Exhibit 10.14
AMENDED AND RESTATED
SECURITY AGREEMENT
     THIS AMENDED AND RESTATED SECURITY AGREEMENT dated as of August 27, 2007
(this “Security Agreement”) is by and among HOLLY ENERGY PARTNERS — OPERATING,
L.P., a Delaware limited partnership (“Borrower”), each subsidiary of the
Borrower party hereto (together with the Borrower, the “Grantors” and
individually, each a “Grantor”) and UNION BANK OF CALIFORNIA, N.A., a national
association, as Administrative Agent (the “Secured Party”) for the ratable
benefit of itself, the Banks (as defined below), the Issuing Banks (as defined
below), and the Swap Counterparties (as defined below) (together with the
Administrative Agent, the Issuing Banks, the Banks, individually a
“Beneficiary”, and collectively, the “Beneficiaries”).
RECITALS
     A. This Security Agreement is entered into in connection with that certain
Amended and Restated Credit Agreement dated as of August 27, 2007 (as it has
been or may be amended, supplemented or otherwise modified from time to time,
the “Credit Agreement”), among the Borrower, the banks party thereto from time
to time (individually, a “Bank” and collectively, the “Banks”), the Banks
issuing letters of credit thereunder from time to time (individually, an
“Issuing Bank” and collectively, the “Issuing Banks”) and Secured Party.
     B. This Security Agreement is intended as an amendment and restatement of
that certain Security Agreement dated as of July 13, 2004, among the Grantors,
the Banks, the Issuing Banks and Secured Party, as amended heretofore (as so
amended “Existing Security Agreement”).
     C. Each Grantor (other than the Borrower) is a Subsidiary of the Borrower
and will derive substantial direct and indirect benefit from (i) the
transactions contemplated by the Credit Agreement and the other Credit Documents
(as defined in the Credit Agreement) and (ii) the Interest Rate Contracts (as
defined in the Credit Agreement) entered into by the Borrower or any of its
Subsidiaries with a Bank or an Affiliate of a Bank (each such counterparty, a
“Swap Counterparty”).
     D. It is a requirement under the Credit Agreement that the Grantors shall
secure the due payment and performance of all Obligations (as defined in the
Credit Agreement) by entering into this Security Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged and
confessed, each Grantor hereby agrees with the Secured Party for the benefit of
the Beneficiaries (a) that the Existing Security Agreement is amended and
restated in its entirety and (b) further agrees as follows:
     Section 1. Definitions; Interpretation. (a) All capitalized terms not
otherwise defined in this Security Agreement that are defined in the Credit
Agreement shall have the

 

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meanings assigned to such terms by the Credit Agreement. Any terms used in this
Security Agreement that are defined in the UCC (as defined below) and not
otherwise defined herein or in the Credit Agreement, shall have the meanings
assigned to those terms by the UCC. All meanings to defined terms, unless
otherwise indicated, are to be equally applicable to both the singular and
plural forms of the terms defined. The following terms shall have the meanings
specified below:
“Accounts” means an “account” as defined in the UCC, including, without
limitation, all of any Grantor’s rights to payment for goods sold or leased,
services performed, or otherwise, whether now in existence or arising from time
to time hereafter, including, without limitation, rights arising under any of
the Contracts or evidenced by an account, note, contract, security agreement,
Chattel Paper (including, without limitation, tangible Chattel Paper and
electronic Chattel Paper), or other evidence of indebtedness or security,
together with all of the right, title and interest of any Grantor in and to
(i) all security pledged, assigned, hypothecated or granted to or held by any
Grantor to secure the foregoing, (ii) all of any Grantor’s right, title and
interest in and to any goods or services, the sale of which gave rise thereto,
(iii) all guarantees, endorsements and indemnifications on, or of, any of the
foregoing, (iv) all powers of attorney granted to any Grantor for the execution
of any evidence of indebtedness or security or other writing in connection
therewith, (v) all books, correspondence, credit files, records, ledger cards,
invoices, and other papers relating thereto, including without limitation all
similar information stored on a magnetic medium or other similar storage device
and other papers and documents in the possession or under the control of any
Grantor or any computer bureau from time to time acting for any Grantor,
(vi) all evidences of the filing of financing statements and other statements
granted to any Grantor and the registration of other instruments in connection
therewith and amendments thereto, notices to other creditors or secured parties,
and certificates from filing or other registration officers, (vii) all credit
information, reports and memoranda relating thereto, and (viii) all other
writings related in any way to the foregoing.
“Cash Collateral” means all amounts from time to time held in any checking,
savings, deposit or other account of such Grantor, including, if applicable, the
Cash Collateral Account, all monies, proceeds or sums due or to become due
therefrom or thereon and all documents (including, but not limited to passbooks,
certificates and receipts) evidencing all funds and investments held in such
accounts.
“Chattel Paper” has the meaning set forth in the UCC.
“Collateral” has the meaning set forth in Section 2 of this Security Agreement.
“Contracts” means all contracts to which any Grantor now is, or hereafter will
be, bound, or to which such Grantor is a party, beneficiary or assignee all
Insurance Contracts, and all exhibits, schedules and other attachments to such
contracts, as the same may be amended, supplemented or otherwise modified or
replaced from time to time.
“Contract Documents” means all Instruments, Chattel Paper, letters of credit,
bonds, guarantees or similar documents evidencing, representing, arising from or
existing in

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respect of, relating to, securing or otherwise supporting the payment of, the
Contract Rights.
“Contract Rights” means (i) all (A) of any Grantor’s rights to payment under any
Contract or Contract Document and (B) payments due and to become due to any
Grantor under any Contract or Contract Document, in each case whether as
contractual obligations, damages or otherwise; (ii) all of any Grantor’s claims,
rights, powers, or privileges and remedies under any Contract or Contract
Document; and (iii) all of any Grantor’s rights under any Contract or Contract
Document to make determinations, to exercise any election (including, but not
limited to, election of remedies) or option or to give or receive any notice,
consent, waiver or approval together with full power and authority with respect
to any Contract or Contract Document to demand, receive, enforce or collect any
of the foregoing rights or any property which is the subject of any Contract or
Contract Document, to enforce or execute any checks, or other instruments or
orders, to file any claims and to take any action which, in the reasonable
opinion of the Secured Party, may be necessary or advisable in connection with
any of the foregoing.
“Document” means a bill of lading, dock warrant, dock receipt, warehouse receipt
or order for the delivery of goods, and also any other document which in the
regular course of business or financing is treated as adequately evidencing that
the person in possession of it is entitled to receive, hold and dispose of the
document and the goods it covers.
“Equipment” means any equipment now or hereafter owned or leased by any Grantor,
or in which any Grantor holds or acquires any other right, title or interest,
constituting “equipment” under the UCC, including, without limitation, all
surface or subsurface machinery, equipment, facilities, supplies, or other
tangible personal property, including tubing, rods, pumps, pumping units and
engines, pipe, pipelines, meters, apparatus, boilers, compressors, liquid
extractors, connectors, valves, fittings, power plants, poles, lines, cables,
wires, transformers, starters and controllers, machine shops, tools, machinery
and parts, storage yards and equipment stored therein, buildings and camps,
telegraph, telephone, and other communication systems, loading docks, loading
racks, and shipping facilities, and any manuals, instructions, blueprints,
computer software (including software that is imbedded in and part of the
equipment), and similar items which relate to the above, and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located together with all improvements thereon and all attachments, components,
parts, equipment and accessories installed thereon or affixed thereto.
“Fixtures” means any fixtures now or hereafter owned or leased by any Grantor,
or in which any Grantor holds or acquires any other right, title or interest,
constituting “fixtures” under the UCC, including without limitation any and all
additions, substitutions and replacements of any of the foregoing, wherever
located together with all improvements thereon and all attachments, components,
parts, equipment and accessories installed thereon or affixed thereto.
“General Intangibles” means all general intangibles now or hereafter owned by
any Grantor, or in which any Grantor holds or acquires any other right, title or
interest,

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constituting “general intangibles” or “payment intangibles” under the UCC,
including, but not limited to, all trademarks, trademark applications, trademark
registrations, tradenames, fictitious business names, business names, company
names, business identifiers, prints, labels, trade styles and service marks
(whether or not registered), trade dress, including logos and/or designs,
copyrights, patents, patent applications, goodwill of any Grantor’s business
symbolized by any of the foregoing, trade secrets, license rights, license
agreements, permits, franchises, and any rights to tax refunds to which any
Grantor is now or hereafter may be entitled.
“Instrument” means an “instrument” as defined in the UCC, including, without
limitation, any Negotiable Instrument, or any other writing which evidences a
right to the payment of money and is not itself a security agreement or lease
and is of a type which is in the ordinary course of business transferred by
delivery with any necessary endorsement or assignment (other than Instruments
constituting Chattel Paper).
“Insurance Contracts” means all contracts and policies of insurance and
re-insurance maintained or required to be maintained by or on behalf of any
Grantor under the Credit Documents.
“Interest Rate Contract” has the meaning set forth in the Credit Agreement.
“Inventory” means all of the inventory of any Grantor, or in which any Grantor
holds or acquires any right, title or interest, of every type or description,
now owned or hereafter acquired and wherever located, whether raw, in process or
finished, and all materials usable in processing the same and all documents of
title covering any inventory, including, without limitation, work in process,
materials used or consumed in any Grantor’s business, now owned or hereafter
acquired or manufactured by any Grantor and held for sale in the ordinary course
of its business, all present and future substitutions therefor, parts and
accessories thereof and all additions thereto, all Proceeds thereof and products
of such inventory in any form whatsoever, and any other item constituting
“inventory” under the UCC.
“Inventory Records” means all books, records, other similar property, and
General Intangibles at any time relating to Inventory.
“Investment Property” means “investment property” as defined in the UCC,
including, without limitation, all securities (whether certificated or
uncertificated), security entitlements, securities accounts, commodity
contracts, and commodity accounts.
“Negotiable Instrument” means a “negotiable instrument” as defined in the UCC.
“Proceeds” means all proceeds (as defined in the UCC) of any or all of the
Collateral, including without limitation (i) any and all proceeds of, all claims
for, and all rights of any Grantor to receive the return of any premiums for,
any insurance, indemnity, warranty or guaranty payable from time to time with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting

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under color of any Governmental Authority), (iii) all proceeds received or
receivable when any or all of the Collateral is sold, exchanged or otherwise
disposed, whether voluntarily, involuntarily, in foreclosure or otherwise,
(iv) all claims of any Grantor for damages arising out of, or for breach of or
default under, any Collateral, (v) all rights of any Grantor to terminate,
amend, supplement, modify or waive performance under any Contracts, to perform
thereunder and to compel performance and otherwise exercise all remedies
thereunder, and (vi) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
“Secured Obligations” means all Obligations now or hereafter existing, including
any extensions, modifications, substitutions, amendments and renewals thereof,
whether for principal, interest, fees, expenses, indemnification, or otherwise.
“Security Agreement” means this Amended and Restated Security Agreement, as the
same may be modified, supplemented or amended from time to time in accordance
with its terms.
“UCC” shall mean the Uniform Commercial Code as the same may, from time to time,
be in effect in the State of Texas; provided, however, in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
Texas, the term “UCC” shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
     (b) All meanings to defined terms, unless otherwise indicated, are to be
equally applicable to both the singular and plural forms of the terms defined.
Article, Section, Schedule, and Exhibit references are to Articles and Sections
of and Schedules and Exhibits to this Security Agreement, unless otherwise
specified. All references to instruments, documents, contracts, and agreements
are references to such instruments, documents, contracts, and agreements as the
same may be amended, supplemented, and otherwise modified from time to time,
unless otherwise specified. The words “hereof”, “herein” and “hereunder” and
words of similar import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement. As used herein, the term “including” means “including,
without limitation”. Paragraph headings have been inserted in this Security
Agreement as a matter of convenience for reference only and it is agreed that
such paragraph headings are not a part of this Security Agreement and shall not
be used in the interpretation of any provision of this Security Agreement.
     Section 2. Assignment, Pledge and Grant of Security Interest.
     (a) As collateral security for the prompt and complete payment and
performance when due of all Secured Obligations, each Grantor hereby assigns,
pledges, and grants to the Secured Party for the benefit of the Beneficiaries a
lien on and continuing security interest in all of such Grantor’s right, title
and interest in, to and under, all items described in this Section 2,

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whether now owned or hereafter acquired by such Grantor and wherever located and
whether now owned or hereafter existing or arising (collectively, the
“Collateral”):

  (i)   all Contracts, all Contract Rights, Contract Documents and Accounts
associated with such Contracts and each and every document granting security to
such Grantor under any such Contract;     (ii)   all Accounts;     (iii)   all
Inventory;     (iv)   all Equipment;     (v)   all General Intangibles;     (vi)
  all Investment Property (other than (A) any Investment Property to the extent
pledged by a Grantor under the Amended and Restated Pledge Agreement dated as of
August 27, 2007 among the Borrower, certain Subsidiaries of the Borrower party
thereto from time to time, and the Secured Party, (B) the Equity Interest in Rio
Grande Pipeline Company owned by Navajo Southern, Inc., (C) the Equity Interest
in Plains JV owned by Plains Holdco, (D) the Equity Interest in UNEV JV owned by
UNEV Holdco, and (E) the Equity Interest in any Future JVs owned by Future
Holdcos);     (vii)   all Fixtures;     (viii)   all Cash Collateral;     (ix)  
any Legal Requirements now or hereafter held by such Grantor (except that any
Legal Requirement which would by its terms or under applicable law become void,
voidable, terminable or revocable by being subjected to the Lien of this
Security Agreement or in which a Lien is not permitted to be granted under
applicable law, is hereby excluded from such Lien to the extent necessary so as
to avoid such voidness, voidability, terminability or revocability);     (x)  
any right to receive a payment under any Interest Rate Contract in connection
with a termination thereof;     (xi)   (A) all policies of insurance and
Insurance Contracts, now or hereafter held by or on behalf of such Grantor,
including casualty and liability, business interruption, and any title
insurance, (B) all Proceeds of insurance, and (C) all rights, now or hereafter
held by such Grantor to any warranties of any manufacturer or contractor of any
other Person;     (xii)   any and all liens and security interests (together
with the documents evidencing such security interests) granted to such Grantor
by an obligor

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      to secure such obligor’s obligations owing under any Instrument, Chattel
Paper, or Contract which is pledged hereunder or with respect to which a
security interest in such Grantor’s rights in such Instrument, Chattel Paper, or
Contract is granted hereunder;     (xiii)   any and all guaranties given by any
Person for the benefit of such Grantor which guarantees the obligations of an
obligor under any Instrument, Chattel Paper or Contract, which are pledged
hereunder;     (xiv)   without limiting the generality of the foregoing, all
other personal property, goods, Instruments, Chattel Paper, Documents, Fixtures,
credits, claims, demands and assets of such Grantor whether now existing or
hereafter acquired from time to time; and     (xv)   any and all additions,
accessions and improvements to, all substitutions and replacements for and all
products and Proceeds of or derived from all of the items described above in
this Section 2.

     (b) Notwithstanding anything contained herein to the contrary, it is the
intention of each Grantor, the Secured Party and the other Beneficiaries that
the amount of the Secured Obligation secured by each Grantor’s interests in any
of its Property shall be in, but not in excess of, the maximum amount permitted
by fraudulent conveyance, fraudulent transfer and other similar law, rule or
regulation of any Governmental Authority applicable to such Grantor.
Accordingly, notwithstanding anything to the contrary contained in this Security
Agreement or in any other agreement or instrument executed in connection with
the payment of any of the Secured Obligations, the amount of the Secured
Obligations secured by each Grantor’s interests in any of its Property pursuant
to this Security Agreement shall be limited to an aggregate amount equal to the
largest amount that would not render such Grantor’s obligations hereunder or the
liens and security interest granted to the Secured Party hereunder subject to
avoidance under Section 548 of the United States Bankruptcy Code or any
comparable provision of any other applicable law.
     Section 3. Representations and Warranties. Each Grantor hereby represents
and warrants the following to the Secured Party and the other Beneficiaries:
     (a) Records. Such Grantor’s sole jurisdiction of formation and type of
organization are as set forth in Schedule 1 attached hereto. Other than for
Accounts which individually or in the aggregate do not exceed $500,000, none of
the Accounts is evidenced by a promissory note or other instrument.
     (b) Other Liens. Such Grantor is, and will be the record, legal, and
beneficial owner of all of the Collateral pledged by such Grantor free and clear
of any Lien, except for the Permitted Liens. No effective financing statement or
other instrument similar in effect covering all or any part of the Collateral
is, or will be, on file in any recording office, except such as may be filed in
connection with this Security Agreement or in connection with other Permitted
Liens or for which satisfactory releases have been received by the Secured
Party.
     (c) Lien Priority and Perfection.

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          (i) Subject only to Permitted Liens, this Security Agreement creates
valid and continuing security interests in the Collateral, securing the payment
and performance of all the Secured Obligations. Upon the filing of financing
statements with the jurisdiction listed in Schedule 1, the security interests
granted to the Secured Party hereunder will constitute valid first-priority
perfected security interests in all Collateral with respect to which a security
interest can be perfected by the filing of a financing statement, subject only
to Permitted Liens.
          (ii) No consent of any other Person and no authorization, approval, or
other action by, and no notice to or filing with any Governmental Authority is
required (A) for the grant by such Grantor of the pledge, assignment, and
security interest granted hereby or for the execution, delivery, or performance
of this Security Agreement by such Grantor, (B) for the validity, perfection, or
maintenance of the pledge, assignment, lien, and security interest created
hereby (including the first-priority (subject to Permitted Liens) nature
thereof), except for security interests that cannot be perfected by filing under
the UCC, or (C) for the exercise by the Secured Party of the rights provided for
in this Security Agreement or the remedies in respect of the Collateral pursuant
to this Security Agreement, except (1) those consents to assignment of licenses,
permits, approvals, and other rights that are as a matter of law not assignable,
(2) those consents, approvals, authorizations, actions, notices or filings which
have been duly obtained or made and, in the case of the maintenance of
perfection, the filing of continuation statements under the UCC, and (3) those
filings and actions described in Section 3(c)(i).
     (d) Tax Identification Number and Organizational Number. The federal tax
identification number of such Grantor and the organizational number (if any) of
such Grantor are as set forth in Schedule 1.
     (e) Tradenames; Prior Names. Except as set forth on Schedule 1, such
Grantor has not conducted business under any name other than its current name
during the five years immediately prior to the date of this Security Agreement.
     Section 4. Covenants.
     (a) Further Assurances.
          (i) Each Grantor agrees that from time to time, at its expense, such
Grantor shall promptly execute and deliver all instruments and documents, and
take all action, that may be reasonably necessary or desirable, or that the
Secured Party may reasonably request, in order to perfect and protect any
pledge, assignment, or security interest granted or intended to be granted
hereby or to enable the Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor (A) at the request of Secured Party,
shall execute such instruments, endorsements or notices, as may be reasonably
necessary or desirable or as the Secured Party may reasonably request, in order
to perfect and preserve the assignments and security interests granted or
purported to be granted hereby, (B) shall, if any Collateral shall be evidenced
by a promissory note or other Instrument or Chattel Paper and such promissory
note, Instrument or Chattel Paper shall, individually or in the aggregate,
exceed $500,000, deliver and pledge to the Secured Party hereunder such note or
Instrument or Chattel Paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
the

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Secured Party, and (C) authorizes the Secured Party to file any financing
statements, amendments or continuations without the signature of such Grantor to
the extent permitted by applicable law in order to perfect or maintain the
perfection of any security interest granted under this Security Agreement
(including, without limitation, financing statements using an “all assets” or
“all personal property” collateral description). Notwithstanding anything in
this Security Agreement to the contrary, the Grantor shall not be required to
take any action with respect to the perfection of the security interest in any
Cash Collateral which is not then held by a Lender or the Borrower or a
Subsidiary of the Borrower.
          (ii) Following written request by the Secured Party, each Grantor
shall pay all filing, registration and recording fees and all refiling,
re-registration and re-recording fees, and all other reasonable expenses
incident to the execution and acknowledgment of this Security Agreement, any
assurance, and all federal, state, county and municipal stamp taxes and other
taxes, duties, imports, assessments and charges arising out of or in connection
with the execution and delivery of this Security Agreement, any agreement
supplemental hereto, any financing statements, and any instruments of further
assurance.
          (iii) Each Grantor shall promptly provide to the Secured Party all
information and evidence the Secured Party may reasonably request concerning the
Collateral to enable the Secured Party to enforce the provisions of this
Security Agreement.
     Section 5. Change of Name; State of Formation. Each Grantor shall give the
Secured Party at least 30 days’ prior written notice before it (i) in the case
of any Grantor that is not a “registered organization” (as such term is defined
in Section 9-102 of the UCC), changes the location of its principal place of
business and chief executive office, (ii) changes the location of its
jurisdiction of formation or organization, (iii) changes the location of the
original copies of any Chattel Paper evidencing Accounts if such Chattel Paper,
individually or in the aggregate, exceeds $500,000, or (iv) changes its name or
uses a trade name other than its current name used on the date hereof. Other
than as permitted by Section 6.09 of the Credit Agreement or as permitted in the
preceding sentence, no Grantor shall amend, supplement, modify or restate its
articles or certificate of incorporation, bylaws, limited liability company
agreements, or other equivalent organizational documents, without the prior
written consent of the Secured Party.
     (a) Right of Inspection. Each Grantor shall hold and preserve, at its own
cost and expense reasonably satisfactory and complete records of the Collateral,
including, but not limited to, Instruments, Chattel Paper, Contracts, and
records with respect to the Accounts, and will permit representatives of the
Secured Party, upon reasonable advance notice, at any time during normal
business hours to inspect and copy them. Upon the occurrence and during the
continuation of any Event of Default, at the Secured Party’s request, each
Grantor shall promptly deliver copies of any and all such records to the Secured
Party.
     (b) Liability Under Contracts and Accounts. Notwithstanding anything in
this Security Agreement to the contrary, (i) the execution of this Security
Agreement shall not release any Grantor from its obligations and duties under
any of the Contract Documents, or any other contract or instrument which are
part of the Collateral and Accounts included in the Collateral, (ii) the
exercise by the Secured Party of any of its rights hereunder shall not release
any Grantor from any of its duties or obligations under any Contract Documents,
or any other Contract or

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Instrument which are part of the Collateral and Accounts included in the
Collateral, and (iii) the Secured Party shall not have any obligation or
liability under any Contract Documents, or any other contract or instrument
which are part of the Collateral and Accounts included in the Collateral by
reason of the execution and delivery of this Security Agreement, nor shall the
Secured Party be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
     (c) Transfer of Certain Collateral; Release of Certain Security Interest.
Each Grantor agrees that it shall not sell, assign, or otherwise dispose of any
Collateral, except as otherwise permitted under the Credit Agreement. The
Secured Party shall promptly, at the Grantors’ expense, execute and deliver all
further instruments and documents, and take all further action that a Grantor
may reasonably request in order to release its security interest in any
Collateral which is disposed of in accordance with the terms of the Credit
Agreement.
     (d) Accounts. Each Grantor agrees that it will use commercially reasonable
efforts to ensure that each Account (i) is and will be, in all material
respects, the genuine, legal, valid, and binding obligations of the account
debtor in respect thereof, representing an unsatisfied obligation of such
account debtor, (ii) is and will be, in all material respects, enforceable in
accordance with its terms, is not and will not be subject to any setoffs,
defenses, taxes, counterclaims, except in the ordinary course of business,
(iii) is and will be, in all material respects, in compliance with all
applicable laws, whether federal, state, local or foreign, and (iv) if evidenced
by Chattel Paper, will not require the consent of the account debtor in respect
thereof in connection with its assignment hereunder.
     (e) Negotiable Instrument. If any Grantor shall at any time hold or acquire
any Negotiable Instruments, including promissory notes, and such Negotiable
Instruments, individually or in the aggregate, exceed $500,000, then such
Grantor shall forthwith endorse, assign and deliver the same to the Secured
Party, accompanied by such instruments of transfer or assignment duly executed
in blank as the Secured Party may from time to time reasonably request.
     (f) Other Covenants of Grantor. Each Grantor agrees that (i) any action or
proceeding to enforce this Security Agreement may be taken by the Secured Party
either in such Grantor’s name or in the Secured Party’s name, as the Secured
Party may deem necessary, and (ii) such Grantor will, until the indefeasible
payment in full in cash of the Secured Obligations (including all Letter of
Credit Obligations), the termination or expiration of all Letters of Credit and
the termination of all obligations of the Issuing Banks and the Banks in respect
of Letters of Credit, the termination of all Interest Rate Contracts and the
termination of all obligations of the Banks in respect of Interest Rate
Contracts, and the termination or expiration of the Commitments, warrant and
defend its title to the Collateral and the interest of the Secured Party in the
Collateral against any claim or demand of any Persons (other than Permitted
Liens) which could reasonably be expected to materially adversely affect such
Grantor’s title to, or the Secured Party’s right or interest in, such
Collateral.
     Section 6. Termination of Security Interest. Upon the indefeasible payment
in full in cash of the Secured Obligations (including all Letter of Credit
Obligations), the termination or expiration of all Letters of Credit and the
termination of all obligations of the Issuing Banks and

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the Banks in respect of Letters of Credit, the termination of all Interest Rate
Contracts and the termination of all obligations of the Banks in respect of
Interest Rate Contracts, and the termination or expiration of the Commitments,
the security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantor to the extent such Collateral
shall not have been sold or otherwise applied pursuant to the terms hereof. Upon
any such termination, the Secured Party will promptly, at the Grantors’ expense,
execute and deliver to the applicable Grantor such documents (including, without
limitation, UCC-3 termination statements) as such Grantor shall reasonably
request to evidence such termination.
     Section 7. Reinstatement. If, at any time after payment in full of all
Secured Obligations and termination of the Secured Party’s security interest,
any payments on the Secured Obligations previously made must be disgorged by the
Secured Party for any reason whatsoever, including, without limitation, the
insolvency, bankruptcy or reorganization of any Grantor or any other Person,
this Security Agreement and the Secured Party’s security interests herein shall
be reinstated as to all disgorged payments as though such payments had not been
made, and each Grantor shall sign and deliver to the Secured Party all
documents, and shall do such other acts and things, as may be reasonably
necessary to reinstate and perfect the Secured Party’s security interest (other
than the Secured Party’s security interest in Cash Collateral that is held by a
Person other than a Lender, the Borrower or any Subsidiary of the Borrower).
EACH GRANTOR SHALL DEFEND AND INDEMNIFY EACH BENEFICIARY FROM AND AGAINST ANY
CLAIM, DAMAGE, LOSS, LIABILITY, COST OR EXPENSE UNDER THIS SECTION 7 (INCLUDING
REASONABLE ATTORNEYS’ FEES AND EXPENSES) IN THE DEFENSE OF ANY SUCH ACTION OR
SUIT INCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE ARISING AS
A RESULT OF THE INDEMNIFIED BENEFICIARY’S OWN NEGLIGENCE BUT EXCLUDING SUCH
CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE THAT IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
FROM SUCH INDEMNIFIED BENEFICIARY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
     Section 8. Remedies upon Event of Default.
     (a) If any Event of Default has occurred and is continuing, the Secured
Party may (and shall at the written request of the Majority Banks), (i) proceed
to protect and enforce the rights vested in it by this Security Agreement or
otherwise available to it, including but not limited to, the right to cause all
revenues and other moneys pledged hereby as Collateral to be paid directly to
it, and to enforce its rights hereunder to such payments and all other rights
hereunder by such appropriate judicial proceedings as it shall deem most
effective to protect and enforce any of such rights, either at law or in equity
or otherwise, whether for specific enforcement of any covenant or agreement
contained in any of the Contract Documents, or in aid of the exercise of any
power therein or herein granted, or for any foreclosure hereunder and sale under
a judgment or decree in any judicial proceeding, or to enforce any other legal
or equitable right vested in it by this Security Agreement or by law; (ii) cause
any action at law or suit in equity or other proceeding to be instituted and
prosecuted and enforce any rights hereunder or included in the Collateral,
subject to the provisions and requirements thereof; (iii) sell or otherwise
dispose of any or all of the Collateral or cause the Collateral to be sold or
otherwise disposed of in one or more sales or transactions, at such prices and
in such manner as may be

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commercially reasonable, and for cash or on credit or for future delivery,
without assumption of any credit risk, at public or private sale, without demand
of performance or notice of intention to sell or of time or place of sale
(except such notice as is required by applicable statute and cannot be waived),
it being agreed that the Secured Party may be a purchaser on behalf of the
Beneficiaries or on its own behalf at any such sale and that the Secured Party,
any other Beneficiary, or any other Person who may be a bona fide purchaser for
value and without notice of any claims of any or all of the Collateral so sold
shall thereafter hold the same absolutely free from any claim or right of
whatsoever kind, including any equity of redemption of any Grantor, any such
demand, notice or right and equity being hereby expressly waived and released to
the extent permitted by law; (iv) incur reasonable expenses, including
reasonable attorneys’ fees, reasonable consultants’ fees, and other costs
appropriate to the exercise of any right or power under this Security Agreement;
(v) perform any obligation of any Grantor hereunder and make payments, purchase,
contest or compromise any encumbrance, charge or lien, and pay taxes and
expenses, without, however, any obligation to do so; (vi) in connection with any
acceleration and foreclosure, take possession of the Collateral and render it
usable and repair and renovate the same, without, however, any obligation to do
so, and enter upon any location where the Collateral may be located for that
purpose, control, manage, operate, rent and lease the Collateral, collect all
rents and income from the Collateral and apply the same to reimburse the
Beneficiaries for any cost or expenses incurred hereunder or under any of the
Credit Documents and to the payment or performance of any Grantor’s obligations
hereunder or under any of the Credit Documents, and apply the balance to the
other Secured Obligations and any remaining excess balance to whomsoever is
legally entitled thereto; (vii) secure the appointment of a receiver for the
Collateral or any part thereof; (viii) require any Grantor to, and each Grantor
hereby agrees that it will at its expense and upon request of the Secured Party
forthwith, assemble all or part of the Collateral as directed by the Secured
Party and make it available to the Secured Party at a place to be designated by
the Secured Party which is reasonably convenient to both parties; (ix) exercise
any other or additional rights or remedies granted to a secured party under the
UCC; or (x) occupy any premises owned or leased by any Grantor where the
Collateral or any part thereof is assembled for a reasonable period in order to
effectuate its rights and remedies hereunder or under law, without obligation to
any Grantor in respect of such occupation. If, pursuant to applicable law, prior
notice of sale of the Collateral under this Section is required to be given to
any Grantor, each Grantor hereby acknowledges that the minimum time required by
such applicable law, or if no minimum time is specified, 10 days, shall be
deemed a reasonable notice period. The Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. The
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
     (b) All reasonable costs and expenses (including reasonable attorneys’ fees
and expenses) incurred by the Secured Party in connection with any suit or
proceeding in connection with the performance by the Secured Party of any of the
agreements contained in any of the Contract Documents, or in connection with any
exercise of its rights or remedies hereunder, pursuant to the terms of this
Security Agreement, shall constitute additional indebtedness secured by this
Security Agreement and shall be paid on demand by the Grantors to the Secured
Party on behalf of the Beneficiaries.

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     Section 9. Remedies Cumulative; Delay Not Waiver.
     (a) No right, power or remedy herein conferred upon or reserved to the
Secured Party is intended to be exclusive of any other right, power or remedy
and every such right, power and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right, power and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder or otherwise shall not
prevent the concurrent assertion or employment of any other appropriate right or
remedy. Resort to any or all security now or hereafter held by the Secured Party
may be taken concurrently or successively and in one or several consolidated or
independent judicial actions or lawfully taken nonjudicial proceedings, or both.
     (b) No delay or omission of the Secured Party to exercise any right or
power accruing upon the occurrence and during the continuance of any Event of
Default as aforesaid shall impair any such right or power or shall be construed
to be a waiver of any such Event of Default or an acquiescence therein; and
every power and remedy given by this Security Agreement may be exercised from
time to time, and as often as shall be deemed expedient, by the Secured Party.
     Section 10. Contract Rights. Upon the occurrence and during the continuance
of an Event of Default, the Secured Party may exercise any of the Contract
Rights and remedies of any Grantor under or in connection with the Instruments,
Chattel Paper, or Contracts which represent Accounts, the General Intangibles,
or which otherwise relate to the Collateral, including, without limitation, any
rights of any Grantor to demand or otherwise require payment of any amount
under, or performance of any provisions of, the Instruments, Chattel Paper, or
Contracts which represent Accounts, or the General Intangibles.
     Section 11. Accounts.
     (a) Upon the occurrence and during the continuance of an Event of Default,
the Secured Party may, or may direct any Grantor to, take any action reasonably
necessary or advisable to enforce collection of the Accounts, including, without
limitation, notifying the account debtors or obligors under any Accounts of the
assignment of such Accounts to the Secured Party and directing such account
debtors or obligors to make payment of all amounts due or to become due directly
to the Secured Party. Upon such notification and direction, and at the expense
of the Grantors, the Secured Party may enforce collection of any such Accounts,
and adjust, settle, or compromise the amount or payment thereof in the same
manner and to the same extent as any Grantor might have done.
     (b) Upon the occurrence and during the continuance of an Event of Default,
and upon receipt by any Grantor of written notice from the Secured Party that an
Event of Default has occurred and is continuing, all amounts and proceeds
(including instruments) received by such Grantor in respect of the Accounts
shall be received in trust for the benefit of the Secured Party hereunder, shall
be segregated from other funds of such Grantor, and shall promptly be paid over
to the Secured Party in the same form as so received (with any necessary
indorsement) to be held as Collateral. Following receipt of such notice and
prior to the waiver or cure of the applicable Event of Default, no Grantor shall
adjust, settle, or compromise the amount or payment of any

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Account, nor release wholly or partly any account debtor or obligor thereof, nor
allow any credit or discount thereon.
     Section 12. Application of Collateral. The proceeds of any sale, or other
realization (other than that received from a sale or other realization permitted
by the Credit Agreement) upon all or any part of the Collateral pledged by any
Grantor shall be applied by the Secured Party as set forth in Section 7.06 of
the Credit Agreement.
     Section 13. Secured Party as Attorney-in-Fact for Grantor. Each Grantor
hereby constitutes and irrevocably appoints the Secured Party, acting for and on
behalf of itself and the Beneficiaries and each successor or assign of the
Secured Party and the Beneficiaries, the true and lawful attorney-in-fact of
such Grantor, with full power and authority in the place and stead of such
Grantor and in the name of such Grantor, the Secured Party or otherwise to take
any action and execute any instrument at the written direction of the
Beneficiaries and enforce all rights, interests and remedies of such Grantor
with respect to the Collateral, including the right:
     (a) to ask, require, demand, receive and give acquittance for any and all
moneys and claims for moneys due and to become due under or arising out of the
any of the other Collateral, including without limitation, any Insurance
Contracts;
     (b) to elect remedies thereunder and to endorse any checks or other
instruments or orders in connection therewith;
     (c) to file any claims or take any action or institute any proceedings in
connection therewith which the Secured Party may deem to be reasonably necessary
or advisable;
     (d) to pay, settle or compromise all bills and claims which may be or
become liens or security interests against any or all of the Collateral, or any
part thereof, unless a bond or other security satisfactory to the Secured Party
has been provided; and
     (e) upon foreclosure, to do any and every act which any Grantor may do on
its behalf with respect to the Collateral or any part thereof and to exercise
any or all of such Grantor’s rights and remedies under any or all of the
Collateral;
provided, however, that the Secured Party shall not exercise any such rights
except upon the occurrence and continuation of an Event of Default. This power
of attorney is a power coupled with an interest and shall be irrevocable.
     Section 14. Secured Party May Perform. The Secured Party may from
time-to-time perform any act which any Grantor has agreed hereunder to perform
and which such Grantor shall fail to promptly perform after being requested in
writing to so perform (it being understood that no such request need be given
after the occurrence and during the continuance of any Event of Default and
after notice thereof by the Secured Party to any Grantor) and the Secured Party
may from time-to-time take any other action which the Secured Party deems
reasonably necessary for the maintenance, preservation or protection of any of
the Collateral or of its security interest therein, and the reasonable expenses
of the Secured Party incurred in connection therewith shall be part of the
Secured Obligations and shall be secured hereby.

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     Section 15. Secured Party Has No Duty. The powers conferred on the Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty on it to exercise any such powers. Except for reasonable
care of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Secured Party shall have no duty as to any
Collateral or responsibility for taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
     Section 16. Reasonable Care. The Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Secured Party accords its own Property.
     Section 17. Payments Held in Trust. After the occurrence and during the
continuance of an Event of Default, all payments received by any Grantor under
or in connection with any Collateral shall be received in trust for the benefit
of the Secured Party, and shall be segregated from other funds of such Grantor
and shall be forthwith paid over to the Secured Party in the same form as
received (with any necessary endorsement).
     Section 18. Miscellaneous.
     (a) Expenses. Each Grantor will upon demand pay to the Secured Party for
its benefit and the benefit of the Beneficiaries the amount of any reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of its
counsel and of any experts, which the Secured Party and the Beneficiaries may
incur in connection with (i) the custody, preservation, use, or operation of, or
the sale, collection, or other realization of, any of the Collateral, (ii) the
exercise or enforcement of any of the rights of the Secured Party or any
Beneficiary hereunder, and (iii) the failure by any Grantor to perform or
observe any of the provisions hereof.
     (b) Amendments; Etc. No amendment or waiver of any provision of this
Security Agreement nor consent to any departure by any Grantor herefrom shall be
effective unless the same shall be in writing and authenticated by the affected
Grantor, the Secured Party and either, as required by the Credit Agreement, the
Majority Banks or all of the Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
     (c) Addresses for Notices. All notices and other communications provided
for hereunder shall be made in the manner and to the addresses set forth in the
Credit Agreement or on the signature page hereto.
     (d) Continuing Security Interest; Transfer of Interest. This Security
Agreement shall create a continuing security interest in the Collateral and,
unless expressly released by the Secured Party, shall (a) remain in full force
and effect until the indefeasible payment in full in cash of the Secured
Obligations (including all Letter of Credit Obligations), the termination or
expiration of all Letters of Credit and the termination of all obligations of
the Issuing Banks and the Banks in respect of Letters of Credit, the termination
of all Interest Rate Contracts and the termination of all obligations of the
Banks in respect of Interest Rate Contracts, and the termination or expiration
of the Commitments, (b) be binding upon each Grantor and its

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successors, tranferees and assigns, and (c) inure, together with the rights and
remedies of the Secured Party hereunder, to the benefit of and be binding upon,
the Secured Party, the Issuing Banks, and the Banks and their respective
successors, transferees, and assigns, and to the benefit of and be binding upon,
the Swap Counterparties, and each of their respective successors, transferees,
and assigns to the extent such successors, transferees, and assigns of a Swap
Counterparty is a Bank or an Affiliate of a Bank. Without limiting the
generality of the foregoing clause, when any Bank assigns or otherwise transfers
any interest held by it under the Credit Agreement or other Credit Document to
any other Person pursuant to the terms of the Credit Agreement or such other
Credit Document, that other Person shall thereupon become vested with all the
benefits held by such Bank under this Security Agreement.
     (e) Severability. Wherever possible each provision of this Security
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Security Agreement.
     (f) Choice of Law. This Security Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas, except
to the extent that the validity or perfection of the security interests
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the state of Texas.
     (g) Counterparts. The parties may execute this Security Agreement in any
number of duplicate originals, each of which constitutes an original, and all of
which, collectively, constitute only one agreement. The parties may execute this
Security Agreement in counterparts, each of which constitutes an original, and
all of which, collectively, constitute only one agreement. Delivery of an
executed counterpart signature page by facsimile is as effective as executing
and delivering this Security Agreement in the presence of the other parties to
this Security Agreement. In proving this Security Agreement, a party must
produce or account only for the executed counterpart of the party to be charged.
     (h) Headings. Paragraph headings have been inserted in this Security
Agreement as a matter of convenience for reference only and it is agreed that
such paragraph headings are not a part of this Security Agreement and shall not
be used in the interpretation of any provision of this Security Agreement.
     (i) Conflicts. In the event of any explicit or implicit conflict between
any provision of this Security Agreement and any provision of the Credit
Agreement, the terms of the Credit Agreement shall be controlling.
     (j) Additional Grantors. Pursuant to Section 5.10 of the Credit Agreement,
each Subsidiary of the Borrower (other than a Restricted Subsidiary) that was
not in existence on the date of the Credit Agreement is required to enter into
this Security Agreement as a Grantor upon becoming a Subsidiary of the Borrower.
Upon execution and delivery after the date hereof by the Secured Party and such
Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become
a Grantor hereunder with the same force and effect as if originally named as a
Grantor herein. The execution and delivery of any instrument adding an
additional Grantor as a

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party to this Security Agreement shall not require the consent of any other
Grantor hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Grantor
as a party to this Security Agreement.
     (k) Amendment and Restatement; Confirmation of Liens. This Security
Agreement is an amendment and restatement of the Existing Security Agreement and
supersedes the Existing Security Agreement in its entirety; provided, however,
that (i) the execution and delivery of this Security Agreement shall not effect
a novation of the Existing Security Agreement but shall be, to the fullest
extent applicable, in modification, renewal, confirmation and extension of the
Existing Security Agreement, and (ii) the Liens, security interests and other
interests in the collateral as described in the Existing Security Agreement (the
“Original Collateral”) granted under the Existing Security Agreement are and
shall remain legal, valid, binding and enforceable with regard to such Original
Collateral. Each Grantor party to the Existing Security Agreement hereby
acknowledges and confirms the continuing existence and effectiveness of such
Liens, security interests and other interests in the Original Collateral granted
under the Existing Security Agreement, and further agrees that the execution and
delivery of this Security Agreement and the other Credit Documents shall not in
any way release, diminish, impair, reduce or otherwise affect such Liens,
security interests and other interests in the Original Collateral granted under
the Existing Security Agreement.
     (l) Entire Agreement. THIS SECURITY AGREEMENT AND THE OTHER CREDIT
DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
     THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
[SIGNATURE PAGES FOLLOW]

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     The parties hereto have caused this Security Agreement to be duly executed
as of the date first above written.

          GRANTORS:   HOLLY ENERGY PARTNERS — OPERATING, L.P.,
a Delaware limited partnership
      By:   HEP Logistics GP, L.L.C., a Delaware limited
liability company, its General Partner            By:   Holly Energy Partners,
L.P., a Delaware limited
partnership, its Managing Member            By:   HEP Logistics Holdings, L.P.,
a Delaware limited
partnership, its General Partner            By:   Holly Logistic Services,
L.L.C., a Delaware limited
liability company, its General Partner              By:           Stephen D.
Wise        Treasurer     

[Signature pages continue.]

Signature page to Amended and Restated Security Agreement 

--------------------------------------------------------------------------------

 

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

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

HEP MOUNTAIN HOME, L.L.C., a Delaware limited liability company

HEP PIPELINE, L.L.C., a Delaware limited liability company

HEP REFINING, L.L.C., a Delaware limited liability company

HEP WOODS CROSS, L.L.C., a Delaware limited liability company
      Each by:   Holly Energy Partners — Operating, L.P., a Delaware limited
partnership and its Sole Member               By:   HEP Logistics GP, L.L.C., a
Delaware limited
liability company, its General Partner            By:   Holly Energy Partners,
L.P., a Delaware limited
partnership, its Managing Member            By:   HEP Logistics Holdings, L.P.,
a Delaware limited
partnership, its General Partner            By:   Holly Logistic Services,
L.L.C., a Delaware limited
liability company, its General Partner              By:           Stephen D.
Wise        Treasurer     

[Signature pages continue.]

Signature page to Amended and Restated Security Agreement 

--------------------------------------------------------------------------------

 

            HEP NAVAJO SOUTHERN, L.P., a Delaware limited partnership

HEP PIPELINE ASSETS, LIMITED PARTNERSHIP, a Delaware limited partnership

HEP FIN-TEX/TRUST-RIVER, L.P., a Texas limited partnership
      Each by:   HEP Pipeline GP, L.L.C., a Delaware limited liability
company and its General Partner            By:   Holly Energy Partners —
Operating, L.P., a         Delaware limited partnership and its Sole       
Member            By:   HEP Logistics GP, L.L.C., a Delaware
limited liability company, its General Partner                    By:   Holly
Energy Partners, L.P., a Delaware         limited partnership, its Managing
Member                    By:   HEP Logistics Holdings, L.P., a Delaware        
limited partnership, its General Partner                    By:   Holly Logistic
Services, L.L.C., a Delaware         limited liability company, its General
Partner                    By:           Stephen D. Wise        Treasurer     

[Signature pages continue.]

Signature page to Amended and Restated Security Agreement 

--------------------------------------------------------------------------------

 

            HEP REFINING ASSETS, L.P., a Delaware limited partnership
      By:   HEP Refining GP, L.L.C., a Delaware limited
liability company and its General Partner            By:   Holly Energy Partners
— Operating, L.P., a
Delaware limited partnership and its Sole Member            By:   HEP Logistics
GP, L.L.C., a Delaware limited
liability company, its General Partner            By:   Holly Energy Partners,
L.P., a Delaware limited        partnership, its Managing Member           
By:   HEP Logistics Holdings, L.P., a Delaware limited        partnership, its
General Partner            By:   Holly Logistic Services, L.L.C., a Delaware
limited        liability company, its General Partner            By:          
Stephen D. Wise        Treasurer     

[Signature pages continue.]

Signature page to Amended and Restated Security Agreement 

--------------------------------------------------------------------------------

 

            HOLLY ENERGY FINANCE CORP., a Delaware corporation
      By:           Matthew P. Clifton        President and Chief Executive
Officer     

[Signature pages continue.]

Signature page to Amended and Restated Security Agreement 

--------------------------------------------------------------------------------

 

            HEP LOGISTICS GP, L.L.C., a Delaware limited liability company
      By:   Holly Energy Partners, L.P., a Delaware limited        partnership,
its Managing Member            By:   HEP Logistics Holdings, L.P., a Delaware
limited        partnership, its General Partner            By:   Holly Logistic
Services, L.L.C., a Delaware limited        liability company, its General
Partner            By:           Stephen D. Wise        Treasurer     

[Signature pages continue.]

Signature page to Amended and Restated Security Agreement 

--------------------------------------------------------------------------------

 

            HOLLY ENERGY PARTNERS, L.P., a Delaware
limited partnership
      By:   HEP Logistics Holdings, L.P., a Delaware limited        partnership,
its General Partner            By:   Holly Logistic Services, L.L.C., a Delaware
limited        liability company, its General Partner            By:          
Stephen D. Wise        Treasurer     

[Signature pages continue.]

Signature page to Amended and Restated Security Agreement 

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          SECURED PARTY:  UNION BANK OF CALIFORNIA, N.A., as
Secured Party for the ratable benefit of the
Beneficiaries
      By:           Sean Murphy        Vice President   

Signature page to Amended and Restated Security Agreement 

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SCHEDULE 1
to Security Agreement

         
Grantor:
  Holly Energy Partners — Operating, L.P.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited partnership
 
       
Organizational Number:
  3743527
 
       
Federal Tax Identification Number:
  51-0504696
 
       
Prior Names:
  HEP Operating Company, L.P.
 
       
Grantor:
  HEP Pipeline GP, L.L.C.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited liability company
 
       
Organizational Number:
  3814279
 
       
Federal Tax Identification Number:
  72-1583767
 
       
Prior Names:
  None
 
       
Grantor:
  HEP Refining GP, L.L.C.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited liability company
 
       
Organizational Number:
  3814280
 
       
Federal Tax Identification Number:
  71-0968297
 
       
Prior Names:
  None

Schedule 1 to Amended and Restated Security Agreement
Page 1

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Grantor:
  HEP Mountain Home, L.L.C.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited liability company
 
       
Organizational Number:
  3814277
 
       
Federal Tax Identification Number:
  71-0968300
 
       
Prior Names:
  None
 
       
Grantor:
  HEP Pipeline, L.L.C.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited liability company
 
       
Organizational Number:
  3814278
 
       
Federal Tax Identification Number:
  71-0968296
 
       
Prior Names:
  None
 
       
Grantor:
  HEP Refining, L.L.C.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited liability company
 
       
Organizational Number:
  3815183
 
       
Federal Tax Identification Number:
  71-0968299
 
       
Prior Names:
  None

Schedule 1 to Amended and Restated Security Agreement
Page 2

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Grantor:
  HEP Woods Cross, L.L.C.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited liability company
 
       
Organizational Number:
  3814281
 
       
Federal Tax Identification Number:
  72-1583768
 
       
Prior Names:
  None
 
       
Grantor:
  HEP Navajo Southern, L.P.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited partnership
 
       
Organizational Number:
  2556546
 
       
Federal Tax Identification Number:
  57-1207829
 
       
Prior Names:
  Navajo Southern, Inc.
 
       
Grantor:
  HEP Pipeline Assets, Limited Partnership
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited partnership
 
       
Organizational Number:
  3814282
 
       
Federal Tax Identification Number:
  51-0512050
 
       
Prior Names:
  None

Schedule 1 to Amended and Restated Security Agreement
Page 3

--------------------------------------------------------------------------------

 

         
Grantor:
  HEP Refining Assets, L.P.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited partnership
 
       
Organizational Number:
  3814285
 
       
Federal Tax Identification Number:
  51-0512052
 
       
Prior Names:
  None
 
       
Grantor:
  HEP Logistics GP, L.L.C.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited liability company
 
       
Organizational Number:
  3743533
 
       
Federal Tax Identification Number:
  51-0504692
 
       
Prior Names:
  None
 
       
Grantor:
  Holly Energy Finance Corp.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  corporation
 
       
Organizational Number:
  3917173
 
       
Federal Tax Identification Number:
  20-2263311
 
       
Prior Names:
  None

Schedule 1 to Amended and Restated Security Agreement
Page 4

--------------------------------------------------------------------------------

 

         
Grantor:
  HEP Fin-Tex/Trust-River, L.P.
 
       
Jurisdiction of Formation / Filing:
  Texas
 
       
Type of Organization:
  limited partnership
 
       
Organizational Number:
  800459650
 
       
Federal Tax Identification Number:
  20-2161011
 
       
Prior Names:
  Alon Pipeline Assets, L.L.C.
 
       
Grantor:
  Holly Energy Partners, L.P.
 
       
Jurisdiction of Formation / Filing:
  Delaware
 
       
Type of Organization:
  limited partnership
 
       
Organizational Number:
  3743531
 
       
Federal Tax Identification Number:
  20-0833098
 
       
Prior Names:
  None

Schedule 1 to Amended and Restated Security Agreement
Page 5

--------------------------------------------------------------------------------

 

Annex 1 to the
Amended and Restated
Security Agreement
     SUPPLEMENT NO. [          ] dated as of [               ] (the
“Supplement”), to the Amended and Restated Security Agreement dated as of
August 27, 2007 (as amended, supplemented or otherwise modified from time to
time, the “Security Agreement”), among HOLLY ENERGY PARTNERS — OPERATING, L.P.,
a Delaware limited partnership (“Borrower”), each subsidiary of Borrower
signatory thereto (together with the Borrower, the “Grantors” and individually,
a “Grantor”) and UNION BANK OF CALIFORNIA, N.A., a national association, as
Administrative Agent (“Secured Party”) for the ratable benefit of itself, the
Banks (as defined below), the Issuing Banks (as defined below), and the Swap
Counterparties (as defined in the Security Agreement) (together with the
Administrative Agent, the Issuing Banks, and the Banks, individually a
“Beneficiary”, and collectively, the “Beneficiaries”).
     A. Reference is made to that certain Amended and Restated Credit Agreement
dated as of August 27, 2007 by and among the Borrower, the lenders party thereto
from time to time (individually, a “Bank” and collectively, the “Banks”), the
Banks issuing letters of credit thereunder from time to time (individually, an
“Issuing Bank” and collectively, the “Issuing Banks”), and Secured Party (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”).
     B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement and/or the
Credit Agreement.
     C. The Grantors have entered into the Security Agreement in order to induce
the Banks to make Advances and the Issuing Banks to issue Letters of Credit.
Pursuant to Section 5.10 of the Credit Agreement, each Subsidiary (other than a
Restricted Subsidiary) of the Borrower that was not in existence on the date of
the Credit Agreement is required to enter into the Security Agreement as a
Grantor upon becoming a Subsidiary. Section 18(j) of the Security Agreement
provides that additional Subsidiaries of the Borrower may become Grantors under
the Security Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary of the Borrower (the “New Grantor”)
is executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Grantor under the Security Agreement in order to induce
the Banks to make additional Advances and the Issuing Banks to issue additional
Letters of Credit and as consideration for Advances previously made and Letters
of Credit previously issued.
     Accordingly, the Secured Party and the New Grantor agree as follows:
     SECTION 1. In accordance with Section 18(j) of the Security Agreement, the
New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby agrees (a) to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and
(b) represents and warrants that the representations and warranties made by it
as a Grantor thereunder are true and correct on and as of the date hereof in all
material respects. In furtherance of the foregoing, the New Grantor, as security
for the payment and performance in

Annex 1 to Amended and Restated Security Agreement
Page 1

--------------------------------------------------------------------------------

 

full of the Secured Obligations (as defined in the Security Agreement), does
hereby create and grant to the Secured Party, its successors and assigns, for
the benefit of the Beneficiaries, their successors and assigns, a continuing
security interest in and lien on all of the New Grantor’s right, title and
interest in and to the Collateral (as defined in the Security Agreement) of the
New Grantor. Each reference to a “Grantor” in the Security Agreement shall be
deemed to include the New Grantor. The Security Agreement is hereby incorporated
herein by reference.
     SECTION 2. The New Grantor represents and warrants to the Secured Party and
the other Beneficiaries that this Supplement has been duly authorized, executed
and delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors’ rights generally and subject, as to enforceability, to equitable
principles of general application (regardless of whether enforcement is sought
in a proceeding in equity or at law)).
     SECTION 3. This Supplement may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Secured Party shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Grantor and the Secured Party.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
     SECTION 4. The New Grantor hereby represents and warrants that set forth on
Schedule 1 attached hereto are (a) its sole jurisdiction of formation and type
of organization, (b) its federal tax identification number and the
organizational number, and (c) all names used by it during the last five years
prior to the date of this Supplement.
     SECTION 5. Except as expressly supplemented hereby, the Security Agreement
shall remain in full force and effect.
     SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.
     SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

Annex 1 to Amended and Restated Security Agreement
Page 2

--------------------------------------------------------------------------------

 

     SECTION 8. All communications and notices hereunder shall be in writing and
given as provided in the Security Agreement. All communications and notices
hereunder to the New Grantor shall be given to it at the address set forth under
its signature hereto.
     SECTION 9. The New Grantor agrees to reimburse the Secured Party for its
reasonable out-of-pocket expenses in connection with this Supplement, including
the reasonable fees, other charges and disbursements of counsel for the Secured
Party.
     THIS SUPPLEMENT, THE SECURITY AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS
DEFINED IN THE CREDIT AGREEMENT REFERRED TO IN THIS SUPPLEMENT, REPRESENT THE
FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
     THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
     IN WITNESS WHEREOF, the New Grantor and the Secured Party have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.

            [Name of New Grantor],
      By:           Name:           Title:             Address:                
      UNION BANK OF CALIFORNIA, N.A., as
Secured Party for the ratable benefit of the
Beneficiaries
      By:           Name:           Title:      

Annex 1 to Amended and Restated Security Agreement
Page 3

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Schedule 1
Supplement No. ____ to
the Amended and Restated
Security Agreement

         
New Grantor:
  [GRANTOR]
 
   
Jurisdiction of Formation / Filing:
  [STATE]
 
   
Type of Organization:
  [ENTITY TYPE]
 
   
Organizational Number:
       
 
   
Federal Tax Identification Number:
       
 
   
Prior Names:
       

Annex 1 to Amended and Restated Security Agreement
Page 4