to delay offering any
Included Registrable Securities for the same period as the delay in the
Underwritten Offering. Any Selling Holder shall have the right to withdraw such
Selling Holder's request for inclusion of such Selling Holder's Registrable
Securities in such offering by giving written notice to HEP of such withdrawal
up to and including the time of pricing of such offering. Each Holder's rights
under this Section 2.02(a) shall terminate when such Holder holds less than five
million dollars ($5,000,000) worth of Purchased Units.
(b) Priority of Piggyback Rights. If the Managing Underwriter or Underwriters of any proposed Underwritten Offering of Common Units included in an Underwritten Offering involving Included Registrable Securities advises HEP that the total amount of Common Units that the Selling Holders and any other Persons intend to include in such offering exceeds the number that can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the Common Units offered or the market for the Common Units, then the Common Units to be included in such Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter or Underwriters advises HEP can be sold without having such adverse effect, with such number to
be allocated (i) first, to HEP; and (ii) second, pro rata among the Selling Holders and Holly (solely with respect to the 70,000 Common Units issued to Holly pursuant to the Pipeline Acquisition Agreement) who have requested participation in such Underwritten Offering based, for each such Selling Holder or Holly, as applicable, on the fraction derived by dividing (x) the number of Common Units proposed to be sold by such Selling Holder or Holly in such Underwritten Offering by (y) the aggregate number of Common Units proposed to be sold by all Selling Holders and Holly in such Underwritten Offering.
Section 2.03. Underwritten Offering.
(a) S-3 Registration. If a Selling Holder elects to dispose of Registrable Securities under the Shelf Registration Statement pursuant to an Underwritten Offering and reasonably anticipates gross proceeds of greater than $20 million from such Underwritten Offering, HEP shall, at the request of such Selling Holder, enter into an underwriting agreement in customary form with the Managing Underwriter or Underwriters, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 2.08, and shall take all such other reasonable actions as are requested by the Managing Underwriter to expedite or facilitate the disposition of the Registrable Securities; provided however, HEP management will not be required to participate in any roadshow or similar marketing effort on behalf of any Selling Holder.
(b) General Procedures. In connection with any Underwritten Offering under this Agreement, HEP shall be entitled to select the Managing Underwriter or Underwriters. In connection with an Underwritten Offering under Section 2.01 or Section 2.03 hereof, each Selling Holder and HEP shall be obligated to enter into an underwriting agreement that contains such representations, covenants, indemnities and other rights and obligations as are customary in underwriting agreements for firm commitment offerings of securities. No Selling Holder may participate in such Underwritten Offering unless such Selling Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement. Each Selling Holder may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, HEP to and for the benefit of such underwriters also be made to and for such Selling Holder's benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to its obligations. No Selling Holder shall be required to make any representations or warranties to or agreements with HEP or the underwriters other than representations, warranties or agreements regarding such Selling Holder and its ownership of the securities being registered on its behalf and its intended method of distribution and any other representation required by law. If any Selling Holder disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw therefrom by notice to HEP and the Managing Underwriter; provided, however, that such withdrawal must be made prior to the time in the penultimate sentence of Section 2.02(a) hereof to be effective. No such withdrawal or abandonment shall affect HEP's obligation to pay Registration Expenses.
Section 2.04. Sale Procedures. In connection with its obligations contained in Section 2.01 and Section 2.03, HEP will, as expeditiously as possible:
(a) prepare and file with the Commission such amendments and supplements to the Shelf Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Shelf Registration Statement effective for the Effectiveness Period and as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the Shelf Registration Statement;
(b) furnish to each Selling Holder (i) as far in advance as reasonably practicable before filing the Shelf Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing the Shelf Registration Statement or such other registration statement or supplement or amendment thereto, and (ii) such number of copies of the Shelf Registration Statement or such other registration statement and the prospectus included therein and any supplements and amendments thereto as such Persons may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Shelf Registration Statement or other registration statement;
(c) if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by the Shelf Registration Statement or any other registration statement contemplated by this Agreement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the Managing Underwriter, shall reasonably request, provided, however, that HEP will not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject;
(d) promptly notify each Selling Holder and each underwriter, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the filing of the Shelf Registration Statement or any other registration statement contemplated by this Agreement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Shelf Registration Statement or any other registration statement or any post-effective amendment thereto, when the same has become effective; and (ii) any written comments from the Commission with respect to any filing referred to in clause (i) and any written request by the Commission for amendments or supplements to the Shelf Registration Statement or any other registration statement or any prospectus or prospectus supplement thereto;
(e) immediately notify each Selling Holder and each underwriter, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the happening of any event as a result of which the prospectus or prospectus supplement contained in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; (ii) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement or any other registration statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or (iii) the receipt by HEP of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision of such notice, HEP agrees to as promptly as practicable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and to take such other action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;
(f) upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and all transmittal letters or other correspondence with the Commission or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of Registrable Securities;
(g) in the case of an Underwritten Offering, furnish upon request,
(i) an opinion of counsel for HEP, dated the effective date of the applicable
registration statement or the date of any amendment or supplement thereto, and a
letter of like kind dated the date of the closing under the underwriting
agreement, and (ii) a "cold comfort" letter, dated the effective date of the
applicable registration statement or the date of any amendment or supplement
thereto and a letter of like kind dated the date of the closing under the
underwriting agreement, in each case, signed by the independent public
accountants who have certified HEP's financial statements included or
incorporated by reference into the applicable registration statement, and each
of the opinion and the "cold comfort" letter shall be in customary form and
covering substantially the same matters with respect to such registration
statement (and the prospectus and any prospectus supplement included therein) as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to the underwriters in Underwritten Offerings of securities
and such other matters as such underwriters may reasonably request;
(h) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;
(i) make available to the appropriate representatives of the Managing Underwriter and Selling Holders access to such information and HEP personnel as is reasonable and customary to enable such parties to establish a due diligence defense under the Securities Act; provided, however, that HEP need not disclose any information to any such representative unless and until such representative has entered into a confidentiality agreement with HEP;
(j) cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by HEP are then listed;
(k) use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of HEP to enable the Selling Holders to consummate the disposition of such Registrable Securities;
(l) provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than the effective date of such registration statement; and
(m) enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition of such Registrable Securities.
Each Selling Holder, upon receipt of notice from HEP of the happening of any event of the kind described in subsection (e) of this Section 2.04, shall forthwith discontinue disposition of the Registrable Securities until such Selling Holder's receipt of the copies of the supplemented or amended prospectus contemplated by subsection (e) of this Section 2.04 or until it is advised in writing by HEP that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings incorporated by reference in the prospectus, and, if so directed by HEP, such Selling Holder will, or will request the managing underwriter or underwriters, if any, to deliver to HEP (at HEP's expense) all copies in their possession or control, other than permanent file copies then in such Selling Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.
Section 2.05. Cooperation by Holders. HEP shall have no obligation to include in the Shelf Registration Statement units of a Holder or in a Underwritten Offering pursuant to Section 2.02 units of a Selling Holder who has failed to timely furnish such information that, in the opinion of counsel to HEP, is reasonably required in order for the registration statement or prospectus supplement, as applicable, to comply with the Securities Act.
Section 2.06. Restrictions on Public Sale by Holders of Registrable Securities. Each Holder of Registrable Securities who is included in the Shelf Registration Statement agrees not to effect any public sale or distribution of the Registrable Securities during the 30 calendar day period following completion of a public offering of equity securities by HEP, provided, however, that the duration of the foregoing restrictions shall be no longer than the duration of the shortest restriction generally imposed by the underwriters on the officers or directors or any other unitholder of HEP on whom a restriction is imposed and provided further that such Selling Holder owns more than five million dollars ($5,000,000) worth of the Purchased Units.
Section 2.07. Expenses.
(a) Certain Definitions. "Registration Expenses" means all expenses
incident to HEP's performance under or compliance with this Agreement to effect
the registration of Registrable Securities the Shelf Registration Statement
pursuant to Section 2.01, an Underwritten Offering pursuant to Section 2.02 or
Section 2.03, and the disposition of such securities, including, without
limitation, all registration, filing, securities exchange listing and The New
York Stock Exchange fees, all registration, filing, qualification and other fees
and expenses of complying with securities or blue sky laws, fees of the National
Association of Securities
Dealers, Inc., transfer taxes and fees of transfer agents and registrars, all word processing, duplicating and printing expenses, the fees and disbursements of counsel and independent public accountants for HEP, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance. Except as otherwise provided in Section 2.08 hereof, HEP shall not be responsible for legal fees incurred by Holders in connection with the exercise of such Holders' rights hereunder. In addition, HEP shall not be responsible for any "Selling Expenses," which means all underwriting fees, discounts and selling commissions allocable to the sale of the Registrable Securities.
(b) Expenses. HEP will pay all reasonable Registration Expenses, including, in the case of an Underwritten Offering, whether or not any sale is made pursuant to such Underwritten Offering. Each Selling Holder shall pay all Selling Expenses in connection with any sale of its Registrable Securities hereunder.
Section 2.08. Indemnification.
(a) By HEP. In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, HEP will indemnify and hold harmless each Selling Holder thereunder, its directors and officers, and each underwriter, pursuant to the applicable underwriting agreement with such underwriter, of Registrable Securities thereunder and each Person, if any, who controls such Selling Holder or underwriter within the meaning of the Securities Act and the Exchange Act, against any losses, claims, damages, expenses or liabilities (including reasonable attorneys' fees and expenses) (collectively, "Losses"), joint or several, to which such Selling Holder or underwriter or controlling Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading, and will reimburse each such Selling Holder, its directors and officers, each such underwriter and each such controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings; provided, however, that HEP will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Selling Holder, such underwriter or such controlling Person in writing specifically for use in the Shelf Registration Statement or such other registration statement, or prospectus supplement, as applicable. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder or any such director, officer or controlling Person, and shall survive the transfer of such securities by such Selling Holder.
(b) By Each Selling Holder. Each Selling Holder agrees severally and not jointly to indemnify and hold harmless HEP, its directors and officers, and each Person, if any, who controls HEP within the meaning of the Securities Act or of the Exchange Act to the same
extent as the foregoing indemnity from HEP to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in the Shelf Registration Statement or prospectus supplement relating to the Registrable Securities, or any amendment or supplement thereto; provided, however, that the liability of each Selling Holder shall not be greater in amount than the dollar amount of the proceeds (net of any Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification.
(c) Notice. Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under this Section 2.08. In any action brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof. The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.08 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, (i) if the indemnifying party has failed to assume the defense and employ counsel or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred. Notwithstanding any other provision of this Agreement, no indemnified party shall settle any action brought against it with respect to which it is entitled to indemnification hereunder without the consent of the indemnifying party, unless the settlement thereof imposes no liability or obligation on, and includes a complete and unconditional release from all liability of, the indemnifying party.
(d) Contribution. If the indemnification provided for in this
Section 2.08 is held by a court or government agency of competent jurisdiction
to be unavailable to any indemnified party or is insufficient to hold them
harmless in respect of any Losses, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Loss in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of such indemnified party on the other in connection with the
statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations; provided, however, that in no event shall
such Selling Holder be required to contribute an aggregate amount in excess of
the dollar amount of proceeds (net of Selling Expenses) received by such Selling
Holder from the sale of Registrable Securities giving rise to such
indemnification. The relative fault of the
indemnifying party on the one hand and the indemnified party on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to herein. The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in connection with investigating or defending any Loss which is the subject of this paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.
(e) Other Indemnification. The provisions of this Section 2.08 shall be in addition to any other rights to indemnification or contribution which an indemnified party may have pursuant to law, equity, contract or otherwise.
Section 2.09. Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Securities to the public without registration, HEP agrees to use its commercially reasonable efforts to:
(a) Make and keep public information regarding HEP available, as those terms are understood and defined in Rule 144 of the Securities Act, at all times from and after the date hereof;
(b) File with the Commission in a timely manner all reports and other documents required of HEP under the Securities Act and the Exchange Act at all times from and after the date hereof; and
(c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request a copy of the most recent annual or quarterly report of HEP, and such other reports and documents so filed as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.
Section 2.10. Transfer or Assignment of Registration Rights. The rights to cause HEP to register Registrable Securities granted to the Purchasers by HEP under this Article II may be transferred or assigned by any Purchaser to one or more transferee(s) or assignee(s) of such Registrable Securities, provided, however, that (a) unless such transferee is an Affiliate of such Purchaser, each such transferee or assignee holds Registrable Securities representing at least five million dollars ($5,000,000) worth of the Purchased Units sold pursuant to the terms of the Purchase Agreement (except that a Purchaser who purchases less than $5 million dollars ($5,000,000) worth of Purchased Units may assign or transfer such registration rights if such Purchaser transfers its Purchased Units as an entirety), (b) HEP is given written notice prior to
any said transfer or assignment, stating the name and address of each such transferee and identifying the securities with respect to which such registration rights are being transferred or assigned, and (c) each such transferee assumes in writing responsibility for its portion of the obligations of such Purchaser under this Agreement.
Section 2.11. Limitation on Subsequent Registration Rights. From and after the date hereof, HEP shall not, without the prior written consent of the Holders of a majority of the outstanding Registrable Securities, enter into any agreement with any current or future holder of any securities of HEP that would allow such current or future holder to require HEP to include securities in any registration statement filed by HEP on a basis that is superior in any way to the piggyback rights granted to Purchaser hereunder.
ARTICLE III.
MISCELLANEOUS
Section 3.01. Communications. All notices and other communications provided for or permitted hereunder shall be made in writing by facsimile, courier service or personal delivery:
(a) if to Purchaser, to the address set forth under that Purchaser's signature block in accordance with the provisions of this Section 3.01,
(b) if to a transferee of Purchaser, to such Holder at the address provided pursuant to Section 2.10 above, and
(c) if to HEP, at 100 Crescent Court, Suite 1600, Dallas, Texas
75201, notice of which is given in accordance with the provisions of this
Section 3.01.
All such notices and communications shall be deemed to have been received at the time delivered by hand, if personally delivered; when receipt acknowledged, if sent via facsimile or sent via Internet electronic mail; and when actually received, if sent by any other means.
Section 3.02. Successor and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including subsequent Holders of Registrable Securities to the extent permitted herein.
Section 3.03. Assignment of Rights. All or any portion of the rights and obligations of any Purchaser under this Agreement may be transferred or assigned by such Purchaser in accordance with Section 2.10 hereof.
Section 3.04. Aggregation of Purchased Units. All Purchased Units held or acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.
Section 3.05. Recapitalization, Exchanges, etc. Affecting the Common Units. The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all Units of HEP or any successor or assign of HEP (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution of, the
Registrable Securities, and shall be appropriately adjusted for combinations, recapitalizations and the like occurring after the date of this Agreement.
Section 3.06. Specific Performance. Damages in the event of breach of this Agreement by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each such Person, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right will not preclude any such Person from pursuing any other rights and remedies at law or in equity which such Person may have.
Section 3.07. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.
Section 3.08. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
Section 3.09. Governing Law. The laws of the State of Delaware shall govern this Agreement without regard to principles of conflict of laws.
Section 3.10. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction.
Section 3.11. Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the rights granted by HEP set forth herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.
Section 3.12. Amendment. This Agreement may be amended only by means of a written amendment signed by HEP and the Holders of a majority of the then outstanding Registrable Securities; provided, however, that no such amendment shall materially and adversely affect the rights of any Holder hereunder without the consent of such Holder.
Section 3.13. No Presumption. If any claim is made by a party relating to any conflict, omission, or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
HOLLY ENERGY PARTNERS, L.P.
By: HEP LOGISTICS HOLDINGS, LP,
its general partner
By: HOLLY LOGISTIC SERVICES, LLC
its general partner
By: /s/ Stephen J. McDonnell
-------------------------
Stephen J. McDonnell
Vice President and
Chief Financial Officer
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Signature Page to Registration Rights Agreement
FIDUCIARY/CLAYMORE MLP
OPPORTUNITY FUND
By: /s/ James J. Cunnane, Jr.
--------------------------------------
James J. Cunnane, Jr.
Managing Director and Senior Portfolio
Manager
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Signature Page to Registration Rights Agreement
PERRY PARTNERS, L.P.
By: PERRY CORP.
its Managing General Partner
By: /s/ Randall Borkenstein
------------------------------
Randall Borkenstein
Managing Director and Chief
Financial Officer
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Signature Page to Registration Rights Agreement
STRUCTURED FINANCE AMERICAS, LLC
By: /s/ Jill Rathjen
-----------------------------------
Jill Rathjen
Officer
By: /s/ Richard Kennedy
------------------------------------
Richard Kennedy
Officer
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Signature Page to Registration Rights Agreement
KAYNE ANDERSON MLP INVESTMENT COMPANY
By: /s/ James C. Baker
------------------------------------
James C. Baker
Vice President
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KAYNE ANDERSON ENERGY TOTAL
RETURN FUND, INC.
By: /s/ James C. Baker
------------------------------------
James C. Baker
Vice President
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Signature Page to Registration Rights Agreement
EXHIBIT 10.1
EXECUTION VERSION
PIPELINES AGREEMENT
This Pipelines Agreement (this "Agreement") is dated as of July 8, 2005, by and among Holly Corporation, a Delaware corporation ("Holly"), Navajo Refining Company, L.P., a Delaware limited partnership ("Navajo Refining" and, together with Holly, the "Holly Entities"), Holly Energy Partners, L.P., a Delaware limited partnership (the "Partnership"), Holly Energy Partners-Operating, L.P., a Delaware limited partnership (the "Operating Partnership"), HEP Pipeline, L.L.C., a Delaware limited liability company ("HEP Pipeline"), HEP Logistics Holdings, L.P., a Delaware limited partnership (the "General Partner"), Holly Logistic Services, L.L.C., a Delaware limited liability company ("Holly GP"), and HEP Logistics GP, L.L.C., a Delaware limited liability company ("OLP GP" and, together with the Partnership, the Operating Partnership, HEP Pipeline, the General Partner and Holly GP, the "Partnership Entities"). Each of the Holly Entities and the Partnership Entities are individually referred to herein as a "Party" and collectively as the "Parties."
RECITALS:
Pursuant to that certain Purchase and Sale Agreement dated as of July 6, 2005 (the "Purchase Agreement") by and among Holly, Navajo Refining and Navajo Pipeline Co., L.P. ("Navajo Pipeline"), and the Partnership, the Operating Partnership and HEP Pipeline, Navajo Pipeline and Navajo Refining have agreed to transfer and convey to HEP Pipeline, and HEP Pipeline has agreed to acquire, the Intermediate Product Pipelines which historically have been utilized by the Holly Entities to transport Intermediate Products.
The Holly Entities desire to continue to transport Intermediate Products in the Intermediate Product Pipelines and the Partnership desires to provide transportation services to the Holly Entities, all on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the covenants and obligations contained herein, the Parties hereby agree as follows:
SECTION 1. DEFINITIONS
Capitalized terms used throughout this Agreement and not otherwise defined herein shall have the meanings set forth below.
"Additives" has the meaning set forth in Section 2(d).
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question, excluding, in the case of Holly, the Partnership Entities.
"Applicable Law" means any applicable statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, agreement, requirement, or other governmental restriction or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued under
any of the foregoing by, or any determination by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each case as amended (including, without limitation, all of the terms and provisions of the common law of such Governmental Authority), as interpreted and enforced at the time in question.
"Arbitrable Dispute" means any and all disputes, Claims, controversies and other matters in question between any of the Partnership Entities, on the one hand, and any of the Holly Entities, on the other hand, arising out of or relating to this Agreement or the alleged breach hereof, or in any way relating to the subject matter of this Agreement regardless of whether (a) allegedly extra-contractual in nature, (b) sounding in contract, tort or otherwise, (c) provided for by Applicable Law or otherwise or (d) seeking damages or any other relief, whether at law, in equity or otherwise.
"Artesia Refinery" means the refining facilities owned by Navajo Refining in Artesia.
"bpd" means barrels per day.
"Claim" means any existing or threatened future claim, demand, suit, action, investigation, proceeding, governmental action or cause of action of any kind or character (in each case, whether civil, criminal, investigative or administrative), known or unknown, under any theory, including those based on theories of contract, tort, statutory liability, strict liability, employer liability, premises liability, products liability, breach of warranty or malpractice.
"Claimant" has the meaning set forth in Section 10(f).
"Conflicts Committee" means the Conflicts Committee of Holly Logistic Services, L.L.C., as general partner of HEP Logistics Holdings, L.P., the sole general partner of the Partnership.
"Contract Quarter" means a three-month period that commences on July 1, October 1, January 1, or April 1, and ends on September 30, December 31, March 31 or June 30, respectively, except that the initial Contract Quarter shall commence on the Effective Date.
"Contract Year" means a year that commences on July 1 and ends on the last day of June, except that the initial Contract Year shall commence on the Effective Date.
"Control" (including with correlative meaning, the term "controlled by") means, as used with respect to any Person, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
"Controlled Affiliates" means with respect to any Person, any other Person that directly or indirectly through one or more intermediaries is controlled by such Person, excluding in the case of Holly, the Partnership Entities.
"Deficiency Notice" has the meaning set forth in Section 9(a).
"Deficiency Payment" has the meaning set forth in Section 9(a).
"Effective Date" means the date of the closing of the Purchase Agreement.
"Force Majeure" means acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy, wars, blockades, insurrections, riots, storms, floods, washouts, arrests, the order of any court or Governmental Authority having jurisdiction while the same is in force and effect, civil disturbances, explosions, breakage, accident to machinery, storage tanks or lines of pipe, inability to obtain or unavoidable delay in obtaining material or equipment, and any other causes whether of the kind herein enumerated or otherwise not reasonably within the control of the Party claiming suspension and which by the exercise of due diligence such Party is unable to prevent or overcome. Notwithstanding anything in this Agreement to the contrary, inability of a Party to make payments when due, be profitable or to secure funds, arrange bank loans or other financing, obtain credit or have adequate capacity or production (other than for reasons of Force Majeure) shall not be regarded as events of Force Majeure.
"Governmental Authority" means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.
"Incentive Tariff" has the meaning set forth in Section 2(b)(ii).
"Intermediate Products" means crude oil, gas oil, diesel, kerosene, casinghead, naphtha, normal butane and isobutane, all of which should be characteristically equal to like products that have been transported on the Intermediate Product Pipelines after January 1, 2003.
"Intermediate Product Pipelines" means the pipelines described on Exhibit A attached hereto.
"Lovington Refinery" means the refining facilities owned by Navajo Refining near Lovington, New Mexico.
"Minimum Revenue Commitment" has the meaning set forth in Section 2(a).
"Omnibus Agreement" means the Omnibus Agreement, dated as of the July 13, 2004, among Holly, the Partnership, the Operating Partnership, the General Partner, Holly GP, OLP GP and Navajo Pipeline, as amended.
"Parties" or "Party" has the meaning set forth in the preamble to this Agreement.
"PPI" has the meaning set forth in Section 2(a).
"Person" means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.
"Prime Rate" means the prime rate per annum announced by Union Bank of California, N.A., or if Union Bank of California, N.A. no longer announces a prime rate for any reason, the prime rate per annum announced by the largest U.S. bank measured by deposits from time to time as its base rate on corporate loans, automatically fluctuating upward or downward with each announcement of such prime rate.
"Refineries" means, collectively, the Artesia Refinery and the Lovington Refinery.
"Refund" has the meaning set forth in Section 9(c).
"Respondent" has the meaning set forth in Section 10(f).
SECTION 2. AGREEMENT TO USE SERVICES RELATING TO PIPELINES.
This Agreement sets forth a commercial arrangement consistent with historical operational practices between the Holly Entities and the Partnership Entities as well as the objectives of the Parties. The Parties intend to be strictly bound by the terms set forth in this Agreement, which set forth the Minimum Revenue Commitment on the part of the Holly Entities and require the Partnership Entities to provide certain transportation services to the Holly Entities. The principal objective of the Partnership Entities is for the Holly Entities to meet or exceed the Minimum Revenue Commitment. The principal objective of the Holly Entities is for the Partnership Entities to provide services to the Holly Entities in a manner that enables the Holly Entities to operate their assets in a manner at least as favorably as their historical practice when the Holly Entities were the owners of the Intermediate Product Pipelines.
(a) Minimum Revenue Commitment. During the term of this Agreement and subject to the terms and conditions of this Agreement, the Holly Entities agree as follows:
(i) Subject to Section 3, for a term of 15 Contract Years commencing on the Effective Date, the Holly Entities will transport on the Intermediate Product Pipelines an amount of Intermediate Products in the aggregate that will produce revenue to the Partnership Entities in an amount at least equal to $2,956,500 per Contract Quarter (the "Minimum Revenue Commitment"). Notwithstanding the foregoing, in the event that the Effective Date is any date other than the first day of a calendar quarter, then the Minimum Revenue Commitment for the initial Contract Quarter shall be prorated based upon the number of days actually in such calendar quarter and the initial Contract Quarter.
(ii) The Minimum Revenue Commitment shall be adjusted on July 1 of each Contract Year commencing on July 1, 2006, by an amount equal to the percentage increase, if any, between the two preceding calendar years, in the Producer Price Index for Finished Goods, seasonally adjusted, as published by the Department of Labor ("PPI"); provided, however, that the Minimum Revenue Commitment will not decrease as a result of any decrease in the PPI. If that index is no longer published, the Holly Entities and the Partnership Entities shall negotiate in good faith to agree on a new index that gives comparable protection against inflation and the same method of adjustment for increases in the new index shall be used to calculate increases in the Minimum Revenue Commitment. If the Holly Entities and the Partnership Entities are unable to agree, a new
index will be determined by binding arbitration in accordance with Section 10(f) of this Agreement and the same method of adjustment for increases in the new index shall be used to calculate increases in the Minimum Revenue Commitment.
(iii) If the Holly Entities are unable for a period in excess of thirty (30) consecutive days to transport on the Intermediate Product Pipelines the volumes of Intermediate Products required to meet the Minimum Revenue Commitment as a result of the Partnership Entities' operational difficulties, prorationing, or inability to provide the 72,000 bpd capacity, then upon written notice by the Holly Entities to the Partnership Entities, the Minimum Revenue Commitment will be reduced for such period of time by an amount equal to: (1) the volume of Intermediate Products that the Holly Entities are unable to transport on the Intermediate Product Pipelines as a result of the Partnership Entities' operational difficulties, prorationing or inability to provide the 72,000 bpd capacity multiplied by (2) the applicable tariffs.
(b) Tariffs.
(i) The initial tariff rates, and the rules and regulations applicable to intrastate service on the Intermediate Product Pipelines shall be as set forth in Exhibit B attached hereto and made a part hereof for all purposes. The initial non-incentive tariff rates shall be adjusted on July 1 of each Contract Year commencing on July 1, 2006, by an amount equal to the percentage change, if any, between the two immediately preceding calendar years, in the PPI. If that index is no longer published, the Holly Entities and the Partnership Entities shall negotiate in good faith to agree on a new index that gives comparable protection against inflation or deflation and the same method of adjustment for increases or decreases in the new index shall be used to calculate increases or decreases in the non-incentive tariff rates. If the Holly Entities and the Partnership Entities are unable to agree, a new index will be determined by binding arbitration in accordance with Section 10(f) of this Agreement and the same method of adjustment for increases or decreases in the new index shall be used to calculate increases or decreases in the non-incentive tariff rates. Notwithstanding that the Minimum Revenue Commitment will be determined on a Contract Year basis, the applicable fees, tariff rates and other charges provided for in this Agreement will become effective as of the date of this Agreement.
(ii) Holly shall pay the Partnership an incentive tariff (the "Incentive Tariff") equal to $0.25 per barrel for barrels shipped in excess of 72,000 bpd up to and including 95,000 bpd; provided, that the Partnership will receive its full base tariff of $0.45 per barrel escalated annually at PPI for any and all non-Holly-owned barrels shipped on the Intermediate Product Pipelines. The Incentive Tariff shall be adjusted on July 1 of each Contract Year, commencing on July 1, 2006, as provided in Section 2(a)(ii).
(iii) As soon as practicable following any Contract Year during which Incentive Tariffs paid to the Partnership did not provide the Partnership with a profit margin of at least 25% on its incremental costs for shipping such additional barrels, Holly shall pay to the Partnership an amount equal to the dollar amount that, when combined
with the Incentive Tariffs paid to the Partnership for such Contract Year, would have provided the Partnership a profit margin of 25% on its incremental costs for shipping such additional barrels.
(c) Obligations of the Partnership Entities. During the term of this
Agreement and subject to the terms and conditions of this Agreement, including
Section 10(c), the Partnership Entities agree to own or lease, operate and
maintain the assets necessary to accept the deliveries from the Holly Entities
and to provide the services required under this Agreement. Notwithstanding the
preceding sentence, subject to Section 10(c) of this Agreement and Article VI of
the Omnibus Agreement, the Partnership Entities are free to sell any of their
assets, including assets that provide services under this Agreement, and the
Partnership or any of the Partnership Entities are free to merge with another
entity (whether or not the Partnership or any of the Partnership Entities is the
surviving entity in such merger) and are free to sell all of their assets or all
of their equity to another entity at any time. At the request of the Holly
Entities, and subject in each case to any applicable common carrier proration
duties, the Partnership Entities agree to use commercially reasonable efforts to
transport by pipeline for the Holly Entities each month during the term of this
Agreement 72,000 bpd of Intermediate Products on the Intermediate Product
Pipelines. To the extent that the Holly Entities are entitled to an exception
under Section 3 of this Agreement to their obligations under Section 2(a) of
this Agreement, the corresponding obligations of the Partnership Entities under
this Section 2(c) will be proportionately reduced.
(d) Pour Point Depressant and Additives. The Partnership Entities shall add pour point depressant to the Intermediate Products as may be requested by the Holly Entities or as may be otherwise required to move certain Intermediate Products in the quantities necessary to meet the Holly Entities schedule. The Holly Entities agree to reimburse the Partnership Entities for the cost of adding pour point depressant to those certain Intermediate Products. All fuel additives, dyes and other additives ("Additives") requested to be added to the Holly Entities' Intermediate Products will be provided by the Holly Entities at no cost to the Partnership Entities or, if the Partnership Entities provide Additives, then the Holly Entities agree to reimburse the Partnership Entities for the costs of the Additives.
(e) Taxes. The Holly Entities will pay all taxes, import duties, license fees and other charges by any Governmental Authority levied on or with respect to the Intermediate Products delivered by the Holly Entities for transportation by the Partnership Entities in the Intermediate Product Pipelines including, but not limited to, any New Mexico gross receipts and compensating (use) taxes. The Holly Entities will reimburse the Partnership Entities for the New Mexico gross receipts tax, but not income tax, levied on or with respect to the transportation services provided by the Partnership Entities to the Holly Entities under this Agreement. Should any Party be required to pay or collect any taxes, duties, charges and or assessments pursuant to any federal, state, county or municipal law or authority now in effect or hereafter to become effective which are payable by the any other Party pursuant to this Section 2(e) the proper Party shall promptly reimburse the other Party therefor.
(f) Timing of Payments. The Holly Entities will make payments to the Partnership Entities by wire transfer of immediately available funds on a monthly basis during the term of this Agreement with respect to services rendered by the Partnership Entities under this
Agreement in the prior month. Payments not received by the Partnership Entities on or prior to the applicable payment date will accrue interest at the Prime Rate from the applicable payment date until paid.
(g) Pipeline Direction. Without Holly's prior written consent, which shall not be unreasonably withheld, the Partnership Entities will not reverse the direction of any Intermediate Product Pipeline or connect any other pipeline to the Intermediate Product Pipelines; provided, however, that the Partnership Entities may take any necessary emergency action to prevent or remedy a release of Intermediate Products from an Intermediate Product Pipeline without obtaining the consent required by this Section 2(g). The Holly Entities shall have the right to reverse the direction of any Intermediate Product Pipelines so long as the Holly Entities agree to reimburse the Partnership Entities for the additional costs and expenses incurred by the Partnership Entities as a result of changing the direction of any Intermediate Products on the Intermediate Product Pipelines (both to reverse and re-reverse), and (ii) to pay the flow reversal rates as set forth on Exhibit B. The tariff rates applicable to any such flow reversal shall be as set forth on Exhibit B and shall be adjusted each year as provided in Section 2(a)(ii).
(h) Notification of Utilization. When requested by the Partnership Entities, Holly will provide to the Partnership Entities written notification of Holly's reasonable good faith estimate of its anticipated future utilization of the Intermediate Product Pipelines of the Partnership Entities.
(i) Scheduling of Product Movements. The Partnership Entities will use their reasonable commercial efforts to schedule Intermediate Products movements and accept deliveries of Intermediate Products hereunder in a manner that is consistent with the historical dealings between the Parties, as such dealings may change from time to time.
(j) Increases in Pipeline Tariff Rates. If new laws or regulations are enacted that require the Partnership Entities to make substantial and unanticipated capital expenditures with respect to the Intermediate Product Pipelines, the Partnership Entities may amend the tariff rates in order to recover the Partnership Entities' cost of complying with these laws or regulations (including a reasonable return). The Holly Entities and the Partnership Entities shall use their reasonable commercial efforts to comply with these laws and regulations, and shall negotiate in good faith to mitigate the impact of these laws and regulations and to determine the amount of the new tariff rates. If the Holly Entities and the Partnership Entities are unable to agree on the amount of the new tariff rates that the Partnership Entities will charge, such tariff rates will be determined by binding arbitration in accordance with Section 10(f) of this Agreement.
SECTION 3. EXCEPTIONS TO THE HOLLY ENTITIES' OBLIGATIONS
(a) Intentionally Omitted.
(b) Force Majeure. In the event that any Party is rendered unable, wholly or in part, by a Force Majeure event from performing its obligations under this Agreement for a period of more than 30 days, then upon the delivery of notice and full particulars of the Force Majeure event in writing within a reasonable time after the occurrence of the Force Majeure event relied on, the obligations of the Parties, so far as they are affected by the Force Majeure event, shall be
suspended for the duration of any inability so caused. Any suspension of the obligations of the Parties as a result of this Section 3(b) shall extend the term of this Agreement. The Holly Entities will be required to pay any amounts accrued and due under this Agreement at the time of the Force Majeure event. The cause of the Force Majeure event shall so far as possible be remedied with all reasonable dispatch, except that no Party shall be compelled to resolve any strikes, lockouts or other industrial disputes other than as it shall determine to be in its best interests. In the event a Force Majeure event prevents the Partnership Entities or the Holly Entities from performing their respective obligations under this Agreement for a period of more than one year, this Agreement may be terminated by the Partnership Entities or the Holly Entities. Nothing in this Section 3(b) shall alter the liability of the Partnership Entities as set forth in the rules and regulations tariffs for the Intermediate Product Pipelines attached hereto as Exhibit B.
SECTION 4. AGREEMENT TO REMAIN SHIPPER
With respect to any Intermediate Products that are produced at a Refinery and transported in any Intermediate Product Pipeline, the Holly Entities agree that they will continue their historical commercial practice of owning such Intermediate Products from such point as such Intermediate Products leave the Refinery until at least such point as they will not be further transported in an Intermediate Product Pipeline and to continue acting in the capacity of the shipper of any such Intermediate Products for their own account at all times that such Intermediate Products are in an Intermediate Product Pipeline.
SECTION 5. AGREEMENT NOT TO CHALLENGE TARIFFS
The Holly Entities agree to any tariff rate changes for the Intermediate Product Pipelines determined in accordance with this Agreement. The Holly Entities agree (a) not to challenge, nor to cause their Controlled Affiliates to challenge, nor to encourage or recommend to any other Person that it challenge, or voluntarily assist in any way any other Person in challenging, in any forum, intrastate tariffs (including joint tariffs) of the Partnership Entities that the Partnership Entities have filed or may file containing rates, rules or regulations that are in effect at any time during the term of this Agreement and regulate the transportation of Intermediate Products, and (b) not to protest or file a complaint, nor cause their Controlled Affiliates to protest or file a complaint, nor encourage or recommend to any other Person that it protest or file a complaint, or voluntarily assist in any way any other Person in protesting or filing a complaint, with respect to regulatory filings that the Partnership Entities have made or may make at any time during the term of this Agreement to change intrastate tariffs (including joint tariffs) for transportation of Intermediate Products in each case so long as such tariffs, regulatory filings or rates changed do not conflict with the terms of this Agreement.
SECTION 6. EFFECTIVENESS AND TERM
This Agreement shall be effective as of the Effective Date, and shall terminate at 12:01 a.m. Dallas, Texas, time on July 8, 2020, unless extended by written mutual agreement of the Parties hereto or as set forth in Section 7; provided, however, that Section 5 shall survive the termination of this Agreement. The Party desiring to extend this Agreement pursuant to this
Section 6 shall provide at least 12 months prior written notice to the other Party of its desire to so extend this Agreement.
SECTION 7. RIGHT TO ENTER INTO A NEW AGREEMENT
For a period of one year following termination without renewal of this Agreement, the Holly Entities will have the right to enter into a new pipelines agreement with the Partnership Entities on commercial terms that substantially match the terms upon which the Partnership Entities propose to enter into an agreement with a third party for similar services on the Intermediate Product Pipelines. The Partnership Entities shall give the Holly Entities 45 days prior written notice of any proposed new pipelines agreement with a third party, and shall inform the Holly Entities of the fee schedules, tariffs, duration and any other terms of the proposed third party agreement.
SECTION 8. NOTICES
All notices or requests or consents provided for by, or permitted to be given pursuant to, this Agreement must be in writing and must be given by depositing same in the United States mail, addressed to the Person to be notified, postpaid, and registered or certified with return receipt requested or by delivering such notice in person or by telecopier or telegram to such Party. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice given by telegram or telecopier shall be effective upon actual receipt if received during the recipient's normal business hours or at the beginning of the recipient's next business day after receipt if not received during the recipient's normal business hours. All notices to be sent to a Party pursuant to this Agreement shall be sent to or made at the address set forth below or at such other address as such Party may stipulate to the other Parties in the manner provided in this Section 8:
if to the Holly Entities:
Holly Corporation
100 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Matthew P. Clifton
Telecopy: 1-214-615-9372
if to the Partnership Entities:
Holly Energy Partners, L.P.
c/o Holly Logistic Services, L.L.C.
100 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: James G. Townsend
Telecopy: 1-505-748-6827
SECTION 9. DEFICIENCY PAYMENTS
(a) As soon as practicable following the end of each Contract Quarter under this Agreement, the Partnership Entities shall deliver to the Holly Entities a written notice (the "Deficiency Notice") detailing any failure of the Holly Entities to meet any of their obligations under Section 2(a) of this Agreement. The Deficiency Notice shall (i) specify in reasonable detail the nature of any deficiency and (ii) specify the approximate dollar amount that the Partnership Entities believe would have been paid by the Holly Entities to the Partnership Entities if the Holly Entities had complied with Section 2(a) of this Agreement (the "Deficiency Payment"). The Holly Entities shall pay the Deficiency Payment to the Partnership Entities upon the later of: (1) 10 days after their receipt of the Deficiency Notice and (2) 30 days following the end of the related Contract Quarter.
(b) If the Holly Entities disagree with the Deficiency Notice, then following the payment of the Deficiency Payment to the Partnership Entities, the chief financial officers of Holly (on behalf of the Holly Entities) and Holly GP (on behalf of the Partnership Entities) shall meet or communicate by telephone at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary and shall negotiate in good faith to attempt to resolve any differences that they may have with respect to matters specified in the Deficiency Notice. During the 30-day period following the payment of the Deficiency Payment, the Holly Entities shall have access to the working papers of the Partnership Entities relating to the Deficiency Notice. If such differences are not resolved within 30 days following the payment of the Deficiency Payment, the Holly Entities and the Partnership Entities shall, within 45 days following the payment of the Deficiency Payment, submit any and all matters which remain in dispute and which were properly included in the Deficiency Notice to arbitration in accordance with Section 10(f).
(c) If it is finally determined pursuant to this Section 9 that the Holly Entities are not required to make any or all of the Deficiency Payment (the "Refund"), the Partnership Entities shall promptly pay to the Holly Entities the Refund, together with interest thereon at the Prime Rate, in immediately available funds.
(d) Deficiency Payments will be credited against any payments owed by the Holly Entities in the following four Contract Quarters in excess of the Minimum Revenue Commitments established by this Agreement for such Contract Quarters; provided, however, that the Holly Entities will not receive credit for any Deficiency Payment in any of the following four Contract Quarters until it has met the Minimum Revenue Commitment in the succeeding Contract Quarter.
SECTION 10. MISCELLANEOUS
(a) Intention as to Refineries. The Holly Entities represent to the Partnership Entities that, as of the date of this Agreement, they are not considering a shut down of any of the Refineries or any changes to any of the Refineries that would have a material adverse effect on the operation of any of the Refineries.
(b) Amendments and Waivers. No amendment or modification of this Agreement shall be valid unless it is in writing and signed by the Parties hereto and, in the case of any amendment or modification adverse to the Partnership Entities, approved by the Conflicts Committee of Holly GP. No waiver of any provision of this Agreement shall be valid unless it is in writing and signed by the Party against whom the waiver is sought to be enforced, and, in the case of any waiver by the Partnership Entities, approved by the Conflicts Committee of Holly GP. No failure or delay in exercising any right hereunder, and no course of conduct, shall operate as a waiver of any provision of this Agreement. No single or partial exercise of a right hereunder shall preclude further or complete exercise of that right or any other right hereunder.
(c) Successors and Assigns. This Agreement shall inure to the benefit of, and shall be binding upon, the Holly Entities, the Partnership Entities and their respective successors and permitted assigns. Neither this Agreement nor any of the rights or obligations hereunder shall be assigned without the prior written consent of Holly (in the case of any assignment by the Partnership Entities) or the Conflicts Committee of Holly GP (in the case of any assignment by the Holly Entities), in each case, such consent is not to be unreasonably withheld or delayed; provided, however, that (i) the Partnership Entities may make such an assignment (including a partial pro rata assignment) to an Affiliate of the Partnership Entities without Holly's consent, (ii) the Holly Entities may make such an assignment (including a pro rata partial assignment) to an Affiliate of the Holly Entities without the Conflicts Committee of Holly GP's consent, (iii) the Holly Entities may make a collateral assignment of their rights and obligations hereunder and/or grant a security interest in all or a portion of the Intermediate Product Pipelines to any bona fide third party lender or debt holder, or trustee or representative for any of them, and (iv) the Partnership Entities may make a collateral assignment of their rights hereunder and/or grant a security interest in all or a portion of the Intermediate Product Pipelines to a bona fide third party lender or debt holder, or trustee or representative for any of them, if such third party lender, debt holder or trustee shall have executed and delivered to the Holly Entities a non-disturbance agreement in such form as is reasonably satisfactory to the Holly Entities and the Holly Entities execute an acknowledgement of such collateral assignment in such form as may from time to time be reasonably requested. Any attempt to make an assignment otherwise than as permitted by the foregoing shall be null and void. The Parties agree to require their respective successors, if any, to expressly assume, in a form of agreement acceptable to the other Parties, their obligations under this Agreement.
(d) Severability. If any provision of this Agreement shall be held invalid or unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect.
(e) Choice of Law. This Agreement shall be subject to and governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.
(f) Arbitration Provision. Any and all Arbitrable Disputes must be resolved through the use of binding arbitration using three arbitrators, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as supplemented to the extent necessary to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code). If there is any inconsistency between this Section and the Commercial
Arbitration Rules or the Federal Arbitration Act, the terms of this Section will control the rights and obligations of the Parties. Arbitration must be initiated within the time limits set forth in this Agreement, or if no such limits apply, then within a reasonable time or the time period allowed by the applicable statute of limitations. Arbitration may be initiated by a Party ("Claimant") serving written notice on the other Party ("Respondent") that the Claimant elects to refer the Arbitrable Dispute to binding arbitration. Claimant's notice initiating binding arbitration must identify the arbitrator Claimant has appointed. The Respondent shall respond to Claimant within 30 days after receipt of Claimant's notice, identifying the arbitrator Respondent has appointed. If the Respondent fails for any reason to name an arbitrator within the 30-day period, Claimant shall petition the American Arbitration Association for appointment of an arbitrator for Respondent's account. The two arbitrators so chosen shall select a third arbitrator within 30 days after the second arbitrator has been appointed. The Claimant will pay the compensation and expenses of the arbitrator named by or for it, and the Respondent will pay the compensation and expenses of the arbitrator named by or for it. The costs of petitioning for the appointment of an arbitrator, if any, shall be paid by Respondent. The Claimant and Respondent will each pay one-half of the compensation and expenses of the third arbitrator. All arbitrators must (i) be neutral Parties who have never been officers, directors or employees of any of the Holly Entities, the Partnership Entities or any of their affiliates and (ii) have not less than seven years experience in the energy industry. The hearing will be conducted in Dallas, Texas and commence within 30 days after the selection of the third arbitrator. The Holly Entities, the Partnership Entities and the arbitrators shall proceed diligently and in good faith in order that the award may be made as promptly as possible. Except as provided in the Federal Arbitration Act, the decision of the arbitrators will be binding on and non-appealable by the Parties hereto. The arbitrators shall have no right to grant or award indirect, consequential, punitive or exemplary damages of any kind.
(g) Rights of Limited Partners. The provisions of this Agreement are enforceable solely by the Parties, and no limited partner of the Partnership shall have the right, separate and apart from the Partnership, to enforce any provision of this Agreement or to compel any Party to comply with the terms of this Agreement.
(h) Further Assurances. In connection with this Agreement and all transactions contemplated by this Agreement, each signatory Party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.
[Remainder of page intentionally left blank. Signature pages follow.]
IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of the date first written above.
HOLLY CORPORATION
By: /s/ Stephen H. McDonnell
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Stephen J. McDonnell,
Vice President and Chief Financial Officer
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NAVAJO REFINING COMPANY, L.P.
By: NAVAJO REFINING GP, L.L.C.,
its general partner
By: /s/ Stephen H. McDonnell
--------------------------------------------
Stephen J. McDonnell,
Vice President and Chief Financial Officer
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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/ Stephen J. McDonnell
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Stephen J. McDonnell,
Vice President and Chief Financial Officer
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Signature Page 1 of 3 to the Pipelines Agreement
HOLLY ENERGY PARTNERS-OPERATING, L.P.
By: HEP LOGISTICS GP, L.L.C.,
its general partner
By: HOLLY ENERGY PARTNERS, L.P.
its sole member
By: HEP LOGISTICS HOLDINGS, L.P.,
its general partner
By: HOLLY LOGISTIC SERVICES, L.L.C.,
its general partner
By: /s/ Stephen J. McDonnell
-------------------------------------------
Stephen J. McDonnell,
Vice President and Chief Financial Officer
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HEP PIPELINE, L.L.C.
By: HOLLY ENERGY PARTNERS -- OPERATING, L.P.
its sole member
By: HEP LOGISTICS GP, LLC.,
its general partner
By: HOLLY ENERGY PARTNERS, L.P.,
its general partner
By: HEP LOGISTICS HOLDINGS, L.P.,
its general partner
By: HOLLY LOGISTIC SERVICES, L.L.C.,
its general partner
By: /s/ Stephen J. McDonnell
-------------------------------------------
Stephen J. McDonnell,
Vice President and Chief Financial
Officer
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Signature Page 2 of 3 to the Pipelines Agreement
HEP LOGISTICS HOLDINGS, L.P.
By: HOLLY LOGISTIC SERVICES, L.L.C.,
its general partner
By: /s/ Stephen J. McDonnell
-----------------------------------------
Stephen J. McDonnell,
Vice President and Chief Financial
Officer
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HOLLY LOGISTIC SERVICES, L.L.C.
By: /s/ Stephen J. McDonnell
--------------------------------------------
Stephen J. McDonnell,
Vice President and Chief Financial Officer
|
HEP LOGISTICS GP, L.L.C.
By: HOLLY ENERGY PARTNERS, L.P.,
its general partner
By: HEP LOGISTICS HOLDINGS, L.P.,
its general partner
By: HOLLY LOGISTIC SERVICES, L.L.C.,
its general partner
By: /s/ Stephen J. McDonnell
-------------------------------------------
Stephen J. McDonnell,
Vice President and Chief Financial Officer
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Signature Page 3 of 3 to the Pipelines Agreement
EXHIBIT A
INTERMEDIATE PRODUCT PIPELINES
"Intermediate Pipelines" means approximately 65 miles of 8" feedstock pipeline and 10" feedstock pipeline, each of which begins at the inlet flange of the delivery manifold motor operated valves at the Lovington Refinery, near Lovington, New Mexico and ends at the outlet flange of the turbine meter at the Artesia Refinery in Artesia, New Mexico, along with any and all connection facilities, including the Enterprise/MAPL connection, field booster pump stations, spare parts, pipes, valves, motors and miscellaneous equipment directly associated with the 8" inch and 10" feedstock pipelines.
EXHIBIT B
ATTACHED TO AND MADE
PART OF THE PIPELINES AGREEMENT,
DATED JULY 8, 2005
TABLE OF RATES
RATES IN CENTS PER BARREL OF 42 UNITED STATES GALLONS
ORIGIN RATE
CARRIER'S RECEIVING POINT DESTINATION RATE TYPE
------------------------- --------------------- ----- -------------
Lovington, New Mexico Artesia, New Mexico 0.450 Non-Incentive
0.250 Incentive
- Barnsdal Station Lovington, New Mexico 0.450 Flow Reversal
- Artesia, New Mexico Lovington, New Mexico 0.450 Flow Reversal
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INCENTIVE RATE TERMS: See Section 2(b)(ii) of the Agreement for the Incentive Rate terms.
NON-INCENTIVE RATE TERMS: See Section 2(a)(i) of the Agreement for the Non-Incentive Rate terms.
FLOW REVERSAL RATE TERMS: See Section 2(g) of the Agreement for additional Flow Reversal terms.
RULES AND REGULATIONS
Company will receive Intermediate Products for interstate transportation only to established delivery stations on its own lines, and lines of connecting pipeline companies, on the following conditions:
ITEM NO. SUBJECT APPLICATION
-------- --------------- ------------------------------------------------------------------------------------------------
As used in these rules and regulations, the following terms have the following meanings:
"Barrels" means 42 United States gallons at sixty degrees (60 degree) Fahrenheit.
"Carrier" means Holly Energy Partners - Operating, L.P.
"Company" means Holly Energy Partners - Operating, L.P.
"Consignee" means the party to whom a Shipper has ordered the delivery of Intermediate Products.
"Intermediate Products" means crude oil, gas oil, diesel, kerosene, casinghead, naphtha, normal
butane and isobutane, all of which should be characteristically equal to like products that
have been transported on the Intermediate Product Pipelines after January 1, 2003.
"Nomination" means an offer by a Shipper to Carrier of a stated quantity of Intermediate Products
for transportation from origin to specified destination.
5 Definitions "Shipment" means a volume of Intermediate Products offered to and accepted by Carrier for
transportation.
"Shipper" means the party who contracts with the Carrier for transportation of Intermediate
Products under the terms of this tariff.
"Transmix" means the mixture that occurs in normal pipeline operations between non-compatible
Intermediate Products.
Intermediate Products will be accepted for transportation at such time as Intermediate Products
of same quality and specifications are currently being transported from receiving point to
destination. Prior to acceptance of Intermediate Products for transportation the Company may
require from the Shipper a certificate setting forth, in detail, the specifications of each
shipment of Intermediate Products. Carrier may also make such tests as it deems necessary.
All additives and inhibitors to be included in Shipper's Intermediate Products must first be
Specifications approved by the Carrier before such Intermediate Products will be accepted for
and transportation. If Intermediate Products tendered by Shipper do not contain corrosion
10 Acceptance inhibitor compound which is satisfactory to Carrier, then Carrier may, at Shipper's
of expense, inject corrosion inhibitor compound in the Intermediate Products to be
Product transported, and Shipper and Consignee will accept delivery of shipments at destination
containing portions of the corrosion inhibitor compound.
Intermediate Products will be accepted for transportation when Shipper has made necessary
arrangements (a) to provide facilities to tender such Intermediate Products and deliver same at
Carrier's receiving manifold at the origin at pumping rates and pressures as required by
Carrier, and (b) to provide facilities at the destination to receive the Intermediate Products
tendered for transportation at flow rates and pressures as required by Carrier.
Carrier may require Shipper to supply adequate buffer material when necessary for quality control
purposes to maintain segregation of Shipments of Intermediate Products.
Shipper will be required to schedule its Intermediate Products for delivery into Carrier's
Shipments- receiving tanks or suction manifold at the origin to meet the cycle within which Carrier
15 Nominations and schedules the Intermediate Products to move. Intermediate Products shall be available for
Minimum shipment 24 hours before the scheduled date for movement into the Carrier's pipeline
Tender system. Shipper shall deliver Intermediate Products to Carrier at a pressure no greater
than 256 psig and at a flowing pressure of at least 100 psig, at a temperature of no greater
than 120 degrees Fahrenheit.
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ITEM NO. SUBJECT APPLICATION
-------- --------------- ------------------------------------------------------------------------------------------------
Mixing with Carrier will endeavor to deliver substantially the same Intermediate Products as received
Other from Shipper to the extent permitted by Carrier's facilities. However, all shipments will
20 Refined be accepted for transportation only on condition that it shall be subject to such changes
Petroleum in gravity or quality while in transit as may result from the mixture with other
Products Intermediate Products in the pipelines.
Carrier will allocate all Transmix to Shipper. Shipper must accept delivery of Transmix from
Carrier no later than 5 days after notification that Transmix is available for distribution to
Shipper. Shipper will have sole responsibility for the disposition of its Transmix.
Refined Company shall have the right to decline to receive any Intermediate Products which may be
Petroleum involved in litigation or the title of which may be in dispute, and it may require of the
Products Shipper satisfactory evidence of his perfect and unencumbered title or satisfactory
to be Free indemnity bond to protect Company.
25 from Liens
and
Charges
Company is engaged in the transportation of Intermediate Products exclusively and therefore
30 Commodity will not accept any other commodity for transportation.
Carrier shall not be liable for loss of Intermediate Products in its custody, damage thereto, or
delay caused by fire, storm, flood, epidemics, Acts of God, riots, insurrection, rebellion,
war, act of the public enemy, quarantine, nuclear or atomic explosion, strikes, picketing, or
other labor stoppages, whether of Carriers employees or other, the authority of law,
requisition or necessity of Government of the United States in time of war, default of Shipper
or Shipper's Consignee or any other cause not due to the sole negligence of Carrier, whether
Liability similar or dissimilar to the cause herein enumerated. In the event of such loss, Shipper
40 of shall bear the loss. Transportation charges will be assessed only on the quantity delivered
Carrier net of volume corrections as set forth in Item No. 45 herein.
Shipments tendered to Carrier for transportation shall be tested by a representative of
Carrier, and gauged or measured by automatic equipment approved by Carrier or by other
methods acceptable in the industry, at locations designated by Carrier. The Shipper shall
Gauging, have the privilege of being present or represented at the gauging and testing. Quantities
Testing, will be computed from correctly compiled tank tables or by Carrier approved meters.
45 and Corrections will be made for temperature from observed degrees Fahrenheit to sixty degrees
Volume (60 degrees) Fahrenheit.
Corrections
Shipper shall bear the actual product losses for shrinkage and evaporation incident to pipeline
transportation up to a maximum of twenty-five hundredths (0.25) of a percent. Carrier shall
offset such product losses with any product gains and shall determine the net product losses on
a calendar quarterly basis.
Either prior to or after the acceptance of Shipments for transportation through Carrier's
pipeline system, Carrier may, upon reasonable notice, require each Shipper to provide a pro
55 Line Fill rata part of the volume of Intermediate Products necessary for pipeline fill. Intermediate
Products provided by a Shipper for this purpose may be withdrawn from the system only with the
prior approval of Carrier or after reasonable notice of such Shipper's intention.
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ITEM NO. SUBJECT APPLICATION
-------- --------------- ------------------------------------------------------------------------------------------------
As a condition precedent to recovery, claims must be filed in writing with Carrier within nine
Claims, (9) months after delivery of the property, or in case of failure to make delivery, then within
Suits, nine (9) months after a reasonable time for delivery has elapsed; and suits shall be instituted
65 Time against Carrier only within two (2) years and one (1) day from the day when notice in writing
for is given by Carrier to the claimant that Carrier has disallowed the claim or any part or parts
Filing thereof specified in the notice. Where claims are not filed or suits are not instituted thereon
in accordance with the foregoing provisions, Carrier shall not be liable, and such claims will
not be paid.
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EXHIBIT 10.2
PREPARED BY AND WHEN
RECORDED RETURN TO:
Holly Corporation
100 Crescent Court, Suite 1600
Dallas, Texas 75201-6927
Attn: General Counsel
MORTGAGE AND DEED OF TRUST
(WITH SECURITY AGREEMENT AND FINANCING STATEMENT)
BY
HEP PIPELINE, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY,
AS GRANTOR
TO
JOHN N. PATTERSON,
AS TRUSTEE
FOR THE BENEFIT OF
HOLLY CORPORATION,
A DELAWARE CORPORATION
AS BENEFICIARY
DATED AS OF JULY 8, 2005
THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A TRANSMITTING UTILITY.
THIS INSTRUMENT COVERS GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN AND IS TO BE FILED FOR RECORD IN THE RECORDS WHERE MORTGAGES ON REAL ESTATE ARE RECORDED. ADDITIONALLY, THIS INSTRUMENT SHOULD BE APPROPRIATELY INDEXED, NOT ONLY AS A MORTGAGE, BUT ALSO AS A FINANCING STATEMENT COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN. THE MAILING ADDRESSES OF THE GRANTOR (DEBTOR) AND BENEFICIARY (BENEFICIARY) ARE SET FORTH IN THIS INSTRUMENT.
MORTGAGE AND DEED OF TRUST
(WITH SECURITY AGREEMENT AND FINANCING STATEMENT)
THIS MORTGAGE AND DEED OF TRUST (WITH SECURITY AGREEMENT AND FINANCING STATEMENT) (hereinafter referred to as this "DEED OF TRUST"), is entered into as of the 8th day of July, 2005, by HEP Pipeline, L.L.C., a Delaware limited liability company (hereinafter referred to as "GRANTOR"), a subsidiary of Holly Energy Partners, L.P., a Delaware limited partnership ("HEP"), whose address for notice hereunder is at 100 Crescent Court, Suite 1600, Dallas, Texas 75201-6927, Attention: General Counsel, facsimile number (214) 871-3523, to John N. Patterson, Trustee (hereinafter referred to in such capacity as "TRUSTEE"), whose address is c/o Scheuer, Yost & Patterson, 125 Lincoln Avenue, Suite 223, Drawer 9570, Santa Fe, New Mexico 87504-9570, for the benefit of the herein below defined Beneficiary.
WITNESSETH:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms shall have the following meanings:
(a) AFFILIATE: With respect to a specified Person, any other Person controlling, controlled by or under common control with that first Person. As used in this definition, the term "control" includes (i) with respect to any Person having voting shares or the equivalent and elected directors, managers or Persons performing similar functions, the ownership of or power to vote, directly or indirectly, shares or the equivalent representing more than 50% of the power to vote in the election of directors, managers or Persons performing similar functions, (ii) ownership of more than 50% of the equity or equivalent interest in any Person and (iii) the ability to direct the business and affairs of any Person by acting as a general partner, manager or otherwise.
(b) BENEFICIARY: Holly Corporation, a Delaware corporation whose address for notice hereunder is 100 Crescent Court, Suite 1600, Dallas, Texas 75201-6927, Attention: General Counsel.
(c) CONTRACTS: The Pipeline Contracts.
(d) DEED OF TRUST: Shall have the meaning set forth in the introductory paragraph hereof.
(e) EASEMENTS: The Pipeline Easements.
(f) EVENT OF DEFAULT: Any happening or occurrence described in Article 7 of this Deed of Trust.
(g) FIXTURES: All materials, supplies, equipment, apparatus and other items now or hereafter acquired by Grantor and now or hereafter attached to, installed in or used in
connection with (temporarily or permanently) the Real Property or the Pipelines, together with all accessions, replacements, betterments and substitutions for any of the foregoing and the proceeds thereof.
(h) GOVERNMENTAL ENTITY: Any court, governmental department, commission, council, board, bureau, agency or other judicial, administrative, regulatory, legislative or other instrumentality of the United States of America or any foreign country, or any state, county, municipality or local governmental body or political subdivision or any such other foreign country.
(i) GRANTOR: The above defined Grantor, whether one or more, and any and all subsequent owners of the Mortgaged Property or any part thereof.
(j) IMPOSITIONS: All real estate and personal property taxes; water, gas, sewer, electricity and other utility rates and charges; charges for any easement, license or agreement maintained for the benefit of the Mortgaged Property; and all other taxes, charges and assessments and any interest, costs or penalties with respect thereto, general and special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature whatsoever which at any time prior to or after the execution hereof may be assessed, levied or imposed upon the Mortgaged Property or the ownership, use, occupancy or enjoyment thereof.
(k) IMPROVEMENTS: The Pipeline Improvements.
(l) LEASES: Any and all leases, subleases, licenses, concessions or other agreements (written or verbal, now or hereafter in effect) which grant a possessory interest in and to, or the right to use, the Mortgaged Property, and all other agreements, such as utility contracts, maintenance agreements and service contracts, which in any way relate to the use, occupancy, operation, maintenance, enjoyment or ownership of the Mortgaged Property, save and except any and all leases, subleases or other agreements pursuant to which Grantor is granted a possessory interest in the Real Property.
(m) LEGAL REQUIREMENTS: Shall mean any and all laws, statutes, codes, rules, regulations, ordinances, judgments, orders, writs, decrees, requirements or determinations of any Governmental Entity, and (ii) to the extent not covered by clause (i) immediately above, any and all requirements of permits, licenses, certificates, authorizations, concessions, franchises or other approvals granted by any Governmental Entity.
(n) MORTGAGED PROPERTY: The Pipeline Assets, together with:
(i) all rights, privileges, tenements, hereditaments, rights-of-way, easements, appendages and appurtenances in anywise appertaining thereto, and all right, title and interest of Grantor in and to any streets, ways, alleys, strips or gores of land adjoining the Real Property or any part thereof; and
(ii) all betterments, additions, alterations, appurtenances, substitutions, replacements and revisions thereof and thereto and all reversions and remainders therein; and
(iii) all other property and rights of Grantor of every kind and character to the extent specifically relating to and used or to be used solely in connection with the foregoing property, and all proceeds and products of any of the foregoing.
As used in this Deed of Trust, the term "MORTGAGED PROPERTY" shall be expressly defined as meaning all or, where the context permits or requires, any portion of the above, and all or, where the context permits or requires, any interest therein. Notwithstanding anything to the contrary herein, in no event shall the term "MORTGAGED PROPERTY" include any Product owned by third parties that may be shipped through or stored at or in any of the Mortgaged Property.
(o) OBLIGATIONS: Shall have the meaning given such term in Section 2.1.
(p) PERMITTED ENCUMBRANCES: Shall mean any of the following matters:
(i) any (A) inchoate liens, security interests or similar charges constituting or securing the payment of expenses which were incurred incidental to the ownership and operation of the Pipelines (collectively, the "OPERATIONS") or the operation, storage, transportation, shipment, handling, repair, construction, improvement or maintenance of the Mortgaged Property, and (B) materialman's, mechanics', repairman's, employees', contractors', operators', warehousemen's, barge or ship owner's and carriers' liens or other similar liens, security interests or charges for liquidated amounts arising in the ordinary course of business incidental to the conduct of the Operations or the ownership and operation of the Mortgaged Property, securing amounts the payment of which is not delinquent and that will be paid in the ordinary course of business or, if delinquent, that are being contested in good faith with any action or proceeding to foreclose or attach any of the Mortgaged Property on account thereof properly stayed; (ii) any liens or security interests for Taxes not yet delinquent or, if delinquent, that are being contested in good faith in the ordinary course of business with any action or proceeding to foreclose or attach any of the Mortgaged Property on account thereof properly stayed; (iii) any liens or security interests reserved in leases, rights of way or other real property interests for rental or for compliance with the terms of such leases, rights of way or other real property interests, provided payment of the debt secured is not delinquent or, if delinquent, is being contested in good faith in the ordinary course of business with any action or proceeding to foreclose or attach any of the Mortgaged Property on account thereof properly stayed; (iv) all prior reservations of minerals in and under or that may be produced from any of the lands constituting part of the Mortgaged Property or on which any part of the Mortgaged Property is located; (v) all liens (other than liens for borrowed money), security interests, charges, easements, restrictive covenants, encumbrances, contracts, instruments, obligations, discrepancies, conflicts, shortages in area or boundary lines, encroachments or protrusions, or overlapping of improvements, defects, irregularities and other matters affecting or encumbering title to the Mortgaged Property which individually or in the aggregate are not such as to unreasonably or materially interfere with or prevent any material operations conducted on the Mortgaged Property; (vi) rights reserved
to or vested in any Governmental Entity to control or regulate any of the Mortgaged Property or the Operations and all Legal Requirements of such authorities, including any building or zoning ordinances and all environmental laws; (vii) any contract, easement, instrument, lien, security instrument, permit, amendment, extension or other matter entered into by a party in accordance with the terms of the Purchase Agreement (as defined in the Pipelines Agreement) or in compliance with the approvals or directives of the other party made pursuant to such Purchase Agreement; (viii) all Post-Closing Consents (as defined in the Purchase Agreement); (ix) defects in the early chain of the title consisting of the mere failure to recite marital status in a document or omissions of successions of heirship proceedings, unless such failure or omission results in another Person's superior claim of title to the Pipeline Easements or relevant portion thereof; (x) any assertion of a defect based on a lack of a survey with respect to the Pipelines; (xi) any title defect affecting (or the termination or expiration of) any easement, right of way, leasehold interest or fee interest affecting property over which the Pipelines pass which has been replaced prior to the date of this Deed of Trust by an easement, right of way, leasehold interest or fee interest covering substantially the same land or the portion thereof used by Beneficiary or its Affiliates; and (xii) all Senior Liens.
(q) PERMITS: The Pipeline Permits.
(r) PERSON: An individual, a corporation, a partnership, a limited liability company, an association, a trust, or any other entity or organization, including, without limitation, any Governmental Entity.
(s) PERSONALTY: The Pipeline Equipment, and all other personal property (other than the Fixtures) and intangible assets of any kind or character as defined in and subject to the provisions of the Uniform Commercial Code Article 9 - Secured Transactions, as the same is codified and in effect in New Mexico, which are now or hereafter located or to be located upon, within or about the Real Property, or which are or may be used in or related to the planning, development, financing or operation of the Mortgaged Property, together with all accessories, replacements and substitutions thereto or therefor and the proceeds thereof.
(t) PIPELINE ASSETS: All of the following assets, properties and rights, whether real, personal or mixed, which are owned or held for use by Grantor solely in connection with the ownership or operation of those certain pipelines described on Exhibit B (the "PIPELINES"):
(i) All parcels of fee simple real property now or hereafter owned by Grantor on which any part of the Pipelines are located including, without limitation, the property held in fee by Grantor described on Exhibit A, if any (collectively, the "PIPELINE FEE LAND");
(ii) All leases of real property now or hereafter entered into or acquired by Grantor on which all or a part of the Pipelines are located, including, without limitation, the leases described on Exhibit A, if any (the "PIPELINE LEASES");
(iii) All easements, rights-of-way, property use agreements, line rights and real property licenses (including right-of-way permits from railroads and road crossing permits or other right-of-way permits from Governmental Entities) required to operate the Pipelines now or hereafter entered into or acquired by Grantor, including, without limitation, the easements, rights-of-way, property use agreements, line rights and real property licenses described on Exhibit A (the "PIPELINE EASEMENTS");
(iv) All structures, fixtures and appurtenances (A) located on the Pipeline Fee Land, (B) located on the land subject to the Pipeline Leases, or (C) located within the Pipeline Easements, and now or hereafter owned by Grantor, including, without limitation, any buildings, pipelines and pumping facilities described on Exhibit A (collectively, the "PIPELINE IMPROVEMENTS");
(v) To the extent same do not constitute Pipeline Improvements, any and all fittings, cathodic protection ground beds, rectifiers, other cathodic or electric protection devices, machinery, engines, pipes, pipelines, valves, valve boxes, connections, gates, scraper trap extenders, telecommunication facilities and equipment (including microwave and other transmission towers), lines, wires, computer hardware, fixed or mobile machinery and equipment, vehicle refueling tanks, pumps, heating and non-pipeline pumping stations, fittings, tools, furniture and metering equipment now owned or hereafter acquired by Grantor (the "PIPELINE EQUIPMENT");
(vi) The contracts, agreements, leases and other legally binding rights and obligations of Grantor described on Exhibit A, if any, but excluding those contracts and agreements constituting Pipeline Leases and Pipeline Easements (the "PIPELINE CONTRACTS");
(vii) Intellectual property rights and related computer software;
(viii) All permits, licenses, certificates, authorizations, registrations, orders, waivers, variances and approvals now or hereafter granted by any Governmental Entity to Grantor or its predecessors in interest pertaining solely to the ownership or operation of the Pipelines, including, without limitation, those permits, licenses, certificates, authorizations, registrations, orders, waivers, variances and approvals described on Exhibit A, in each case to the extent the same are assignable (the "PIPELINE PERMITS"); and
(ix) All records and documents now or hereafter acquired by Grantor relating solely to the ownership, condition or operation of the Pipeline Assets (the "PIPELINE RECORDS").
(u) PIPELINE CONTRACTS: Shall have the meaning set forth in subsection
(vi) of the definition of Pipeline Assets.
(v) PIPELINE EASEMENTS: Shall have the meaning set forth in subsection
(iii) of the definition of Pipeline Assets.
(w) PIPELINE EQUIPMENT: Shall have the meaning set forth in subsection (v) of the definition of Pipeline Assets.
(x) PIPELINE FEE LAND: Shall have the meaning set forth in subsection (i) of the definition of Pipeline Assets.
(y) PIPELINE IMPROVEMENTS: Shall have the meaning set forth in subsection
(iv) of the definition of Pipeline Assets.
(z) PIPELINE LEASES: Shall have the meaning set forth in subsection (ii) of the definition of Pipeline Assets.
(aa) PIPELINE PERMITS: Shall have the meaning set forth in subsection
(viii) of the definition of Pipeline Assets.
(bb) PIPELINE REAL PROPERTY: Collectively, the Pipeline Fee Land, the Pipeline Leases, the Pipeline Improvements and the Pipeline Easements.
(cc) PIPELINE RECORDS: Shall have the meaning set forth in subsection (ix) of the definition of Pipeline Assets.
(dd) PIPELINES: Shall have the meaning set forth in the first paragraph of the definition of Pipeline Assets.
(ee) PIPELINES AGREEMENT: That certain Pipelines Agreement dated as of July __, 2005 by and among Beneficiary, HEP, Navajo Refining Company, L.P., a Delaware limited partnership, Holly Energy Partners-Operating, L.P., a Delaware limited partnership, Grantor, HEP Logistics Holdings, L.P., a Delaware limited partnership, Holly Logistic Services, L.L.C., a Delaware limited liability company, and HEP Logistics GP, L.L.C., a Delaware limited liability company, together with any amendments, restatements or modifications from time to time made thereto.
(ff) PRODUCT: Crude oil, gas oil, diesel, kerosene, casinghead, naphtha, normal butane and isobutane transported through the Pipelines.
(gg) PURCHASE AGREEMENT: That certain Purchase and Sale Agreement dated as of July 6, 2005 by and among Beneficiary, Navajo Pipeline Co., L.P., a Delaware limited partnership, Navajo Refining Company, L.P., a Delaware limited partnership, HEP, Holly Energy Partners - Operating, L.P., a Delaware limited partnership, and Grantor.
(hh) REAL PROPERTY: The Pipeline Real Property.
(ii) SECURITY DOCUMENTS: This Deed of Trust and any and all other documents now or hereafter executed by Grantor or any other Person to evidence or secure the performance of the Obligations.
(jj) SENIOR BANK LIENS: Collectively, (i) each lien and security interest in all or any portion of the Mortgaged Property heretofor or hereafter granted by Grantor or its Affiliates under the Senior Credit Agreement, and (ii) each lien and security interest in all or any portion of the Mortgaged Property hereafter granted by any Person who acquires an interest in all or any portion of the Mortgaged Property securing senior debt of such Person.
(kk) SENIOR CREDIT AGREEMENT: That certain Credit Agreement dated as of July 7, 2004 (as extended, amended, supplemented, restated, replaced or refinanced in whole or in part, from time to time) among Holly Energy Partners - Operating, L.P., a Delaware limited partnership, the banks party thereto from time to time, and Union Bank of California, N.A., in its capacity as administrative agent (or any assignee of or successor to such administrative agent).
(ll) SENIOR LIEN: Collectively, the Senior Bank Liens and each other lien and security interest as to which the lien and security interest granted pursuant to this Deed of Trust has been subordinated thereto pursuant to the terms of a Subordination, Non-Disturbance and Attornment Agreement in substantially the form of Attachment 1 hereto executed by the Beneficiary and the holder of such lien and security interest and recorded in the Official Public Records of Real Property of Eddy and Lea Counties, New Mexico and (at the election of such holder) any or all of the other counties in New Mexico in which any of the Mortgaged Property is located.
(mm) TAXES: Any and all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, leases, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, or assessments.
ARTICLE 2
GRANT
2.1 GRANT. To secure and enforce the prompt performance and compliance by HEP
of all obligations set forth for HEP in Section 2(c), Section 7, and
Section 10(c) of the Pipelines Agreement, plus all claims (as such term is
defined in the Bankruptcy Code) of or damages owed to the Beneficiary
against HEP and/or the Mortgaged Property resulting from any rejection of
the Pipelines Agreement by HEP in any bankruptcy or insolvency proceeding
involving HEP, and any reasonable costs and expenses (including, but not
limited to, attorneys' and experts' fees and court costs) incurred by
Beneficiary in enforcing and exercising its rights hereunder
(collectively, the "OBLIGATIONS"), Grantor has GRANTED, BARGAINED, SOLD
and CONVEYED, and by these presents does GRANT, BARGAIN, SELL and CONVEY,
unto Trustee the Mortgaged Property,
subject, however, to the Permitted Encumbrances, TO HAVE AND TO HOLD the Mortgaged Property unto Trustee, forever, and Grantor does hereby bind itself, its successors and assigns to WARRANT AND FOREVER DEFEND the title to the Mortgaged Property unto Trustee against every Person whomsoever lawfully claiming or to claim the same or any part thereof other than against any holder of any Senior Lien; provided, however, that this grant shall terminate upon the full performance and discharge of all of the Obligations and in accordance with the other terms set forth herein.
2.2 MAXIMUM SECURED INDEBTEDNESS. THE OUTSTANDING INDEBTEDNESS SECURED BY PROPERTY LOCATED IN NEW MEXICO SHALL NOT AT ANY ONE TIME EXCEED THE AGGREGATE MAXIMUM AMOUNT OF $100,000,000, WHICH SHALL CONSTITUTE THE MAXIMUM AMOUNT AT ANY TIME SECURED HEREBY.
ARTICLE 3
WARRANTIES AND REPRESENTATIONS
Grantor hereby unconditionally warrants and represents to Beneficiary as follows:
3.1 ORGANIZATION AND POWER. Grantor (a) is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and has complied with all conditions prerequisite to its doing business in the State of New Mexico and (b) has all requisite power and all governmental certificates of authority, licenses, permits, qualifications and documentation to own, lease and operate its properties and to carry on its business as now being, and as proposed to be, conducted.
3.2 VALIDITY OF SECURITY DOCUMENTS. The execution, delivery and performance by
Grantor of the Security Documents (a) are within Grantor's powers and have
been duly authorized by Grantor's Manager or other necessary parties, and
all other requisite action for such authorization has been taken; (b) have
received all (if any) requisite prior governmental approval in order to be
legally binding and enforceable in accordance with the terms thereof; and
(c) will not violate, be in conflict with, result in a breach of or
constitute (with due notice or lapse of time, or both) a default under,
any Legal Requirement or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of Grantor's
property or assets, except as contemplated by the provisions of the
Security Documents. The Security Documents constitute the legal, valid and
binding obligations of Grantor and others obligated under the terms of the
Security Documents, in accordance with their respective terms.
3.3 LIEN OF THIS INSTRUMENT. Subject to the Senior Liens, this Deed of Trust constitutes a valid and subsisting deed of trust lien on the Real Property and the Fixtures and a valid, subsisting security interest in and to, and a valid assignment of, the Personalty and Leases, all in accordance with the terms hereof.
3.4 LITIGATION. There are no actions, suits or proceedings pending, or to the knowledge of Grantor threatened, against or affecting the Grantor as a result of or in connection with
Grantor's entering into this Deed of Trust, or involving the validity or enforceability of this Deed of Trust or the priority of the liens and security interests created by the Security Documents, and no event has occurred (including specifically Grantor's execution of the Security Documents) which will violate, be in conflict with, result in the breach of, or constitute (with due notice or lapse of time, or both) a default under, any Legal Requirement or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of Grantor's property other than the liens and security interests created by the Security Documents.
ARTICLE 4
AFFIRMATIVE COVENANTS OF GRANTOR
Grantor hereby unconditionally covenants and agrees with Beneficiary that, except for the Permitted Encumbrances, Grantor will protect the lien and security interest status of this Deed of Trust and except for the Permitted Encumbrances, will not, without the prior written consent of Beneficiary, place, or permit to be placed, or otherwise mortgage, hypothecate or encumber the Mortgaged Property with, any other lien or security interest of any nature whatsoever (statutory, constitutional or contractual) regardless of whether same is allegedly or expressly inferior to the lien and security interest created by this Deed of Trust, and, if any such lien or security interest is asserted against the Mortgaged Property, Grantor will promptly, at its own cost and expense, (a) pay the underlying claim in full or take such other action so as to cause same to be released and (b) within five days from the date such lien or security interest is so asserted, give Beneficiary notice of such lien or security interest. Such notice shall specify who is asserting such lien or security interest and shall detail the origin and nature of the underlying claim giving rise to such asserted lien or security interest.
ARTICLE 5
NEGATIVE COVENANTS OF GRANTOR
Grantor hereby covenants and agrees with Beneficiary that, until the full performance and discharge of all of the Obligations, Grantor will not, without the prior written consent of Beneficiary, create, place or permit to be created or placed, or through any act or failure to act, acquiesce in the placing of, or allow to remain, any mortgage, pledge, lien (statutory, constitutional or contractual), security interest, encumbrance or charge on, or conditional sale or other title retention agreement, regardless of whether same are expressly subordinate to the liens of the Security Documents, with respect to, the Mortgaged Property, other than the Permitted Encumbrances.
ARTICLE 6
AFFIRMATIVE COVENANTS OF BENEFICIARY
By its acceptance hereof, Beneficiary recognizes that (a) Grantor is obligated or may hereafter become obligated to any of the Credit Parties (as defined in the SNDA [defined below]) in connection with the Senior Credit Agreement, and (b) Grantor and any future owner of the
Mortgaged Property may incur additional indebtedness or become otherwise obligated to one or more banks, insurance companies, investment banks or other financial institutions regularly engaged in commercial lending and/or bonds, debentures, notes and similar instruments evidencing obligations that may be secured by liens or security interests on some or all of Grantor's property, including the Mortgaged Property (the holder of such liens or security interests being a "SECURED LENDER"). To the extent that any such Secured Lender notifies Beneficiary of Secured Lender's desire to subordinate the lien and security interest held by Beneficiary pursuant to this Deed of Trust, Beneficiary, by its acceptance hereof, will agree to effect such subordination by promptly executing, in one or more counterparts, a Subordination, Non-Disturbance and Attornment Agreement in substantially the form of Attachment 1 hereto (the "SNDA"). The subordination of this Deed of Trust shall (i) not be effective unless and until the SNDA has been executed by the Secured Lender, and (ii) be subject to compliance by the Secured Lender with its obligations under Section 3 and Section 4 of the SNDA. Any Secured Lender who is a party to an SNDA and who is in compliance with its obligations under Section 3 and Section 4 of such SNDA is hereinafter referred to as a "LIENHOLDER."
ARTICLE 7
EVENTS OF DEFAULT
The term "EVENT OF DEFAULT", as used in the Security Documents, shall mean the occurrence or happening, at any time and from time to time, of any one or more of the following.
7.1 BREACH OF DEED OF TRUST. (a) Grantor shall (i) fail to perform or observe, in any material respect, any covenant, condition or agreement of this Deed of Trust to be performed or observed by Grantor, or (ii) breach any warranty or representation made by Grantor in this Deed of Trust, and such failure or breach shall continue unremedied for a period of thirty (30) days after receipt of written notice thereof to the Grantor from the Beneficiary; provided, however, that in the event such failure or breach cannot be reasonably cured within such thirty (30) day period and Grantor has diligently proceeded (and continues to proceed) to cure such breach, Grantor shall have an additional sixty (60) days to cure such failure or breach, or (b) HEP shall fail to perform all of the Obligations in full and on or before the dates same are to be performed (after giving effect to any applicable grace and cure periods).
7.2 VOLUNTARY BANKRUPTCY. Grantor shall (a) voluntarily be adjudicated a bankrupt or insolvent, (b) procure, permit or suffer the voluntary or involuntary appointment of a receiver, trustee or liquidator for itself or for all or any substantial portion of its property, (c) file any petition seeking a discharge, rearrangement, or reorganization of its debts pursuant to the bankruptcy laws or any other debtor relief laws of the United States or any state or any other competent jurisdiction, or (d) make a general assignment for the benefit of its creditors.
7.3 INVOLUNTARY BANKRUPTCY. If (a) a petition is filed against Grantor seeking to rearrange, reorganize or extinguish its debts under the provisions of any bankruptcy or other debtor relief law of the United States or any state or other competent jurisdiction, and such petition is not dismissed or withdrawn within sixty (60) days after its filing, or (b) a court
of competent jurisdiction enters an order, judgment or decree appointing, without the consent of Grantor a receiver or trustee for it, or for all or any part of its property, and such order, judgment, or decree is not dismissed, withdrawn or reversed within sixty (60) days after the date of entry of such order, judgment or decree.
7.4 REJECTION OF PIPELINES AGREEMENT. A rejection, by or on behalf of Grantor or HEP, of the Pipelines Agreement in bankruptcy.
ARTICLE 8
REMEDIES
8.1 REMEDIES. Subject, in each case, to the rights of any Lienholder arising under or pursuant to the Senior Liens, and the terms and provisions of the SNDA, and provided no material default by the Holly Entities (as defined in the Pipelines Agreement) has occurred and is continuing, if an Event of Default shall occur and be continuing, Beneficiary may, at Beneficiary's election and by or through Trustee or otherwise, exercise any or all of the following rights, remedies and recourses:
(a) ENTRY UPON MORTGAGED PROPERTY. Enter upon the Mortgaged Property and take exclusive possession thereof and of all books, records and accounts relating thereto. If Grantor remains in possession of all or any part of the Mortgaged Property after an Event of Default and without Beneficiary's prior written consent thereto, Beneficiary may invoke any and all legal remedies to dispossess Grantor, including specifically one or more actions for forcible entry and detainer, trespass to try title and writ of restitution. Nothing contained in the foregoing sentence shall, however, be construed to impose any greater obligation or any prerequisites to acquiring possession of the Mortgaged Property after an Event of Default than would have existed in the absence of such sentence.
(b) OPERATION OF MORTGAGED PROPERTY. Hold, lease, manage, operate or otherwise use or permit the use of the Mortgaged Property, either itself or by other Persons, firms or entities, in such manner, for such time and upon such other terms as Beneficiary may deem to be prudent and reasonable under the circumstances (making such repairs, alterations, additions and improvements thereto and taking any and all other action with reference thereto, from time to time, as Beneficiary shall deem necessary or desirable), and apply all amounts collected by Trustee or Beneficiary in connection therewith in accordance with the provisions of Section 8.8.
(c) TRUSTEE OR RECEIVER. Prior to, upon or at any time after, commencement of any legal proceedings hereunder, make application to a court of competent jurisdiction as a matter of strict right and without notice to Grantor or regard to the adequacy of the Mortgaged Property for the satisfaction of the Obligations for appointment of a receiver of the Mortgaged Property, and Grantor does hereby irrevocably consent to such appointment. Any such receiver shall have all the usual powers and duties of receivers in similar cases, including the full power to rent, maintain and otherwise operate the Mortgaged Property upon such terms as may be approved by the court.
(d) OTHER. Exercise any and all other rights, remedies and recourses granted under this Deed of Trust.
8.2 REMEDIES CUMULATIVE, CONCURRENT AND NONEXCLUSIVE. Beneficiary shall have
all rights, remedies and recourses granted in the Pipelines Agreement and,
subject to the rights of any Lienholder arising under or pursuant to the
Senior Liens, and the terms and provisions of the SNDA, the Deed of Trust
and same (a) shall be cumulative and concurrent; (b) may be pursued
separately, successively or concurrently against Grantor or others
obligated under this Deed of Trust, or against the Mortgaged Property, or
against any one or more of them, at the sole discretion of Beneficiary;
(c) may be exercised as often as occasion therefor shall arise, it being
agreed by Grantor that the exercise or failure to exercise any of same
shall in no event be construed as a waiver or release thereof or of any
other right, remedy or recourse; and (d) are intended to be, and shall be,
nonexclusive.
8.3 OBLIGATIONS. Neither Grantor, HEP nor any other Person hereafter obligated for performance or fulfillment of all or any of the Obligations shall be relieved of such obligation by reason of (a) the failure of Trustee to comply with any request of Grantor or any other Person to enforce any provisions of this Deed of Trust; (b) the release, regardless of consideration, of the Mortgaged Property or the addition of any other property to the Mortgaged Property; (c) any agreement or stipulation between any subsequent owner of the Mortgaged Property and Beneficiary extending, renewing, rearranging or in any other way modifying the terms of the Security Documents without first having obtained the consent of, given notice to or paid any consideration to Grantor or such other Person, and in such event Grantor and all such other Persons shall continue to be liable to make payment according to the terms of any such extension or modification agreement unless expressly released and discharged in writing by Beneficiary; or (d) by any other act or occurrence save and except the complete fulfillment of all of the Obligations.
8.4 RELEASE OF AND RESORT TO COLLATERAL. Beneficiary may release, regardless of consideration, any part of the Mortgaged Property without, as to the remainder, in any way impairing, affecting, subordinating or releasing the lien or security interest created in or evidenced by this Deed of Trust or their stature as a lien and security interest in and to the Mortgaged Property.
8.5 WAIVER OF REDEMPTION, NOTICE AND MARSHALLING OF ASSETS. To the fullest extent permitted by law, Grantor hereby irrevocably and unconditionally waives and releases (a) all benefits that might accrue to Grantor by virtue of any present or future law exempting the Mortgaged Property from attachment, levy or sale on execution or providing for any appraisement, valuation, stay of execution, exemption from civil process, redemption or extension of time for payment; (b) all notices of any Event of Default or of Trustee's election to exercise or his actual exercise of any right, remedy or recourse provided for under this Deed of Trust; and (c) any right to a marshalling of assets or a sale in inverse order of alienation.
8.6 LIMITATION ON NEW MEXICO REDEMPTION. Pursuant to NMSA 1978, Section 39-5-19 (1965), the redemption period after foreclosure sale for any Mortgaged Property situated in or otherwise subject to the laws of the State of New Mexico shall be limited to one (1) month.
8.7 DISCONTINUANCE OF PROCEEDINGS. In case Beneficiary shall have proceeded to invoke any right, remedy or recourse permitted under this Deed of Trust and shall thereafter elect to discontinue or abandon same for any reason, Beneficiary shall have the unqualified right so to do and, in such an event, Grantor and Beneficiary shall be restored to their former positions with respect to the Obligations, the Security Documents, the Mortgaged Property and otherwise, and the rights, remedies, recourses and powers of Beneficiary shall continue as if same had never been invoked.
8.8 APPLICATION OF PROCEEDS. Subject, in each case, to the rights of any Lienholder arising under or pursuant to the Senior Liens, and the terms and provisions of the SNDA (including, without limitation, the right to receive payments otherwise due to HEP under the terms of the Pipelines Agreement), the proceeds and other amounts generated by the holding, operating or other use of, the Mortgaged Property shall be applied by Trustee or Beneficiary (or the receiver, if one is appointed) to the extent that funds are so available therefrom in the following orders of priority:
(a) first, to the payment of the costs and expenses of taking possession of the Mortgaged Property and of holding, using, leasing, repairing and improving the same, including without limitation (i) trustees' and receivers' fees, (ii) court costs, (iii) attorneys' and accountants' fees, and (iv) the payment of any and all Impositions, liens, security interests or other rights, titles or interests equal or superior to the lien and security interest of this Deed of Trust (except those to which the Mortgaged Property has been sold subject to and without in any way implying Beneficiary's prior consent to the creation thereof);
(b) second, to the payment of all amounts which may be due to Beneficiary with respect to the Obligations;
(c) third, to the extent permitted by law, funds are available therefor out of the proceeds generated by the holding, operating or other use of the Mortgaged Property and known by Beneficiary, to the payment of any indebtedness or obligation secured by a subordinate deed of trust on or security interest in the Mortgaged Property; and
(d) fourth, to Grantor.
8.9 INDEMNITY. IN CONNECTION WITH ANY ACTION TAKEN BY TRUSTEE AND/OR BENEFICIARY PURSUANT TO THIS DEED OF TRUST, TRUSTEE AND/OR BENEFICIARY AND THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS, REPRESENTATIVES, ATTORNEYS, ACCOUNTANTS AND EXPERTS (COLLECTIVELY THE "INDEMNIFIED PARTIES") SHALL NOT BE LIABLE FOR ANY LOSS SUSTAINED BY GRANTOR RESULTING FROM (i) AN
ASSERTION THAT TRUSTEE, BENEFICIARY OR INDEMNIFIED PARTY HAS RECEIVED FUNDS FROM THE OPERATIONS OF THE MORTGAGED PROPERTY CLAIMED BY THIRD PERSONS OR (ii) ANY ACT OR OMISSION OF TRUSTEE, BENEFICIARY OR INDEMNIFIED PARTY IN ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE MORTGAGED PROPERTY, INCLUDING IN EITHER CASE SUCH LOSS WHICH MAY RESULT FROM THE ORDINARY NEGLIGENCE OF TRUSTEE, BENEFICIARY OR AN INDEMNIFIED PARTY OR WHICH MAY RESULT FROM STRICT LIABILITY, WHETHER UNDER APPLICABLE LAW OR OTHERWISE, UNLESS SUCH LOSS IS CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH OF TRUSTEE, BENEFICIARY OR ANY INDEMNIFIED PARTY NOR SHALL TRUSTEE, BENEFICIARY AND/OR ANY INDEMNIFIED PARTY BE OBLIGATED TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY OF GRANTOR. GRANTOR SHALL AND DOES HEREBY AGREE TO INDEMNIFY TRUSTEE, BENEFICIARY AND EACH OF THEIR RESPECTIVE INDEMNIFIED PARTIES FOR, AND TO HOLD THEM HARMLESS FROM, ANY AND ALL LOSSES WHICH MAY OR MIGHT BE INCURRED BY TRUSTEE, BENEFICIARY OR INDEMNIFIED PARTY BY REASON OF THIS DEED OF TRUST OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER, INCLUDING SUCH LOSSES WHICH MAY RESULT FROM THE ORDINARY NEGLIGENCE OF TRUSTEE, BENEFICIARY OR AN INDEMNIFIED PARTY OR WHICH MAY RESULT FROM STRICT LIABILITY, WHETHER
UNDER APPLICABLE LAW OR OTHERWISE, UNLESS SUCH LOSS IS CAUSED BY THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH OF TRUSTEE, BENEFICIARY OR INDEMNIFIED PARTY. SHOULD TRUSTEE, BENEFICIARY AND/OR ANY INDEMNIFIED PARTY MAKE ANY EXPENDITURE ON ACCOUNT OF ANY SUCH LOSSES, THE AMOUNT THEREOF, INCLUDING, WITHOUT LIMITATION, COSTS, EXPENSES AND REASONABLE
ATTORNEYS' FEES, SHALL BE A DEMAND OBLIGATION (WHICH OBLIGATION GRANTOR
HEREBY EXPRESSLY PROMISES TO PAY) OWING BY GRANTOR TO TRUSTEE AND/OR
BENEFICIARY AND SHALL BEAR INTEREST FROM THE DATE EXPENDED UNTIL PAID AT
THE HIGHEST RATE ALLOWED BY LAW, SHALL BE A PART OF THE OBLIGATIONS AND
SHALL BE SECURED BY THIS DEED OF TRUST. THE LIABILITIES OF GRANTOR AS SET
FORTH IN THIS SECTION 8.9 SHALL SURVIVE THE TERMINATION OF THIS DEED OF
TRUST.
8.10 LIMITATIONS ON INDEMNIFICATIONS.
(a) To the extent, if at all, but only to the extent, that NMSA 1978,
Section 56-7-1 (1971), as amended from time to time, is applicable to this
Deed of Trust or any indemnification agreements herein, any agreement to
indemnify any indemnitee given in this Deed of Trust, regardless of
whether such agreement to indemnify makes reference to this or any other
limitation provision, will not extend to liability, claims, damages,
losses or expenses, including attorneys' fees, arising out of (i) the
preparation or approval
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of maps, drawings, opinions, reports, surveys, change orders, designs or
specifications by such indemnitee, or the agents or employees of such
indemnitee, or (ii) the giving of or the failure to give directions or
instructions by such indemnitee, or the agents or employees of such
indemnitee, where such giving or failure to give directions or
instructions is the primary cause of bodily injury to persons or damage to
property.
(b) To the extent, if at all, but only to the extent, that NMSA 1978,
Section 56-7-2 (1999), as amended from time to time, is applicable to this
Deed of Trust or any indemnification agreements herein, or agreement to
indemnify any indemnitee given in this Deed of Trust, regardless of
whether such undertaking or agreement to indemnify makes reference to this
or any other limitation provision, this Deed of Trust does not purport to
indemnify such indemnitee against loss or liability for damages arising
from: (i) the sole or concurrent negligence of such indemnitee or the
agents or employees of such indemnitee; (ii) the sole or concurrent
negligence of an independent contractor who is directly responsible to
such indemnitee; or (iii) an accident that occurs in operations carried on
at the direction or under the supervision of such indemnitee, an employee
or representative of such indemnitee or in accordance with methods and
means specified by such indemnitee or the employees or representatives of
such indemnitee.
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ARTICLE 9
SECURITY AGREEMENT
9.1 SECURITY INTEREST. This Deed of Trust shall be construed as a deed of trust on real property and it shall (subject to the Senior Liens) also constitute and serve as a "Security Agreement" on personal property within the meaning of, and shall constitute a security interest under, the Uniform Commercial Code (as the same is codified and in effect in New Mexico) with respect to the Personalty, Fixtures and Leases. To this end, Grantor has GRANTED, BARGAINED, CONVEYED, ASSIGNED, TRANSFERRED, AND SET OVER, and by these presents does GRANT, BARGAIN, CONVEY, ASSIGN, TRANSFER AND SET OVER, unto Trustee and unto Beneficiary, a security interest in all of Grantor's right, title and interest in, to and under the Personalty, Fixtures and Leases to secure the full and timely performance and discharge of the Obligations, subject only to the Permitted Encumbrances.
9.2 FINANCING STATEMENTS. Grantor hereby authorizes Beneficiary to file such "Financing Statements," and Grantor hereby agrees to execute and deliver such further assurances as Beneficiary may, from time to time, consider reasonably necessary to create, perfect and preserve Beneficiary's security interest herein granted and Beneficiary may cause such statements and assurances to be recorded and filed, at such times and places as may be required or permitted by law to so create, perfect and preserve such security interest.
9.3 UNIFORM COMMERCIAL CODE REMEDIES. Subject, in each case, to the rights of any Lienholder under or pursuant to the Senior Liens, and the terms and provisions of the SNDA and this Deed of Trust, Beneficiary and/or Trustee shall have all the rights, remedies and recourses (other than auction and sale rights) with respect to the Personalty, Fixtures and Leases afforded to it by the aforesaid Uniform Commercial Code (as the
same is codified and in effect in New Mexico) in addition to, and not in limitation of, the other rights, remedies and recourses afforded by this Deed of Trust.
9.4 NO OBLIGATION OF TRUSTEE OR BENEFICIARY. The assignment and security interest herein granted shall not be deemed or construed to constitute Trustee or Beneficiary as a trustee in possession of the Mortgaged Property, to obligate Trustee or Beneficiary to lease the Mortgaged Property or attempt to do same, or to take any action, incur any expense or perform or discharge any obligation, duty or liability whatsoever.
9.5 FIXTURE FILING. This Deed of Trust shall constitute a "fixture filing" for all purposes of Article 9 of the Uniform Commercial Code, as codified and in effect in New Mexico. All or part of the Mortgaged Property are or are to become fixtures; information concerning the security interest herein granted may be obtained at the addresses set forth on the first page hereof. The address of the Secured Party (Beneficiary) is the address set forth in Section 1.1(a) and the address of the Debtor (Grantor) is the address set forth in the opening recital of this Deed of Trust.
9.6 SATISFACTION AND RELEASE. If (a) all Obligations secured hereby shall be
paid, performed and satisfied in full, the Mortgaged Property (or any
portion thereof, in which case the provisions of clauses (i) through (iv)
below shall be applicable only to such portion) shall be sold, consigned,
conveyed or transferred in accordance with the provisions of the Pipelines
Agreement, (c) the Pipelines Agreement shall be terminated, cancelled or
otherwise expire, and the Obligations of HEP set forth in Section 2(c) of
the Pipelines Agreement shall no longer be applicable, and/or (d) at any
time Grantor's or HEP's (in the event Grantor does not have a stand-alone
credit rating) senior unsecured debt has an Investment Grade Rating (as
hereinafter defined) from both Moody's Investors Service, Inc. ("MOODY'S")
and Standard & Poor's Ratings Group ("S&P") (or any successor to the
rating business of either thereof), then this Deed of Trust shall be null
and void, (ii) the liens and security interests created by this Deed of
Trust shall be released as promptly as practicable, (iii) the Mortgaged
Property shall revert to Grantor (or the transferee in the case of clause
(b) above) free and clear of the liens and security interests created by
this Deed of Trust, and Beneficiary and Trustee (as applicable) shall
execute and deliver, or cause to be executed and delivered, instruments of
satisfaction and release that are reasonably requested by Grantor.
Otherwise, this Deed of Trust shall remain and continue in full force and
effect. As used in this Section 9.6, the term "Investment Grade Rating"
shall mean a rating equal to or higher than Baa3 (or the equivalent) by
Moody's, or BBB- (or the equivalent) by S&P.
ARTICLE 10
CONCERNING THE TRUSTEE
10.1 NO REQUIRED ACTION. Trustee shall not be required to take any action
toward the execution and enforcement of the trust hereby created or to
institute, appear in or defend any action, suit or other proceeding in
connection therewith where in his opinion such action will be likely to
involve him in expense or liability, unless requested so to do by a
written instrument signed by Beneficiary and, if Trustee so requests,
unless Trustee is
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tendered security and indemnity satisfactory to him against any and all
costs, expense and liabilities arising therefrom. Trustee shall not be
responsible for the execution, acknowledgment or validity of the Security
Documents, or for the proper authorization thereof, or for the sufficiency
of the lien and security interest purported to be created hereby, and
makes no representation in respect thereof or in respect of the rights,
remedies and recourses of Beneficiary.
10.2 CERTAIN RIGHTS. With the approval of Beneficiary, Trustee shall have the
right to take any and all of the following actions: (a) to select, employ
and advise with counsel (who may be, but need not be, counsel for
Beneficiary) upon any matters arising hereunder, including the
preparation, execution and interpretation of the Security Documents, and
shall be fully protected in relying as to legal matters on the advice of
counsel; (b) to execute any of the trusts and powers hereof and to perform
any duty hereunder either directly or through his agents or attorneys; (c)
to select and employ, in and about the execution of his duties hereunder,
suitable accountants, engineers and other experts, agents and
attorneys-in-fact, either corporate or individual, not regularly in the
employ of Trustee, and Trustee shall not be answerable for any act,
default or misconduct of any such accountant, engineer or other expert,
agent or attorney-in-fact, if selected with reasonable care, or for any
error of judgment or act done by Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee's gross negligence or bad faith; and (d) to take any and all other
lawful action as Beneficiary may instruct Trustee to take to protect or
enforce Beneficiary's rights hereunder. Trustee shall not be personally
liable in case of entry by him, or anyone entering by virtue of the powers
herein granted him, upon the Mortgaged Property for debts contracted or
liability or damages incurred in the management or operation of the
Mortgaged Property. Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any action
taken or proposed to be taken by him hereunder, believed by him in good
faith to be genuine. Trustee shall be entitled to reimbursement for
expenses incurred by him in the performance of his duties hereunder and to
reasonable compensation for such of his services hereunder as shall be
rendered. Grantor will, from time to time, pay the compensation due to
Trustee hereunder and reimburse Trustee for, and save him harmless
against, any and all liability and expenses which may be incurred by him
in the performance of his duties.
10.3 RETENTION OF MONEYS. All moneys received by Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by law) and Trustee shall be
under no liability for interest on any moneys received by him hereunder.
10.4 SUCCESSOR TRUSTEES. Trustee may resign by the giving of notice of such
resignation in writing to Beneficiary. If Trustee shall die, resign or
become disqualified from acting in the execution of this trust, or shall
fail or refuse to execute the same when requested by Beneficiary so to do,
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or if, for any reason, Beneficiary shall prefer to appoint a substitute trustee to act instead of the aforenamed Trustee, Beneficiary shall have full power to appoint a substitute trustee and, if preferred, several substitute trustees in succession who shall succeed to all the estates, properties, rights, powers and duties of the aforenamed
Trustee. Such appointment may be executed by any authorized agent of
Beneficiary, and if such Beneficiary be a corporation and such appointment
be executed in its behalf by any officer of such corporation, such
appointment shall be conclusively presumed to be executed with authority
and shall be valid and sufficient without proof of any action by the Board
of Directors or any superior officer of the corporation. Grantor hereby
ratifies and confirms any and all acts which the aforenamed Trustee, or
his successor or successors in this trust, shall do lawfully by virtue
hereof.
10.5 PERFECTION OF APPOINTMENT. Should any deed, conveyance or instrument of
any nature be required from Grantor by any successor Trustee to more fully
and certainly vest in and confirm to such new Trustee such estates,
rights, powers and duties, then, upon request by such Trustee, any and all
such deeds, conveyances and instruments shall be made, executed,
acknowledged and delivered and shall be caused to be recorded and/or filed
by Grantor.
10.6 SUCCESSION INSTRUMENTS. Any new Trustee appointed pursuant to any of the
provisions hereof shall, without any further act, deed or conveyance,
become vested with all the estates, properties, rights, powers and trusts
of its or his predecessor in the rights hereunder with like effect as if
originally named as Trustee herein; but nevertheless, upon the written
request of Beneficiary or of the successor Trustee, the Trustee ceasing to
act shall execute and deliver an instrument transferring to such successor
Trustee, upon the trusts herein expressed, all the estates, properties,
rights, powers and trusts of the Trustee so ceasing to act, and shall duly
assign, transfer and deliver any of the property and moneys held by such
Trustee to the successor Trustee so appointed in its or his place.
10.7 NO REPRESENTATION BY TRUSTEE. By accepting or approving anything required
to be observed, performed or fulfilled or to be given to Trustee or
Beneficiary pursuant to the Security Documents, including but not limited
to, any officer's certificate, balance sheet, statement of profit and loss
or other financial statement, survey, appraisal or insurance policy,
neither Trustee nor Beneficiary shall be deemed to have warranted,
consented to, or affirmed the sufficiency, legality, effectiveness or
legal effect of the same, or of any term, provision or condition thereof,
and such acceptance or approval thereof shall not be or constitute any
warranty, consent or affirmation with respect thereto by Trustee or
Beneficiary.
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ARTICLE 11
MISCELLANEOUS
11.1 PERFORMANCE AT GRANTOR'S EXPENSE. The cost and expense of performing or
complying with any and all of the Obligations shall be borne solely by
Grantor and/or HEP to the extent provided in the Pipelines Agreement.
11.2 SURVIVAL OF OBLIGATIONS. Each and all of the Obligations shall survive the
execution and delivery of the Security Documents and shall continue in
full force and effect until the Obligations have been performed and
discharged in full.
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11.3 FURTHER ASSURANCES. Grantor, upon the request of Trustee or Beneficiary,
will execute, acknowledge, deliver and record and/or file such further
instruments and do such further acts as may be necessary, desirable or
proper to carry out more effectively the purpose of the Security Documents
and to subject to the liens and security interests thereof any property
intended by the terms thereof to be covered thereby, including
specifically but without limitation, any renewals, additions,
substitutions, replacements, betterments or appurtenances to the then
Mortgaged Property.
11.4 RECORDING AND FILING. Grantor will cause the Security Documents and all
amendments and supplements thereto and substitutions therefor to be
recorded, filed, re-recorded and refiled in such manner and in such places
as Trustee or Beneficiary shall reasonably request, and will pay all such
recording, filing, re-recording and refiling taxes, fees and other
charges.
11.5 NOTICES. All notices or other communications required or permitted to be
given pursuant to this Deed of Trust shall be in writing and shall be
considered as properly given if mailed by first-class United States mail,
postage prepaid, registered or certified with return receipt requested, or
by delivering same in person to the intended addressee or by prepaid
telegram. Notice so mailed shall be effective two days following its
deposit. Notice given in any other manner shall be effective only if and
when received by the addressee. For purposes of notice, the addresses of
Beneficiary and Grantor shall be as set forth in Section 1.1(a) and the
opening recital hereinabove, respectively; provided, however, that either
party shall have the right to change its address for notice hereunder to
any other location within the continental United States by the giving of
thirty (30) days' notice to the other party in the manner set forth
hereinabove.
11.6 NO WAIVER. Any failure by Trustee or Beneficiary to insist, or any
election by Trustee or Beneficiary not to insist, upon strict performance
by Grantor of any of the terms, provisions or conditions of the Security
Documents shall not be deemed to be a waiver of same or of any other
terms, provision or condition thereof and Trustee or Beneficiary shall
have the right at any time or times thereafter to insist upon strict
performance by Grantor of any and all of such terms, provisions and
conditions.
11.7 BENEFICIARY'S RIGHT TO PERFORM THE OBLIGATIONS. If Grantor shall fail,
refuse or neglect to make any payment or perform any act required by the
Security Documents (after giving effect to any applicable notice and cure
period), then at any time thereafter, and without further notice to or
demand upon Grantor and without waiving or releasing any other right,
remedy or recourse Beneficiary may have because of same, Beneficiary may
(but shall not be obligated to) make such payment or perform such act for
the account of and at the expense of Grantor, and shall have the right to
enter upon or in the Real Property for such purpose and to take all such
action thereon and with respect to the Mortgaged Property as it may deem
necessary or appropriate but in any case subject to the rights of any
Lienholder arising under or pursuant to the Senior Liens and the terms and
provisions of the SNDA. If Beneficiary shall elect to pay any Imposition
or other sums due with reference to the Mortgaged Property, Beneficiary
may do so in reliance on any bill, statement or assessment procured from
the appropriate Governmental Entity or other issuer thereof without
inquiring into the accuracy or validity thereof. Similarly, in
19
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making any payments to protect the security intended to be created by the
Security Documents, Beneficiary shall not be bound to inquire into the
validity of any apparent or threatened adverse title, lien, encumbrance,
claim or charge before making an advance for the purpose of preventing or
removing the same. Grantor shall indemnify Beneficiary for all losses,
expenses, damage, claims and causes of action, including reasonable
attorneys' fees, incurred or accruing by reason of any acts performed by
Beneficiary pursuant to the provisions of this Section 11.7 or by reason
of any other provision in the Security Documents. All sums paid by
Beneficiary pursuant to this Section 11.7 and all other sums expended by
Beneficiary to which it shall be entitled to be indemnified, together with
interest thereon at the maximum rate allowed by law from the date of such
payment or expenditure, shall be secured by the Security Documents and
shall be paid by Grantor to Beneficiary upon demand.
11.8 COVENANTS RUNNING WITH THE LAND. All Obligations contained in the Security
Documents are intended by the parties to be, and shall be construed as,
covenants running with the Mortgaged Property.
11.9 SUCCESSORS AND ASSIGNS. All of the terms of the Security Documents shall
apply to, be binding upon and inure to the benefit of the parties thereto,
their successors and assigns, and all other Persons claiming by, through
or under them.
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11.10 SEVERABILITY. The Security Documents are intended to be performed in accordance with, and only to the extent permitted by, all applicable Legal Requirements. If any provision of any of the Security Documents or the application thereof to any Person or circumstance shall, for any reason and to any extent, be invalid or unenforceable neither the remainder of the instrument in which such provision is contained nor the application of such provision to other Persons or circumstances nor the other instruments referred to hereinabove shall be affected thereby, but rather shall be enforced to the greatest extent permitted by law.
11.11 ENTIRE AGREEMENT AND MODIFICATION. The Security Documents contain the entire agreements between the parties relating to the subject matter hereof and thereof and all prior agreements relative thereto which are not contained herein or therein are terminated. Notwithstanding anything herein to the contrary, Grantor and, by its acceptance hereof, Beneficiary hereby acknowledge and agree that in the event that any of the terms or provisions of this Deed of Trust conflict with any terms or provisions of the Pipelines Agreement, the terms or provisions of the Pipelines Agreement shall govern and control for all purposes. The Security Documents may not be amended, revised, waived, discharged, released or terminated orally but only by a written instrument or instruments (a) executed by the party against which enforcement of the amendment, revision, waiver, discharge, release or termination is asserted, and (b) consented to by the Lienholders to the extent any such amendment, revision, waiver, discharge, release or termination would be materially adverse to the rights of any such Lienholder. Any alleged amendment, revision, waiver, discharge, release or termination which is not so documented shall not be effective as to any party.
11.12 COUNTERPARTS. This Deed of Trust may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute but one instrument.
11.13 APPLICABLE LAW. The Security Documents shall be governed by and construed according to the laws of the State of New Mexico (excluding any conflicts of law, rule or principle that might refer such matters to the laws of another jurisdiction).
11.14 NO PARTNERSHIP. Nothing contained in the Security Documents is intended to, or shall be construed as, creating to any extent and in any manner whatsoever, any partnership, joint venture, or association between Grantor, Trustee and Beneficiary, or in any way make Beneficiary or Trustee coprincipals with Grantor with reference to the Mortgaged Property, and any inferences to the contrary are hereby expressly negated.
11.15 HEADINGS. The Article, Section and Subsection entitlements hereof are inserted for convenience of reference only and shall in no way alter, modify or define, or be used in construing, the text of such Articles, Sections or Subsections.
11.16 WAIVER OF STAY, MORATORIUM, AND SIMILAR RIGHTS. Grantor agrees, to the full extent that it may lawfully do so, that it will not at any time insist upon or plead or in any way take advantage of any appraisement, valuation, stay, marshalling of assets, extension, redemption or moratorium law now or hereafter in force and effect so as to prevent or hinder the enforcement of the provisions of this Deed of Trust or the indebtedness secured hereby, or any agreement between Grantor and Beneficiary or any rights or remedies Beneficiary may have thereunder, hereunder or by law.
11.17 TRANSFER OF MORTGAGED PROPERTY. No sale, lease, exchange, assignment, conveyance or other transfer (each, a "TRANSFER") of the Mortgaged Property will extinguish the lien or security interest created by this Deed of Trust, except to the extent provided in Section 9.6 of this Deed of Trust or in the Pipelines Agreement. As a condition to any Transfer, Beneficiary may (a) require the express assumption of the Obligations by the transferee (with or without the release of Grantor from liability in respect thereof), and (b) require the execution of an assumption agreement, modification agreements, supplemental security documents and financing statements satisfactory in form and substance to Beneficiary.
11.18 ESTOPPEL CERTIFICATES. Grantor and Beneficiary agree to execute and deliver from time to time, upon the request of the other party, a certificate regarding the status of the Pipelines Agreement, consisting of statements, if true (or if not, specifying why not), (a) that the Pipelines Agreement is in full force and effect, (b) the date through which payments have been paid, (c) the date of the commencement of the term of the Pipelines Agreement, (d) the nature of any amendments or modifications of the Pipelines Agreement, (e) to such party's actual knowledge without investigation, no default, or state of facts which with the passage of time or notice (or both) would constitute a default, exists under the Pipelines Agreement, (f) to such party's actual knowledge without investigation, no setoffs, recoupments, estoppels, claims or counterclaims exist against the other party under the Pipelines Agreement, and (g) such other factual matters as may be reasonably requested.
11.19 FINAL AGREEMENT. Grantor acknowledges receipt of a copy of this instrument at the time of execution hereof. Grantor acknowledges that, except as incorporated in writing in this Deed of Trust, there are not, and were not, and no persons are or were authorized to make any representations, understandings, stipulations, agreements or promises, oral or written, with respect to the matters addressed in this Deed of Trust. THE WRITTEN AGREEMENTS HEREIN REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
11.20 OTHER NEW MEXICO PROVISIONS.
(a) In addition to the requirements for giving notice set forth elsewhere in this instrument, all notices shall be sent by regular, first-class United States mail, postage prepaid.
(b) Notwithstanding anything to the contrary contained in this instrument, the appointment of a receiver for the Mortgaged Property shall be in accordance with the New Mexico Receivership Act, Section 44-8-1, et seq., NMSA 1978.
(c) To the extent this instrument constitutes a deed of trust, it is subject to the New Mexico Deed of Trust Act, Section 48-10-1, et seq., NMSA 1978.
(d) To the extent this instrument constitutes a mortgage, the grant of the mortgage is made with mortgage covenants and upon the statutory mortgage condition, for the breach of which, except as otherwise provided herein, this instrument is subject to foreclosure as provided by law.
(e) For Security Agreement and Fixture Filing purposes, (1) the Debtor's name is HEP Pipeline, L.L.C., whose address is shown on the first page of this instrument; (2) the Secured Party's name is Holly Corporation, whose address is shown on the first page of this instrument; (3) this instrument covers materials, supplies, equipment, apparatus and other items that are, or are to become, fixtures; and (4) the real property to which such fixtures are related is attached to this instrument as Exhibit A.
[SIGNATURE PAGE TO FOLLOW]
WITNESS THE EXECUTION HEREOF as of the date first above written.
GRANTOR:
HEP PIPELINE, L.L.C., a Delaware limited liability
company
By: Holly Energy Partners - Operating, L.P., a
Delaware limited partnership, its sole member
By: HEP Logistics GP, L.L.C., a Delaware
limited liability company, its general partner
By: Holly Energy Partners, L.P., a Delaware
limited partnership, its sole member
By: HEP Logistics Holdings, L.P., a
Delaware limited partnership, its
general partner
By: Holly Logistic Services, L.L.C.,
a Delaware limited liability
company, its general partner
By: /s/ Stephen J. McDonnell
----------------------------
Stephen J. McDonnell
Vice President and
Chief Financial Officer
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EMPLOYER IDENTIFICATION NUMBER OF GRANTOR: 71-0968296
ORGANIZATIONAL NUMBER OF GRANTOR: 381427
[Signature Page]
THE STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on July 8, 2005, by Stephen J. McDonnell, Vice President and Chief Financial Officer of Holly Logistic Services, L.L.C., a Delaware limited liability company, general partner of HEP Logistics Holdings, L.P., a Delaware limited partnership, general partner of Holly Energy Partners, L.P., a Delaware limited partnership, sole member of HEP Logistics GP, L.L.C., a Delaware limited liability company, general partner of Holly Energy Partners - Operating, L.P., a Delaware limited partnership, sole member of HEP Pipeline, L.L.C., a Delaware limited liability company.
/s/ Notary Public ---------------------------------- Notary Public, State of Texas |
[Acknowledgement Page]
EXHIBIT A
EXHIBIT B
DESCRIPTION OF PIPELINES
Approximately 65 miles of 8" feedstock pipeline and 10" feedstock pipeline, each of which begins at the inlet flange of the delivery manifold motor operated valves at the Lovington Refinery, near Lovington, New Mexico and ends at the outlet flange of the turbine meter at the Artesia Refinery in Artesia, New Mexico, along with any and all connection facilities, including the Enterprise/MAPL connection, field booster pump stations, spare parts, pipes, valves, motors and miscellaneous equipment directly associated with the 8" inch and 10" feedstock pipelines.
ATTACHMENT 1
FORM OF SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
After recording, return to:
Vinson & Elkins L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Attention: Mark C. Anderson, Jr.
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
This Subordination, Non-Disturbance and Attornment Agreement (this "AGREEMENT") is executed as of July __, 2005, among Union Bank of California, N.A., in its capacity as administrative agent (or any assignee of or successor to such administrative agent) under the Credit Agreement (as defined below) and on behalf of the Credit Parties (as defined below) ("ADMINISTRATIVE AGENT"), and Holly Corporation, a Delaware corporation ("HOLLY").
RECITALS:
A. Holly Energy Partners - Operating, L.P., a Delaware limited partnership ("OPERATING"), the financial institutions party thereto from time to time (individually, a "FINANCIAL INSTITUTION" and collectively, the "FINANCIAL INSTITUTIONS"), the Financial Institutions issuing letters of credit thereunder from time to time, if any (individually, an "ISSUING BANK" and collectively, the "ISSUING BANKS"), the Financial Institutions or any affiliate thereof that have entered into hedging arrangements with Operating or any subsidiary thereof from time to time (individually, a "SWAP COUNTERPARTY" and collectively, the "SWAP COUNTERPARTIES" and, together with Administrative Agent, the Financial Institutions and the Issuing Banks, being collectively referred to herein as the "CREDIT PARTIES") are parties to that certain Credit Agreement dated as of July 7, 2004 (as heretofore and hereafter renewed, extended, amended, supplemented, replaced, modified and/or restated from time to time, the "CREDIT AGREEMENT").
B. The Financial Institutions are the present owners and holders of certain promissory notes dated July 7, 2004, executed by Operating and payable to the order of each such Financial Institution (as heretofore and hereafter renewed, extended, amended, supplemented, replaced, modified, and/or restated from time to time and together with any additional notes issued under or pursuant to the Credit Agreement, the "NOTES"). Administrative Agent, for the ratable benefit of the Credit Parties, is the beneficiary of that certain (i) Mortgage, Deed of Trust, Security Agreement, Assignment of Rents and Leases, Fixture Filing and Financing Statement dated as of July __, 2005 (as heretofore and hereafter renewed, extended, amended, supplemented, replaced, modified, and/or restated from time to time, the "SENIOR MORTGAGE"), and the secured party under certain other security agreements and documents
Attachment 1-1
entered into in connection with the Credit Agreement (as heretofore and hereafter renewed, extended, amended, supplemented, replaced, modified, and/or restated from time to time, the "SECURITY INSTRUMENTS" and, together with the Credit Agreement, the Notes, the Senior Mortgage and any other documents, instruments and agreements executed and/or delivered in connection with the Credit Agreement, collectively, the "SENIOR LOAN DOCUMENTS").
C. Pursuant to the Senior Loan Documents and to secure the Notes and the other Secured Obligations (as defined in the Senior Mortgage), HEP Pipeline, L.L.C., a Delaware limited liability company ("HEP PIPELINE") and a subsidiary of Holly Energy Partners, L.P., a Delaware limited partnership ("HEP") granted a security interest and mortgage lien to or for the benefit of Administrative Agent, covering the right, title and interest of HEP Pipeline in certain property described in Exhibit A attached hereto (the "PROPERTY").
D. Holly is the current owner of certain rights and interests under and pursuant to the provisions of that certain Pipelines Agreement dated as of July __, 2005 by and among Holly, HEP, Navajo Refining Company, L.P., a Delaware limited partnership, Operating, HEP Pipeline, HEP Logistics Holdings, L.P., a Delaware limited partnership, Holly Logistic Services, L.L.C., a Delaware limited liability company, and HEP Logistics GP, L.L.C., a Delaware limited liability company (together with any amendments, restatements or modifications from time to time made thereto, the "PIPELINES AGREEMENT").
E. Holly is the current beneficiary of certain liens and security interests in a portion of the Property (the "SUBORDINATED LIENS") under and pursuant to the provisions of that certain Mortgage and Deed of Trust (with Security Agreement and Financing Statement) (the "HOLLY MORTGAGE") dated as of July __, 2005 executed by HEP Pipeline to John N. Patterson, Trustee, for the benefit of Holly, securing the Obligations (as defined in the Holly Mortgage and referred to herein as the "HEP OBLIGATIONS"), such Holly Mortgage being recorded (or to be recorded) in various counties in the State of New Mexico.
F. Holly has agreed to subordinate its Subordinated Lien under the Holly Mortgage (but not, pursuant to this Agreement, any of its rights and interests under the Pipelines Agreement) to (i) the Senior Mortgage and the other Senior Loan Documents, and (ii) any other mortgage, deed of trust or security instrument granted by a Purchaser (as defined below) or any subsequent purchaser of any portion of the Mortgaged Property (as heretofore and hereafter renewed, extended, amended, supplemented, replaced, modified, and/or restated from time to time, a "FUTURE SENIOR MORTGAGE") that secures debt and obligations of, and other extensions of credit to, such Purchaser or purchaser (together with the Secured Obligations (as defined in the Senior Mortgage), referred to herein as the "SENIOR SECURED OBLIGATIONS") and Administrative Agent has agreed that it and any such Purchaser at foreclosure of the Senior Mortgage shall recognize and not disturb or extinguish the Holly Mortgage, all on the terms and conditions hereinafter set forth.
Attachment 1-2
AGREEMENTS:
NOW, THEREFORE, in consideration of Ten Dollars ($10) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Administrative Agent and Holly hereby covenants and agrees as follows:
1. SUBORDINATION OF HOLLY MORTGAGE.
(a) Subject to the provisions of Section 3 and Section 4 hereof, the Subordinated Liens of Holly under the Holly Mortgage and all of the terms, covenants and provisions of the Holly Mortgage, and all rights, remedies and options of Holly thereunder, are and shall at all times continue to be subject, subordinate and inferior in all respects to the Senior Loan Documents and any Future Senior Mortgage and to the liens and security interests thereof and to all amendments, modifications, and replacements thereof, with the same force and effect as if the Senior Loan Documents, or if applicable, the Future Senior Mortgage, had been executed, delivered and recorded prior to the execution, delivery and recordation of the Holly Mortgage. This Agreement is not intended, and shall not be construed, to (i) subordinate the rights and interests of Holly under the Pipelines Agreement (including Holly's right to quiet enjoyment under the Pipelines Agreement or any claims, remedies or damages that may be due or available to, or become due or available to, Holly under the Pipelines Agreement), or subordinate the Holly Mortgage to any mortgage, deed of trust, assignment, security agreement, financing statement or other security document, other than, with respect to clause (ii), the Senior Loan Documents and the Future Senior Mortgage. Nothing in this Agreement shall impair, as between HEP or Operating, on the one hand, and Holly, on the other hand, the obligations of HEP and Operating, which are absolute and unconditional, to perform the HEP Obligations in accordance with their terms.
(b) Notwithstanding anything herein or in the Holly Mortgage to the contrary, Holly hereby acknowledges and agrees, and HEP Pipeline by its consent to this Agreement acknowledges and agrees, that (i) in the event that any of the terms or provisions of this Agreement conflict with any terms or provisions of the Holly Mortgage, the terms or provisions of this Agreement shall govern and control for all purposes; and (ii) without the written prior consent of the Administrative Agent or the beneficiary of any Future Senior Mortgage (together with the Credit Parties, the "SENIOR BENEFICIARIES"), neither Holly nor HEP Pipeline (nor any future owner of the Mortgaged Property) will amend, revise, supplement, replace, restate, or otherwise modify the Holly Mortgage if such amendment, revision, supplement, replacement, restatement or other modification would be materially adverse to the rights of any Senior Beneficiary.
2. RELATIVE RIGHTS AND PRIORITIES. Subject to the provisions of Section 1,
Section 3 and Section 4 hereof:
(a) Until the Senior Secured Obligations have been indefeasibly paid in full, all commitments to extend credit under the Credit Agreement (or if applicable, any agreement governing obligations secured by a Future Senior Mortgage) have terminated, and all letters of credit issued thereunder have been terminated and returned (the "SENIOR OBLIGATIONS PAYMENT
Attachment 1-3
DATE"), Holly will not (i) commence any foreclosure (whether a judicial foreclosure or non-judicial foreclosure) of the Holly Mortgage, (ii) accept a deed or assignment in lieu of foreclosure, (iii) otherwise exercise any of its rights or remedies under the Holly Mortgage, or (iv) take any Enforcement Action.
(b) Holly agrees that, until the Senior Obligations Payment Date has occurred:
(i) it will not take or cause to be taken any action, the purpose or effect of which is to make any Subordinated Lien pari passu with or senior to, or to give Holly any preference or priority relative to, the liens and security interests with respect to the Senior Secured Obligations;
(ii) it will not oppose, object to, interfere with, hinder or delay, in any manner, whether by judicial proceedings (including without limitation the filing of an Insolvency Proceeding (as herein defined)) or otherwise, any foreclosure, sale, lease, exchange, transfer or other disposition of the Mortgaged Property (as defined in the Holly Mortgage and with the same meaning herein as therein defined) by any of the Senior Beneficiaries or any other Enforcement Action taken by or on behalf of any of the Senior Beneficiaries;
(iii) it has no right to (x) direct any of the Senior Beneficiaries to exercise any right, remedy or power with respect to the Mortgaged Property or pursuant to the Senior Loan Documents or any Future Senior Mortgage or (y) consent or object to the exercise by any of the Senior Beneficiaries of any right, remedy or power with respect to the Mortgaged Property or pursuant to the Senior Loan Documents or any Future Senior Mortgage or to the timing or manner in which any such right is exercised or not exercised (or, to the extent they may have any such right described in this clause (iii), whether as a junior lien creditor or otherwise, they hereby irrevocably waive such right);
(iv) it will not institute any suit or other proceeding or assert in any suit, Insolvency Proceeding or other proceeding any claim against any of the Senior Beneficiaries seeking damages from or other relief by way of specific performance, instructions or otherwise, with respect to, and none of the Senior Beneficiaries shall be liable for any action taken or omitted to be taken by any of the Senior Beneficiaries with respect to the Mortgaged Property or pursuant to the Senior Loan Documents or any Future Senior Mortgage; and
(v) the Senior Beneficiaries shall have the prior right to collect and receive any and all proceeds which may be paid or distributed in respect of the Mortgaged Property in any Insolvency Proceeding or otherwise arising from any sale or other disposition of the Mortgaged Property.
(c) Until the Senior Obligations Payment Date has occurred, Holly agrees that it shall not, in, or in connection with, any Insolvency Proceeding, file any pleadings or motions, take any position at any hearing or proceeding of any nature, or otherwise take any action whatsoever, in each case, that is inconsistent with the terms or spirit of, or intent of the parties
Attachment 1-4
with respect to, this Agreement, including, without limitation, with respect to the determination of any liens or claims held by any of the Senior Beneficiaries (including the validity and enforceability thereof) or the value of any claims of such parties under the United States Bankruptcy Code or otherwise; provided that Holly may file a proof of claim in an Insolvency Proceeding, subject to the limitations contained in this Agreement and only if consistent with the terms and the limitations imposed hereby; provided further, that if no proof of claim is filed in any Insolvency Proceeding with respect to the HEP Obligations by the 10th day prior to the bar date for such proof of claim, the Senior Beneficiaries may (but shall have no duty or obligation to), after notice to Holly, file such proof of claim, provided that the foregoing shall not confer to any Senior Beneficiary the right to vote on behalf of Holly in any insolvency proceeding.
(d) Until the Senior Obligations Payment Date has occurred, whether or not an Insolvency Proceeding has been commenced by or against the owner of the Mortgaged Property, any of the Senior Beneficiaries shall have the exclusive right to take and continue any Enforcement Action with respect to the Mortgaged Property, without any consultation with or consent of Holly. Upon the occurrence and during the continuance of a default or an event of default under the Senior Loan Documents or any Future Senior Mortgage, any of the Senior Beneficiaries may take and continue any Enforcement Action with respect to the Senior Secured Obligations and the Mortgaged Property in such order and manner as they may determine in their sole discretion.
(e) To the extent required, Holly hereby consents to the liens and security interests created by the Senior Mortgage and any Future Senior Mortgage, and Holly shall not object to or contest, or support any other person or entity in contesting or objecting to, in any proceeding (including without limitation, any Insolvency Proceeding), the validity, extent, perfection, priority or enforceability of any lien or security interest in the Mortgaged Property granted in favor of any of the Senior Beneficiaries. Notwithstanding any failure by any of the Senior Beneficiaries or Holly or their respective representatives to perfect their liens in the Mortgaged Property or any avoidance, invalidation or subordination by any third party or court of competent jurisdiction of the liens in the Mortgaged Property granted in favor of any of the Senior Beneficiaries or Holly, the priority and rights as between any of the Senior Beneficiaries and Holly and its representatives with respect to the Mortgaged Property shall be as set forth herein.
As used in this Section 2, the following terms shall have the following meanings:
"ENFORCEMENT ACTION" means any demand for payment or acceleration thereof, the bringing of any lawsuit or other proceeding, the exercise of any rights and remedies, directly or indirectly, with respect to any Mortgaged Property, any enforcement or foreclosure of any lien or security interest, any sale in lieu of foreclosure, the taking of possession, exercise of any offset, repossession, garnishment, sequestration or execution, any collection of any Mortgaged Property, any notice to account debtors on any Mortgaged Property or the commencement or prosecution of enforcement of any of the rights and remedies under the Senior Loan Documents or applicable law, including without limitation the exercise of any rights of set-off or recoupment, and the exercise of any rights or remedies of a secured creditor under the uniform commercial code of any applicable jurisdiction, under the United States Bankruptcy Code, as amended from time to
Attachment 1-5
time or otherwise; provided, that, neither the exercise or enforcement by Holly of its rights under the Pipelines Agreement, nor the filing of a proof of claim in an Insolvency Proceeding, shall constitute an Enforcement Action.
"INSOLVENCY PROCEEDING" means any proceeding in respect of bankruptcy, insolvency, winding up, receivership, dissolution or assignment for the benefit of creditors, in each of the foregoing events whether under the United States Bankruptcy Code, as amended from time to time or any similar federal, state or foreign bankruptcy, insolvency, reorganization, receivership or similar law.
3. RECOGNITION AND NON-DISTURBANCE OF HOLLY MORTGAGE. If Administrative Agent, any other Credit Party or any other person (Administrative Agent, any other Credit Party or such other person being herein called a "PURCHASER") shall become the owner of any part of the Property by reason of the foreclosure (whether a judicial foreclosure or non-judicial foreclosure) of the Senior Mortgage or the acceptance of a deed or assignment in lieu of foreclosure or otherwise (any of such being herein called a "FORECLOSURE EVENT"), then for so long as the Pipelines Agreement is in effect, the Purchaser shall (i) recognize the Holly Mortgage, and the Holly Mortgage shall not be terminated or affected thereby, but shall continue in full force and effect upon all of the terms, covenants and conditions set forth in the Holly Mortgage, and (ii) be bound by and subject to all of the terms, provisions, covenants and conditions of the Holly Mortgage; provided, that, the Holly Mortgage shall be subordinated to any Future Senior Mortgage, regardless of whether such Future Senior Mortgage is a direct replacement of an existing Senior Mortgage or Security Instrument, and any such Future Senior Mortgage shall be considered a "Senior Mortgage" for purposes of this Agreement and the Holly Mortgage. Administrative Agent shall not claim, or seek adjudication, that the Holly Mortgage has been terminated or otherwise adversely affected by any Foreclosure Event.
4. PIPELINES AGREEMENT. Administrative Agent recognizes and confirms that the Pipelines Agreement, and the rights and interests of Holly thereunder, shall in no way be restricted, limited or otherwise affected by this Agreement, the Holly Mortgage, the Senior Mortgage, any Future Senior Mortgage, the Security Instruments or any liens or security interests thereof; provided, however, that, Holly agrees that nothing in the Pipelines Agreement shall (a) prevent any Purchaser or subsequent purchaser from owning or operating the Mortgaged Property, so long as such Purchaser or subsequent purchaser shall have assumed, and be in compliance with, HEP's obligations under the Pipelines Agreement and shall have executed an "SNDA" as defined in, and in accordance with, Article 6 of the Holly Mortgage, or (b) be deemed to invalidate or require the release of any Senior Beneficiary's liens in the Mortgaged Property in connection with the exercise by Holly of a purchase option under the Pipelines Agreement or otherwise. Holly shall not amend, modify or supplement the Pipelines Agreement without the prior written consent of the Majority Banks (as defined in the Credit Agreement); provided, that, such amendments, modifications or supplements may be made without the consent of the Majority Banks if such amendments, modifications or supplements (i) individually or in the aggregate, are not materially adverse to the rights of the Administrative Agent or the Financial Institutions, and (ii) individually or in the aggregate, do not materially decrease the economic benefit that Operating would have otherwise received pursuant to such agreement. Administrative Agent, both for itself and for any Purchaser, further agrees that upon any
Attachment 1-6
Foreclosure Event, the Pipelines Agreement shall not be terminated or affected thereby, nor shall Holly's right to ship or store petroleum products through the pipelines or in the terminals, respectively, constituting a portion of the Property in accordance with the provisions of the Pipelines Agreement (or any other rights of Holly under the Pipelines Agreement) be affected or disturbed because of the Foreclosure Event, but rather the Pipelines Agreement shall continue in full force and effect as direct obligations between the Purchaser and Holly, upon all of the terms, covenants and conditions set forth in the Pipelines Agreement. Neither Administrative Agent nor any Purchaser shall claim, or seek adjudication, that the Pipelines Agreement has been terminated or otherwise adversely affected by any Foreclosure Event. Notwithstanding the foregoing, in the event that the Pipelines Agreement is rejected in bankruptcy or is otherwise terminated, the Purchaser shall, promptly upon request by Holly, enter into a Pipelines Agreement with Holly on substantially the same terms (and with tariffs and minimum volumes commensurate with those then applicable under the Pipelines Agreement) and conditions as the rejected or terminated Pipelines Agreement, but having a term commencing on the date on which Purchaser acquired title to any portion of the Property. The immediately preceding sentence shall be deemed to be a covenant running with the land and shall be binding on any person or entity that acquires title to all or party of the Property by, through or under the Senior Mortgage.
5. ATTORNMENT WITH RESPECT TO THE PIPELINES AGREEMENT. Upon the occurrence of any Foreclosure Event, Holly shall attorn to the Purchaser, the Purchaser shall accept such attornment, and the Purchaser and Holly shall be bound to each other under all of the terms, provisions, covenants and conditions of the Pipelines Agreement; provided, that, except for Holly's express rights and remedies under the Pipelines Agreement, in no event shall the Purchaser be liable for any act, omission, default, misrepresentation, or breach of warranty of HEP or HEP Pipeline (or any owner of the Mortgaged Property prior to such Purchaser) or obligations accruing prior to Purchaser's actual ownership of the Property. The provisions of this Agreement regarding attornment by Holly shall be self-operative and effective without the necessity of execution of any new document on the part of any party hereto or the respective heirs, legal representatives, successors or assigns of any such party. Holly agrees, however, to execute and deliver upon the request of Purchaser, any instrument or certificate which in the reasonable judgment of Purchaser may be necessary or appropriate to evidence such attornment.
6. ESTOPPEL CERTIFICATE. Holly agrees to execute and deliver from time to time, upon the request of any of the Senior Beneficiaries, a certificate regarding the status of the Pipelines Agreement, consisting of statements, if true (or if not, specifying why not), (a) that the Pipelines Agreement is in full force and effect, (b) the date through which payments have been paid, (c) the date of the commencement of the term of the Pipelines Agreement, (d) the nature of any amendments or modifications of the Pipelines Agreement, (e) to Holly's actual knowledge without investigation, no default, or state of facts which with the passage of time or notice (or both) would constitute a default, exists under the Pipelines Agreement, (f) to Holly's actual knowledge without investigation, no setoffs, recoupments, estoppels, claims or counterclaims exist against HEP under the Pipelines Agreement, and (g) such other factual matters as may be reasonably requested.
7. [INTENTIONALLY OMITTED].
Attachment 1-7
8. RELIANCE ON NOTICES. HEP Pipeline agrees that Holly may rely upon any and all notices from Administrative Agent or any Purchaser, even if such conflict with notices from HEP Pipeline.
9. NOTICES. All notices, consents and other communications pursuant to the provisions of this Agreement shall be in writing and shall be sent by (a) registered or certified mail, postage prepaid, return receipt requested, (b) nationally recognized overnight delivery service, or (c) telecopier, addressed as follows:
If to Administrative Agent: Union Bank of California, N.A.
445 South Figueroa Street, 15th Floor
Los Angeles, California 90071
Attention: Don Smith
Telecopy: (213) 236-6823
If to Holly: Holly Corporation
100 Crescent Court, Suite 1600
Dallas, Texas 75201-6927
Attention: General Counsel
Telecopy: (214) 871-3523
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Notice sent by registered or certified mail, postage prepaid, return receipt requested, shall be deemed given and received on the third Business Day (hereinafter defined) after being deposited in the United States mail, notice sent by nationally recognized overnight delivery service shall be deemed given in conformity with this paragraph and received on the first Business Day after being deposited with such delivery service, and notice given by telecopier shall be deemed given and received upon actual receipt if received during the recipient's normal business hours or at the beginning of the recipient's next Business Day after receipt if not received during the recipient's normal business hours. Each party may designate a change of address by notice to the other party. "BUSINESS DAY" means a day upon which commercial banks are not authorized or required by law to close in Dallas, Texas.
10. BINDING EFFECT. This Agreement shall be binding upon Administrative Agent, Holly and any Purchaser and inure to the benefit of the Senior Beneficiaries and Holly and their respective successors and assigns. HEP Pipeline has assigned to Administrative Agent its rights hereunder, and HEP has assigned to Administrative Agent its rights under the Pipelines Agreement by way of a collateral assignment. The parties agree that any person that shall become the owner of any of the rights of HEP Pipeline hereunder, or any of the rights of HEP under the Pipelines Agreement by reason of foreclosure (whether a judicial foreclosure or non-judicial foreclosure and including, without limitation, Administrative Agent) or the acceptance of a deed or assignment in lieu of foreclosure or otherwise shall (i) have the same rights as HEP Pipeline hereunder, and HEP under the Pipelines Agreement, including, without limitation, under this Section 10, and (ii) be bound by and subject to all of the terms, provisions, covenants and conditions of this Agreement.
Attachment 1-8
11. GENERAL DEFINITIONS. The term "ADMINISTRATIVE AGENT" as used herein shall include the successors and assigns of Administrative Agent. The term "HEP" as used herein shall include the successors and assigns of HEP under the Pipelines Agreement, but shall not mean or include Administrative Agent. The term "Property" as used herein shall mean the Property, the improvements now or hereafter located thereon and the estates therein encumbered by the Senior Mortgage. The term "HOLLY" as used herein shall include the successors and assigns of Holly hereunder and under the Pipelines Agreement including, without limitation, any Holly Successor.
12. MODIFICATIONS. This Agreement may not be modified in any manner or terminated except by an instrument in writing executed by the parties hereto.
13. GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State in which the Property is located.
14. DUPLICATE ORIGINALS; COUNTERPARTS. This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of such together shall constitute a single Agreement.
15. FURTHER ASSURANCES. Without unreasonable delay and to the extent requested by HEP, subject to Section 4 hereof and Article 6 of the Holly Mortgage, Holly will enter into new Subordination, Non-Disturbance and Attornment Agreements, if necessary or advisable, to facilitate the extension, amendment, supplement, restatement, replacement or refinancing of the indebtedness under the Credit Agreement.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
Attachment 1-9
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
ADMINISTRATIVE AGENT: UNION BANK OF CALIFORNIA, N.A., as
Administrative Agent
By:_____________________________________
Sean Murphy, Vice President
HOLLY: HOLLY CORPORATION
By:____________________________________
Stephen J. McDonnell, Vice President
and Chief Financial Officer
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Attachment 1-10
HEP PIPELINE'S CONSENT
The undersigned hereby consents to the foregoing Subordination, Non-Disturbance
and Attornment Agreement and, without limitation, agrees to the provisions of
Section 8 thereof.
GRANTOR:
HEP PIPELINE, L.L.C., a Delaware limited liability
company
By: Holly Energy Partners - Operating, L.P., a Delaware
limited partnership, its sole member
By: HEP Logistics GP, L.L.C., a Delaware limited
liability company, its general partner
By: Holly Energy Partners, L.P., a Delaware
limited partnership, its sole member
By: HEP Logistics Holdings, L.P., a
Delaware limited partnership, its
general partner
By: Holly Logistic Services, L.L.C.,
a Delaware limited liability
company, its general partner
By:______________________________
Stephen J. McDonnell
Vice President and
Chief Financial Officer
Attachment 1-11
THE STATE OF TEXAS
COUNTY OF DALLAS
THIS INSTRUMENT was acknowledged before me on July ___, 2005 by Sean Murphy, Vice President of Union Bank of California, N.A., a national banking association, as Administrative Agent, on behalf of such banking association.
Notary Public in and for the State of Texas
THE STATE OF TEXAS
COUNTY OF DALLAS
THIS INSTRUMENT was acknowledged before me on July ___, 2005 by Stephen J. McDonnell, Vice President and Chief Financial Officer of Holly Corporation, a Delaware corporation, on behalf of such corporation.
____________________________________________
Notary Public in and for the State of Texas
_____________________________ ____________________________________________
My Commission Expires Printed Name of Notary
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Attachment 1-12
THE STATE OF TEXAS
COUNTY OF DALLAS
THIS INSTRUMENT was acknowledged before me on July ___, 2005 by Stephen J. McDonnell, Vice President and Chief Financial Officer of Holly Logistic Services, L.L.C., a Delaware limited liability company, general partner of HEP Logistics Holdings, L.P., a Delaware limited partnership, general partner of Holly Energy Partners, L.P., a Delaware limited partnership, sole member of HEP Logistics GP, L.L.C., a Delaware limited liability company, general partner of Holly Energy Partners - Operating, L.P., a Delaware limited partnership, sole member of HEP Pipeline, L.L.C., a Delaware limited liability company, on behalf of such limited liability company.
____________________________________________
Notary Public in and for the State of Texas
__________________________ ____________________________________________
My Commission Expires Printed Name of Notary
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Attachment 1-13
EXHIBIT A
PROPERTY
Attachment 1-14
EXHIBIT 10.3
EXECUTION VERSION
CONSENT AND AMENDMENT NO. 4
This CONSENT AND AMENDMENT NO. 4 (this "Agreement") dated as of July 8, 2005 is among Holly Energy Partners - Operating, L.P., successor to HEP Operating Company, L.P. (the "Borrower"), the Existing Guarantors (as defined below), the Banks (as defined in the Credit Agreement (as defined below)), and Union Bank of California, N.A., as administrative agent for such Banks (in such capacity, the "Administrative Agent").
RECITALS
A. The Borrower, the Banks, and the Administrative Agent are parties to the Credit Agreement dated as of July 7, 2004, as amended by the Consent and Omnibus Amendment dated as of July 30, 2004, by the Consent, Waiver and Amendment No. 2 dated as of February 28, 2005, and by the Waiver and Amendment dated as of June 17, 2005 (as so amended, the "Credit Agreement").
B. In connection with such Credit Agreement, the undersigned Subsidiaries of the Borrower (the "Existing Guarantors") executed and delivered a Guaranty Agreement dated as of July 13, 2004 (as the same has been supplemented and as the same may be further amended, modified or supplemented from time to time, the "Guaranty") in favor of the Administrative Agent for the benefit of the Beneficiaries (as defined therein).
C. The Borrower, Holly Energy Partners, L.P., a Delaware limited partnership (the "Limited Partner"), and HEP Pipeline, L.L.C., a Delaware limited liability company ("HEP"), as buyer parties have entered into a Purchase and Sale Agreement dated as of July 6, 2005 (the "Acquisition Agreement") with Holly Corporation, a Delaware corporation ("Parent"), Navajo Pipeline Co., L.P., a Delaware limited partnership ("Navajo Pipeline") and Navajo Refining Company, L.P., a Delaware limited partnership ("Navajo Refining") as seller parties, pursuant to which the Limited Partner and/or certain of its Subsidiaries will acquire (the "Acquisition") certain pipelines and related assets (the "Acquired Assets"), which Acquired Assets will, pursuant to a Contribution Agreement dated as of July 8, 2005 (the "Contribution Agreement") among the Borrower, the Limited Partner and HEP, as transferee parties, and Parent, Navajo Pipeline and Navajo Refining, as transferor parties, be contributed to and owned by HEP after the Acquisition.
D. Prior to the closing of, and to partially finance, the Acquisition, the Limited Partner and Holly Energy Finance Corp. ("Finance Corp") issued $35,000,000 of unsecured 6.25% Senior Notes due 2015 which are guaranteed by all wholly owned domestic subsidiaries of the Limited Partner and Finance Corp
E. The Borrower has requested that the Banks (i) expressly consent to the Acquisition, and (ii) amend the Credit Agreement to (a) permit a junior security interest in the Acquired Assets in favor of the Parent, and (b) make certain other changes to the Credit Agreement.
F. Subject to the terms and conditions set forth herein, the Banks are willing to make the consent and amendments set forth herein.
THEREFORE, the Borrower, the Existing Guarantors, the Required Banks, and the Administrative Agent hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 TERMS DEFINED ABOVE. As used in this Agreement, each of the terms defined in the opening paragraph and the Recitals above shall have the meanings assigned to such terms therein.
SECTION 1.02 TERMS DEFINED IN THE CREDIT AGREEMENT. Each term defined in the Credit Agreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement, unless expressly provided to the contrary.
SECTION 1.03 OTHER DEFINITIONAL PROVISIONS. The words "hereby", "herein", "hereinafter", "hereof", "hereto" and "hereunder" when used in this Agreement shall refer to this Agreement as a whole and not to any particular Article, Section, subsection or provision of this Agreement. Section, subsection and Exhibit references herein are to such Sections, subsections and Exhibits to this Agreement unless otherwise specified. All titles or headings to Articles, Sections, subsections or other divisions of this Agreement or the exhibits hereto, if any, are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such Articles, Sections, subsections, other divisions or exhibits, such other content being controlling as the agreement among the parties hereto. Whenever the context requires, reference herein made to the single number shall be understood to include the plural; and likewise, the plural shall be understood to include the singular. Words denoting sex shall be construed to include the masculine, feminine and neuter, when such construction is appropriate; and specific enumeration shall not exclude the general but shall be construed as cumulative. Definitions of terms defined in the singular or plural shall be equally applicable to the plural or singular, as the case may be, unless otherwise indicated.
ARTICLE II.
CONSENT AND AMENDMENTS
SECTION 2.01 CONSENT. To the extent necessary and provided that (a) the Acquisition is in compliance with the terms of the Credit Agreement and (b) the conditions set forth in Article IV below are met, the Banks hereby consent to the Acquisition and the transactions contemplated by the Acquisition Agreement and the Contribution Agreement.
SECTION 2.02 AMENDMENTS TO CREDIT AGREEMENT. Effective as of the Effective Date, the Credit Agreement shall hereby be amended as follows:
(a) The following definitions shall be inserted in alphabetical order in Section 1.01 of the Credit Agreement:
"Alon Contribution Agreement" means the Contribution Agreement dated as of January 25, 2005 among T & R Assets, Inc., Fin-Tex Pipe Line Company, and Alon USA Refining, Inc., as transferors, and Alon Pipeline Assets, LLC, Alon Pipeline Logistics, LLC, Alon USA, Inc., Alon USA, LP, the Limited Partner and certain of its Subsidiaries.
"Amendment No. 4" means Consent and Amendment No. 4 to this Agreement dated as of July 8, 2005.
"HC Acquisition Closing Date" means the date upon which the "Acquisition" as defined in Amendment No. 4 is consummated.
"HC Contribution Agreement" means the Contribution Agreement dated as of July 8, 2005 among the Parent, Navajo Pipeline Co., L.P., a Delaware limited partnership, and Navajo Refining Company, L.P., a Delaware limited partnership, as transferor parties, and the Limited Partner, the Borrower and HEP Pipeline, L.L.C., a Delaware limited liability company as transferee parties.
"HC Mortgage" means the Mortgage and Deed of Trust (with Security Agreement and Financing Statement) dated as of the HC Acquisition Closing Date made by HEP Pipeline, L.L.C., a Delaware limited liability company, to John N. Patterson, as Trustee for the benefit of the Parent.
"HC Pipelines Agreement" means the Pipelines Agreement dated as of the HC Acquisition Closing Date among the Borrower, the Parent, the Limited Partner, Navajo Refining Company, L.P., a Delaware limited partnership, HEP Pipeline, L.L.C., a Delaware limited liability company, HEP Logistics Holdings, Holly Logistic Services, and the General Partner.
"HC Purchase and Sale Agreement" means the Purchase and Sale Agreement dated as of July 6, 2005 among the Parent, Navajo Pipeline Co., a Delaware limited partnership, and Navajo Refining Company, L.P., a Delaware limited partnership, as seller parties, and the Limited Partner, the Borrower and HEP Pipeline, L.L.C., a Delaware limited liability company, as buyer parties.
(b) The definition of "Contribution Agreement" in Section 1.01 of the Credit Agreement is amended to be the defined term "Initial Contribution Agreement", and such term shall be realphabetized. The rest of the definition shall remain unchanged and all references to "Contribution Agreement" existing in the Credit Agreement and the other Credit Documents prior to the date of this Agreement shall be changed to refer instead to the "Initial Contribution Agreement."
(c) The definition of "Interest Coverage Ratio" in Section 1.01 of the Credit Agreement is hereby amended by adding the following sentence to the end of such definition:
To the extent that the EBITDA included in the calculation of the Interest Coverage Ratio for any period shall include pro forma amounts in connection with the Acquisition of any Person during
such period, the Interest Expense shall also include pro forma amounts with respect to the Interest Expense of such Person.
(d) The definition of "Material Contracts" in Section 1.01 of the Credit Agreement is amended and restated to read in its entirety as follows:
"Material Contracts" means, collectively, (a) the Borrower Partnership Agreement, the Intercompany Pipelines and Terminals Agreement, the Omnibus Agreement, the Initial Contribution Agreement, the Alon Contribution Agreement, the Alon Mortgage, the Alon Pipelines and Terminals Agreement, the HC Contribution Agreement, the HC Mortgage, the HC Purchase and Sale Agreement, and the HC Pipelines Agreement, and (b) any other material documents, agreements or instruments related to any of the foregoing (i) to which the Borrower or any of its Subsidiaries is a party, and (ii) which, if terminated or cancelled, could reasonably be expected to have a Material Adverse Effect.
(e) The definition of "Pipeline Systems" in Section 1.01 of the Credit Agreement is amended and restated to read in its entirety as follows:
"Pipeline Systems" means (a) the approximately 780 miles of Refined Products pipelines located in New Mexico, Texas and Utah that are owned or leased by Borrower or any of its Subsidiaries and that are used by Borrower and its Subsidiaries in the Business, (b) the 249-mile Refined Products pipeline owned by the Restricted Subsidiary which is used in the Business to transport liquid petroleum gases from the western part of the state of Texas to the border between the state of Texas and Mexico near El Paso, (c) the Refined Product Pipelines (as defined and described in the Alon Pipelines and Terminals Agreement) that are owned by HEP Pipeline and that are used in the Business, (d) the Intermediate Product Pipelines (as defined and described in the HC Pipelines Agreement) that are owned by HEP Pipeline, L.L.C., a Delaware limited liability company, and that are used in the Business, and (e) any other pipelines owned or leased by the Borrower or any Subsidiary of the Borrower that are used in the Business.
(f) The definition of "Tangible Net Worth" in Section 1.01 of the Credit Agreement is hereby deleted.
(g) The following clause (k) is added to the end of Section 6.01 of the Credit Agreement:
(k) In favor of the Parent (or any assignee or successor thereto) securing certain obligations under the HC Pipelines Agreement, pursuant to the HC Mortgage, so long as such Liens are subordinated to the Liens on the same assets securing the Obligations on terms not less advantageous to the Administrative Agent and the Banks than those contained in the Subordination, Non-Disturbance and Attornment Agreement executed by the Administrative Agent and the Parent as of the date of the consummation of the Acquisition (as defined in Amendment No. 4).
(h) Section 6.12 of the Credit Agreement is amended and restated to read in its entirety as follows:
Section 6.12. Reserved. Reserved.
(i) Section 7.01(d)(iv) of the Credit Agreement is amended and restated to read in its entirety as follows:
(iv) (A) Any default or event of default shall have occurred under any of the Material Contracts which has not been cured within any applicable grace period and which default or event of default could reasonably be expected to have a Material Adverse Effect, (B) any of the Material Contracts (other than the Alon Mortgage or the HC Mortgage) shall have terminated, or (C) any Person other than the Limited Partner or any of its Subsidiaries takes (or notifies the Limited Partner or any of its Subsidiaries that it intends to take) remedial action under the Alon Mortgage, the Alon Pipelines and Terminals Agreement, the HC Mortgage or the HC Pipelines Agreement (or any successor or replacement agreement to the foregoing) that constitutes or could reasonably be expected to take the form of the purchase, occupation, or operation of any of the applicable Pipeline Systems or Terminals by a Person other than the Borrower or its wholly owned Subsidiaries.
(j) Exhibit D to the Credit Agreement is deleted and replaced with Exhibit D attached hereto.
ARTICLE III.
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.01 BORROWER REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants that: (a) the representations and warranties contained in the Credit Agreement and the representations and warranties contained in the other Credit Documents are true and correct in all material respects on and as of the Effective Date as if made on as and as of such date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date; (b) no Default has occurred which is continuing; (c) the execution, delivery and performance of this Agreement are within the partnership power and authority of the Borrower and have been duly authorized by appropriate partnership action and proceedings; (d) this Agreement constitutes the legal, valid, and binding obligation of the Borrower enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; (e) there are no governmental or other third party consents, licenses and approvals required to be obtained by the Borrower in connection with the execution, delivery, performance of this Agreement by the Borrower or the validity and enforceability of this Agreement against the Borrower; and (f) the Liens under the Security Documents are valid and subsisting and secure Borrower's obligations under the Credit Documents.
SECTION 3.02 EXISTING GUARANTORS' REPRESENTATIONS AND WARRANTIES. Each Existing Guarantor represents and warrants that: (a) the representations and warranties of such Guarantor contained in the Guaranty and the representations and warranties contained in the other Credit Documents to which such Existing Guarantor is a party are true and correct in all material respects on and as of the Effective Date as if made on as and as of such date, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they shall be true and correct as of such earlier date; (b) no
Default has occurred which is continuing; (c) the execution, delivery and
performance of this Agreement are within the corporate or other organizational
power and authority of such Existing Guarantor and have been duly authorized by
appropriate action and proceedings; (d) this Agreement constitutes the legal,
valid, and binding obligation of such Existing Guarantor enforceable in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the rights of
creditors generally and general principles of equity; (e) there are no
governmental or other third party consents, licenses and approvals required to
be obtained by such Existing Guarantor in connection with the execution,
delivery or performance of this Agreement by such Existing Guarantor or the
validity and enforceability of this Agreement against such Existing Guarantor;
(f) it has no defenses to the enforcement of its Guaranty; and (g) the Liens
under the Security Documents to which such Existing Guarantor is a party are
valid and subsisting and secure such Existing Guarantor's obligations under the
Credit Documents.
SECTION 3.03 COVENANTS. The Borrower at its expense will, and will cause each Existing Guarantor to, promptly execute and deliver to the Administrative Agent upon reasonable request all such documents, agreements and instruments to state more fully the security obligations set out in any of the Security Documents, or to perfect, protect or preserve any Liens created pursuant to any of the Security Documents, or to make any recordings, to file any notices or obtain any consents, all as may be necessary or appropriate to grant or perfect a first lien in each Existing Guarantor's assets. The Borrower hereby authorizes the Administrative Agent to file any amendments to financing statements without the signature of the Borrower to the extent permitted by applicable law in order to perfect or maintain the perfection of any security interest granted under any of the Credit Documents. Without limiting the foregoing:
(a) promptly after the closing of the Acquisition but in any event not more than five days after the Effective Date (or, with respect to any Acquired Assets not being acquired and conveyed to HEP on the Effective Date, within five days after such acquisition by, and conveyance to, HEP of the applicable Acquired Assets), the Borrower will at its expense deliver or cause to be delivered to the Administrative Agent (i) Mortgages duly executed and delivered by HEP in favor of the Administrative Agent for the benefit of the Secured Parties (as defined therein) covering all real property assets included in the applicable Acquired Assets, including, without limitation, those certain Acquired Assets consisting of real property located in Eddy and Lea Counties, New Mexico, (ii) a legal opinion of counsel to HEP licensed in New Mexico (which counsel shall be acceptable to the Administrative Agent) with respect to the Mortgages described in the preceding clause (i) in form and substance satisfactory to the Administrative Agent and the Required Banks, and including, without limitation, opinions regarding the enforceability of such Mortgages and the validity and perfection of the Liens created thereby, and (iii) complete and correct copies of any amendments to the Acquisition Agreement or the Contribution Agreement not previously delivered to the Administrative Agent; provided that, if HEP shall not have, within 90 days of the date of this Agreement, (A) acquired substantially all of the Acquired Assets, (B) delivered the Mortgages, opinions and other documents required by this Section 3.03(a), and (C) caused the Administrative Agent to have an Acceptable Security Interest in such Acquired Assets for the benefit of itself and the Banks (it being understood, however, that if the legal opinions referred to above contain no requirement or qualification regarding the need to obtain consents in order to create or perfect the Liens granted under such
Mortgages, then HEP shall not be required to obtain such consents in order to comply with this clause (C)), then an Event of Default shall be deemed to have occurred under the Credit Agreement.
(b) promptly after the closing of the Acquisition, the Borrower will at its expense deliver or cause to be delivered to the Administrative Agent complete and correct copies of any material bills of sale, material assignments, and other material documents or agreements executed in connection with the Acquisition and not previously delivered to the Administrative Agent.
ARTICLE IV.
CONDITIONS
The consent provided herein shall become effective and enforceable against the parties hereto, and the Credit Agreement shall be amended as provided herein, upon the date all of the following conditions precedent have been met (the "Effective Date"):
SECTION 4.01 DOCUMENTS. The Administrative Agent shall have received each of the following:
(a) this Agreement duly and validly executed and delivered by duly authorized officers of the Borrower, the Existing Guarantors, the Administrative Agent, and the Required Banks; and
(b) a fully executed copy, certified by the Limited Partner, of the Contribution Agreement and the Acquisition Agreement, together with all of their respective exhibits, schedules, and amendments thereto.
SECTION 4.02 NO DEFAULT. No Default shall have occurred which is continuing as of the Effective Date.
SECTION 4.03 REPRESENTATIONS. The representations and warranties in this Agreement shall be true and correct in all material respects as of the Effective Date.
SECTION 4.04 FEES. The Borrower shall have paid all reasonable fees and expenses of the Administrative Agent's outside legal counsel pursuant to all invoices presented to the Borrower for payment not less than one Business Day prior to the Effective Date. Additionally, the Borrower shall pay to the Administrative Agent for the benefit of the Banks approving this Agreement in an aggregate amount equal to .05% on each Bank's respective Commitment, such fee to be due and payable on the date this Agreement is executed by the Administrative Agent and the Required Banks.
ARTICLE V.
MISCELLANEOUS
SECTION 5.01 EFFECT ON CREDIT DOCUMENTS; ACKNOWLEDGMENTS.
(a) The Borrower acknowledges that on the date hereof all Obligations are payable without defense, offset, counterclaim or recoupment.
(b) The Administrative Agent, the Issuing Banks, and the Banks hereby expressly reserve all of their rights, remedies, and claims under the Credit Documents. Nothing in this Agreement shall constitute a waiver or relinquishment of (i) any Default or Event of Default under any of the Credit Documents, (ii) any of the agreements, terms or conditions contained in any of the Credit Documents, (iii) any rights or remedies of the Administrative Agent, the Issuing Bank or any Bank with respect to the Credit Documents, or (iv) the rights of the Administrative Agent, any Issuing Bank or any Bank to collect the full amounts owing to them under the Credit Documents.
(c) Each of the Borrower, the Existing Guarantors, Administrative Agent, Issuing Banks, and Banks does hereby adopt, ratify, and confirm the Credit Agreement and each other Credit Document, as amended hereby, and acknowledges and agrees that the Credit Agreement and each other Credit Document, as amended hereby, is and remains in full force and effect, and the Borrower and the Existing Guarantors acknowledge and agree that their respective liabilities under the Credit Agreement and the other Credit Documents are not impaired in any respect by this Agreement.
(d) From and after the Effective Date, all references to the Credit Agreement and the Credit Documents shall mean such Credit Agreement and such Credit Documents as amended by this Agreement.
(e) This Agreement is a Credit Document for the purposes of the provisions of the other Credit Documents. Without limiting the foregoing, any breach of representations, warranties, and covenants under this Agreement shall be a Default or Event of Default, as applicable, under the Credit Agreement.
SECTION 5.02 REAFFIRMATION OF THE GUARANTY. Each Existing Guarantor hereby ratifies, confirms, acknowledges and agrees that its obligations under the Guaranty are in full force and effect and that such Existing Guarantor continues to unconditionally and irrevocably guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, all of the Guaranteed Obligations (as defined in the Guaranty), as such Guaranteed Obligations may have been amended by this Agreement, and its execution and delivery of this Agreement does not indicate or establish an approval or consent requirement by such Existing Guarantor under the Guaranty in connection with the execution and delivery of amendments to the Credit Agreement, the Notes or any of the other Credit Documents (other than the Guaranty or any other Credit Document to which such Existing Guarantor is a party).
SECTION 5.03 COUNTERPARTS. This Agreement may be signed in any number of counterparts, each of which shall be an original and all of which, taken together, constitute a
single instrument. This Agreement may be executed by facsimile signature and all such signatures shall be effective as originals.
SECTION 5.04 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Credit Agreement.
SECTION 5.05 INVALIDITY. In the event that any one or more of the provisions contained in this Agreement shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement.
SECTION 5.06 GOVERNING LAW. This Agreement shall be deemed to be a contract made under and shall be governed by and construed in accordance with the laws of the State of Texas.
SECTION 5.07 ENTIRE AGREEMENT. THIS AGREEMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS AGREEMENT, THE NOTES, AND THE OTHER CREDIT DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[SIGNATURES BEGIN ON NEXT PAGE]
EXECUTED effective as of the date first above written.
BORROWER:
HOLLY ENERGY PARTNERS - OPERATING, L.P., a Delaware
limited partnership
By: HEP Logistics GP, L.L.C., a Delaware
limited liability company, its General Partner
By: Holly Energy Partners, L.P., a Delaware
limited partnership, its Managing Member
By: HEP Logistics Holdings, L.P., a
Delaware limited partnership, its
General Partner
By: Holly Logistic Services,
L.L.C., a Delaware limited
liability company, its General
Partner
By: /s/ Stephen J. McDonnell
---------------------------
Name: Stephen J. McDonnell
Title: Vice President and Chief
Executive Officer
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Signature page to Consent, Waiver and Amendment No. 4
EXISTING GUARANTORS:
HEP PIPELINE GP, L.L.C., a Delaware
limited liability company
HEP REFINING GP, L.L.C., a Delaware
limited liability company
HEP MOUNTAIN HOME, L.L.C., a Delaware
limited liability company
HEP PIPELINE, L.L.C., a Delaware
limited liability company
HEP REFINING, L.L.C., a Delaware
limited liability company
HEP WOODS CROSS, L.L.C., a Delaware
limited liability company
Each by: Holly Energy Partners - Operating, L.P., a
Delaware limited partnership and its Sole
Member
By: HEP Logistics GP, L.L.C., a Delaware
limited liability company, its General Partner
By: Holly Energy Partners, L.P., a Delaware
limited partnership, its Managing Member
By: HEP Logistics Holdings, L.P., a
Delaware limited partnership, its
General Partner
By: Holly Logistic Services,
L.L.C., a Delaware limited
liability company, its General
Partner
By: /s/ Stephen J. McDonnell
---------------------------
Name: Stephen J. McDonnell
Title: Vice President and
Chief Financial Officer
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HOLLY ENERGY FINANCE CORP., a Delaware corporation
By: /s/ Stephen J. McDonnell
------------------------------
Name: Stephen J. McDonnell
Title: Vice President and
Chief Financial Officer
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Signature page to Consent, Waiver and Amendment No. 4
HEP NAVAJO SOUTHERN, L.P., a Delaware limited
partnership
HEP PIPELINE ASSETS, LIMITED PARTNERSHIP,
a Delaware limited partnership
HEP FIN-TEX/TRUST-RIVER, L.P., a Texas limited
partnership
Each by: HEP Pipeline GP, L.L.C., a Delaware
limited liability company and its General
Partner
By: Holly Energy Partners - Operating, L.P., a Delaware limited partnership and its Sole Member
By: HEP Logistics GP, L.L.C., a Delaware limited liability company, its General Partner
By: Holly Energy Partners, L.P., a Delaware limited partnership, its Managing Member
By: HEP Logistics Holdings, L.P., a Delaware limited partnership, its General Partner
By: Holly Logistic Services, L.L.C., a Delaware limited liability company, its General Partner
By: /s/ Stephen J. McDonnell
--------------------------
Name: Stephen J. McDonnell
Title: Vice President and
Chief Financial Officer
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Signature page to Consent, Waiver and Amendment No. 4
HOLLY ENERGY PARTNERS, L.P., a Delaware limited partnership
By: HEP Logistics Holdings, L.P., a Delaware limited partnership, its General Partner
By: Holly Logistic Services, L.L.C., a Delaware limited liability company, its General Partner
By: /s/ Stephen J. McDonnell
-----------------------------------
Name: Stephen J. McDonnell
Title: Vice President and
Chief Financial Officer
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HEP REFINING ASSETS, L.P., a Delaware limited partnership
By: HEP Refining GP, L.L.C., a Delaware limited liability company and its General Partner
By: Holly Energy Partners - Operating, L.P., a Delaware limited partnership and its Sole Member
By: HEP Logistics GP, L.L.C., a Delaware limited liability company, its General Partner
By: Holly Energy Partners, L.P., a Delaware limited partnership, its Managing Member
By: HEP Logistics Holdings, L.P., a Delaware limited partnership, its General Partner
By: Holly Logistic Services, L.L.C., a Delaware limited liability company, its General Partner
By: /s/ Stephen J. McDonnell
------------------------
Name: Stephen J. McDonnell
Title: Vice President and
Chief Financial Officer
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Signature page to Consent, Waiver and Amendment No. 4
HEP LOGISTICS GP, L.L.C., a Delaware limited liability company
By: Holly Energy Partners, L.P., a Delaware limited partnership, its Managing Member
By: HEP Logistics Holdings, L.P., a Delaware limited partnership, its General Partner
By: Holly Logistic Services, L.L.C., a Delaware limited liability company, its General Partner
By: /s/ Stephen J. McDonnell
-------------------------------
Name: Stephen J. McDonnell
Title: Vice President and
Chief Financial Officer
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Signature page to Consent, Waiver and Amendment No. 4
ADMINISTRATIVE AGENT:
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Sean Murphy
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Sean Murphy, Vice President
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BANKS:
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Sean Murphy
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Sean Murphy, Vice President
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Signature page to Consent, Waiver and Amendment No. 4
BANK OF AMERICA, NATIONAL ASSOCIATION
By: /s/ Claire M. Liu
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Name: Claire M. Liu
Title: Senior Vice President
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Signature page to Consent, Waiver and Amendment No. 4
GUARANTY BANK
By: /s/ Jim R. Hamilton
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Name: Jim R. Hamilton
Title: Senior Vice President
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Signature page to Consent, Waiver and Amendment No. 4
FORTIS CAPITAL CORP.
By: /s/ Kathleen de Lathauwer
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Name: Kathleen de Latheuwer
Title: Senior Vice President
By: /s/ Casey Lowary
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Name: Casey Lowary
Title: Senior Vice President
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Signature page to Consent, Waiver and Amendment No. 4
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Reed V. Thompson
---------------------------------------
Name: Reed V. Thompson
Title: Vice President
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Signature page to Consent, Waiver and Amendment No. 4
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Mark E. Thompson
---------------------------------------
Name: Mark E. Thompson
Title: Vice President
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Signature page to Consent, Waiver and Amendment No. 4
EXHIBIT D
TO CREDIT AGREEMENT
FORM OF COMPLIANCE CERTIFICATE
FOR THE PERIOD FROM _______, 200__ TO ________, 200__
This certificate dated as of ______________, _______ is prepared pursuant to the Credit Agreement dated as of July 7, 2004 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement") among Holly Energy Partners - Operating, L.P. (f/k/a HEP OPERATING COMPANY, L.P.) a Delaware limited partnership ("Borrower"), the lenders party thereto (the "Banks"), the Banks issuing letters of credit thereunder from time to time (the "Issuing Banks") and UNION BANK OF CALIFORNIA, N.A., as administrative agent for such Banks and Issuing Banks (in such capacity, the "Administrative Agent"). Unless otherwise defined in this certificate, capitalized terms that are defined in the Credit Agreement shall have the meanings assigned to them by the Credit Agreement.
The undersigned hereby certifies (a) that no Default or Event of Default has occurred or is continuing, (b) that all of the representations and warranties made by the Borrower and the Guarantors contained in the Credit Agreement and in each of the other Credit Documents are true and correct in all material respects on and as of the date hereof, and (c) that as of the last day of the previous fiscal quarter, the following statements, amounts, and calculations were true and correct:
I. Section 6.10 Leverage Ratio.
(a) Consolidated Funded Debt $_______________
(b) Consolidated Net Income (1)
(c) Interest Expense (2) $_______________
(d) taxes, depreciation, amortization, and other non-cash items $_______________
(e) EBITDA = (b) + (c)(3) + (d)(4) $____________(5)
(2) For the Borrower and its Subsidiaries determined on a Consolidated basis, for any period, the total interest, letter of credit fees, and other fees incurred in connection with any Debt for such period, whether paid or accrued, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, all as determined in conformity with GAAP.
(3) To the extent deducted in determining Consolidated Net Income.
Exhibit D - Page 1 of 3
Leverage Ratio = (a) divided by (e) ________________
Maximum Leverage Ratio 3.50 to 1.00
Compliance Yes No
II. Section 6.11 Interest Coverage Ratio
(a) EBITDA (see I(e) above) _____________(5)
(b) Interest Expense(6) _____________(7)
Leverage Ratio = (a) divided by (b) ________________
Minimum Interest Coverage Ratio 3.50 to 1.00
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Compliance Yes No
(5) For each fiscal quarter, EBITDA shall be measured for the four fiscal quarter period then ended. The results of operations of all Persons in which the Borrower or any of its Subsidiaries owns less than all of the Equity Interests of such Person (including the Restricted Subsidiary) shall only be included in EBITDA to the extent that the Borrower or any other wholly-owned Subsidiary of the Borrower actually receives cash distributions in respect of its ownership interests in such Person during such period for which EBITDA is being calculated.
(6) The total interest, letter of credit fees, and other fees incurred in connection with any Debt for such period, whether paid or accrued, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, all as determined in conformity with GAAP.
(7) For each fiscal quarter, Interest Expense shall be measured for the four fiscal quarter period then ended.
Exhibit D - Page 2 of 3
IN WITNESS THEREOF, I have hereto signed my name to this Compliance Certificate as of _________________, 20____.
HOLLY ENERGY PARTNERS - OPERATING, L.P., a Delaware
limited partnership
By: HEP Logistics GP, L.L.C., a Delaware
limited liability company, its General Partner
By: Holly Energy Partners, L.P., a Delaware
limited partnership, its Managing Member
By: HEP Logistics Holdings, L.P., a
Delaware limited partnership, its
General Partner
By: Holly Logistic Services,
L.L.C., a Delaware limited
liability company, its General
Partner
By: _______________________________
Name: _____________________________
Title: ____________________________
Exhibit D - Page 3 of 3
EXHIBIT 99.1
Holly Energy Partners and Holly Corporation Close Previously Announced Pipelines Transaction; Holly Energy Privately Sells 1.1 Million Common Units as part of Financing for Pipelines Transaction
DALLAS, TX -- Holly Energy Partners, L.P. (NYSE:HEP) ("Holly Energy" or the "Partnership") and Holly Corporation (NYSE:HOC) ("Holly") today announced that Holly Energy has acquired Holly's intermediate feedstock pipelines connecting its Lovington, NM and Artesia, NM refining facilities in a transaction valued at $81.5 million, which consisted of approximately $77.7 million in cash, 70,000 in common units of Holly Energy and a capital account credit to maintain Holly's current general partner interest in Holly Energy. As previously announced on June 10, 2005, the Boards of Directors of Holly Energy and Holly, and the Conflicts Committee of the Board of Directors of Holly Energy, approved the acquisition, which was made pursuant to an option to purchase these pipelines granted by Holly to Holly Energy at the time of Holly Energy's initial public offering in July 2004.
Concurrently with the closing of the purchase agreement with Holly, Holly Energy has also privately sold 1.1 million common units for $45.1 million to a limited number of institutional investors. Holly Energy utilized the proceeds raised in this private placement and Holly Energy's recently completed offering of an additional $35.0 million in principal amount of its 6.25% senior notes due 2015 to finance the cash portion of the pipelines transaction described above.
This release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein. The securities to be offered have not been registered under the Securities Act of 1933 or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Holly Energy Partners, L.P., headquartered in Dallas, Texas, provides refined petroleum product transportation and terminal services to the petroleum industry, including Holly Corporation, which, after giving effect to the transactions described herein, owns a 45% interest in the Partnership. The Partnership owns and operates refined product pipelines and terminals primarily in West Texas, New Mexico, Arizona, Washington, Colorado and Utah. In addition, the Partnership owns a 70% interest in Rio Grande Pipeline Company, a transporter of LPGs from West Texas to Northern Mexico.
Holly Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel and jet fuel. Holly operates through its subsidiaries a 75,000 bpd refinery located in Artesia, New Mexico, a 26,000 bpd refinery in Woods Cross, Utah, and an 8,000 bpd refinery in Great Falls, Montana.
The following is a `safe harbor' statement under the Private Securities Litigation Reform Act of 1995: 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. These statements are based on our beliefs and assumptions using currently available information and expectations
as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings with the Securities and Exchange Commission and those relating to the acquisition of the intermediate pipelines from Holly and the future performance of these assets. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in these statements. The forward-looking statements speak only as of the date made, other than as required by law, and 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:
Stephen J. McDonnell, Vice President and Chief Financial Officer
M. Neale Hickerson, Vice President, Treasury and Investor Relations
Holly Energy Partners, L.P.
214/871-3555