Exhibit 10.1

HOLLY ENERGY PARTNERS, L.P.

HOLLY ENERGY FINANCE CORP.

$400,000,000 6.000% Senior Notes due 2024

 

 

Purchase Agreement

July 13, 2016

New York, New York

Citigroup Global Markets Inc.

      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 Guarantors (defined herein) agree with you as
follows:

1. Issuance of Notes. The Issuers propose to issue and sell to Citigroup Global
Markets Inc., (the “Representative”) and the other initial purchasers listed on
Schedule I hereto (together with the Representative, the “Initial Purchasers”)
$400,000,000 in aggregate principal amount of 6.000% Senior Notes due 2024 (the
“Notes”). The Issuers’ obligations under the Notes and the Indenture (as defined
below) will be, jointly and severally, unconditionally guaranteed (the
“Guarantees” and, together with the 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 July 12, 2016 (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”,
“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

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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”).

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

For the avoidance of doubt, references in this Agreement to the “Subsidiaries”
(as defined below) shall be deemed to include Finance Corp. and the Guarantors.

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 Notes set forth
opposite its name on Schedule I attached hereto. The purchase price for the
Securities shall be 98.50% of their principal amount.

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 July 19, 2016 (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 (“DTC”) 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(j) 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 the name of
Cede & Co., as DTC’s nominee, and having an aggregate principal amount
corresponding to the aggregate principal amount of the Notes.

4. Agreements of the Issuers and Guarantors. Each of the Issuers and Guarantors,
jointly and severally, covenants and agrees 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

 

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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(p), 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.

(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 or limited partnership 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.

 

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(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 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 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.

(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, in each case, during the one year period following the Closing Date,
resell any of the Securities that have been reacquired by any of them, other
than pursuant to an effective registration statement under the Act.

(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.

 

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(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 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.

(o) 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.

(p) 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 referring to any Issuer Written Communication (as defined below),
the Partnership will furnish to the Representative 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 Representative reasonably objects, or any amendment or supplement
thereto prepared in accordance with Section 4(b).

(q) 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.

(r) 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.

(s) 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
Representative, 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.

 

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(t) The Issuers will, for a period of twelve months following the Execution
Time, furnish to the Representative all reports or other communications
(financial or other) generally made available to the Partnership’s unitholders,
and deliver such reports and communications to the Representative as soon as
they are available, unless such documents are furnished to or filed with the
Securities and Exchange Commission (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 Representative 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.

(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(p). 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”).

 

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(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) 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 (with
regard to the Partnership and its Subsidiaries taken as a whole) 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 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.

(v) Holly Energy Partners—Operating, L.P., a Delaware limited partnership (the
“Operating Partnership”) 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 (as
defined below), 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 such properties, 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.

(vi) Each of the Issuers and each Subsidiary (as such term is defined below)
(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. A “Material Adverse
Effect” means a material adverse effect on the business, condition (financial or
other), result of operations, properties or prospects of the Partnership and the
Subsidiaries, taken as a whole.

 

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(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. 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.

(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).

 

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(xiii) The consolidated capitalization of the Partnership as of March 31, 2016,
is, on an adjusted basis, 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 authorized and
validly 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 Partnership free and clear of all liens (other than
transfer restrictions imposed by the Act, any applicable joint venture
agreements for non-wholly-owned Subsidiaries, 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
as of the date hereof (the “Credit Agreement”), among the Operating Partnership,
the Partnership and 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.

(xiv) Other than as set forth on Schedule II, the Issuers, the Guarantors and
the Subsidiaries 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. 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.

(xv) This Agreement has been duly authorized, executed and delivered by each
Issuer, the General Partner, GP L.L.C. and each Guarantor and conforms in all
material respects to the description thereof contained in the Offering
Memorandum. Each Issuer and each Guarantor has all requisite corporate,
partnership or limited liability company power and authority to execute and
deliver each of the Note Documents, to consummate the transactions contemplated
hereby and thereby, to issue, sell and deliver the Notes or the Guarantees (as
applicable) and to perform its obligations under this Agreement and the other
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 L.L.C., the Operating
Partnership, OLP GP, the Guarantors 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 and by the other Note Documents, shall have been validly taken.

(xvi) 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

 

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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.

(xvii) 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.

(xviii) 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.

(xix) None of the Issuers 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 and the Guarantors, 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 respective 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.

(xx) The execution, delivery and performance of this Agreement and the other
Note Documents and the consummation of the transactions contemplated hereby and
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.

 

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(xxi) 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 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 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.

(xxii) The public accountants whose reports appear or are incorporated by
reference in the Offering Memorandum are independent public accountants with
respect to the Partnership within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public Accountants
and as required by the Public Company Accounting Oversight Board (the “PCAOB”).
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,
except that the interim financial statements do not include full footnote
disclosure. The financial information set forth under the captions “Summary –
Summary Historical Financial and Operating Data” and “Selected Financial Data”
included in or incorporated by reference in the Offering Memorandum has been
prepared on a basis consistent with that of the audited and unaudited financial
statements from which it is derived.

(xxiii) 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) except
for the Partnership’s regular distribution of $0.575 per unit, announced on
April 22, 2016 and payable on May 13, 2016 to holders of record of the
Partnership’s common units on May 2, 2016, 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 have been prepared in
accordance with the Commission’s rules and guidelines applicable thereto.

(xxiv) 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 such Issuer or Subsidiary, as the case may be,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect and, to the best knowledge of the Issuers and the
Guarantors, no such proceedings are threatened.

 

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(xxv) No labor dispute with the employees of the Issuers or any Subsidiary
exists or, to the knowledge of the Issuers and the Guarantors, is imminent and
the Issuers are not aware of any existing or imminent labor disturbance by the
employees of any of their or the Subsidiaries’ principal suppliers, contractors
or customers, in each case, that is reasonably likely to result in a Material
Adverse Effect.

(xxvi) Except as disclosed in the Offering Memorandum, the Partnership and its
Subsidiaries (i) 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”), (ii) 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, (iii) are in
compliance with the terms and conditions of any such Permits, and (iv) 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 (v) 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.

(xxvii) 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.

(xxviii) Each of the Issuers and the Subsidiaries has 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 (exclusive
of any amendment or supplement thereto) 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 has 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

 

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(exclusive of any amendment or supplement thereto); and except as described in
the Offering Memorandum, none of the Permits contains any restriction that is
materially burdensome to the Partnership and the Subsidiaries, taken as a whole.

(xxix) The Operating Partnership and the other 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
Partnership and its 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 Partnership and its
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 Partnership and its
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 Partnership and its
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
Partnership and its Subsidiaries, taken as a whole.

(xxx) 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.

(xxxi) There is and has been no failure on the part of the Partnership or any
member, officer or director of the Partnership, the General Partner or GP
L.L.C., in their capacities as such, to comply in all material respects 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 relating to loans and Sections 302 and 906 relating to
certifications.

(xxxii) None of the Partnership or 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 or a sanction for
violation by such persons of (i) the Foreign Corrupt Practices Act of 1977, as
amended, or the rules or 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, (ii)

 

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the U.K. Bribery Act 2010, as amended, or the rules or regulations thereunder
(together with the FCPA, the “Anti-Bribery Laws”) or (iii) any similar law of
any other relevant jurisdiction or the rules or regulations thereunder; the
Partnership, the Subsidiaries and, to the knowledge of the Partnership, their
affiliates, have conducted their businesses in compliance with the Anti-Bribery
Laws and similar laws of any other relevant jurisdiction and the rules and
regulations thereunder, and have instituted and maintain policies and procedures
designed to ensure, and which are reasonably expected to continue to ensure,
continued compliance therewith; and no part of the proceeds from the sale of the
Securities will be used, directly or indirectly, in violation of the
Anti-Bribery Laws or any similar law of any other relevant jurisdiction, or the
rules or regulations thereunder.

(xxxiii) 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.

(xxxiv) 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 (i) is, or is controlled or 50% or
more owned by or is acting on behalf of, an individual or entity that is
currently subject to any sanctions administered or enforced by the United States
(including any administered or enforced by the Office of Foreign Assets Control
of the U.S. Treasury Department, the U.S. Department of State, or the Bureau of
Industry and Security of the U.S. Department of Commerce) or other relevant
sanctions authority (collectively, “Sanctions” and such persons, “Sanctioned
Persons”), (ii) is located, organized or resident in a country or territory that
is, or whose government is, the subject of Sanctions that broadly prohibit
dealings with that country or territory (collectively, “Sanctioned Countries”
and each a “Sanctioned Country”) or (iii) will 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 Sanctioned Person, or in any
other manner that would result in a violation of any Sanctions by, or could
result in the imposition of Sanctions against, any individual or entity
(including any individual or entity participating in the offering, whether as
underwriter, advisor, investor or otherwise).

(xxxv) Except as has been disclosed to the Initial Purchasers or is not material
to the analysis under any Sanctions, neither the Partnership nor any of the
Subsidiaries has engaged in any dealings or transactions with or for the benefit
of a Sanctioned Person, or with or in a Sanctioned Country, in the preceding 3
years, nor does the Partnership or any of the Subsidiaries have any plans to
increase its dealings or transactions with or for the benefit of Sanctioned
Persons, or with or in Sanctioned Countries.

(xxxvi) The statements set forth in the Offering Memorandum under the caption
“Description of Notes”, insofar as they purport to constitute a summary of the
terms of the Notes, under the caption “Certain Material U.S. Federal Income Tax
Considerations”, and under the caption “Plan of Distribution”, insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Partnership by or on behalf of any Initial Purchaser through the Representative
expressly for use therein.

 

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(xxxvii) 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.

(xxxviii) The Partnership and the Subsidiaries maintain a system of internal
control over financial reporting (as such term is defined in Rule 13(a)-15(f)
under the Exchange Act) that complies with the requirements of the Exchange Act
and has been designed by the Partnership’s principal executive officer and
principal financial officer, or under their supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles and that 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 is prepared in accordance with the Commission’s rules and
guidelines applicable thereto. The Partnership’s internal control over financial
reporting is effective to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and the
Partnership is not aware of any material weaknesses in its internal controls
over financial reporting.

(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) The Partnership maintains disclosure controls and procedures (as such term
is defined in Rule 13a-15(e) under the Exchange Act) that comply with the
requirements of the Exchange Act; such disclosure controls and procedures have
been 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 by others within those entities; and
such disclosure controls and procedures are effective.

(xli) 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 Partnership and the
Subsidiaries. Neither the Partnership nor any of 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 Closing Date.

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

(xliii) 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.

 

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(xliv) No Subsidiary is currently prohibited, directly or indirectly, from
paying any dividends to the Partnership, from making any other distribution on
such Subsidiary’s capital stock (or other ownership interests, as the case may
be), 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, except as described in or
contemplated in the Offering Memorandum.

(xlv) 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.

(xlvi) 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.

(xlvii) 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 their
affiliates has entered into, or will enter into, any contractual arrangement
with respect to the distribution of the Securities except for this Agreement.

(xlviii) 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.

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.

 

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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 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.”

 

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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 Representative 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.

(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 Representative 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 Final 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

 

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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.

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.

 

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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.

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 Financial Officer and Treasurer 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 in
Section 3(a)(62) of the Exchange 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;

 

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(d) The Initial Purchasers shall have received on the Closing Date opinions
dated the Closing Date, addressed to the Initial Purchasers, of (i) Vinson &
Elkins 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(a) and Annex II(b) 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 Representative. 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) 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 Representative 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 3 business days prior to the
Closing Date, and otherwise in form and substance satisfactory to the
Representative and counsel to the Initial Purchasers;

(h) (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 Final 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 Final
Offering Memorandum (exclusive of any amendment or supplement thereto), and
(ii) since the respective dates as of which information is given in the Final
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 Final Offering Memorandum (exclusive of
any amendment or supplement thereto), 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 Securities on the terms and in the manner contemplated in the
Final Offering Memorandum (exclusive of any amendment or supplement thereto);

(i) 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

 

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(j) 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,
except to the extent set forth in Section 11(d) hereof.

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), that (a) the statements relating to stabilization transactions
and penalty bids set forth in the ninth and tenth paragraphs, and the fourth and
fifth sentences of the eighth paragraph, each under “Plan of Distribution” in
the Preliminary Offering Memorandum and the Final Offering Memorandum and
(b) the name and contact information of the Initial Purchasers in the
Preliminary Offering Memorandum and the Final Offering Memorandum, constitute
the only information furnished in writing by or on 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 made by or on behalf of the Initial Purchasers or any controlling
person thereof or by or on behalf of the Issuers, the Guarantors or any
controlling person thereof, and shall survive delivery of and payment for the
Notes to and by the Initial Purchasers. The agreements contained in
Sections 4(f), 6, 7, 9 and 11(d), and in Sections 13 through 19 shall survive
the termination of this Agreement, including any termination pursuant to
Sections 8, 11 or 12.

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 NYSE MKT LLC or the Nasdaq Global 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

 

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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 Representative’s 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 Representative’s 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 13 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. Default by an Initial Purchaser. 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 Notes 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 Notes which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase shall exceed 10%
of the aggregate principal amount of Notes 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 12, the Closing Date shall be postponed for such
period, not exceeding seven Business Days, as the Representative 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., as the
Representative, 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 Representative in care of Citigroup Global Markets Inc. at 388
Greenwich Street, New York, New York 10013, Facsimile: (212) 816-7912,
Attention: General Counsel; 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, (fax: 214-237-3051), Attention: Stephen D. Wise,
Vice President and Treasurer, with a copy for information purposes only to
Vinson & Elkins LLP, Trammell Crow Center, 2001 Ross Avenue, Suite 2700, Dallas,
Texas 75201-2975, Attention: Alan Bogdanow, Esq.

 

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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.

15. CONSTRUCTION; GOVERNING LAW. 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 competent subject
matter jurisdiction 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

 

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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, ISSUERS: 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/ MARK A. PLAKE

      Mark A. Plake       President HOLLY ENERGY FINANCE CORP. By:  

/S/ MARK A. PLAKE

  Mark A. Plake   President

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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GUARANTORS: EL DORADO OPERATING LLC, a Delaware limited liability company HEP
CASPER SLC LLC, a Delaware limited liability company HEP EL DORADO LLC, a
Delaware limited liability company HEP LOGISTICS GP, L.L.C., a Delaware limited
liability company HOLLY ENERGY PARTNERS-OPERATING, L.P., a Delaware limited
partnership HOLLY ENERGY STORAGE-LOVINGTON LLC, a Delaware limited liability
company CHEYENNE LOGISTICS LLC, a Delaware limited liability company EL DORADO
LOGISTICS LLC, a Delaware limited liability company EL DORADO OSAGE LLC, a
Delaware limited liability company HEP PIPELINE GP, L.L.C., a Delaware limited
liability company HEP REFINING GP, L.L.C., a Delaware limited liability company
HEP REFINING, L.L.C., a Delaware limited liability company HEP TULSA LLC, a
Delaware limited liability company LOVINGTON-ARTESIA, L.L.C., a Delaware limited
liability company ROADRUNNER PIPELINE, L.L.C., a Delaware limited liability
company

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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HEP CHEYENNE LLC, a Delaware limited liability company HEP SLC, LLC, a Delaware
limited liability company HEP UNEV HOLDINGS LLC, a Delaware limited liability
company HEP UNEV PIPELINE LLC, a Delaware limited liability company By:  

/S/ MARK A. PLAKE

  Mark A. Plake   President

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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HEP MOUNTAIN HOME, L.L.C., a Delaware limited liability company HEP PIPELINE,
L.L.C., a Delaware limited liability company HEP WOODS CROSS, L.L.C., a Delaware
limited liability company Each by:   Holly Energy Partners—Operating, L.P., a
Delaware limited partnership, its Sole Member   By:  

/S/ MARK A. PLAKE

    Mark A. Plake     President

[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, its General Partner     By:    

/S/ MARK A. PLAKE

        Mark A. Plake         President

[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, its General Partner     By:  
 

/S/ MARK A. PLAKE

        Mark A. Plake         President

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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Accepted as of the date hereof on its own behalf and as Representative of the
several Initial Purchasers listed on Schedule I: CITIGROUP GLOBAL MARKETS INC.
By:  

/s/ Scott Schlossel

Name/Title:   Scott Schlossel, Managing Director

[SIGNATURE PAGE TO PURCHASE AGREEMENT]

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SCHEDULE I

 

Initial Purchaser

   Principal Amount
of
Notes
to be Purchased  

Citigroup Global Markets Inc.

   $ 104,000,004   

Merrill Lynch, Pierce, Fenner & Smith

                      Incorporated

     46,000,000   

MUFG Securities Americas Inc.

     46,000,000   

Wells Fargo Securities, LLC

     46,000,000   

BBVA Securities Inc

     16,000,000   

Goldman, Sachs & Co.

     16,000,000   

PNC Capital Markets LLC

     16,000,000   

Scotia Capital (USA) Inc.

     16,000,000   

SunTrust Robinson Humphrey, Inc.

     16,000,000   

TD Securities (USA) LLC

     16,000,000   

U.S. Bancorp Investments, Inc

     16,000,000   

BNP Paribas Securities Corp.

     7,666,666   

Capital One Securities, Inc.

     7,666,666   

Citizens Capital Markets, Inc.

     7,666,666   

Comerica Securities, Inc.

     7,666,666   

Fifth Third Securities, Inc.

     7,666,666   

SMBC Nikko Securities America, Inc.

     7,666,666      

 

 

                       Total    $ 400,000,000      

 

 

 

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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%)

El Dorado Operating LLC

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

El Dorado Osage LLC

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

HEP Casper SLC LLC

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

HEP El Dorado LLC

   Delaware    El Dorado Logistics LLC (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 UNEV Holdings LLC

   Delaware   

Holly Energy Partners, L.P. (100% class A units)

HollyFrontier Holdings LLC (100% class B units)

HEP UNEV Pipeline LLC

   Delaware    HEP UNEV Holdings (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 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)

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Subsidiary

   Jurisdiction of
Organization   

Equity Holder and % Held by Each

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%)

HEP Cheyenne LLC

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

 

Joint Venture

  

Jurisdiction of
Organization

  

Equity Holder and % Held by Each

Frontier Aspen LLC

   Delaware   

HEP Casper SLC LLC (50%)

Plains Pipeline, L.P. (50%)

Osage Pipe Line Company, LLC

   Delaware   

El Dorado Osage LLC (50%)

CHS McPherson Refinery Inc. (50%)

SLC Pipeline LLC

   Delaware   

HEP SLC, LLC (25%)

Rocky Mountain Pipeline System LLC (75%)

UNEV Pipeline, LLC

   Delaware   

HEP UNEV Pipeline LLC (75%)

Sinclair Transportation Company (25%)

Cheyenne Pipeline LLC

   Texas   

HEP Cheyenne LLC (50%)

Rocky Mountain Pipeline System LLC (50%)

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ANNEX I

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

 

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

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ANNEX II(a)

FORM OF OPINION OF COUNSEL TO THE ISSUERS

The opinion of Vinson & Elkins LLP, counsel for the Issuers and the Guarantors
(capitalized terms not otherwise defined herein shall have the meanings provided
in the Purchase Agreement, to which this is an Annex), to be delivered pursuant
to Section 8(d) of the Purchase Agreement shall be to the effect that:

 

1. Each of the Partnership, the General Partner and the Partnership Guarantors
has been duly formed and is validly existing in good standing as a limited
partnership under the Delaware Revised Uniform Limited Partnership Act
(“DRULPA”) or the Texas Revised Limited Partnership Act (the “TRLPA”), as
applicable, with all necessary limited partnership power and authority to own or
lease its properties and to conduct its business, and, in the case of the
General Partner, to serve as the general partner of the Partnership, in each
case in all material respects as described in the Pricing Disclosure Package and
the Final Offering Memorandum. Each of the Partnership, the General Partner and
each of the Partnership Guarantors is duly registered or qualified as a foreign
limited partnership for the transaction of business under the laws of the
jurisdictions set forth beside its name on Annex A.

 

2. Each of GP LLC and the LLC Guarantors has been duly formed and is validly
existing in good standing as a limited liability company under the Delaware
Limited Liability Company Act (the “Delaware LLC Act”) with all necessary
limited liability company power and authority to own or lease its properties and
to conduct its business, and, in the case of OLP GP and GP LLC, to serve as the
general partner of the Operating Partnership and the General Partner,
respectively, in each case in all material respects as described in the Pricing
Disclosure Package and the Final Offering Memorandum. Each of GP LLC and the LLC
Guarantors is duly registered or qualified as a foreign limited liability
company for the transaction of business under the laws of the jurisdictions set
forth beside its name on Annex A.

 

3. Finance Corp. has been duly formed and is validly existing in good standing
as a corporation under the Delaware General Corporation Law (the “DGCL”) with
all necessary corporate power and authority to own or lease its properties and
to conduct its business in all material respects as described in the Pricing
Disclosure Package and the Final Offering Memorandum. Finance Corp. is duly
registered or qualified as a foreign corporation for the transaction of business
under the laws of the jurisdictions set forth beside its name on Annex A.

 

4. (i) The General Partner is the sole general partner of the Partnership,
owning of record, and to our knowledge, beneficially, a 2.0% general partner
interest in the Partnership; (ii) such general partner interest has been duly
authorized and validly issued in accordance with the Partnership Agreement;
(iii) such general partner interest is free and clear of all liens, claims,
charges, encumbrances, or security interests (“Liens”) that may be perfected
solely by the filing, with the Secretary of State of the State of Delaware
pursuant to the Uniform Commercial Code of the State of Delaware (the “Delaware
UCC”), of a financing statement, naming the General Partner as “debtor” and
properly describing such general partner interest; and (iv) to our knowledge,
such general partner interest is not subject to any other restrictions on
transfer, except (A) as may arise under applicable federal or state securities
laws (as to which we express no opinion) and (B) for restrictions created by or
arising under the DRULPA and restrictions on transferability set forth in the
Partnership Agreement.

 

5.

(i) OLP GP is the sole general partner of the Operating Partnership, owning of
record, and to our knowledge, beneficially, a 0.001% general partner interest in
the Operating Partnership; (ii) such

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  general partner interest has been duly authorized and validly issued in
accordance with the partnership agreement of the Operating Partnership (the
“Operating Partnership Agreement”); (iii) such general partner interest is free
and clear of all Liens that may be perfected solely by the filing, with the
Secretary of State of the State of Delaware pursuant to the Delaware UCC, of a
financing statement, naming OLP GP as “debtor” and properly describing such
general partner interest, except for those arising or created in connection with
the Second Amended and Restated Credit Agreement, dated as of February 14, 2011,
as amended by Amendment No. 1 to the Second Amended and Restated Credit
Agreement, dated as of February 3, 2012, Agreement and Amendment No. 2 to the
Second Amended and Restated Credit Agreement, dated as of June 29, 2012,
Amendment No. 3 to the Second Amended and Restated Credit Agreement, and
Amendment No. 1 to the Second Amended and Restated Security Agreement, dated as
of November 22, 2013, Agreement and Amendment No. 4 to the Second Amended and
Restated Credit Agreement, dated as of April 28, 2015, and Agreement and
Amendment No. 5 to the Second Amended and Restated Credit Agreement, dated as of
March 10, 2016 (as so amended, the “Credit Agreement”); and (iv) to our
knowledge, such general partner interest is not subject to any other
restrictions on transfer, except (A) as may arise under applicable federal or
state securities laws (as to which we express no opinion), (B) for restrictions
created by or arising under the DRULPA and restrictions on transferability set
forth in the Operating Partnership Agreement, and (C) for restrictions arising
in connection with the Credit Agreement.

 

6. (i) The Partnership owns, to our knowledge, 100% of the issued and
outstanding shares of capital stock of Finance Corp.; (ii) such capital stock
has been duly authorized and validly issued and is fully paid and nonassessable;
(iii) such capital stock, except as set forth in the Final Offering Memorandum,
is owned by the Partnership free and clear of all Liens that may be perfected
solely by the filing, with the Secretary of State of the State of Delaware
pursuant to the Delaware UCC, of a financing statement, naming the Partnership
as “debtor” and properly describing such capital stock, except for those arising
or created in connection with the Credit Agreement; (iv) such capital stock was
not issued in violation of any statutory preemptive or, to our knowledge, any
similar right; and (v) to our knowledge, such capital stock is not subject to
any other restrictions on transfer, except (A) as may arise under applicable
federal or state securities laws (as to which we express no opinion), (B) for
restrictions created by or arising under the Finance Corp. Organizational
Documents, and (C) for restrictions arising in connection with the Credit
Agreement.

 

7. (i) The Partnership is the sole limited partner of the Operating Partnership,
owning of record, and to our knowledge, beneficially, a 99.999% limited partner
interest in the Operating Partnership; (ii) such limited partner interest has
been duly authorized and validly issued in accordance with the Operating
Partnership Agreement and is fully paid (to the extent required under the
Operating Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by Sections 17-607 and 17-804 of the DRULPA);
(iii) such limited partner interest is free and clear of all Liens that may be
perfected solely by the filing, with the Secretary of State of the State of
Delaware pursuant to the Delaware UCC, of a financing statement, naming the
Partnership as “debtor” and properly describing such limited partner interest,
except for those arising or created in connection with the Credit Agreement; and
(iv) to our knowledge, such limited partner interest is not subject to any other
restrictions on transfer, except (A) as may arise under applicable federal or
state securities laws (as to which we express no opinion), (B) for restrictions
created by or arising under the DRULPA and restrictions on transferability set
forth in the Operating Partnership Agreement and (C) for restrictions arising in
connection with the Credit Agreement.

 

8.

(i) GP LLC is the sole general partner of the General Partner, owning of record,
and to our knowledge, beneficially, a 0.001% general partner interest in the
General Partner; (ii) such general partner interest has been duly authorized and
validly issued in accordance with the partnership agreement of the General
Partner (the “General Partner Partnership Agreement”); (iii) such general

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  partner interest is free and clear of all Liens that may be perfected solely
by the filing, with the Secretary of State of the State of Delaware pursuant to
the Delaware UCC, of a financing statement, naming GP LLC as “debtor” and
properly describing such general partner interest; and (iv) to our knowledge,
such general partner interest is not subject to any other restrictions on
transfer, except (A) as may arise under applicable federal or state securities
laws (as to which we express no opinion) and (B) for restrictions created by or
arising under the DRULPA and restrictions on transferability set forth in the
General Partner Partnership Agreement.

 

9. (i) Navajo Pipeline is the sole limited partner of the General Partner,
owning of record, and to our knowledge, beneficially, a 99.999% limited partner
interest in the General Partner; (ii) such limited partner interest has been
duly authorized and validly issued in accordance with the General Partner
Partnership Agreement and is fully paid (to the extent required under the
General Partner Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by Sections 17-607 and 17-804 of the DRULPA);
(iii) such limited partner interest is free and clear of all Liens that may be
perfected solely by the filing, with the Secretary of State of the State of
Delaware pursuant to the Delaware UCC, of a financing statement, naming Navajo
Pipeline as “debtor” and properly describing such limited partner interest; and
(iv) to our knowledge, such limited partner interest is not subject to any other
restrictions on transfer, except (A) as may arise under applicable federal or
state securities laws (as to which we express no opinion) and (B) for
restrictions created by or arising under the DRULPA and restrictions on
transferability set forth in the General Partner Partnership Agreement.

 

10. (i) Navajo Pipeline is the sole member of GP LLC, owning of record, and to
our knowledge, beneficially, a 100% membership interest in GP LLC; (ii) such
membership interest has been duly authorized and validly issued in accordance
with the GP LLC Agreement and is fully paid (to the extent required under the GP
LLC Agreement) and nonassessable (except as such nonassessability may be
affected by Sections 18-607 and 18-804 of the Delaware LLC Act); (iii) such
membership interest is free and clear of all Liens that may be perfected solely
by the filing, with the Secretary of State of the State of Delaware pursuant to
the Delaware UCC, of a financing statement, naming Navajo Pipeline as “debtor”
and properly describing such membership interest; and (iv) to our knowledge,
such membership interest is not subject to any other restrictions on transfer,
except (A) as may arise under applicable federal or state securities laws (as to
which we express no opinion) and (B) for restrictions created by or arising
under the Delaware LLC Act and restrictions on transferability set forth in the
GP LLC Agreement.

 

11. (i) The Operating Partnership is the sole member of each of the LLC
Guarantors, excluding OLP GP, UNEV Holdings, UNEV Pipeline, Storage-Lovington
and HEP El Dorado (the “Excluded LLCs”), owning of record, and to our knowledge,
beneficially, a 100% membership interest in each of the LLC Guarantors,
excluding the Excluded LLCs; (ii) such membership interests have been duly
authorized and validly issued in accordance with the limited liability company
agreements of each of such LLC Guarantors (the “LLC Guarantors Agreements”) and
are fully paid (to the extent required under the LLC Guarantors Agreements) and
nonassessable (except as such nonassessability may be affected by Sections
18-607 and 18-804 of the Delaware LLC Act); (iii) such membership interests are
free and clear of all Liens that may be perfected solely by the filing, with the
Secretary of State of the State of Delaware pursuant to the Delaware UCC, of a
financing statement, naming the Operating Partnership as “debtor” and properly
describing such membership interest, except for those arising or created in
connection with the Credit Agreement; and (iv) to our knowledge, such membership
interests are not subject to any other restrictions on transfer, except (A) as
may arise under applicable federal or state securities laws (as to which we
express no opinion), (B) for restrictions created by or arising under the
Delaware LLC Act and restrictions on transferability set forth in the LLC
Guarantors Agreements and (C) for restrictions arising in connection with the
Credit Agreement.

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12. (i) Pipeline GP is the sole general partner of each of Pipeline Assets LP
and Navajo Southern, owning of record, and to our knowledge, beneficially, a
.001% general partner interest in each of Pipeline Assets LP and Navajo
Southern, respectively, (ii) such general partner interests have been duly
authorized and validly issued in accordance with the partnership agreements of
Pipeline Assets LP and Navajo Southern; (iii) such general partner interests are
free and clear of all Liens that may be perfected solely by the filing, with the
Secretary of State of the State of Delaware pursuant to the Delaware UCC, of a
financing statement, naming Pipeline GP as “debtor” and properly describing such
general partner interests, except for those arising or created in connection
with the Credit Agreement; and (iv) to our knowledge, such general partner
interests are not subject to any other restrictions on transfer, except (A) as
may arise under applicable federal or state securities laws (as to which we
express no opinion), (B) for restrictions created by or arising under the DRULPA
and restrictions on transferability set forth in the respective partnership
agreements of Pipeline Assets LP and Navajo Southern and (C) for restrictions
arising in connection with the Credit Agreement.

 

13. (i) Refining GP is the sole general partner of Refining Assets LP, owning of
record, and to our knowledge, beneficially, a .001% general partner interest in
Refining Assets LP; (ii) such general partner interest has been duly authorized
and validly issued in accordance with the partnership agreements of Refining
Assets LP; (iii) such general partner interest is free and clear of all Liens
that may be perfected solely by the filing, with the Secretary of State of the
State of Delaware pursuant to the Delaware UCC, of a financing statement, naming
Refining GP as “debtor” and properly describing such general partner interest,
except for those arising or created in connection with the Credit Agreement; and
(iv) to our knowledge, such general partner interest is not subject to any other
restrictions on transfer, except (A) as may arise under applicable federal or
state securities laws (as to which we express no opinion), (B) for restrictions
created by or arising under the DRULPA and restrictions on transferability set
forth in the partnership agreement of Refining Assets LP and (C) for
restrictions arising in connection with the Credit Agreement.

 

14. (i) Pipeline GP is the sole general partner of Fin-Tex, owning of record,
and to our knowledge, beneficially, a .001% general partner interest in Fin-Tex;
(ii) such general partner interest has been duly authorized and validly issued
in accordance with the partnership agreement of Fin-Tex; (iii) such general
partner interest is free and clear of all Liens that may be perfected solely by
the filing, with the Secretary of State of the State of Texas pursuant to the
Uniform Commercial Code of the State of Texas (the “Texas UCC”), of a financing
statement, naming Pipeline GP as “debtor” and properly describing such general
partner interest, except for those arising or created in connection with the
Credit Agreement; and (iv) to our knowledge, such general partner interest is
not subject to any other restrictions on transfer, except (A) as may arise under
applicable federal or state securities laws (as to which we express no opinion),
(B) for restrictions created by or arising under the TRLPA and restrictions on
transferability set forth in the partnership agreement of Fin-Tex and (C) for
restrictions arising in connection with the Credit Agreement.

 

15.

(i) The Operating Partnership is the sole limited partner of each of Pipeline
Assets LP, Navajo Southern and Refining Assets LP, owning of record, and to our
knowledge, beneficially, a 99.999% limited partner interest in each of Pipeline
Assets LP, Navajo Southern, and Refining Assets LP; (ii) such limited partner
interests have been duly authorized and validly issued in accordance with the
partnership agreements of Pipeline Assets LP, Navajo Southern and Refining
Assets LP, respectively, and are fully paid (to the extent required under each
such partnership agreement) and nonassessable (except as such nonassessability
may be affected by Sections 17-607 and 17-804 of the DRULPA); (iii) each such
limited partner interest is free and clear of all Liens that may be perfected
solely by the filing, with the Secretary of State of the State of Delaware
pursuant to the Delaware UCC, of a financing statement, naming the Operating
Partnership as “debtor” and properly describing such limited partner interest,
except for those arising or created in connection with the Credit Agreement;

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  and (iv) to our knowledge, such limited partner interest is not subject to any
other restrictions on transfer, except (A) as may arise under applicable federal
or state securities laws (as to which we express no opinion), (B) for
restrictions created by or arising under the DRULPA and restrictions on
transferability set forth in the partnership agreements of Pipeline Assets LP,
Navajo Southern and Refining Assets LP, as applicable and (C) for restrictions
arising in connection with the Credit Agreement.

 

16. (i) The Operating Partnership is the sole limited partner of Fin-Tex, owning
of record, and to our knowledge, beneficially, a 99.999% limited partner
interest in Fin-Tex; (ii) such limited partner interest has been duly authorized
and validly issued in accordance with the partnership agreement of Fin-Tex and
is fully paid (to the extent required under the partnership agreement of
Fin-Tex) and nonassessable (except as such nonassessability may be affected by
Sections 6.07 and 8.05 of the TRLPA); (iii) such limited partner interest is
free and clear of all Liens that may be perfected solely by the filing, with the
Secretary of State of the State of Texas pursuant to the Texas UCC, of a
financing statement, naming the Operating Partnership as “debtor” and properly
describing such limited partner interest, except for those arising or created in
connection with the Credit Agreement; and (iv) to our knowledge, such limited
partner interest is not subject to any other restrictions on transfer, except
(A) as may arise under applicable federal or state securities laws (as to which
we express no opinion), (B) for restrictions created by or arising under the
TRLPA and restrictions on transferability set forth in the partnership agreement
of Fin-Tex and (C) for restrictions arising in connection with the Credit
Agreement.

 

17. (i) The Partnership is the sole Class A member of UNEV Holdings, owning of
record, and to our knowledge, beneficially, all of the Class A units in UNEV;
(ii) such membership interests have been duly authorized and validly issued in
accordance with the limited liability company agreement of UNEV Holdings (as
amended, the “UNEV Holdings LLC Agreement”) and are fully paid (to the extent
required under the UNEV LLC Agreement) and nonassessable (except as such
nonassessability may be affected by Sections 18-607 and 18-804 of the Delaware
LLC Act); (iii) such membership interests are free and clear of all Liens that
may be perfected solely by the filing, with the Secretary of State of the State
of Delaware pursuant to the Delaware UCC, of a financing statement, naming the
Partnership as “debtor” and properly describing such membership interest, except
for those arising or created in connection with the Credit Agreement; and
(iv) to our knowledge, such membership interests are not subject to any other
restrictions on transfer, except (A) as may arise under applicable federal or
state securities laws (as to which we express no opinion), (B) for restrictions
created by or arising under the DRULPA and restrictions on transferability set
forth in the UNEV Holdings LLC Agreement and (C) for restrictions arising in
connection with the Credit Agreement.

 

18. (i) HollyFrontier Holdings is the sole Class B member of UNEV Holdings,
owning of record, and to our knowledge, beneficially, all of the Class B units
in UNEV; (ii) such membership interests have been duly authorized and validly
issued in accordance with the UNEV Holdings LLC Agreement and are fully paid (to
the extent required under the UNEV LLC Agreement) and nonassessable (except as
such nonassessability may be affected by Sections 18-607 and 18-804 of the
Delaware LLC Act); (iii) such membership interests are free and clear of all
Liens that may be perfected solely by the filing, with the Secretary of State of
the State of Delaware pursuant to the Delaware UCC, of a financing statement,
naming HollyFrontier Holdings as “debtor” and properly describing such
membership interest; and (iv) to our knowledge, such membership interests are
not subject to any other restrictions on transfer, except (A) as may arise under
applicable federal or state securities laws (as to which we express no opinion)
and (B) for restrictions created by or arising under the DRULPA and restrictions
on transferability set forth in the UNEV Holdings LLC Agreement.

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19. (i) UNEV Holdings is the sole member of UNEV Pipeline, owning of record, and
to our knowledge, beneficially, a 100% membership interest in UNEV Pipeline;
(ii) such membership interest has been duly authorized and validly issued in
accordance with the limited liability company agreement of UNEV Pipeline (as
amended, the “UNEV Pipeline LLC Agreement”) and is fully paid (to the extent
required under the UNEV Pipeline LLC Agreement) and nonassessable (except as
such nonassessability may be affected by Sections 18-607 and 18-804 of the
Delaware LLC Act); (iii) such membership interest is free and clear of all Liens
that may be perfected solely by the filing, with the Secretary of State of the
State of Delaware pursuant to the Delaware UCC, of a financing statement, naming
UNEV Holdings as “debtor” and properly describing such membership interest,
except for those arising or created in connection with the Credit Agreement; and
(iv) to our knowledge, such membership interest is not subject to any other
restrictions on transfer, except (A) as may arise under applicable federal or
state securities laws (as to which we express no opinion), (B) for restrictions
created by or arising under the Delaware LLC Act and restrictions on
transferability set forth in the UNEV Pipeline LLC Agreement and (C) for
restrictions arising in connection with the Credit Agreement.

 

20. (i) HEP Refining is the sole member of Storage-Lovington, owning of record,
and to our knowledge, beneficially, a 100% membership interest in
Storage-Lovington; (ii) such membership interest has been duly authorized and
validly issued in accordance with the limited liability company agreement of
Storage-Lovington (as amended, the “Storage-Lovington LLC Agreement”) and is
fully paid (to the extent required under the Storage-Lovington LLC Agreement)
and nonassessable (except as such nonassessability may be affected by Sections
18-607 and 18-804 of the Delaware LLC Act); (iii) such membership interest is
free and clear of all Liens that may be perfected solely by the filing, with the
Secretary of State of the State of Delaware pursuant to the Delaware UCC, of a
financing statement, naming HEP Refining as “debtor” and properly describing
such membership interest, except for those arising or created in connection with
the Credit Agreement; and (iv) to our knowledge, such membership interest is not
subject to any other restrictions on transfer, except (A) as may arise under
applicable federal or state securities laws (as to which we express no opinion),
(B) for restrictions created by or arising under the Delaware LLC Act and
restrictions on transferability set forth in the Storage-Lovington LLC Agreement
and (C) for restrictions arising in connection with the Credit Agreement.

 

21. (i) El Dorado Logistics is the sole member of HEP El Dorado, owning of
record, and to our knowledge, beneficially, a 100% membership interest in HEP El
Dorado; (ii) such membership interest has been duly authorized and validly
issued in accordance with the limited liability company agreement of HEP El
Dorado (as amended, the “HEP El Dorado LLC Agreement”) and is fully paid (to the
extent required under the HEP El Dorado LLC Agreement) and nonassessable (except
as such nonassessability may be affected by Sections 18-607 and 18-804 of the
Delaware LLC Act); (iii) such membership interest is free and clear of all Liens
that may be perfected solely by the filing, with the Secretary of State of the
State of Delaware pursuant to the Delaware UCC, of a financing statement, naming
El Dorado Logistics as “debtor” and properly describing such membership
interest, except for those arising or created in connection with the Credit
Agreement; and (iv) to our knowledge, such membership interest is not subject to
any other restrictions on transfer, except (A) as may arise under applicable
federal or state securities laws (as to which we express no opinion), (B) for
restrictions created by or arising under the Delaware LLC Act and restrictions
on transferability set forth in the HEP El Dorado LLC Agreement and (C) for
restrictions arising in connection with the Credit Agreement.

 

22.

Each Issuer and each Guarantor has all requisite corporate, partnership, or
limited liability company power and authority (as applicable) to execute,
deliver, and perform all of its obligations under the Note Documents and to
consummate the transactions contemplated thereby and, without limitation,

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  each Issuer and Guarantor has all requisite corporate, partnership or limited
liability company power and authority (as applicable) to issue, sell and deliver
and perform its obligations under the Notes and the Guarantees.

 

23. The Purchase Agreement has been duly and validly authorized, executed, and
delivered by each Issuer and each Guarantor.

 

24. The Indenture has been duly and validly authorized, executed and delivered
by the Issuers and each Guarantor and (assuming the due authorization,
execution, and delivery thereof by the Trustee) is a legally binding and valid
obligation of the Issuers and the Guarantors, enforceable against each of them
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”).

 

25. The Notes have been duly and validly authorized for issuance and sale to the
Initial Purchasers by the Issuers, 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 the Purchase
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.

 

26. 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 the Purchase Agreement and the Indenture, the
Guarantees will be legally binding and valid obligations of the Guarantors,
enforceable against each of them in accordance with their terms, except as the
enforcement thereof may be limited by the Bankruptcy Exceptions.

 

27. 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
Guarantor, (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 filed by the Partnership as an exhibit to its
Annual Report on Form 10-K for the year ended December 31, 2015, its Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2016, or any
Current Report on Form 8-K filed during 2016 and prior to the delivery of this
opinion and to which either Issuer or any Guarantor is a party or by which any
of them or any of their respective properties may be bound or (C) violate the
DRULPA, the Delaware LLC Act, the DGCL, the TRLPA, or other laws of the State of
Texas, the laws of the State of New York, or United States federal law (other
than federal and state securities laws or “Blue Sky” laws, as to which we
express no opinion (except as specifically set forth in paragraphs (31) and
(32) below)), which breach or default in the cases of clauses (B) or (C) would
reasonably be expected to have a Material Adverse Effect.

 

28.

No consent, approval, authorization, order, registration, filing, or
qualification (“Consent”) under the DRULPA, the Delaware LLC Act, the DGCL, the
TRLPA or any other Texas law, New York law or federal law is required for the
offering, issuance and sale by the Issuers of the Notes; the execution,
delivery, and performance of the Purchase Agreement and the other Note Documents
by the Issuers and the Guarantors or the consummation by the Issuers and the
Guarantors of the transactions

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  contemplated thereby, except (i) for such Consents required under the
Securities Act, the Exchange Act, and state securities or “Blue Sky” laws, as to
which we express no opinion, (ii) for such Consents that have been obtained or
made, (iii) for such Consents that, if not obtained, would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect; or
(iv) as disclosed in the Pricing Disclosure Package and the Final Offering
Memorandum.

 

29. The statements set forth in the Pricing Disclosure Package and the Final
Offering Memorandum under the caption “Description of Notes,” insofar as they
purport to constitute a summary of the terms of the Notes, are accurate and
complete in all material respects.

 

30. Subject to the assumptions, qualifications and limitations set forth in the
discussion in the Pricing Disclosure Package and the Final Offering Memorandum
under the caption “Certain Material U.S. Federal Income Tax Considerations” (the
“Discussion”) and based on the accuracy of the facts set forth in the Pricing
Disclosure Package and the Final Offering Memorandum and the representations
made by the Partnership in the Purchase Agreement, the Discussion, insofar as it
purports to describe or summarize the United States federal income tax laws or
legal conclusions with respect thereto, is accurate and complete in all material
respects.

 

31. 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.

 

32. Assuming the accuracy of the representations of the Issuers, each Guarantor
and the Initial Purchasers in the Purchase Agreement and the due performance
thereof by all such parties, no registration of the Notes or the Guarantees
under the Securities Act and no qualification of the Indenture under the Trust
Indenture Act of 1939, as amended, is required for the purchase of the Notes by
you or the initial resale of the Notes by you, in each case, in the manner
contemplated by the Purchase Agreement and the Final Offering Memorandum.

In addition, such counsel shall state that they have participated in conferences
with officers and other representatives of the Issuers, the Guarantors, the
General Partner and GP LLC, representatives of Ernst & Young LLP, the current
independent registered public accounting firm of the Partnership, and
representatives of and counsel for the Initial Purchasers, at which the contents
of the Pricing Disclosure Package and the Final Offering Memorandum, and related
matters, were discussed. Although such counsel is not passing upon and do not
assume any responsibility for or express any opinion regarding, the accuracy,
completeness or fairness of the statements contained in the Pricing Disclosure
Package and the Final Offering Memorandum, except for those referred to in
paragraphs (29) and (30) above, based on such counsel’s participation described
above (relying with respect to factual matters to the extent such counsel deemed
appropriate upon statements by officers and other representatives of the
Issuers, the Guarantors, the General Partner, or GP LLC), no facts have come to
such counsel’s attention to cause such counsel to believe that any part of the
Pricing Disclosure Package, as of July 13, 2016, or the Final Offering
Memorandum, as of its date and as of the date of this letter, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided that such
counsel need express no view, belief, or comment with respect to the financial
statements and the other financial or accounting data included or incorporated
by reference in or omitted from the Pricing Disclosure Package or the Final
Offering Memorandum.

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ANNEX II(b)

FORM OF OPINION OF GENERAL COUNSEL FOR THE ISSUERS

General Counsel Opinion

The opinion of Denise C. McWatters, general counsel for the Issuers and the
Guarantors (capitalized terms not otherwise defined herein shall have the
meanings provided in the Purchase Agreement, to which this is an Annex), to be
delivered pursuant to Section 8(d) of the Purchase Agreement shall be to the
effect that:

1. to the knowledge of such counsel, none of the offering, issuance and sale by
the Issuers and the Guarantors of the Securities, the execution, delivery and
performance by each Issuer and each Guarantor of the Note Documents, or the
consummation of the transactions contemplated thereby constitutes or will
constitute a breach or violation of, or a default under (or an event which, with
notice or lapse of time or both, would constitute such a default), or require
consent or waiver under any agreement or lease or other instrument to which
either Issuer or any Guarantor is a party or by which any of their respective
properties may be bound, which breach, violation or default, or failure to
acquire consent or waiver would, if continued, reasonably be expected to have a
Material Adverse Effect (as defined in the Purchase Agreement), other than such
consents and waivers as have been obtained or will be obtained prior to the
Closing Date and which, on the Closing Date, will be in full force and effect;

2. to the knowledge of such counsel, none of the offering, issuance and sale by
the Issuers and the Guarantors of the Securities, the execution, delivery and
performance by each Issuer and each Guarantor of the Note Documents to which it
is a party, or the consummation of the transactions contemplated thereby
constitutes or will constitute a breach or violation of, or a default under (or
an event which, with notice or lapse of time or both, would constitute such a
default), or require consent or waiver under, any order, judgment, decree or
injunction of any federal, Texas or Delaware court or government agency or body
directed to either Issuer or any Guarantor or any of their respective properties
in a proceeding to which any of them or any such property is a party, which
breach, violation or default would reasonably be expected to have a Material
Adverse Effect;

3. to the knowledge of such counsel, neither Issuer nor any Guarantor is in
(i) violation of its certificate or agreement of limited partnership,
certificate of formation or limited liability company agreement, articles of
incorporation or bylaws or other organizational documents, or (ii) 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 in breach, default (or an event which, with
notice or lapse of time or both, would constitute such a default) or violation
in the performance of any obligation, agreement 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 violation or breach,
default or violation would, if continued, reasonably be expected to have a
Material Adverse Effect; and

4. to the knowledge of such counsel, there are no pending or threatened actions,
suits or proceedings against or affecting either Issuer or any Guarantor or any
of their respective properties that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

In rendering such opinion, such counsel may (A) rely in respect of matters of
fact upon information obtained from officers and employees of GP L.L.C., the
General Partner, the Partnership and the Subsidiaries and from public officials,
(B) assume that all documents submitted to her as originals are authentic, that
all copies submitted to her conform to the originals thereof, and that the
signatures on all

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documents examined by such counsel are genuine, (C) state that such counsel’s
opinion is limited to federal laws, the DRULPA, the Delaware LLC Act, the DGCL,
the TRLPA and the laws of the State of Texas and (D) state that such counsel
expresses no opinion with respect to state or local taxes or tax statutes.

Additionally, such counsel shall state that she (or an attorney in her
department who reports to her) has participated in conferences with officers and
other representatives of the Issuers, the Guarantors, the General Partner and GP
LLC, representatives of Ernst & Young LLP, the current independent registered
public accounting firm of the Partnership, and representatives of and counsel
for the Initial Purchasers, at which the contents of the Pricing Disclosure
Package and the Final Offering Memorandum, and related matters, were discussed.
Although such counsel is not passing upon and does not assume any responsibility
for or express any opinion regarding, the accuracy, completeness or fairness of
the statements contained in the Pricing Disclosure Package and the Final
Offering Memorandum, no facts have come to her attention to cause her to believe
that any part of the Pricing Disclosure Package, as of July 13, 2016, or the
Final Offering Memorandum, as of its date and as of the date of this letter,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided that such
counsel need express no view, belief, or comment with respect to the financial
statements and related schedules and the other financial or accounting data
included or incorporated by reference in or omitted from the Pricing Disclosure
Package or the Final Offering Memorandum.

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EXHIBIT A

HOLLY ENERGY PARTNERS, L.P.

HOLLY ENERGY FINANCE CORP.

Pricing Term Sheet

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Summary of Terms           Issuers:    Holly Energy Partners, L.P. and Holly
Energy Finance Corporation    Issue:    Senior Unsecured Notes    Distribution:
   144A/Reg. S (without registration rights)    Ratings(I):    B1 / BB (Moodys /
S&P)    Maturity:    August 1, 2024    Principal Amount:    $400,000,000    Net
Proceeds:    $393,100,000 (after initial purchaser discounts and expenses)   
Coupon:    6.000%    Yield:    6.000%    Spread:    469 b.p.   
vs. TSY 1.375% due 6/30/2023 Price at Issue:    100.000%   
Interest Payment Dates:    February 1 & August 1    1st Interest Payment Date:
   February 1, 2017    Call Schedule:   

Non-Callable until August 1, 2019 subject to makewhole

August 1, 2019                            104.500%

August 1, 2020                            103.000%

August 1, 2021                            101.500%

August 1, 2022 and thereafter     100.000%

   Equity Clawback:    35% at 106.000% prior to August 1, 2019    Change of
Control:    Investor put at 101%    Make Whole:    T+50 b.p.    Denominations:
  

Minimum denominations of $2,000 and higher

integral multiples of $1,000 in excess thereof

   Bookrunners:   

Citigroup, BofA Merrill Lynch, BBVA, MUFG, US Bancorp, Wells

Fargo Securities

   Senior Co-Managers:   

Goldman, Sachs & Co., PNC Capital Markets LLC, Scotiabank,

SunTrust Robinson Humphrey, TD Securities

   Co-Managers:   

BNP Paribas, Capital One Securities, Citizens Capital Markets, Inc.,

Comerica Securities, Fifth Third Securities, SMBC Nikko

   Trade Date:    July 13, 2016    Settlement Date (T + 4):    July 19, 2016,
which will be the fourth business day following the date of the pricing of the
notes. Under Rule 15c6-1 of the Exchange Act, trades in the secondary market
generally settle in three business days, unless the parties to any such trade
expressly agree otherwise. Accordingly, purchasers who wish to trade notes on
the date of pricing or the next succeeding business day will be required, by
virtue of the fact that the notes initially will settle in T+4, to specify
alternative settlement arrangements to prevent a failed settlement. Purchasers
of notes who wish to trade notes prior to settlement should consult their own
advisors.   

CUSIP / ISIN:

144A:

RegS:

  

435765 AG7 / US435765AG70

U4377T AD2 / USU4377TAD29

  

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Changes from Preliminary Memorandum

The aggregate principal amount of notes to be issued in the offering has been
increased from $300,000,000 to $400,000,000. As a result, all corresponding
references in the Company’s preliminary offering memorandum, dated July 12, 2016
(the “Preliminary Memorandum”), relating to these amounts will be adjusted
accordingly.

In addition, the Company expects to utilize the additional proceeds to repay
indebtedness under the Company’s revolving credit agreement. As a result, the
amount of indebtedness that would have been outstanding under the Company’s
revolving credit agreement as of March 31, 2016, on an as adjusted basis, has
been correspondingly decreased from $470,200,000 to $371,900,000.

(I) A securities rating is not a recommendation to buy, sell or hold securities
and should be evaluated independently of any other rating. The rating is subject
to revision or withdrawal at any time by the assigning rating organization.

 

 

These securities have not been registered under the Securities Act of 1933, as
amended, and may only be sold to qualified institutional buyers pursuant to Rule
144A or pursuant to another applicable exemption from registration.

The information in this term sheet supplements the (Preliminary Memorandum and
supercedes the information in the Preliminary Memorandum to the extent
inconsistent with the information in the Preliminary Memorandum. This term sheet
is qualified in its entirety by reference to the Preliminary Memorandum. Terms
used herein but not defined herein shall have the respective meanings as set
forth in the Preliminary Memorandum.

ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO
THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES
WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA
BLOOMBERG OR ANOTHER EMAIL SYSTEM.

A copy of the final offering memorandum covering Holly Energy Partners, L.P. and
Holly Energy Finance Corporation may be obtained by contacting Citi’s Prospectus
Department (1-800-831-9146).