Exhibit 10.1

EXECUTION VERSION

HOLLY ENERGY PARTNERS, L.P.

HOLLY ENERGY FINANCE CORP.

$300,000,000 6.50% Senior Notes due 2020

 

 

Purchase Agreement

February 28, 2012

New York, New York

Citigroup Global Markets Inc.

UBS Securities LLC

Wells Fargo Securities, LLC

As representative of the several Initial Purchasers

named in Schedule I hereto

c/o Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Ladies and Gentlemen:

Holly Energy Partners, L.P., a Delaware limited partnership (“Holly Energy
Partners” or the “Partnership”) and Holly Energy Finance Corp., a Delaware
corporation (“Finance Corp.” and, together with Holly Energy Partners, the
“Issuers”), and each of the other Guarantors (defined herein) agree with you as
follows:

1. Issuance of Notes. The Issuers propose to issue and sell to Citigroup Global
Markets Inc., UBS Securities LLC and Wells Fargo Securities, LLC (collectively,
the “Representatives”) and the other initial purchasers listed on Schedule I
hereto (together with the Representatives, the “Initial Purchasers”)
$300,000,000 in aggregate principal amount of 6.50% Senior Notes due 2020 (the
“Original Notes”). The Issuers’ obligations under the Original Notes and the
Indenture (as defined below) will be, jointly and severally, unconditionally
guaranteed (the “Guarantees” and, together with the Original Notes, the
“Securities”), on a senior basis, by each of the Subsidiaries (as defined below)
listed on the signature pages hereto (each individually, a “Guarantor” and
collectively, the “Guarantors”). The Securities will be issued pursuant to an
indenture (the “Indenture”), to be dated as of the Closing Date (as defined
herein) by and among the Issuers, the Guarantors and U.S. Bank National
Association, as trustee (the “Trustee”).

The Securities will be offered and sold to the Initial Purchasers pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the “Act”). The Issuers have prepared a preliminary offering
memorandum, dated as of February 28, 2012 (the “Preliminary Offering
Memorandum”), and a pricing supplement thereto dated the date hereof (the
“Pricing Supplement”). The Preliminary Offering Memorandum and the Pricing
Supplement are herein referred to as the “Pricing Disclosure Package.” Promptly
after the execution of this Purchase Agreement (this “Agreement”), the Issuers
will prepare a final offering memorandum dated the date hereof (the “Final
Offering Memorandum”). Unless stated to the contrary, any references herein to
the terms “Pricing Disclosure Package” and “Final Offering Memorandum” shall be
deemed to refer to and include any information filed under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), prior to the date hereof
and incorporated by reference therein, and any references herein to the terms
“amend”,

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“amendment” or “supplement” with respect to the Final Offering Memorandum shall
be deemed to refer to and include any information filed under the Exchange Act
subsequent to the date hereof that is incorporated by reference therein. All
references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” (or other references of
like import) in the Pricing Disclosure Package (including the Preliminary
Offering Memorandum) or Final Offering Memorandum shall be deemed to mean and
include all such financial statements and schedules and other information which
are incorporated by reference in the Pricing Disclosure Package or Final
Offering Memorandum, as the case may be.

The Initial Purchasers have advised the Issuers that the Initial Purchasers
intend, as soon as they deem practicable after this Agreement has been executed
and delivered, to resell (the “Exempt Resales”) the Securities in private sales
exempt from registration under the Act on the terms set forth in the Pricing
Disclosure Package, solely to (i) persons whom the Initial Purchasers reasonably
believe to be “qualified institutional buyers” (“QIBs”), as defined in Rule 144A
under the Act (“Rule 144A”), in accordance with Rule 144A and (ii) other
eligible purchasers pursuant to offers and sales that occur outside the United
States within the meaning of Regulation S under the Act (“Regulation S”) in
accordance with Regulation S (the persons specified in clauses (i) and (ii), the
“Eligible Purchasers”).

Holders (including subsequent transferees) of the Securities will have the
registration rights under the registration rights agreement (the “Registration
Rights Agreement”), among the Issuers and the Initial Purchasers, to be dated
the Closing Date. Under the Registration Rights Agreement, the Issuers will
agree to use reasonable best efforts to file with the Securities and Exchange
Commission (the “Commission”) a registration statement under the Act (the
“Exchange Offer Registration Statement”) relating to a new issue of debt
securities (collectively with the Private Exchange Notes (as defined in the
Registration Rights Agreement), the “Exchange Notes” and, together with the
Original Notes, the “Notes”), guaranteed by the guarantors under the Indenture,
to be offered in exchange for the Original Notes and the Guarantees thereof (the
“Exchange Offer”) and issued under the Indenture or an indenture substantially
identical to the Indenture (except for the provisions relating to the transfer
restrictions and payment of Special Interest (as defined in the Registration
Rights Agreement)) no later than 400 days after the date of the initial issuance
of the Original Notes. Notwithstanding the foregoing, the Registration Rights
Agreement will provide that the Issuers and Guarantors will not be required to
consummate the Exchange Offer with respect to any Original Notes that are freely
tradable under Rule 144 under the Securities Act before the required date for
the consummation of such Exchange Offer if (i) on or before such date, the
Issuers have afforded the opportunity to the holders of such Original Notes to
have the restrictive legend on such Original Notes removed and (ii) the
unrestricted Original Notes would no longer bear a restricted CUSIP number. If
the Issuers fail to satisfy either their registration obligations under the
Registration Rights Agreement or if the Issuers fail to accomplish the items
described in clauses (i) and (ii) above, the Issuers will be required to pay
Special Interest (as defined in the Registration Rights Agreement) to the
holders of the Original Notes under certain circumstances.

This Agreement, the Notes, the Guarantees, the Indenture and the Registration
Rights Agreement are hereinafter sometimes referred to collectively as the “Note
Documents.” The issuance and sale of the Securities is referred to as the
“Offering.”

2. Agreements to Sell and Purchase. On the basis of the representations,
warranties and covenants contained in this Agreement, the Issuers and Guarantors
agree to issue and sell to the Initial Purchasers, and on the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained in this Agreement, each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Issuers and Guarantors, the aggregate principal amount of the Securities set
forth opposite its name on Schedule I attached hereto. The purchase price for
the Securities shall be 98.25% of their principal amount.

 

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3. Delivery and Payment. Delivery of, and payment of the purchase price for, the
Securities shall be made at 10:00 A.M., New York time, on March 12, 2012 (such
date and time, the “Closing Date”) at the offices of Latham & Watkins LLP, 885
Third Avenue, New York, New York 10022. The Closing Date and the location of
delivery of and the form of payment for the Securities may be varied by mutual
agreement between the Initial Purchasers and the Issuers.

The Securities shall be delivered by the Issuers and Guarantors to the Initial
Purchasers (or as the Initial Purchasers direct) through the facilities of The
Depository Trust Company against payment by the Initial Purchasers of the
purchase price therefor by means of wire transfer of immediately available funds
to such account or accounts specified by the Partnership in accordance with
Section 8(k) on or prior to the Closing Date, or by such means as the parties
hereto shall agree prior to the Closing Date. The Securities shall be evidenced
by one or more certificates in global form registered in such names as the
Initial Purchasers may request upon at least one business day’s notice prior to
the Closing Date and having an aggregate principal amount corresponding to the
aggregate principal amount of the Securities.

4. Agreements of the Issuers and Guarantors. Each of the Issuers and Guarantors,
jointly and severally, covenant and agree with the Initial Purchasers as
follows:

(a) To furnish the Initial Purchasers and those persons identified by the
Initial Purchasers, without charge, as many copies of the Preliminary Offering
Memorandum, the Pricing Supplement, any Issuer Written Communication (as defined
below) and the Final Offering Memorandum, and any amendments or supplements
thereto, as the Initial Purchasers may reasonably request. The Issuers consent
to the use of the Preliminary Offering Memorandum, the Pricing Supplement and
the Final Offering Memorandum, and any amendments or supplements thereto, by the
Initial Purchasers in connection with Exempt Resales.

(b) As promptly as practicable following the execution and delivery of this
Agreement and in any event not later than the second business day following the
date hereof, to prepare and deliver to the Initial Purchasers the Final Offering
Memorandum, which shall consist of the Preliminary Offering Memorandum as
modified only by the information contained in the Pricing Supplement. Not to
amend or supplement the Preliminary Offering Memorandum or the Pricing
Supplement. Not to amend or supplement the Final Offering Memorandum prior to
the Closing Date unless the Initial Purchasers shall previously have been
advised of such proposed amendment or supplement at least two business days
prior to the proposed use, and shall not have objected to such amendment or
supplement.

(c) Subject to Section 4(q), if, prior to the later of (x) the Closing Date and
(y) the time that the Initial Purchasers have completed their distribution of
the Securities, any event shall occur that, in the judgment of the Issuers or in
the judgment of counsel to the Initial Purchasers, makes any statement of a
material fact in the Final Offering Memorandum, as then amended or supplemented,
untrue or that requires the making of any additions to or changes in the Final
Offering Memorandum in order to make the statements in the Final Offering
Memorandum, as then amended or supplemented, in the light of the circumstances
under which they are made, not misleading, or if it is necessary to amend or
supplement the Final Offering Memorandum to comply with all applicable laws, the
Issuers shall promptly notify the Initial Purchasers of such event and (subject
to Section 4(b)) prepare an appropriate amendment or supplement to the Final
Offering Memorandum so that (i) the statements in the Final Offering Memorandum,
as amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances at the Closing Date and at
the time of sale of Securities, not misleading and (ii) the Final Offering
Memorandum will comply with applicable law.

 

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(d) To qualify or register the Securities under the securities laws of such
jurisdictions as the Initial Purchasers may request and to continue such
qualification in effect so long as required for the Exempt Resales.
Notwithstanding the foregoing, no Issuer shall be required to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified or to
execute a general consent to service of process in any such jurisdiction or
subject itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.

(e) To advise the Initial Purchasers promptly, and if requested by the Initial
Purchasers, to confirm such advice in writing, of the issuance by any securities
commission of any stop order suspending the qualification or exemption from
qualification of any of the Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for such purpose by any securities
commission or other regulatory authority. The Issuers shall use their reasonable
best efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption of any of the Securities under any securities laws,
and if at any time any securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption of any of the
Securities under any securities laws, the Issuers shall use their reasonable
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.

(f) Whether or not the transactions contemplated by this Agreement are
consummated, to pay all costs, expenses, fees and disbursements (including fees
and disbursements of counsel and accountants for the Issuers) incurred and
stamp, documentary or similar taxes incident to and in connection with: (i) the
preparation, printing and distribution of the Preliminary Offering Memorandum,
the Pricing Supplement, any Issuer Written Communication (as defined below) and
the Final Offering Memorandum and any amendments and supplements thereto,
(ii) all expenses (including travel expenses) of the Issuers and the Initial
Purchasers in connection with any meetings with prospective investors in the
Securities, (iii) the preparation, notarization (if necessary) and delivery of
the Note Documents and all other agreements, memoranda, correspondence and
documents prepared and delivered in connection with this Agreement and with the
Exempt Resales, (iv) the issuance, transfer and delivery of the Securities by
the Issuers and Guarantors to the Initial Purchasers, (v) the qualification or
registration of the Securities for offer and sale under the securities laws of
the several states of the United States or provinces of Canada (including,
without limitation, the cost of printing and mailing preliminary and final Blue
Sky or legal investment memoranda and fees and disbursements of counsel
(including local counsel) to the Initial Purchasers relating thereto), (vi) the
inclusion of the Securities in the book-entry system of The Depository Trust
Company (“DTC”), (vii) the rating of the Securities by rating agencies,
(viii) the fees and expenses of the Trustee and its counsel and (ix) the
performance by the Issuers and the Guarantors of their other obligations under
the Note Documents.

(g) To use the proceeds from the sale of the Original Notes in the manner
described in the Preliminary Offering Memorandum under the caption “Use of
Proceeds.”

(h) To do and perform all things required to be done and performed under this
Agreement by them prior to or after the Closing Date and to satisfy all
conditions precedent on their part to the delivery of the Securities.

 

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(i) Not to, and not to permit any Subsidiary to, sell, offer for sale or solicit
offers to buy any security (as defined in the Act) that would be integrated with
the sale of the Securities in a manner that would require the registration under
the Act of the sale of the Securities to the Initial Purchasers or any Eligible
Purchasers.

(j) Not to, and to cause its affiliates (as defined in Rule 144 under the Act)
not to, resell any of the Securities that have been reacquired by any of them.

(k) Not to engage, not to allow any Subsidiary to engage, and to cause its other
affiliates and any person acting on their behalf (other than, in any case, the
Initial Purchasers and any of their affiliates, as to whom the Issuers and the
Guarantors make no covenant) not to engage, in any form of general solicitation
or general advertising (within the meaning of Regulation D under the Act) in
connection with any offer or sale of the Securities in the United States.

(l) Not to engage, not to allow any Subsidiary to engage, and to cause its other
affiliates and any person acting on their behalf (other than, in any case, the
Initial Purchasers and any of their affiliates, as to whom the Issuers and the
Guarantors make no covenant) not to engage, in any directed selling effort with
respect to the Securities, and to comply with the offering restrictions
requirement of Regulation S. Terms used in this paragraph have the meanings
given to them by Regulation S.

(m) From and after the Closing Date, for so long as any of the Securities remain
outstanding and are “restricted securities” within the meaning of Rule 144(a)(3)
under the Act and during any period in which the Partnership is not subject to
Section 13 or 15(d) of the Exchange Act, to make available upon request the
information required by Rule 144A(d)(4) under the Act to (i) any holder or
beneficial owner of Securities in connection with any sale of such Securities
and (ii) any prospective purchaser of such Securities from any such holder or
beneficial owner designated by the holder or beneficial owner. The Partnership
will pay the expenses of preparing, printing and distributing such documents.

(n) To comply with their obligations under the Registration Rights Agreement.

(o) To comply with their obligations under the letter of representations to DTC
relating to the approval of the Securities by DTC for “book-entry” transfer and
to use their commercially reasonable efforts to obtain approval of the
Securities by DTC for “book-entry” transfer.

(p) Prior to the Closing Date, to furnish without charge to the Initial
Purchasers, (i) as soon as they have been prepared by the Partnership, a copy of
any regularly prepared internal financial statements of the Partnership and the
Subsidiaries for any period subsequent to the period covered by the financial
statements appearing in the Pricing Disclosure Package, (ii) all other reports
and other communications (financial or otherwise) that the Partnership mails or
otherwise makes available to its security holders and (iii) such other
information as the Initial Purchasers shall reasonably request.

(q) Not to, and not to permit any of its affiliates or anyone acting on its or
its affiliates’ behalf to (other than the Initial Purchasers and their
affiliates), distribute prior to the Closing Date any offering material in
connection with the offer and sale of the Securities other than the Preliminary
Offering Memorandum, the Pricing Supplement, any electronic roadshow and the
Final Offering Memorandum. Before making, preparing, using, authorizing,
approving or

 

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referring to any Issuer Written Communication (as defined below), the
Partnership will furnish to the Representatives and counsel for the Initial
Purchasers a copy of such written communication for review and will not make,
prepare, use, authorize, approve or refer to any such written communication to
which the Representatives reasonably objects, or any amendment or supplement
thereto prepared in accordance with Section 4(b).

(r) During the period of two years after the Closing Date or, if earlier, until
such time as the Securities are no longer restricted securities (as defined in
Rule 144 under the Act), not to be or become a closed-end investment company
required to be registered, but not registered, under the Investment Company Act
of 1940.

(s) In connection with the offering, until the Initial Purchasers shall have
notified the Issuers of the completion of the distribution of the Securities,
not to, and not to permit any of its affiliates (as such term is defined in
Rule 501(b) of Regulation D under the Act) to, either alone or with one or more
other persons, bid for or purchase for any account in which it or any of its
affiliates has a beneficial interest, for the purpose of creating actual or
apparent active trading in, or of raising the price of, the Securities.

(t) During the period from the date hereof through and including the date that
is 60 days after the date hereof, without prior written consent of the
Representatives, offer, sell, contract to sell or otherwise dispose of any debt
securities issued or guaranteed by the Partnership or any Subsidiary and having
a tenor of more than one year.

(u) The Issuers will, for a period of twelve months following the Execution
Time, furnish to the Representatives all reports or other communications
(financial or other) generally made available to its shareholders, and deliver
such reports and communications to the Representatives as soon as they are
available, unless such documents are furnished to or filed with the Commission
or any securities exchange on which any class of securities of the Issuers are
listed or are disclosed in accordance with Regulation FD and generally made
available to the public.

5. Representations and Warranties. (a) Each of the Issuers and Guarantors,
jointly and severally, represents and warrants to the Initial Purchasers that,
as of the date hereof and as of the Closing Date (references in this Section 5
to the “Offering Memorandum” are to (x) the Pricing Disclosure Package in the
case of representations and warranties made as of the date hereof and (y) the
Final Offering Memorandum in the case of representations and warranties made as
of the Closing Date):

(i) Neither the Pricing Disclosure Package, as of the date hereof or as of the
Closing Date, nor the Final Offering Memorandum, as of its date or (as amended
or supplemented in accordance with Section 4(b), if applicable) as of the
Closing Date, contains or represents any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Issuers and Guarantors make no
representation or warranty with respect to information relating to the Initial
Purchasers contained in or omitted from the Pricing Disclosure Package, the
Final Offering Memorandum or any amendment or supplement thereto in reliance
upon and in conformity with information furnished to the Issuers in writing by
or on behalf of any Initial Purchaser through the Representatives expressly for
inclusion in the Pricing Disclosure Package, the Final Offering Memorandum or
amendment or supplement thereto, as the case may be. No order preventing the use
of the Preliminary Offering Memorandum, the Pricing Supplement or the Final
Offering Memorandum, or any amendment or supplement thereto, or any order
asserting that any of the transactions contemplated by this Agreement are
subject to the registration requirements of the Act, has been issued or, to the
knowledge of the Issuers, has been threatened.

 

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(ii) The Issuers (including their agents and representatives, other than the
Initial Purchasers in their capacity as such) have not prepared, made, used,
authorized, approved or referred to and will not prepare, make, use, authorize,
approve or refer to any written communication that constitutes an offer to sell
or solicitation of an offer to buy the Securities (each such communication by
the Issuers or their agents and representatives an “Issuer Written
Communication”) other than (i) the Pricing Disclosure Package, (ii) the Final
Offering Memorandum, (iii) the documents listed on Annex I hereto, including a
term sheet substantially in the form of Exhibit A hereto and (iv) any electronic
road show or other written communications, in each case used in accordance with
Section 4(q). Each such Issuer Written Communication, when taken together with
the Pricing Disclosure Package as of the date hereof, did not, and at the
Closing Date will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

The documents incorporated by reference in the Offering Memorandum at the time
they were or hereafter are filed with the Commission complied and will comply in
all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder (the “Exchange Act Regulations”).

(iii) There are no securities of the Issuers or Guarantors that are listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that are quoted in a United States automated interdealer quotation system of the
same class within the meaning of Rule 144A as the Securities.

(iv) The capitalization of the Issuers as of the Closing Date will be as set
forth in the as adjusted column under the heading “Capitalization” in the
Offering Memorandum. Attached as Schedule II is a true and complete list of each
entity in which the Partnership has a direct or indirect majority equity or
voting interest (each a “Subsidiary” and, together, the “Subsidiaries”), their
jurisdictions of organization, name of equityholder(s) and percentage held by
each equityholder. All of the issued and outstanding equity interests of each
Subsidiary have been duly and validly authorized and issued, are fully paid (to
the extent required by such Subsidiary’s limited liability company or
partnership agreement) and (except (i) as such nonassessability may be affected
by the Delaware LLC Act or the DRULPA and (ii) with respect to any general
partner interests) nonassessable, were not issued in violation of any preemptive
or similar right and, except as set forth in the Offering Memorandum, are owned,
directly or indirectly through Subsidiaries, by the Issuers free and clear of
all liens (other than transfer restrictions imposed by the Act, the securities
or Blue Sky laws of certain jurisdictions and security interests granted
pursuant to the Second Amended and Restated Credit Agreement, dated as of
February 14, 2011, as amended by the Agreement and Amendment No. 1 to Second
Amended and Restated Credit Agreement, dated as of February 3, 2012 (as so
amended, the “Credit Agreement”), each among the Holly Energy
Partners—Operating, L.P., a Delaware limited partnership (the “Operating
Partnership”), the Subsidiaries party thereto as guarantors and the financial
institutions party thereto). Except as set forth in the Offering Memorandum,
there are no outstanding options, warrants or other rights to acquire or
purchase, or instruments convertible into or exchangeable for, any equity
interests of the Issuers, or any of the Subsidiaries.

 

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(v) Neither the Issuers nor any of the Subsidiaries (as defined below) has
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Offering Memorandum any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Memorandum; and, since the respective dates as of
which information is given in the Offering Memorandum, there has not been any
change in the capital stock or long-term debt of the Partnership or any of its
Subsidiaries or any material adverse change, or any development that would
reasonably be expected to result in a material adverse change, in or affecting
the general affairs, management, financial position, partners’ or stockholders’
equity or results of operations of the Issuers and the Subsidiaries, taken as a
whole, otherwise than as set forth or contemplated in the Offering Memorandum.

(vi) The Issuers and the Subsidiaries, as the case may be, have good and
indefeasible title to all real property and good title to all personal property
described in the Offering Memorandum as owned by the Operating Partnership and
the Subsidiaries, as the case may be, free and clear of all (A) liens and
security interests or (B) other claims and other encumbrances (other than liens
or security interests) except (i) as provided in the Credit Agreement, mortgages
and deeds of trust granted in favor of Alon USA, LP, a Texas limited
partnership, and HollyFrontier Corporation, a Delaware corporation, in
connection with the use of pipelines and/or terminals by those entities or their
affiliates, or as otherwise described, and subject to the limitations contained,
in the Offering Memorandum or (ii) such as do not materially interfere with the
use of such properties taken as a whole as they have been used in the past and
are proposed to be used in the future as described in the Offering Memorandum,
provided that, with respect to any real property and buildings held under lease
by the Operating Partnership and the other Subsidiaries, such real property and
buildings are held under valid and subsisting and enforceable leases with such
exceptions as do not materially interfere with the use of the properties of the
Operating Partnership and the other Subsidiaries, taken as a whole, as they have
been used in the past as described in the Offering Memorandum and are proposed
to be used in the future as described in the Offering Memorandum.

(vii) HEP Logistics Holdings, L.P., a Delaware limited partnership (the “General
Partner”), (A) has been duly formed and is validly existing and in good standing
as a limited partnership under the laws of the State of Delaware; (B) has all
requisite partnership power and authority necessary to own its property and
carry on its business as now being conducted; and (C) is qualified to do
business and is in good standing in all jurisdictions in which the nature of the
business conducted by it or its ownership of property makes such qualification
necessary, except where the failure to be so qualified and be in good standing,
individually or in the aggregate, would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. A “Material Adverse
Effect” means a material adverse effect on the business, condition (financial or
other), results of operations, properties or prospects of the Issuers and the
Subsidiaries, taken as a whole. At the date hereof and at the Closing Date, the
General Partner will be the sole general partner of the Partnership.

(viii) Holly Logistic Services, L.L.C., a Delaware limited liability company
(“GP L.L.C.”), (A) has been duly formed and is validly existing and in good
standing as a limited liability company under the laws of the State of Delaware;
(B) has all requisite limited liability company power and authority necessary to
own its property and carry on its business as now being conducted; and (C) is
qualified to do business and is in good standing in all jurisdictions in which
the nature of the business conducted by it or its ownership of property makes
such qualification necessary, except where the failure to be so qualified and be
in good standing, individually or in the aggregate, would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
At the date hereof and at the Closing Date, GP L.L.C. will be the sole general
partner of General Partner.

 

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(ix) The issued and outstanding limited partner interests of the Partnership
consist of the common units and incentive distribution rights as set forth in
the Offering Memorandum. All of the Partnership’s outstanding common units and
incentive distribution rights and the limited partner interests represented
thereby have been duly authorized and validly issued in accordance with the
Partnership’s First Amended and Restated Agreement of Limited Partnership dated
as of July 13, 2004, as amended (the “Partnership Agreement”), and are fully
paid (to the extent required under the Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by Sections 17-607 and 17-804
of the Delaware Revised Uniform Limited Partnership Act (the “DRULPA”) and as
otherwise described in the Offering Memorandum).

(x) The Partnership owns 100% of the issued and outstanding shares of capital
stock of Finance Corp.; such capital stock has been duly authorized and validly
issued in accordance with the certificate of incorporation and by-laws of
Finance Corp., as amended to date (the “Finance Corp. Organizational
Documents”), and is fully paid and nonassessable, were not issued in violation
of any preemptive or similar right and, except as set forth in the Offering
Memorandum, are owned by the Partnership free and clear of all liens (other than
transfer restrictions imposed by the Act and the securities or Blue Sky laws of
certain jurisdictions).

(xi) All of the issued and outstanding partnership interests of the General
Partner have been duly authorized and validly issued and are fully paid (to the
extent required under the General Partner’s partnership agreement) and the
limited partner interests in the General Partner are nonassessable (except as
such nonassessability may be affected by Sections 17-607 and 17-804 of the
DRULPA and as otherwise described in the Offering Memorandum).

(xii) All of the issued and outstanding membership interests of GP L.L.C. have
been duly authorized and validly issued, are fully paid (to the extent required
under the limited liability company agreement of GP L.L.C.) and nonassessable
(except as such nonassessability may be affected by Sections 18-607 and 17-804
of the Delaware Limited Liability Act (the “Delaware LLC Act”) and as otherwise
described in the Offering Memorandum).

(xiii) Each of the Issuers and each Subsidiary (A) is a corporation, limited
liability company, partnership or other entity duly organized and validly
existing under the laws of the jurisdiction of its organization; (B) has all
requisite corporate, limited liability company, partnership, or other power and
authority necessary to own its property and carry on its business as now being
conducted and proposed to be conducted in the future as described in the
Offering Memorandum; and (C) is qualified to do business and is in good standing
in all jurisdictions in which the nature of the business conducted by it or its
ownership of property makes such qualification necessary, in each case in all
material respects as described in the Offering Memorandum, except where the
failure to be so qualified and be in good standing, individually or in the
aggregate, would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

(xiv) Other than as set forth on Schedule II, none of the Issuers, the
Guarantors or the Subsidiaries own, and at the Closing Date, none will own,
directly or indirectly, any equity or long-term debt securities of any
corporation, partnership, limited liability company, joint venture, association
or other entity. The General Partner, HEP Logistics GP, L.L.C. (“OLP GP”) and GP
L.L.C. do not own, and at the Closing Date will not own, directly or indirectly,
any equity or long-term debt securities of any corporation, partnership, limited
liability company, joint venture, association or other entity other than their
respective partnership interests in the Partnership, the Operating Partnership
and the General Partner.

 

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(xv) Each Issuer and each Guarantor has all requisite corporate, partnership or
limited liability company power and authority to execute, deliver and perform
all of its obligations under the Note Documents to which it is a party and to
consummate the transactions contemplated hereby, and to issue, sell and deliver
the Notes and perform its obligations under the Note Documents, as applicable.
At the Closing Date, all corporate, partnership and limited liability company
action, as the case may be, required to be taken by the Partnership, Finance
Corp., the General Partner, GP LLC, the Operating Partnership, OLP GP or the
Subsidiaries or any of their stockholders, members or partners for the
authorization, issuance, sale and delivery of the Securities and the
consummation of the transactions contemplated hereby, shall have been validly
taken.

(xvi) This Agreement has been duly and validly authorized, executed and
delivered by each Issuer, the General Partner, GP LLC and each Guarantor.

(xvii) The Indenture has been duly and validly authorized by each Issuer and
each Guarantor and, when duly executed and delivered by the Issuers and each
Guarantor (assuming the due authorization, execution and delivery thereof by the
Trustee), will be a legally binding and valid obligation of each such Issuer and
Guarantor, enforceable against it in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity and the
discretion of the court before which any proceeding therefor may be brought (the
“Bankruptcy Exceptions”). The Indenture, when executed and delivered, will
conform in all material respects to the description thereof in the Offering
Memorandum.

(xviii) The Notes have been duly and validly authorized for issuance and sale to
the Initial Purchasers by the Issuers, and when duly issued, authenticated,
executed and delivered by the Issuers against payment therefor by the Initial
Purchasers in accordance with the terms of this Agreement and the Indenture, the
Notes will be legally binding and valid obligations of the Issuers, entitled to
the benefits of the Indenture and enforceable against the Issuers in accordance
with their terms, except as the enforcement thereof may be limited by the
Bankruptcy Exceptions. The Notes, when issued, authenticated, executed and
delivered, will conform in all material respects to the description thereof in
the Offering Memorandum. The Exchange Notes have been, or on or before the
Closing Date will be, duly and validly authorized for issuance by the Issuers,
and when issued, authenticated and delivered by the Issuers in accordance with
the terms of the Registration Rights Agreement, the Exchange Offer and the
Indenture, the Exchange Notes will be legally binding and valid obligations of
the Issuers, entitled to the benefits of the Indenture and enforceable against
the Issuers in accordance with their terms, except as the enforcement thereof
may be limited by the Bankruptcy Exceptions.

(xix) The Guarantees have been duly and validly authorized by each of the
Guarantors and, when the Notes are duly issued, authenticated by the Trustee and
executed and delivered by the Issuers against payment by the Initial Purchasers
in accordance with the terms of this Agreement and the Indenture, will be
legally binding and valid obligations of the Guarantors, enforceable against
each of them in accordance with their terms, except that enforceability thereof
may be limited by the Bankruptcy Exceptions. The Guarantees, when issued will
conform in all material respects to the description thereof in the Offering
Memorandum. The guarantees of the

 

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Exchange Notes have been duly and validly authorized by each of the Guarantors
and, when the Exchange Notes are issued, authenticated by the Trustee and
delivered in accordance with the terms of the Registration Rights Agreement, the
Exchange Offer and the Indenture, will be legally binding and valid obligations
of the Guarantors, enforceable against each of them in accordance with their
terms, except that enforceability thereof may be limited by the Bankruptcy
Exceptions

(xx) The Registration Rights Agreement has been duly and validly authorized by
each Issuer and each Guarantor and, when duly executed and delivered by the
Issuers and the Guarantors (assuming the due authorization, execution and
delivery thereof by the Initial Purchasers), will constitute a valid and legally
binding obligation of each such Issuer, enforceable against it in accordance
with its terms, except that (A) the enforcement thereof may be limited by the
Bankruptcy Exceptions and (B) any rights to indemnity or contribution thereunder
may be limited by federal and state securities laws and public policy
considerations. The Registration Rights Agreement, when executed and delivered,
will conform in all material respects to the description thereof in the Offering
Memorandum.

(xxi) Neither Issuer nor any Subsidiary is in (A) violation of its certificate
or agreement of limited partnership, limited liability company agreement,
certificate or articles of incorporation or bylaws or other organizational
documents, (B) violation of any law, statute, ordinance, administrative or
governmental rule or regulation applicable to it or of any decree of any court
or governmental agency or body having jurisdiction over it or (C) breach,
default (or an event which, with notice or lapse of time or both, would
constitute such default) or violation in performance of any obligation,
agreement, covenant or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any agreement, indenture, lease or other
instrument to which it is a party or by which it or any of its properties may be
bound, which breach, default or violation, in the case of clauses (B) or (C),
would, if continued, reasonably be expected to have a Material Adverse Effect.
To the knowledge of the Issuers, no third party to any indenture, mortgage, deed
of trust, loan agreement or other agreement to which either Issuer or any
Subsidiary is a party or by which any of them is bound or to which any of their
properties is subject, is in default under any such agreement, which breach,
default or violation would, if continued, reasonably be expected to have a
Material Adverse Effect.

(xxii) The execution, delivery and performance of the Note Documents and the
consummation of the transactions contemplated thereby do not and will not
(A) violate the certificate of limited partnership, agreement of limited
partnership, certificate of formation, limited liability company agreement,
certificate or articles of incorporation, or bylaws of the Issuers or any
Subsidiary, (B) conflict with or constitute a breach of or a default under (or
an event that with notice or the lapse of time, or both, would constitute a
default), any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which either Issuer or any Subsidiary is a party or
by which any of them or any of their respective properties may be bound,
(C) violate any statute, law or regulation or any order, judgment, decree or
injunction of any court or governmental agency or body having authority over
either Issuer or any Subsidiary or any of their properties in a proceeding to
which any of them or their property is a party or (D) result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
either Issuer or any Subsidiary, which conflicts, breaches, violations or
defaults, in the case of clauses (B), (C) or (D), would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

(xxiii) No consent, approval, authorization, order, registration, filing or
qualification of or with any court, governmental agency or body is required for
the offering, issuance and sale by the Issuers of the Notes, the issuance of the
Guarantees by the Guarantors, the execution, delivery

 

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and performance of this Agreement and the other Note Documents by the Issuers
and the Guarantors, or the consummation by the Issuers and the Guarantors of the
transactions contemplated hereby or thereby, except (i) for such consents,
approvals and similar authorizations required under the Registration Rights
Agreement, the Securities Act, the Exchange Act and state securities or “Blue
Sky” laws and (ii) for such consents which, if not obtained would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(xxiv) The public accountants whose reports appear or are incorporated by
reference in the Offering Memorandum are independent public accountants with
respect to the Issuers within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public Accountants.
The historical financial statements (including the notes thereto) included or
incorporated by reference in the Offering Memorandum present fairly in all
material respects the consolidated combined financial position, results of
operations, cash flows and changes in partner’s equity of the entities to which
they relate at the respective dates and for the respective periods indicated.
All such financial statements have been prepared in accordance with generally
accepted accounting principles in the United States (“GAAP”) applied on a
consistent basis throughout the periods presented (except as disclosed therein)
and in compliance with Regulation S-X (“Regulation S-X”) under the Exchange Act.
The financial information set forth under the captions “Summary — Summary
historical financial and operating data” and “Selected historical financial and
operating data” included in or incorporated by reference in the Offering
Memorandum have been prepared on a basis consistent with that of the audited
financial statements from which they have been derived.

(xxv) Since the date as of which information is given in the Offering
Memorandum, except as set forth or contemplated in the Offering Memorandum,
(A) neither Issuer nor any Subsidiary has (1) incurred any liabilities or
obligations, direct or contingent, that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect, or (2) entered into
any material transaction not in the ordinary course of business and (B) other
than regular quarterly distributions in an amount not to exceed $0.885per unit,
there has been no dividend or distribution of any kind declared, paid or made by
the Partnership on any of its equity interests. The interactive data in
eXtensible Business Reporting Language included or incorporated by reference in
the Offering Memorandum fairly presents the information called for in all
material respects and has been prepared in accordance with the Commission’s
rules and guidelines applicable thereto.

(xxvi) The assumptions used in the preparation of the adjusted financial
information included in the Offering Memorandum (including “EBITDA” and
“distributable cash flow”) are reasonable, and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.

(xxvii) No Subsidiary of the Partnership is currently prohibited, directly or
indirectly, from paying any dividends to the Partnership, from making any other
distribution on such Subsidiary’s capital stock, from repaying to the
Partnership any loans or advances to such Subsidiary from the Partnership or
from transferring any of such Subsidiary’s property or assets to the Partnership
or any other Subsidiary of the Partnership, except as described in or
contemplated in the Offering Memorandum.

(xxviii) Except as set forth in the Offering Memorandum, there are no legal or
governmental proceedings pending to which either Issuer or any Subsidiary is a
party or of which any property of either Issuer or any Subsidiary is the subject
which, if determined adversely to either Issuer or any Subsidiary, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect and, to the best of the Issuers’ knowledge, no such proceedings are
threatened.

 

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(xxix) No labor dispute with the employees of the Issuers or any Subsidiary
exists or, to the knowledge of the Issuers, is imminent, that is reasonably
likely to result in a Material Adverse Effect.

(xxx) Except as disclosed in the Offering Memorandum, the Partnership and its
Subsidiaries (A) are in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of human health
and safety and the environment or imposing liability or standards of conduct,
including the transport of, concerning any Hazardous Material (as defined below)
(“Environmental Laws”), (B) have received, and maintain in full force and
effect, all Permits (as defined below) required of them under applicable
Environmental Laws to conduct their respective businesses, (C) are in compliance
with the terms and conditions of any such Permits, (D) to the knowledge of the
Partnership, do not have any liability in connection with either noncompliance
with Environmental Laws or with the release into the environment of any
hazardous Materials and (E) are not subject to any pending or, to the knowledge
of the Partnership, threatened claim or other legal proceeding under any
Environmental Laws, except where such noncompliance with the Environmental Laws,
failure to receive required Permits, failure to comply with the terms and
conditions of such Permits or liability in connection with such noncompliance,
releases, claims or legal proceedings, would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect. The term
“Hazardous Material” means (A) any “hazardous substance” as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (B) any “hazardous waste” as defined in the Resource Conservation and
Recovery Act, as amended, (C) any petroleum or petroleum product, (D) any
polychlorinated biphenyl and (E) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance regulated under or
within the meaning of any other Environmental Law.

(xxxi) In the ordinary course of its business, the Partnership periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Partnership and its Subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Partnership has
concluded that such associated costs and liabilities as of the date hereof would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect;

(xxxii) Each of the Issuers and the Subsidiaries have such permits, consents,
licenses, franchises, certificates and authorizations of governmental or
regulatory authority (“Permits”) as are necessary to own its properties and to
conduct its business in the manner described in the Offering Memorandum, subject
to such qualifications as may be set forth in the Offering Memorandum and except
for such Permits which, if not obtained, would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; each of the
Issuers and the Subsidiaries have fulfilled and performed all its material
obligations with respect to such Permits which are due to have been fulfilled
and performed and no event has occurred which allows, or after notice or lapse
of time would allow, revocation or termination thereof or results in any
impairment of the rights of the holder of any such Permit, except for such
revocations, terminations and impairments that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, subject in
each case to such qualifications as may be set forth in the Offering Memorandum;
and except as described in the Offering Memorandum, none of the Permits contain
any restriction that is materially burdensome to the Issuers and the
Subsidiaries, taken as a whole.

 

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(xxxiii) The Partnership and the Subsidiaries have such consents, easements,
rights-of-way, permits or licenses from each person (collectively,
“rights-of-way”) as are necessary to conduct its business in the manner
described, and subject to the limitations contained, in the Offering Memorandum,
except for (A) qualifications, reservations and encumbrances which would not
reasonably be expected to have a Material Adverse Effect upon the ability of the
Issuers and the Subsidiaries, taken as a whole, to conduct their businesses in
all material respects as currently conducted and as contemplated by the Offering
Memorandum to be conducted and (B) such rights-of-way that, if not obtained,
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect upon the ability of the Issuers and the Subsidiaries,
taken as a whole, to conduct their businesses in all material respects as
currently conducted and as contemplated by the Offering Memorandum to be
conducted; other than as set forth, and subject to the limitations contained, in
the Offering Memorandum, each of the Issuers and the Subsidiaries has fulfilled
and performed all its material obligations with respect to such rights-of-way
and no event has occurred that allows, or after notice or lapse of time would
allow, revocation or termination thereof or would result in any impairment of
the rights of the holder of any such rights-of-way, except for such revocations,
terminations and impairments that would not have a Material Adverse Effect upon
the ability of the Issuers and the Subsidiaries, taken as a whole, to conduct
their businesses in all material respects as currently conducted and as
contemplated by the Offering Memorandum to be conducted; and, except as
described in the Offering Memorandum, none of such rights-of-way contains any
restriction that is materially burdensome to the Issuers and the Subsidiaries,
taken as a whole.

(xxxiv) The Issuers and the Subsidiaries have filed (or have obtained extensions
with respect to) all federal, state and foreign income and franchise tax returns
required to be filed through the date hereof, which returns are complete and
correct in all material respects, and have timely paid all taxes shown to be due
pursuant to such returns, other than those (A) which, if not paid, would not
reasonably be expected to have a Material Adverse Effect or (B) which are being
contested in good faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles.

(xxxv) Neither the Partnership nor any of its Subsidiaries nor, to the knowledge
of the Partnership, any member, officer, agent, employee or affiliate of the
Partnership or any of its Subsidiaries is aware of or has taken any action,
directly or indirectly, that would result in a violation by such persons of the
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”), including, without limitation, making use of the mails
or any means or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of the giving
of anything of value to any “foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA; and the Partnership, its
Subsidiaries and, to the knowledge of the Partnership, its affiliates have
conducted their businesses in compliance with the FCPA and have instituted and
maintain policies and procedures designed to ensure, and which are reasonably
expected to continue to ensure, continued compliance therewith;

 

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(xxxvi) The operations of the Partnership and its Subsidiaries are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements and the money laundering statutes and the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Partnership or any of its Subsidiaries with respect to the Money
Laundering Laws is pending or, to the best knowledge of the Partnership,
threatened;

(xxxvii) Neither the Partnership nor any of its Subsidiaries nor, to the
knowledge of the Partnership, any member, officer, agent, employee or affiliate
of the Partnership or any of its Subsidiaries is currently subject to any
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Partnership will not directly or
indirectly use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other
person or entity, for the purpose of financing the activities of any person
currently subject to any U.S. sanctions administered by OFAC;

(xxxviii) None of the Issuers or the Guarantors is, nor, after giving effect to
the Offering and the application of the proceeds thereof, will be an “investment
company” or a company “controlled by” an “investment company” as such terms are
defined in the Investment Company Act of 1940, as amended.

(xxxix) Since the date of the latest audited financial statements included or
incorporated by reference in the Offering Memorandum, there has been no change
in the Partnership’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the
Partnership’s internal control over financial reporting.

(xl) Except as described in the section entitled “Plan of Distribution” in the
Offering Memorandum, there are no contracts, agreements or understandings
between either Issuer or any Subsidiary and any other person other than the
Initial Purchasers pursuant to this Agreement that would give rise to a valid
claim against either Issuer, any Subsidiary or any of the Initial Purchasers for
a brokerage commission, finder’s fee or like payment in connection with the
issuance, purchase and sale of the Securities.

(xli) Each Note Document conforms in all material respects to the description
thereof contained in the Offering Memorandum.

(xlii) The statements in the Preliminary Offering Memorandum and the Final
Offering Memorandum under the headings “Certain Material United States Federal
Tax Considerations”, “Plan of Distribution,” “Description of Notes” and “Legal
Matters” fairly summarize the matters therein described in all material
respects.

(xliii) The Issuers and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that:
(A) transactions are executed in accordance with management’s general or
specific authorizations; (B) transactions are recorded as necessary to permit
preparation of their financial statements in conformity with GAAP and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management’s general or specific authorization; and (D) the
recorded accountability for their assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

 

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(xliv) The Partnership has established and maintains disclosure controls and
procedures (as such term is defined in Rules 13a-15 and 15d-14 under the
Exchange Act); such disclosure controls and procedures are designed to ensure
that material information relating to the Partnership and the Subsidiaries is
made known to the Partnership’s principal executive officer and principal
financial officer of the Partnership by others within the Partnership or any
Subsidiary, and such disclosure controls and procedures are reasonably effective
to perform the functions for which they were established subject to the
limitations of any such control system; the Partnership’s auditors and the audit
committee of the board of directors of GP LLC have been advised of: (A) any
significant deficiencies in the design or operation of internal controls which
could adversely affect the Partnership’s ability to record, process, summarize,
and report financial data; and (B) any fraud, whether or not material, that
involves management or other employees who have a role in the Partnership’s
internal controls; and since the date of the most recent evaluation of such
disclosure controls and procedures, there have been no significant changes in
internal controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses. Since the date of the latest audited
financial statements included or incorporated by reference in the Offering
Memorandum, there has been no change in the Partnership’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Partnership’s internal control over financial reporting.

(xlv) None of the Issuers, the Guarantors or any of their affiliates (as defined
in Rule 501(b) of Regulation D under the Act) has, directly or through any
person acting on its or their behalf (other than any Initial Purchaser, as to
which no representation is made), (A) taken, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of any Issuer to
facilitate the sale or resale of the Securities, (B) sold, bid for, purchased or
paid any person any compensation for soliciting purchases of the Securities in a
manner that would require registration of the Securities under the Act or paid
or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of any Issuer in a manner that would require
registration of the Securities under the Act, (C) sold, offered for sale,
contracted to sell, pledged, solicited offers to buy or otherwise disposed of or
negotiated in respect of any security (as defined in the Act) that is currently
or will be integrated with the sale of the Securities in a manner that would
require the registration of the Securities under the Act or (D) engaged in any
directed selling effort (as defined by Regulation S) with respect to the
Securities, and each of them has complied with the offering restrictions
requirement of Regulation S.

(xlvi) No form of general solicitation or general advertising (prohibited by the
Act in connection with offers or sales such as the Exempt Resales) was used by
the Issuers or any person acting on its behalf (other than any Initial
Purchaser, as to which no representation is made) in connection with the offer
and sale of any of the Securities or in connection with Exempt Resales,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio or the Internet, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising within the
meaning of Regulation D under the Act. Neither the Issuers nor any of its
affiliates has entered into, or will enter into, any contractual arrangement
with respect to the distribution of the Securities except for this Agreement.

(xlvii) Neither the issuance, sale and delivery of the Securities nor the
application of the proceeds thereof by the Issuers as described in the Offering
Memorandum will violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board of Governors.

 

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(xlviii) There is and has been no failure on the part of the Issuers and any of
the Issuers’ directors or officers, in their capacities as such, to comply with
any provision of the Sarbanes Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith (the “Sarbanes Oxley Act”), including
Section 402 related to loans and Sections 302 and 906 related to certifications.

(xlix) The Issuers and the Subsidiaries maintain, or are entitled to the
benefits of, insurance in such amounts and covering such risks as the Issuers
reasonably believe is adequate for the conduct of the business of the Issuers
and the Subsidiaries. None of the Issuers or the Subsidiaries has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to continue
such insurance, and all such insurance is outstanding and duly in force on the
date hereof and will be outstanding and duly in force at the Closing Date.

(l) The Partnership is a partnership for U.S. federal income tax purposes.

Each certificate signed by any officer of either Issuer or any Guarantor and
delivered to the Initial Purchasers or counsel for the Initial Purchasers
pursuant to, or in connection with, this Agreement shall be deemed to be a
representation and warranty by the Issuers and Guarantors to the Initial
Purchasers as to the matters covered by such certificate.

The Issuers acknowledge that the Initial Purchasers and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to Section 8 of this
Agreement, counsel to the Partnership and counsel to the Initial Purchasers will
rely upon the accuracy and truth of the foregoing representations and the
Issuers hereby consent to such reliance.

(b) Each Initial Purchaser represents that it is a QIB and acknowledges that it
is purchasing the Securities pursuant to a private sale exemption from
registration under the Act, and that the Securities have not been registered
under the Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except pursuant to an exemption from
the registration requirements of the Act. Each Initial Purchaser, severally and
not jointly, represents, warrants and covenants to the Issuers and Guarantors
that:

(i) Neither it, nor any person acting on its behalf, has or will solicit offers
for, or offer or sell, the Securities by any form of general solicitation or
general advertising (as those terms are used in Regulation D under the Act) or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act, and it has and will solicit offers for the Securities only from, and
will offer and sell the Securities only to, (1) persons whom such Initial
Purchaser reasonably believes to be QIBs or, if any such person is buying for
one or more institutional accounts for which such person is acting as fiduciary
or agent, only when such person has represented to such Initial Purchaser that
each such account is a QIB to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in reliance
on the exemption from the registration requirements of the Act pursuant to Rule
144A, or (2) persons other than U.S. persons outside the United States in
reliance on, and in compliance with, the exemption from the registration
requirements of the Act provided by Regulation S.

(ii) With respect to offers and sales outside the United States, such Initial
Purchaser has offered the Securities and will offer and sell the Securities
(1) as part of its distribution at any time and (2) otherwise until 40 days
after the later of the commencement of the offering of the Securities and the
Closing Date, only in accordance with Rule 903 of Regulation S or

 

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another exemption from the registration requirements of the Act. Accordingly,
neither such Initial Purchasers nor any person acting on their behalf has
engaged or will engage in any directed selling efforts (within the meaning of
Regulation S) with respect to the Securities, and any such persons have complied
and will comply with the offering restrictions requirements of Regulation S.
Terms used in this Section 5(b)(ii) have the meanings given to them by
Regulation S.

Each Initial Purchaser severally agrees that, at or prior to confirmation of a
sale of Securities pursuant to Regulation S it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Securities from it or through it during the
restricted period a confirmation or notice to substantially the following
effect:

“The Securities covered hereby have not been registered under the United States
Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered or sold within the United States or to or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time and (ii) otherwise
until forty days after the later of the date upon which the offering of the
Securities commenced and the date of closing, except in either case in
accordance with Regulation S or Rule 144A under the Securities Act. Terms used
above have the meaning given to them by Regulation S.”

The Initial Purchasers understand that the Issuers and Guarantors and, for
purposes of the opinions to be delivered to them pursuant to Section 8 hereof,
counsel to the Issuers and Guarantors and counsel to the Initial Purchasers will
rely upon the accuracy and truth of the foregoing representations, and each
Initial Purchaser hereby consents to such reliance.

6. Indemnification. (a) The Issuers and Guarantors, jointly and severally, agree
to indemnify and hold harmless the Initial Purchasers, each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, the agents, employees, officers and directors
of any Initial Purchaser and the agents, employees, officers and directors of
any such controlling person from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (including, but not limited, to
reasonable attorneys’ fees and any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all reasonable
amounts paid in settlement of any claim or litigation) (collectively, “Losses”)
to which they or any of them may become subject under the Act, the Exchange Act
or otherwise insofar as such Losses (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Pricing Disclosure Package, any Issuer Written
Communication (including, but not limited to, any electronic roadshow), the
Final Offering Memorandum, or in any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that none of
the Issuers and Guarantors will be liable in any such case to the extent, but
only to the extent, that any such Loss arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
relating to an Initial Purchaser made therein in reliance upon and in conformity
with written information furnished to the Partnership by or on behalf of such
Initial Purchaser through the Representatives expressly for use therein. This
indemnity agreement will be in addition to any liability that the Issuers and
Guarantors may otherwise have, including, but not limited to, liability under
this Agreement.

 

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(b) Each Initial Purchaser, severally and not jointly, agrees to indemnify and
hold harmless the Issuers and Guarantors, and each person, if any, who controls
any of the Issuers and Guarantors within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, the agents, employees, officers and directors
of any of the Issuers and Guarantors and of any such controlling person from and
against any and all Losses to which they or any of them may become subject under
the Act, the Exchange Act or otherwise insofar as such Losses (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Pricing Disclosure Package
or the Final Offering Memorandum, or in any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that any such Loss arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission relating to such Initial Purchaser made therein in reliance upon and in
conformity with information furnished in writing to the Partnership by or on
behalf of such Initial Purchaser through the Representatives expressly for use
therein. The Issuers and Guarantors and the Initial Purchasers acknowledge that
the information described in Section 9 is the only information furnished in
writing by the Initial Purchasers to the Issuers expressly for use in the
Preliminary Offering Memorandum or the Offering Memorandum.

(c) Promptly after receipt by an indemnified party under subsection 6(a) or
6(b) above of notice of the commencement of any action, suit or proceeding
(collectively, an “action”), such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such subsection,
notify each party against whom indemnification is to be sought in writing of the
commencement of such action (but the failure so to notify the indemnifying party
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it has been prejudiced in any material respect by such failure).
In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement of such action, the
indemnifying party will be entitled to participate in such action, and to the
extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense of such action with counsel satisfactory to such indemnified
party. Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such action, but the
reasonable fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) the named
parties to such action (including any impleaded parties) include such
indemnified party and the indemnifying parties (or such indemnifying parties
have assumed the defense of such action), and such indemnified party or parties
shall have reasonably concluded that there may be defenses available to it or
them that are different from or additional to those available to one or all of
the indemnifying parties (in which case the indemnifying parties shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such reasonable fees and expenses of
counsel shall be borne by the indemnifying parties. In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
counsel (together with appropriate local counsel) at any time for all
indemnified parties in connection with any one action or separate but
substantially similar or related actions arising in the same jurisdiction out of
the same general allegations or circumstances. An indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent, which consent may not be unreasonably withheld. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement (x) includes
an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding and (y) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.

 

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7. Contribution. In order to provide for contribution in circumstances in which
the indemnification provided for in Section 6 of this Agreement is for any
reason held to be unavailable from the indemnifying party, or is insufficient to
hold harmless a party indemnified under Section 6 of this Agreement, each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such aggregate Losses (i) in such proportion as
is appropriate to reflect the relative benefits received by the Issuers and
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, from
the offering of the Securities or (ii) if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Issuers
and Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
in connection with the statements or omissions that resulted in such Losses, as
well as any other relevant equitable considerations. The relative benefits
received by the Issuers and Guarantors, on the one hand, and the Initial
Purchasers, on the other hand, shall be deemed to be in the same proportion as
(x) the total proceeds from the offering of Securities (net of discounts and
commissions but before deducting expenses) received by the Issuers and
Guarantors are to (y) the total discount and commissions received by the Initial
Purchasers. The relative fault of the Issuers and Guarantors, on the one hand,
and the Initial Purchasers, on the other hand, 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
relates to information supplied by an Issuer or the Initial Purchasers and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission or alleged statement or omission.

The Issuers and Guarantors and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to above. Notwithstanding the
provisions of this Section 7, (i) in no case shall any Initial Purchaser be
required to contribute any amount in excess of the amount by which the total
discount and commissions applicable to the Securities purchased by such Initial
Purchaser pursuant to this Agreement exceeds the amount of any damages that such
Initial Purchaser has otherwise been required to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 7, each person,
if any, who controls any Initial Purchaser within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as the Initial Purchasers, and each person, if any, who controls an
Issuer or a Guarantor within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each director, officer, employee and agent
of an Issuer or a Guarantor shall have the same rights to contribution as the
Issuers and Guarantors. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 7, notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 7 or otherwise, but the failure so to notify
the contributing party will not relieve it from liability under this Section 7
unless and to the extent it has been prejudiced in any material respect by such
failure; provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under Section 6 for
purposes of indemnification. Anything in this section to the contrary
notwithstanding, no party shall be liable for contribution with respect to any
action or claim settled without its written consent; provided, however, that
such written consent was not unreasonably withheld. The contribution obligations
of the Initial Purchasers under this Section 7 are several in proportion to
their respective purchase obligations with respect to the Securities and not
joint.

 

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8. Conditions of Initial Purchasers’ Obligations. The obligations of the Initial
Purchasers to purchase and pay for the Securities, as provided for in this
Agreement, shall be subject to satisfaction of the following conditions prior to
or concurrently with such purchase:

(a) All of the representations and warranties of the Issuers and the Guarantors
contained in this Agreement shall be true and correct on the date of this
Agreement and on the Closing Date. The Issuers and the Guarantors shall have
performed or complied with all of the agreements and covenants contained in this
Agreement and required to be performed or complied with by them at or prior to
the Closing Date. The Initial Purchasers shall have received a certificate,
dated the Closing Date, signed by the chief executive officer and chief
financial officer of the Issuers, certifying as to the foregoing and to the
effect in Section 8(c);

(b) The Final Offering Memorandum shall have been printed and copies distributed
to the Initial Purchasers as required by Section 4(b). No stop order suspending
the qualification or exemption from qualification of the Securities in any
jurisdiction shall have been issued and no proceeding for that purpose shall
have been commenced or shall be pending or threatened;

(c) Since the execution of this Agreement, there shall not have been any
decrease in the rating of any debt of the Issuers or any Subsidiary by any
“nationally recognized statistical rating organization” (as defined for purposes
of Rule 436(g) under the Act), or any notice given of any intended or potential
decrease in any such rating or of a possible change in any such rating that does
not indicate the direction of the possible change;

(d) The Initial Purchasers shall have received on the Closing Date opinions
dated the Closing Date, addressed to the Initial Purchasers, of (i) Fulbright
and Jaworski LLP, counsel to the Issuers and the Guarantors and (ii) Denise C.
McWatters, general counsel of the Issuers and the Guarantors, substantially in
the form of Annex II(b) and Annex II(c) attached hereto;

(e) The Initial Purchasers shall have received on the Closing Date an opinion
dated the Closing Date of Latham & Watkins LLP, counsel to the Initial
Purchasers, in form and substance satisfactory to the Representatives. Such
counsel shall have been furnished with such certificates and documents as they
may reasonably request to enable them to review or pass upon the matters
referred to in this Section 8 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions contained in this Agreement;

(f) The Issuers, the Guarantors and the Trustee shall have executed and
delivered the Indenture and the Initial Purchasers shall have received copies
thereof;

(g) The Issuers shall have executed and delivered the Registration Rights
Agreement and the Initial Purchasers shall have received executed counterparts
thereof;

(h) On the date hereof, the Initial Purchasers shall have received a “comfort
letter” from the independent public accountants for the Partnership, dated the
date of this Agreement, addressed to the Initial Purchasers and in form and
substance satisfactory to the Representatives and counsel to the Initial
Purchasers, covering the financial and accounting information in the Pricing
Disclosure Package. In addition, the Initial Purchasers shall have received a
“bring-down comfort letter” from the independent public accountants for the
Partnership, dated as of the Closing Date, addressed to the Initial Purchasers
and in the form of the “comfort letter” delivered on the date hereof, except
that (i) it shall cover the financial and accounting information in the Final
Offering Memorandum and any amendment or supplement thereto and (ii) procedures
shall be brought down to a date no more than 5 days prior to the Closing Date,
and otherwise in form and substance satisfactory to the Representatives and
counsel to the Initial Purchasers;

 

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(i) The Initial Purchasers shall have received on and as of the date hereof a
certificate of the chief financial officer of the Partnership that is reasonably
satisfactory to the Representatives with respect to certain financial
information contained in the Preliminary Offering Memorandum and the Final
Offering Memorandum;

(j) (i) Neither the Partnership nor any of its Subsidiaries shall have sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Offering Memorandum any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering Memorandum, and
(ii) since the respective dates as of which information is given in the Offering
Memorandum there shall not have been any change in the capital stock or
long-term debt of the Partnership or any of its Subsidiaries or any change, or
any development involving a prospective change, in or affecting the general
affairs, management, financial position, partners’ or stockholders’ equity or
results of operations of the Partnership or any of its Subsidiaries, otherwise
than as set forth or contemplated in the Offering Memorandum, the effect of
which, in any such case described in clause (i) or (ii), is in your judgment so
material and adverse as to make it impracticable or inadvisable to proceed with
the offering or the delivery of the Notes on the terms and in the manner
contemplated in the Offering Memorandum;

(k) The Initial Purchasers shall have been furnished with written instructions
for the application of the proceeds of the Securities in accordance with this
Agreement and such other information as they may reasonably request; and

(l) All agreements set forth in the blanket representation letter of the Issuers
to DTC relating to the approval of the Notes by DTC for “book-entry” transfer
shall have been complied with.

If any of the conditions specified in this Section 8 shall not have been
fulfilled when and as required by this Agreement to be fulfilled (or waived by
the Initial Purchasers), this Agreement may be terminated by the Initial
Purchasers on notice to the Issuers at any time at or prior to the Closing Date,
and such termination shall be without liability of any party to any other party.

The documents required to be delivered by this Section 8 will be delivered at
the office of counsel for the Initial Purchasers on the Closing Date.

9. Initial Purchasers Information. The Issuers, the Guarantors and the Initial
Purchasers severally acknowledge that, for all purposes (including Sections
5(a)(i) and 6), (a) the statements relating to stabilization transactions set
forth in the sixth paragraph, (b) the first sentence of the seventh paragraph
(c) and the eighth, tenth and the twelfth paragraphs each under “Plan of
Distribution” in the Preliminary Offering Memorandum and the Final Offering
Memorandum constitute the only information furnished in writing by or behalf of
any Initial Purchaser expressly for use in the Pricing Disclosure Package or the
Final Offering Memorandum.

10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements contained in this Agreement, including the
agreements contained in Sections 4(f) and 11(d), the indemnity agreements
contained in Section 6 and the contribution agreements contained in Section 7,
shall remain operative and in full force and effect regardless of any
investigation

 

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made by or on behalf of the Initial Purchasers or any controlling person thereof
or by or on behalf of the Partnership or any controlling person thereof, and
shall survive delivery of and payment for the Original Notes to and by the
Initial Purchasers. The agreements contained in Sections 4(f), 6, 7, 9 and
11(d) shall survive the termination of this Agreement, including pursuant to
Section 11.

11. Effective Date of Agreement; Termination. (a) This Agreement shall become
effective upon execution and delivery of a counterpart hereof by each of the
parties hereto.

(b) The Initial Purchasers shall have the right to terminate this Agreement at
any time prior to the Closing Date by notice to the Partnership from the Initial
Purchasers, without liability (other than with respect to Sections 6 and 7) on
the Initial Purchasers’ part to the Partnership or any affiliate thereof if, on
or prior to such date, (i) the Partnership shall have failed, refused or been
unable to perform any agreement on its part to be performed under this Agreement
when and as required; (ii) any other condition to the obligations of the Initial
Purchasers under this Agreement to be fulfilled by the Issuers and Guarantors
pursuant to Section 8 is not fulfilled when and as required; (iii) trading in
any securities of the Partnership shall be suspended or limited by the
Commission or the New York Stock Exchange, or trading in securities generally on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market shall have been suspended or materially limited, or minimum prices shall
have been established thereon by the Commission, or by such exchange or other
regulatory body or governmental authority having jurisdiction; (iv) a general
moratorium shall have been declared by either Federal or New York State
authorities or a material disruption in commercial banking or securities
settlement or clearance services in the United States shall have occurred;
(v) there is an outbreak or escalation of hostilities or national or
international calamity in any case involving the United States, on or after the
date of this Agreement, or if there has been a declaration by the United States
of a national emergency or war or other national or international calamity or
crisis (economic, political, financial or otherwise) which affects the U.S. and
international markets, making it, in the Representatives’ judgment,
impracticable to proceed with the offering or delivery of the Securities on the
terms and in the manner contemplated in the Pricing Disclosure Package; or
(vi) there shall have been such a material adverse change in general economic,
political or financial conditions or the effect (or potential effect if the
financial markets in the United States have not yet opened) of international
conditions on the financial markets in the United States shall be such as, in
the Representatives’ judgment, to make it inadvisable or impracticable to
proceed with the offering or delivery of the Securities on the terms and in the
manner contemplated in the Pricing Disclosure Package.

(c) Any notice of termination pursuant to this Section 11 shall be given at the
address specified in Section 12 below by telephone or facsimile, confirmed in
writing by letter.

(d) If this Agreement shall be terminated pursuant to Section 11(b)(i) or (ii),
the Issuers and Guarantors, jointly and severally, will reimburse the Initial
Purchasers for all of their reasonable out-of-pocket expenses (including,
without limitation, the fees and expenses of the Initial Purchasers’ counsel)
incurred in connection with this Agreement and the transactions contemplated
hereby.

12. If any one or more Initial Purchasers shall fail to purchase and pay for any
of the Securities agreed to be purchased by such Initial Purchaser hereunder and
such failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining Initial Purchasers shall
be obligated severally to take up and pay for (in the respective proportions
which the principal amount of Securities set forth opposite their names in
Schedule I hereto bears to the aggregate principal amount of Securities set
forth opposite the names of all the remaining Initial Purchasers) the Securities
which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase; provided, however, that in the event that the aggregate principal
amount of Securities which the

 

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defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase
shall exceed 10% of the aggregate principal amount of Securities set forth in
Schedule I hereto, the remaining Initial Purchasers shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Initial Purchasers do not purchase all the
Securities, this Agreement will terminate without liability to any nondefaulting
Initial Purchaser or the Partnership. In the event of a default by any Initial
Purchaser as set forth in this Section 11(e), the Closing Date shall be
postponed for such period, not exceeding seven Business Days, as the
Representatives shall determine in order that the required changes in the Final
Offering Memorandum or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Initial
Purchaser of its liability, if any, to the Partnership or any nondefaulting
Initial Purchaser for damages occasioned by its default hereunder.

13. Notices. In all dealings hereunder, you shall act on behalf of each of the
Initial Purchasers, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any Initial
Purchaser made or given jointly by Citigroup Global Markets Inc., UBS Securities
LLC and Wells Fargo Securities, LLC as the Representatives, except as otherwise
provided herein. All statements, requests, notices and agreements hereunder
shall be in writing, and if to the Initial Purchasers shall be delivered or sent
by mail or facsimile transmission to (i) you as the Representatives in care of
Citigroup Global Markets Inc. at 388 Greenwich Street, New York, New York 10013,
Facsimile: (212) 816-7912, Attention: General Counsel; UBS Securities LLC, 677
Washington Blvd., Stamford, CT 06901 (fax number: 203-719-1075), Attention: High
Yield Syndicate Department, with a copy for information purposes only to (i) UBS
Securities LLC, 677 Washington Blvd., Stamford, CT 06901 (fax number:
203-719-3667), Attention: Legal and Compliance Department; and Wells Fargo
Securities, LLC at 375 Park Avenue, New York, New York 10152, Attention: Legal
Department and (ii) Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022
(fax number: 212-751-4864), Attention: Jonathan R. Rod, Esq.; and if sent to the
Issuers and Guarantors, shall be mailed, delivered or telecopied and confirmed
in writing to Holly Energy Partners, L.P., 2828 N. Harwood, Suite 1300, Dallas,
Texas, 75201, (telephone: 214-871-3555, fax: 214-615-9380), Attention: General
Counsel, with a copy for information purposes only to Fulbright & Jaworski LLP,
1301 McKinney, Suite 5100, Houston, TX 77010-3095 (fax number: 713-651-5246),
Attention: Kevin Trautner, Esq.

All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when receipt acknowledged by
telecopier machine, if telecopied; and one business day after being timely
delivered to a next day air courier.

In accordance with the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)), the Initial Purchasers are required
to obtain, verify and record information that identifies their respective
clients, including the Partnership, which information may include the name and
address of their respective clients, as well as other information that will
allow the initial purchasers to properly identify their respective clients.

14. Parties. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Initial Purchasers, the Issuers and Guarantors and the other
indemnified parties referred to in Sections 6 and 7, and their respective
successors and assigns, and no other person shall have or be construed to have
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. The term “successors
and assigns” shall not include a purchaser, in its capacity as such, of
Securities from the Initial Purchasers.

 

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15. Construction. This Agreement shall be construed in accordance with the
internal laws of the State of New York (without giving effect to any provisions
thereof relating to conflicts of law).

16. Submission to Jurisdiction; Waiver of Jury Trial. No proceeding related to
this Agreement or the transactions contemplated hereby may be commenced,
prosecuted or continued in any court other than the courts of the State of New
York located in the City and County of New York or in the United States District
Court for the Southern District of New York, which courts shall have
jurisdiction over the adjudication of such matters, and the Issuers and
Guarantors hereby consent to the jurisdiction of such courts and personal
service with respect thereto. The Issuers and Guarantors hereby waive all right
to trial by jury in any proceeding (whether based upon contract, tort or
otherwise) in any way arising out of or relating to this Agreement. The Issuers
and Guarantors agree that a final judgment in any such proceeding brought in any
such court shall be conclusive and binding upon the Issuers and Guarantors and
may be enforced in any other courts in the jurisdiction of which the Issuers and
Guarantors are or may be subject, by suit upon such judgment.

17. Captions. The captions included in this Agreement are included solely for
convenience of reference and are not to be considered a part of this Agreement.

18. Counterparts. This Agreement may be executed in various counterparts that
together shall constitute one and the same instrument.

19. No Fiduciary Relationship. The Issuers and Guarantors hereby acknowledge
that the Initial Purchasers are acting solely as initial purchasers in
connection with the purchase and sale of the Securities. The Issuers and
Guarantors further acknowledge that each of the Initial Purchasers is acting
pursuant to a contractual relationship created solely by this Agreement entered
into on an arm’s length basis and in no event do the parties intend that any
Initial Purchaser act or be responsible as a fiduciary to the Issuers and
Guarantors, their management, stockholders, creditors or any other person in
connection with any activity that such Initial Purchaser may undertake or has
undertaken in furtherance of the purchase and sale of the Securities, either
before or after the date hereof. The Initial Purchasers hereby expressly
disclaim any fiduciary or similar obligations to the Issuers and Guarantors,
either in connection with the transactions contemplated by this Agreement or any
matters leading up to such transactions, and the Issuers and Guarantors hereby
confirm their understanding and agreement to that effect. The Issuers and
Guarantors and each Initial Purchaser agree that they are each responsible for
making their own independent judgments with respect to any such transactions,
and that any opinions or views expressed by any Initial Purchaser to the Issuers
and Guarantors regarding such transactions, including but not limited to any
opinions or views with respect to the price or market for the Securities, do not
constitute advice or recommendations to the Issuers and Guarantors. The Issuers
and Guarantors hereby waive and release, to the fullest extent permitted by law,
any claims that such Issuers and Guarantors may have against the Initial
Purchasers with respect to any breach or alleged breach of any fiduciary or
similar duty to the Issuers and Guarantors in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions.

[Signature Pages Follow]

 

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If the foregoing Purchase Agreement correctly sets forth the understanding among
the Issuers and Guarantors and the Initial Purchasers, please so indicate in the
space provided below for the purpose, whereupon this letter and your acceptance
shall constitute a binding agreement among the Issuers and the Guarantors and
the Initial Purchasers.

 

Very truly yours,

 

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 D. Wise  

Name: Stephen D. Wise

Title: Vice President and Treasurer

HOLLY ENERGY FINANCE CORP. By:   /s/ Stephen D. Wise  

Name: Stephen D. Wise

Title: Vice President and Treasurer

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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GUARANTORS:

 

HEP LOGISTICS GP, L.L.C., a Delaware limited liability company

  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 D. Wise    

Name: 

Title:

 

Stephen D. Wise

Vice President and Treasurer

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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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 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 D. Wise   Name:   Stephen D. Wise   Title:  
Vice President and Treasurer

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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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 LOVINGTON-ARTESIA,
L.L.C., a Delaware limited liability company HEP SLC, LLC, a Delaware limited
liability company HEP TULSA LLC, a Delaware limited liability company ROADRUNNER
PIPELINE, 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 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 D. Wise  
Name:   Stephen D. Wise   Title:   Vice President and Treasurer

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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HEP FIN-TEX/TRUST RIVER, L.P., a Texas limited partnership HEP NAVAJO SOUTHERN,
L.P., a Delaware limited partnership HEP PIPELINE ASSETS, LIMITED PARTNERSHIP, a
Delaware 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, 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 D. Wise   Name:   Stephen D. Wise   Title:  
Vice President and Treasurer

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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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, 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 D. Wise  
Name:   Stephen D. Wise   Title:   Vice President and Treasurer

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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HOLLY ENERGY STORAGE-LOVINGTON LLC,

a Delaware limited liability company

  By:   /s/ Stephen D. Wise  

Name:  Stephen D. Wise

Title:    Vice President and Treasurer

HOLLY ENERGY STORAGE-TULSA LLC,

a Delaware limited liability company

  By:   /s/ Stephen D. Wise  

Name:  Stephen D. Wise

Title:    Vice President and Treasurer

CHEYENNE LOGISTICS LLC,

a Delaware limited liability company

  By:   /s/ Stephen D. Wise  

Name:  Stephen D. Wise

Title:    Vice President and Treasurer

EL DORADO LOGISTICS LLC,

a Delaware limited liability company

  By:   /s/ Stephen D. Wise  

Name:  Stephen D. Wise

Title:    Vice President and Treasurer

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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Accepted as of the date hereof on its own behalf

and as Representatives of the several Initial Purchasers

listed on Schedule I:

 

CITIGROUP GLOBAL MARKETS INC.

 

By:   /s/ Christopher Abbate            

 

Name/Title: Christopher Abbate/Managing Director

 

UBS SECURITIES LLC By:   /s/ Brendan Dillu            

 

Name/Title Brendan Dillu/Managing Director

 

 

By:   /s/ Kevin T. Pluff Name/Title Kevin T. Pluff/Executive Director  

 

WELLS FARGO SECURITIES, LLC By:   /s/ Jeff Gore            

 

Name/Title Jeff Gore/Managing Director

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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SCHEDULE I

 

     Principal  Amount
of
Notes
to be Purchased  

Initial Purchaser

  

Citigroup Global Markets Inc.

   $ 70,000,000   

UBS Securities LLC

     70,000,000   

Wells Fargo Securities, LLC

     70,000,000   

Banco Bilbao Vizcaya Argentaria, S.A.

     6,285,714   

Capital One Southcoast, Inc.

     5,714,286   

Comerica Securities, Inc.

     5,714,286   

Credit Suisse Securities (USA) LLC

     5,142,857   

Deutsche Bank Securities Inc.

     5,142,857   

Goldman, Sachs & Co.

     5,142,857   

Lloyds Securities Inc.

     5,142,857   

Mitsubishi UFJ Securities (USA), Inc.

     9,428,571   

Morgan Stanley & Co., LLC

     5,142,857   

Natixis Securities Americas LLC

     5,142,857   

PNC Capital Markets LLC

     5,142,857   

RB International Markets (USA) LLC

     5,142,857   

SMBC Nikko Capital Markets Limited

     5,142,857   

Sun Trust Robinson Humphrey, Inc.

     5,142,857   

TD Securities (USA) LLC

     5,142,857   

U.S. Bancorp Investments, Inc.

     6,285,714      

 

 

 

Total

   $ 300,000,000      

 

 

 

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SCHEDULE II

 

Subsidiary

  

Jurisdiction of

Organization

  

Equity Holder and % Held by Each

Cheyenne Logistics LLC

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

El Dorado Logistics LLC

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

HEP Fin-Tex/Trust-River, L.P.

   Texas   

Holly Energy Partners—Operating, L.P. (99.999% limited partner)

 

HEP Pipeline GP, L.L.C. (0.001% general partner)

HEP Logistics GP, L.L.C.

   Delaware    Holly Energy Partners, L.P. (100%)

HEP Mountain Home, L.L.C.

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

HEP Navajo Southern, L.P.

   Delaware   

Holly Energy Partners—Operating, L.P. (99.999% limited partner)

 

HEP Pipeline GP, L.L.C. (0.001% general partner)

HEP Pipeline, L.L.C.

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

HEP Pipeline Assets, Limited Partnership

   Delaware   

Holly Energy Partners—Operating, L.P. (99.999% limited partner)

 

HEP Pipeline GP, L.L.C. (0.001% general partner)

HEP Pipeline GP, L.L.C.

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

HEP Refining, L.L.C.

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

HEP Refining Assets, L.P.

   Delaware   

Holly Energy Partners—Operating, L.P. (99.999% limited partner)

 

HEP Refining GP, L.L.C. (0.001% general partner)

HEP Refining GP, L.L.C.

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

HEP SLC, LLC

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

HEP Tulsa LLC

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

HEP Woods Cross, L.L.C.

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

Holly Energy Storage-Lovington LLC

   Delaware    HEP Refining, L.L.C. (100%)

Holly Energy Storage-Tulsa LLC

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

Holly Energy Finance Corp.

   Delaware    Holly Energy Partners, L.P. (100%)

Holly Energy Partners—Operating, L.P.

   Delaware   

Holly Energy Partners, L.P. (99.999% limited partner)

 

HEP Logistics GP, L.L.C. (0.001% general partner)

Lovington-Artesia, L.L.C.

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

Roadrunner Pipeline, L.L.C.

   Delaware    Holly Energy Partners—Operating, L.P. (100%)

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ANNEX I

 

1. List each document provided as an amendment or supplement to the Preliminary
Offering Memorandum

 

2. Term sheet containing the terms of the securities, substantially in the form
of Exhibit A.

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ANNEX II(b)

FORM OF OPINION OF COUNSEL TO THE ISSUERS

See attached

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ANNEX II(c)

FORM OF OPINION OF GENERAL COUNSEL FOR THE ISSUERS

General Counsel Opinion

See attached

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EXHIBIT A

HOLLY ENERGY PARTNERS, L.P.

HOLLY ENERGY FINANCE CORP.

Pricing Term Sheet

See attached