Document:

exv4w3

 

Execution Copy

Exhibit 4.3

 

 

 

 

REGISTRATION RIGHTS AGREEMENT

Dated as of June 28, 2005

by and among

HOLLY ENERGY PARTNERS, L.P.

and

HOLLY ENERGY FINANCE CORP.

as Issuers,

and

UBS SECURITIES LLC,

as Initial Purchaser

61/4% Senior Notes due 2015

 

 

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 1.
	 	Definitions	 	 	1	 
	 
	 	 	 	 	 	 
	Section 2.
	 	Exchange Offer	 	 	4	 
	 
	 	 	 	 	 	 
	Section 3.
	 	Shelf Registration	 	 	6	 
	 
	 	 	 	 	 	 
	Section 4.
	 	Liquidated Damages	 	 	7	 
	 
	 	 	 	 	 	 
	Section 5.
	 	Registration Procedures	 	 	8	 
	 
	 	 	 	 	 	 
	Section 6.
	 	Registration Expenses	 	 	15	 
	 
	 	 	 	 	 	 
	Section 7.
	 	Indemnification	 	 	15	 
	 
	 	 	 	 	 	 
	Section 8.
	 	Rule 144A	 	 	18	 
	 
	 	 	 	 	 	 
	Section 9.
	 	Underwritten Registrations	 	 	18	 
	 
	 	 	 	 	 	 
	Section 10.
	 	Miscellaneous	 	 	18	 
	 
	 	 	 	 	 	 
	 (a)
	 	No Inconsistent Agreements	 	 	18	 
	 (b)
	 	Adjustments Affecting Registrable Notes	 	 	19	 
	 (c)
	 	Amendments and Waivers	 	 	19	 
	 (d)
	 	Notices	 	 	19	 
	 (e)
	 	Successors and Assigns	 	 	20	 
	 (f)
	 	Counterparts	 	 	20	 
	(g)
	 	Headings	 	 	20	 
	 (h)
	 	Governing Law	 	 	20	 
	(i)
	 	Severability	 	 	20	 
	 (j)
	 	Securities Held by the Issuer or Its Affiliates	 	 	21	 
	(k)
	 	Third-Party Beneficiaries	 	 	21	 
	 (l)
	 	Entire Agreement	 	 	21	 

 

 i

 

REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (this “Agreement”) is dated as of June 28, 2005, by
and between Holly Energy Partners, L.P., a Delaware limited partnership (“Holly Energy
Partners”), and Holly Energy Finance Corp., a Delaware corporation (“Finance Corp.”
and, together with Holly Energy Partners, the “Issuers”), and the guarantors listed on
Schedule I hereto (each, a “Guarantor” and collectively, the “Guarantors”), on the
one hand, and UBS Securities LLC (the “Initial Purchaser”), on the other hand.

          This Agreement is entered into in connection with the Purchase Agreement, dated as of June 14,
2005, by and among the Issuers, the Guarantors and the Initial Purchaser (the “Purchase
Agreement”), relating to the offering of $35,000,000 aggregate principal amount of the Issuers’
61/4% Senior Notes due 2015 (the “Notes”). The execution and delivery of this Agreement is a
condition to the Initial Purchaser’s obligation to purchase the Notes under the Purchase Agreement.

          The parties hereby agree as follows:

     Section 1. Definitions

          As used in this Agreement, the following terms shall have the following meanings:

          "action” shall have the meaning set forth in Section 7(c) hereof.

          "Advice” shall have the meaning set forth in Section 5 hereof.

          "Agreement” shall have the meaning set forth in the first introductory paragraph hereto.

          "Applicable Period” shall have the meaning set forth in Section 2(b) hereof.

          "Board of Directors” shall have the meaning set forth in Section 5 hereof.

          "Business Day” shall mean a day that is not a Legal Holiday.

          "Commission” shall mean the Securities and Exchange Commission.

          "Day” shall mean a calendar day.

          "Damages Payment Date” shall have the meaning set forth in Section 4(b) hereof.

          "Delay Period” shall have the meaning set forth in Section 5 hereof.

          "Effectiveness Period” shall have the meaning set forth in Section 3(b) hereof.

          "Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder.

          "Exchange Notes” shall have the meaning set forth in Section 2(a) hereof.

          "Exchange Offer” shall have the meaning set forth in Section 2(a) hereof.

 

 

          "Exchange Offer Registration Statement” shall have the meaning set forth in Section 2(a)
hereof.

          "Existing Notes” shall mean the Issuers’ existing 6.25% Senior Notes due 2015 issued under the
Indenture

          "Holder” shall mean any holder of a Registrable Note or Registrable Notes.

          "Indenture” shall mean the Indenture, dated as of February 28, 2005, by and among the Issuers,
the Guarantors and U.S. Bank National Association as trustee, pursuant to which the Notes are being
issued, as amended or supplemented from time to time in accordance with the terms thereof.

          "Initial Purchaser” shall have the meaning set forth in the first introductory paragraph
hereof.

          "Inspectors” shall have the meaning set forth in Section 5(m) hereof.

          "Issue Date” shall mean June 28, 2005, the date of original issuance of the Notes.

          "Issuers” shall have the meaning set forth in the introductory paragraph hereto and shall also
include the Issuers’ permitted successors and assigns.

          "Legal Holiday” shall mean a Saturday, a Sunday or a day on which banking institutions in New
York, New York are required by law, regulation or executive order to remain closed.

          "Liquidated Damages” shall have the meaning set forth in Section 4(a) hereof.

          "Losses” shall have the meaning set forth in Section 7(a) hereof.

          "NASD” shall have the meaning set forth in Section 5(q) hereof.

          "Notes” shall have the meaning set forth in the second introductory paragraph hereto.

          "Participant” shall have the meaning set forth in Section 7(a) hereof.

          "Participating Broker-Dealer” shall have the meaning set forth in Section 2(b) hereof.

          "Person” shall mean an individual, corporation, partnership, joint venture association, joint
stock company, trust, unincorporated limited liability company, government or any agency or
political subdivision thereof or any other entity.

          "Private Exchange” shall have the meaning set forth in Section 2(b) hereof.

          "Private Exchange Notes” shall have the meaning set forth in Section 2(b) hereof.

          "Prospectus” shall mean the prospectus included in any Registration Statement (including,
without limitation, any prospectus subject to completion and a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.

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          "Purchase Agreement” shall have the meaning set forth in the second introductory paragraph
hereof.

          "Records” shall have the meaning set forth in Section 5(m) hereof.

          "Registrable Notes” shall mean each Note upon its original issuance and at all times
subsequent thereto, each Exchange Note as to which Section 2(c)(iii) hereof is applicable upon
original issuance and at all times subsequent thereto and each Private Exchange Note upon original
issuance thereof and at all times subsequent thereto, in each case until (i) a Registration
Statement (other than, with respect to any Exchange Note as to which Section 2(c)(ii) hereof is
applicable, the Exchange Offer Registration Statement) covering such Note, Exchange Note or Private
Exchange Note has been declared effective by the Commission and such Note, Exchange Note or such
Private Exchange Note, as the case may be, has been disposed of in accordance with such effective
Registration Statement, (ii) such Note has been exchanged pursuant to the Exchange Offer for an
Exchange Note or Exchange Notes that may be resold without restriction under state and federal
securities laws, (iii) such Note, Exchange Note or Private Exchange Note, as the case may be,
ceases to be outstanding for purposes of the Indenture or (iv) such Note, Exchange Note or Private
Exchange Note has been sold in compliance with Rule 144 or is salable pursuant to Rule 144(k).

          "Registration Default” shall have the meaning set forth in Section 4(a) hereof.

          "Registration Statement” shall mean any appropriate registration statement of the Issuers
covering any of the Registrable Notes filed with the Commission under the Securities Act, and all
amendments and supplements to any such Registration Statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.

          "Requesting Participating Broker-Dealer” shall have the meaning set forth in Section 2(b)
hereof.

          "Rule 144” shall mean Rule 144 promulgated under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or regulation hereafter
adopted by the Commission providing for offers and sales of securities made in compliance therewith
resulting in offers and sales by subsequent holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus delivery requirements of the Securities
Act.

          "Rule 144A” shall mean Rule 144A promulgated under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or regulation hereafter
adopted by the Commission.

          "Rule 415” shall mean Rule 415 promulgated under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.

          "Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

          "Shelf Filing Event” shall have the meaning set forth in Section 2(c) hereof.

          "Shelf Registration” shall have the meaning set forth in Section 3(a) hereof.

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          “Shelf Registration Statement” shall mean a Registration Statement filed in connection with a
Shelf Registration.

          “TIA” shall mean the Trust Indenture Act of 1939, as amended.

          “Trustee” shall mean the trustee under the Indenture and the trustee (if any) under any
indenture governing the Exchange Notes and Private Exchange Notes.

          “Underwritten registration or underwritten offering” shall mean a registration in which
securities of the Issuers are sold to an underwriter for reoffering to the public.

     Section 2. Exchange Offer

          (a) The Issuers shall (i) file a Registration Statement (the “Exchange Offer Registration
Statement”) within 30 days after the Issue Date with the Commission on an appropriate
registration form with respect to a registered offer (the “Exchange Offer”) to exchange any
and all of the Registrable Notes for a like aggregate principal amount of notes (the “Exchange
Notes”) that are identical in all material respects to the Notes (except that the Exchange
Notes shall not contain terms with respect to transfer restrictions or Liquidated Damages upon a
Registration Default), (ii) use commercially reasonable efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act within 90 days after the
Issue Date and (iii) use commercially reasonable efforts to consummate the Exchange Offer within
120 days after the Issue Date. Upon the Exchange Offer Registration Statement being declared
effective by the Commission, the Issuers will offer the Exchange Notes in exchange for surrender of
the Notes. The Issuers shall keep the Exchange Offer open for not less than 20 business days (or
longer if required by applicable law) after the date notice of the Exchange Offer is mailed to
Holders.

          Each Holder that participates in the Exchange Offer will be required to represent to the
Issuers in writing that (i) any Exchange Notes to be received by it will be acquired in the
ordinary course of its business, (ii) it has no arrangement or understanding with any Person to
participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes in
violation of the provisions of the Securities Act or, if it is an affiliate, it will comply with
the registration and prospectus delivery requirements of the Securities Act to the extent
applicable, (iii) if such Holder is not a broker-dealer, it is not engaged in, and does not intend
to engage in, a distribution of Exchange Notes, (iv) if such Holder is a broker-dealer that will
receive Exchange Notes for its own account in exchange for Notes that were acquired as a result of
market-making or other trading activities, it will deliver a prospectus in connection with any
resale of such Exchange Notes and (v) such Holder has full power and authority to transfer the
Notes in exchange for the Exchange Notes and that the Issuers will acquire good and unencumbered
title thereto free and clear of any liens, restrictions, charges or encumbrances and not subject to
any adverse claims.

          (b) The Issuers and the Initial Purchaser acknowledge that the staff of the Commission has
taken the position that any broker-dealer that elects to exchange Notes that were acquired by such
broker-dealer for its own account as a result of market-making or other trading activities for
Exchange Notes in the Exchange Offer (a “Participating Broker-Dealer”) may be deemed to be
an “underwriter” within the meaning of the Securities Act and must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such Exchange Notes (other than
a resale of an unsold allotment resulting from the original offering of the Notes).

          The Issuers and the Initial Purchaser also acknowledge that the staff of the Commission has
taken the position that if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and the means by which

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Participating Broker-Dealers may resell the Exchange Notes, without naming the Participating
Broker-Dealers or specifying the amount of Exchange Notes owned by them, such Prospectus may be
delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligations under
the Securities Act in connection with resales of Exchange Notes for their own accounts, so long as
the Prospectus otherwise meets the requirements of the Securities Act.

          In light of the foregoing, if requested by a Participating Broker-Dealer (a “Requesting
Participating Broker-Dealer”), the Issuers agree to use their commercially reasonable efforts
to keep the Exchange Offer Registration Statement continuously effective for a period not to exceed
180 days after the date on which the Exchange Registration Statement is declared effective, or such
longer period if extended pursuant to the last paragraph of Section 5 hereof (such period, the
“Applicable Period”), or such earlier date as all Requesting Participating Broker-Dealers
shall have notified the Issuers in writing that such Requesting Participating Broker-Dealers have
resold all Exchange Notes acquired in the Exchange Offer. The Issuers shall include a plan of
distribution in such Exchange Offer Registration Statement that meets the requirements set forth in
the preceding paragraph.

          If, prior to consummation of the Exchange Offer, the Initial Purchaser or any Holder, as the
case may be, holds any Notes acquired by it that have, or that are reasonably likely to be
determined to have, the status of an unsold allotment in an initial distribution, or if any Holder
is not entitled to participate in the Exchange Offer, the Issuers upon the request of the Initial
Purchaser or any such Holder, as the case may be, shall simultaneously with the delivery of the
Exchange Notes in the Exchange Offer, issue and deliver to the Initial Purchaser or any such
Holder, as the case may be, in exchange (the “Private Exchange”) for such Notes held by the
Initial Purchaser or any such Holder, as the case may be, a like principal amount of notes (the
“Private Exchange Notes”) of the Issuers that are identical in all material respects to the
Exchange Notes except that the Private Exchange Notes may be subject to restrictions on transfer
and bear a legend to such effect. The Private Exchange Notes shall be issued pursuant to the same
indenture as the Exchange Notes and bear the same CUSIP number as the Exchange Notes.

          For each Note surrendered in the Exchange Offer, the Holder will receive an Exchange Note
having a principal amount equal to that of the surrendered Note. Interest on each Exchange Note
and Private Exchange Note issued pursuant to the Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the Notes surrendered in
exchange therefor or, if no interest has been paid on the Notes, from the Issue Date.

          Upon consummation of the Exchange Offer in accordance with this Section 2, the Issuers shall
have no further registration obligations, except as set forth in Section (c) hereof.

          In connection with the Exchange Offer, the Issuers shall:

     (1) mail or cause to be mailed to each Holder entitled to participate in the Exchange
Offer a copy of the Prospectus forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and related documents;

     (2) utilize the services of a depositary for the Exchange Offer with an address in the
Borough of Manhattan, The City of New York;

     (3) permit Holders to withdraw tendered Notes at any time prior to the close of
business, New York time, on the last Business Day on which the Exchange Offer shall remain
open; and

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     (4) otherwise comply in all material respects with all applicable laws, rules and
regulations.

          As soon as practicable after the close of the Exchange Offer and the Private Exchange, if any,
the Issuers shall:

     (1) accept for exchange all Notes validly tendered and not validly withdrawn by the
Holders pursuant to the Exchange Offer and the Private Exchange, if any;

     (2) deliver or cause to be delivered to the Trustee for cancellation all Notes so
accepted for exchange; and

     (3) cause the Trustee to authenticate and deliver promptly to each such Holder of
Notes, Exchange Notes or Private Exchange Notes, as the case may be, equal in principal
amount to the Registrable Notes of such Holder so accepted for exchange.

          The Exchange Offer and the Private Exchange shall not be subject to any conditions, other than
that (i) the Exchange Offer or Private Exchange, as the case may be, does not violate applicable
law or any applicable interpretation of the staff of the Commission, (ii) no action or proceeding
shall have been instituted or threatened in any court or by any governmental agency which might
materially impair the ability of the Issuers to proceed with the Exchange Offer or the Private
Exchange, and no material adverse development shall have occurred in any existing action or
proceeding with respect to the Issuers and (iii) all governmental approvals shall have been
obtained, which approvals the Issuers deem necessary for the consummation of the Exchange Offer or
Private Exchange.

          The Exchange Notes and the Private Exchange Notes shall be issued under (i) the Indenture or
(ii) an indenture identical in all material respects to the Indenture (in either case, with such
changes as are necessary to comply with any requirements of the Commission to effect or maintain
the qualification thereof under the TIA) and which, in either case, has been qualified under the
TIA and shall provide that (a) the Exchange Notes shall not be subject to the transfer restrictions
set forth in the Indenture and (b) the Private Exchange Notes shall be subject to the transfer
restrictions set forth in the Indenture. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes shall vote and consent together on all
matters as one class and that none of the Exchange Notes, the Private Exchange Notes or the Notes
will have the right to vote or consent as a separate class on any matter.

          (c) In the event that (i) any changes in law or the applicable interpretations of the staff of
the Commission do not permit the Issuers to effect the Exchange Offer, (ii) any Holder, other than
the Initial Purchaser, is prohibited by law or the applicable interpretations of the staff of the
Commission from participating in the Exchange Offer or does not receive Exchange Notes on the date
of the exchange that may be sold without restriction under state and federal securities laws (other
than due solely to the status of such holder as an affiliate of the Issuers within the meaning of
the Securities Act) or (iii) the Initial Purchaser so requests with respect to Notes or Private
Exchange Notes that have, or that are reasonably likely to be determined to have, the status of
unsold allotments in an initial distribution (each such event referred to in clauses (i) through
(iii) of this sentence, a “Shelf Filing Event”), then the Issuers shall file a Shelf
Registration pursuant to Section 3 hereof.

     Section 3. Shelf Registration

          If at any time a Shelf Filing Event shall occur, then:

6

 

          (a) Shelf Registration. The Issuers shall file with the Commission a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the
Registrable Notes not exchanged in the Exchange Offer, Private Exchange Notes and Exchange Notes as
to which Section 2(c)(iii) is applicable (the “Shelf Registration”). The Issuers shall use
commercially reasonable efforts to file with the Commission the Shelf Registration as promptly as
practicable, but in no event more than 60 days following the date on which the obligation to file
such Shelf Registration Statement with the Commission arises. The Shelf Registration shall be on
such appropriate form permitting registration of such Registrable Notes for resale by Holders in
the manner or manners designated by them (including, without limitation, one or more underwritten
offerings). The Issuers shall not permit any securities other than the Registrable Notes and the
Existing Notes to be included in the Shelf Registration.

          (b) The Issuers shall use their commercially reasonable efforts (x) to cause the Shelf
Registration to be declared effective under the Securities Act on or prior to the later of 60
calendar days after the Issue Date or 90 days after the Shelf Registration is required to be filed
with the Commission and (y) to keep the Shelf Registration continuously effective under the
Securities Act for the period ending on the date which is two years from the Issue Date, subject to
extension pursuant to the penultimate paragraph of Section 5 hereof (the “Effectiveness
Period”), or such shorter period ending when all Registrable Notes covered by the Shelf
Registration have been sold in the manner set forth and as contemplated in the Shelf Registration;
provided, however, that (i) the Effectiveness Period in respect of the Shelf
Registration shall be extended to the extent required to permit dealers to comply with the
applicable prospectus delivery requirements of Rule 174 under the Securities Act and as otherwise
provided herein and (ii) the Issuers may suspend the effectiveness of the Shelf Registration
Statement under the circumstance referred to in the penultimate paragraph of Section 5 hereof.

          (c) Supplements and Amendments. The Issuers agree to supplement or make amendments to
the Shelf Registration Statement as and when required by the rules, regulations or instructions
applicable to the registration form used for such Shelf Registration Statement or by the Securities
Act or rules and regulations thereunder for shelf registration, or if reasonably requested by the
Holders of a majority in aggregate principal amount of the Registrable Notes covered by such
Registration Statement or by any underwriter of such Registrable Notes.

     Section 4. Liquidated Damages

          (a) The Issuers and the Initial Purchaser agree that the Holders will suffer damages if the
Issuers fail to fulfill their obligations under Section 2 or Section 3 hereof and that it would not
be feasible to ascertain the extent of such damages with precision. Accordingly, the Issuers agree
that if:

     (i) the Exchange Offer Registration Statement is not filed with the Commission on or prior
to the 30th day following the Issue Date or, if that day is not a Business Day, the next day
that is a Business Day,

     (ii) the Exchange Offer Registration Statement is not declared effective on or prior to the
90th day following the Issue Date or, if that day is not a Business Day, the next day that
is a Business Day,

     (iii) the Exchange Offer is not consummated on or prior to the 120th day following the Issue
Date, or, if that day is not a Business Day, the next day that is a Business Day; or

     (iv) the Shelf Registration Statement is required to be filed but is not declared effective
by the later of 60 calendar days after the Issue Date or 90 days after the Shelf

7

 

Registration is required to be filed with the Commission, or, if either such day is not a
Business Day, the next day that is a Business Day or is declared effective by such date but
thereafter ceases to be effective or usable, except if the Shelf Registration ceases to be
effective or usable as specifically permitted by the penultimate paragraph of Section 5
hereof

(each such event referred to in clauses (i) through (iv) a “Registration Default”),
liquidated damages in the form of additional cash interest (“Liquidated Damages”) will
accrue on the affected Notes and the affected Exchange Notes, as applicable. The rate of
Liquidated Damages will be 0.25% per annum for the first 90-day period immediately following the
occurrence of a Registration Default, increasing by an additional 0.25% per annum with respect to
each subsequent 90-day period up to a maximum amount of additional interest of 1.00% per annum,
from and including the date on which any such Registration Default shall occur to, but excluding,
the earlier of (1) the date on which all Registration Defaults have been cured or (2) the date on
which all the Notes and Exchange Notes otherwise become freely transferable by Holders other than
affiliates of the Issuers without further registration under the Securities Act.

Notwithstanding the foregoing, (1) the amount of Liquidated Damages payable shall not increase
because more than one Registration Default has occurred and is pending and (2) a Holder of Notes or
Exchange Notes who is not entitled to the benefits of the Shelf Registration Statement
(i.e., such Holder has not elected to include information) shall not be entitled to
Liquidated Damages with respect to a Registration Default that pertains to the Shelf Registration
Statement.

          (b) So long as Notes remain outstanding, the Issuers shall notify the Trustee within five
Business Days after each and every date on which an event occurs in respect of which Liquidated
Damages is required to be paid. Any amounts of Liquidated Damages due pursuant to clauses (a)(i),
(a)(ii), (a)(iii) or (a)(iv) of this Section 4 will be payable in cash semi-annually on each March
1 and September 1 (each a “Damages Payment Date”), commencing with the first such date
occurring after any such Liquidated Damages commence to accrue, to Holders to whom regular interest
is payable on such Damages Payment Date with respect to Notes that are Registrable Securities. The
amount of Liquidated Damages for Registrable Notes will be determined by multiplying the applicable
rate of Liquidated Damages by the aggregate principal amount of all such Registrable Notes
outstanding on the Damages Payment Date following such Registration Default in the case of the
first such payment of Liquidated Damages with respect to a Registration Default (and thereafter at
the next succeeding Damages Payment Date until the cure of such Registration Default), multiplied
by a fraction, the numerator of which is the number of days such Liquidated Damages rate was
applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day
months and, in the case of a partial month, the actual number of days elapsed), and the denominator
of which is 360.

     Section 5. Registration Procedures

          In connection with the filing of any Registration Statement pursuant to Section 2 or 3 hereof,
the Issuers shall effect such registrations to permit the sale of the securities covered thereby in
accordance with the intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Issuers hereunder, the Issuers shall:

     (a) Prepare and file with the Commission the Registration Statement or Registration
Statements prescribed by Section 2 or 3 hereof, and use their commercially reasonable
efforts to cause each such Registration Statement to become effective and remain effective
as provided herein; provided, however, that if (1) such filing is pursuant
to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under the
Securities Act by any Participating Broker-Dealer

8

 

who seeks to sell Exchange Notes during the Applicable Period relating thereto, before
filing any Registration Statement or Prospectus or any amendments or supplements thereto,
the Issuers shall furnish to and afford the Holders of the Registrable Notes covered by such
Registration Statement or each such Participating Broker-Dealer, as the case may be, its
counsel (if such counsel is known to the Issuers) and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto) proposed to be
filed (in each case at least five Business Days prior to such filing or such later date as
is reasonable under the circumstances). The Issuers shall not file any Registration
Statement or Prospectus or any amendments or supplements thereto if the Holders of a
majority in aggregate principal amount of the Registrable Notes covered by such Registration
Statement, or any such Participating Broker-Dealer, as the case may be, its counsel, or the
managing underwriters, if any, shall reasonably object on a timely basis.

     (b) Prepare and file with the Commission such amendments and post-effective amendments
to each Shelf Registration Statement or Exchange Offer Registration Statement, as the case
may be, as may be necessary to keep such Registration Statement continuously effective for
the Effectiveness Period or the Applicable Period, as the case may be; cause the related
Prospectus to be supplemented by any Prospectus supplement required by applicable law, and
as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in
force) promulgated under the Securities Act; and comply with the provisions of the
Securities Act and the Exchange Act applicable to them with respect to the disposition of
all securities covered by such Registration Statement as so amended or in such Prospectus as
so supplemented and with respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus, in each case, in accordance with
the intended methods of distribution set forth in such Registration Statement or Prospectus,
as so amended.

     (c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto
from whom the Issuers have received written notice that such Broker-Dealer will be a
Participating Broker-Dealer in the applicable Exchange Offer, notify the selling Holders of
Registrable Notes, or each such Participating Broker-Dealer, as the case may be, their
counsel and the managing underwriters, if any, as promptly as possible, and, if requested by
any such Person, confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any Holder may, upon
request, obtain, at the sole expense of the Issuers, one conformed copy of such Registration
Statement or post-effective amendment including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and exhibits), (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any preliminary prospectus or
the initiation of any proceedings for that purpose, (iii) if at any time when a Prospectus
is required by the Securities Act to be delivered in connection with sales of the
Registrable Notes or resales of Exchange Notes by Participating Broker-Dealers the
representations and warranties of the Issuers contained in any agreement (including any
underwriting agreement) contemplated by Section 5(l)(i) hereof cease to be true and correct
in all material respects, (iv) of the receipt by the Issuers of any notification with
respect to the suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Notes or the Exchange Notes for offer or
sale in any jurisdiction, or the initiation or threatening of any proceeding for such
purpose, (v) of the happening of any event,

9

 

the existence of any condition or any information becoming known to the Issuers that
makes any statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in or amendments or supplements
to such Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (vi) of the Issuers’ determination that a
post-effective amendment to a Registration Statement would be appropriate.

     (d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use their
commercially reasonable efforts to prevent the issuance of any order suspending the
effectiveness of a Registration Statement or of any order preventing or suspending the use
of a Prospectus or suspending the qualification (or exemption from qualification) of any of
the Registrable Notes or the Exchange Notes, as the case may be, for sale in any
jurisdiction, and, if any such order is issued, to use their commercially reasonable efforts
to obtain the withdrawal of any such order at the earliest practicable moment.

     (e) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period and if
reasonably requested by the managing underwriter or underwriters (if any), the Holders of a
majority in aggregate principal amount of the Registrable Notes covered by such Registration
Statement or any Participating Broker-Dealer, as the case may be, (i) promptly incorporate
in such Registration Statement or Prospectus a prospectus supplement or post-effective
amendment such information as the managing underwriter or underwriters (if any), such
Holders or any Participating Broker-Dealer, as the case may be (based upon advice of
counsel), reasonably determine is necessary to be included therein and (ii) make all
required filings of such prospectus supplement or such post-effective amendment as soon as
practicable after the Issuers have received notification of the matters to be incorporated
in such prospectus supplement or post-effective amendment; provided,
however, that the Issuers shall not be required to take any action hereunder that
would, in the written opinion of counsel to the Issuers, violate applicable laws.

     (f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, furnish or make
electronically accessible to each selling Holder of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, who so requests, its counsel and each
managing underwriter, if any, at the sole expense of the Issuers, one conformed copy of the
Registration Statement or Registration Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if requested, all documents incorporated
or deemed to be incorporated therein by reference and all exhibits.

10

 

     (g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, deliver to each
selling Holder of Registrable Notes or each such Participating Broker-Dealer, as the case
may be, its respective counsel, and the underwriters, if any, at the sole expense of the
Issuers, as many copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably request; and, subject to
the last paragraph of this Section 5, the Issuers hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers (if any), in connection with the offering and
sale of the Registrable Notes covered by, or the sale by Participating Broker-Dealers of the
Exchange Notes pursuant to, such Prospectus and any amendment or supplement thereto.

     (h) Prior to any public offering of Registrable Notes or Exchange Notes or any delivery
of a Prospectus contained in the Exchange Offer Registration Statement by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use their
commercially reasonable efforts to register or qualify, and to cooperate with the one
representative chosen by a majority in principal amount of the Registrable Notes held by the
selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case
may be, the managing underwriter or underwriters, if any, and its respective counsel in
connection with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes or Exchange Notes, as the case may be, for offer
and sale under the securities or Blue Sky laws of such jurisdictions within the United
States as such representative, Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request; provided, however, that where Exchange
Notes or Registrable Notes are offered other than through an underwritten offering, the
Issuers agree to use their commercially reasonable efforts to cause the Issuers’ counsel to
perform Blue Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably necessary or advisable
to enable the disposition in such jurisdictions of such Exchange Notes or Registrable Notes
covered by the applicable Registration Statement; provided, however, that
the Issuers shall not be required to (A) qualify generally to do business in any
jurisdiction where they are not then so qualified, (B) take any action that would subject
them to general service of process in any such jurisdiction where it they are not then so
subject or (C) subject themselves to taxation in excess of a nominal dollar amount in any
such jurisdiction where they are not then so subject.

     (i) If a Shelf Registration is filed pursuant to Section 3 hereof, cooperate with the
selling Holders of Registrable Notes and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates representing Registrable
Notes to be sold, which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company and enable such Registrable
Notes to be in such denominations and registered in such names as the managing underwriter
or underwriters, if any, or selling Holders may request at least five Business Days prior to
any sale of such Registrable Notes or Exchange Notes.

     (j) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer

11

 

who seeks to sell Exchange Notes during the Applicable Period, upon the occurrence of
any event contemplated by Section 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable
prepare and (subject to Section 5(a) and the penultimate paragraph of this Section 5) file
with the Commission, at the sole expense of the Issuers, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, or file any other
required document so that, as thereafter delivered to the purchasers of the Registrable
Notes being sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

     (k) Prior to the effective date of the first Registration Statement relating to the
Registrable Notes, (i) provide the Trustee with certificates for the Registrable Notes in a
form eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP number
for the Registrable Notes.

     (l) In connection with any underwritten offering of Registrable Notes pursuant to a
Shelf Registration, enter into an underwriting agreement as is customary in underwritten
offerings of debt securities similar to the Notes and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in order to expedite or
facilitate the registration or the disposition of such Registrable Notes and, in such
connection, (i) make such representations and warranties to, and covenants with, the
underwriters with respect to the business of the Issuers and Holly Energy Partners’
subsidiaries, as then conducted (including any acquired business, properties or entity, if
applicable), and the Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings of debt securities similar to the Notes,
and confirm the same in writing if and when requested; (ii) use their commercially
reasonable efforts to obtain the written opinions of counsel to the Issuers and written
updates thereof in form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the underwriters covering the matters customarily
covered in opinions requested in underwritten offerings and such other matters as may be
reasonably requested by the managing underwriter or underwriters; (iii) use their
commercially reasonable efforts to obtain “cold comfort” letters and updates thereof in
form, scope and substance reasonably satisfactory to the managing underwriter or
underwriters from independent certified public accountants, addressed to each of the
underwriters, such letters to be in customary form and covering matters of the type
customarily covered in “cold comfort” letters in connection with underwritten offerings; and
(iv) if an underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in Section 7 hereof (or
such other provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Registrable Notes covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section; provided that the Issuers shall not be
required to provide indemnification to any underwriter selected in accordance with the
provisions of Section 9 hereof with respect to information relating to such underwriter
furnished in writing to the Issuers by or on behalf of such underwriter expressly for
inclusion in such Registration Statement. The above shall be done at each closing under
such underwriting agreement, or as and to the extent required thereunder.

     (m) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to

12

 

sell Exchange Notes during the Applicable Period, make available for inspection one
representative chosen by a majority in principal amount of the Registrable Notes held by of
the selling Holders of such Registrable Notes being sold or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent retained by any such
representative or each such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the “Inspectors”), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate documents
and instruments of the Issuers and Holly Energy Partners’ subsidiaries (collectively, the
“Records”) as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers, directors and employees
of the Issuers and Holly Energy Partners’ subsidiaries to supply all information reasonably
requested by any such Inspector in connection with such Registration Statement and
Prospectus. Each Inspector shall agree in writing that it will keep the Records
confidential and that it will not disclose, or use in connection with any market
transactions in violation of any applicable securities laws, any Records that the Issuers
determine, in good faith, to be confidential and that Holly Energy Partners notifies the
Inspectors in writing are confidential unless (i) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction, (ii)
disclosure of such information is necessary in the opinion of counsel for an Inspector in
connection with any action, claim, suit or proceeding, directly or indirectly, involving or
potentially involving such Inspector and arising out of, based upon, relating to, or
involving this Agreement or the Purchase Agreement, or any transactions contemplated hereby
or thereby or arising hereunder or thereunder, or (iii) the information in such Records has
been made generally available to the public other than as a result of a breach of the
confidentiality provisions set forth in this section (m); provided, however,
that (i) each Inspector shall agree to use commercially reasonable efforts to provide notice
to the Issuers of the potential disclosure of any information by such Inspector pursuant to
clause (i) or (ii) of this sentence to permit the Issuers to obtain a protective order (or
waive the provisions of this paragraph (m)) and (ii) each such Inspector shall take such
actions as are reasonably necessary to protect the confidentiality of such information (if
practicable).

     (n) Provide an indenture trustee for the Registrable Notes or the Exchange Notes, as
the case may be, and cause the Indenture or the trust indenture provided for in Section 2(a)
hereof to be qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Registrable Notes; and in connection
therewith, cooperate with the trustee under any such indenture and the Holders of the
Registrable Notes or Exchange Notes, as applicable, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use their commercially reasonable efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the Commission to enable such indenture to be so
qualified in a timely manner.

     (o) Comply with all applicable rules and regulations of the Commission and make
generally available to the Issuers’ securityholders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable Notes or Exchange
Notes are sold to underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Issuers after the effective date of a Registration Statement,
which statements shall cover said 12-month periods consistent with the requirements of Rule
158.

13

 

     (p) If the Exchange Offer or a Private Exchange is to be consummated, upon delivery of
the Registrable Notes by Holders to the Issuers (or to such other Person as directed by the
Issuers) in exchange for the Exchange Notes or the Private Exchange Notes, as the case may
be, mark, or cause to be marked, on such Registrable Notes that such Registrable Notes are
being cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be; provided that in no event shall such Registrable Notes be marked as
paid or otherwise satisfied.

     (q) Cooperate with each seller of Registrable Notes covered by any Registration
Statement and each underwriter, if any, participating in the disposition of such Registrable
Notes and their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the “NASD”).

          The Issuers may require each seller of Registrable Notes or Exchange Notes as to which any
registration is being effected to furnish to the Issuers such information regarding such seller and
the distribution of such Registrable Notes or Exchange Notes as the Issuers may, from time to time,
reasonably request and, in any event, each such seller shall be required to provide to the Issuers
the selling security holder information required by Item 507 or 508, as applicable, of Regulation
S-K under the Exchange Act. The Issuers may exclude from such registration the Registrable Notes
of any seller so long as such seller fails to furnish such information within a reasonable time
after receiving such request and in the event of such an exclusion, the Issuers shall have no
further obligation under this Agreement (including, without limitation, the obligations under
Section 4) with respect to such seller or any subsequent Holder of such Registrable Notes. Each
seller as to which any Shelf Registration is being effected agrees to furnish promptly to the
Issuers all information required to be disclosed in order to make any information previously
furnished to the Issuers by such seller not materially misleading.

          If any such Registration Statement refers to any Holder by name or otherwise as the holder of
any securities of the Issuers, then such Holder shall have the right to require (i) the insertion
therein of language, in form and substance reasonably satisfactory to such Holder, to the effect
that the holding by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the securities covered thereby and that such holding does
not imply that such Holder will assist in meeting any future financial requirements of the Issuers,
or (ii) in the event that such reference to such Holder by name or otherwise is not required by the
Securities Act or any similar federal statute then in force, the deletion of the reference to such
Holder in any amendment or supplement to the applicable Registration Statement filed or prepared
subsequent to the time that such reference ceases to be required.

          Each Holder of Registrable Notes and each Participating Broker-Dealer agrees by acquisition of
such Registrable Notes or Exchange Notes that, upon actual receipt of any notice from the Issuers
(x) of the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv),
or 5(c)(v) hereof, or (y) that the Board of Directors of the General Partner (the “Board of
Directors”) has resolved that the Issuers have a bona fide business purpose for doing so, then
the Issuers may delay the filing or the effectiveness of the Exchange Offer Registration Statement
or the Shelf Registration Statement (if not then filed or effective, as applicable) and shall not
be required to maintain the effectiveness thereof or amend or supplement the Exchange Offer
Registration Statement or the Shelf Registration, in all cases, for a period (a “Delay
Period”) expiring upon the earlier to occur of (i) in the case of the immediately preceding
clause (x), such Holder’s or Participating Broker-Dealer’s receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(i) hereof or until it is advised in
writing (the “Advice”) by the Issuers that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto or (ii) in the case of
the immediately preceding clause (y), the date which is the earlier of (A) the date on which such
business purpose ceases to interfere with the Issuers’ obligations to file or maintain the
effectiveness of any such Registration

14

 

Statement pursuant to this Agreement or (B) 60 days after the Issuers notify the Holders of
such good faith determination. There shall not be more than 60 days of Delay Periods during any
12-month period. Each of the Effectiveness Period and the Applicable Period, if applicable, shall
be extended by the number of days during any Delay Period. Any Delay Period will not alter the
obligations of the Issuers to pay Liquidated Damages under the circumstances set forth in Section 4
hereof.

          In the event of any Delay Period pursuant to clause (y) of the preceding paragraph, notice
shall be given as soon as practicable after the Board of Directors makes such a determination of
the need for a Delay Period and shall advise the recipient thereof of the agreement of such Holder
provided in the next succeeding sentence. Each Holder, by his acceptance of any Registrable Note,
agrees that during any Delay Period, each Holder will discontinue disposition of such Notes or
Exchange Notes covered by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be.

     Section 6. Registration Expenses

          All fees and expenses incident to the performance of or compliance with this Agreement by the
Issuers (other than any underwriting discounts or commissions) shall be borne by the Issuers,
whether or not the Exchange Offer Registration Statement or the Shelf Registration is filed or
becomes effective or the Exchange Offer is consummated, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including, without limitation,
reasonable fees and disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility of the Registrable Notes
or Exchange Notes for investment under the laws of such jurisdictions (x) where the holders of
Registrable Notes are located, in the case of an Exchange Offer, or (y) as provided in Section 5(h)
hereof, in the case of a Shelf Registration or in the case of Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing prospectuses if the printing of prospectuses is requested
by the managing underwriter or underwriters, if any, or by the Holders of a majority in aggregate
principal amount of the Registrable Notes included in any Registration Statement or in respect of
Exchange Notes to be sold by any Participating Broker-Dealer during the Applicable Period, as the
case may be, (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Issuers and reasonable fees and disbursements of one special counsel for all of the
sellers of Registrable Notes in connection with a Shelf Registration (exclusive of any counsel
retained pursuant to Section 7 hereof), (v) fees and disbursements of all independent certified
public accountants referred to in Section 5(l)(iii) hereof, (vi) fees and expenses of all other
Persons retained by the Issuers, (vii) the fees and expenses incurred in connection with the rating
of the securities, in each case, if applicable, and (viii) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting agreements, indentures and
any other documents necessary in order to comply with this Agreement. Notwithstanding the
foregoing or anything to the contrary, each Holder shall pay all underwriting discounts and
commissions of any underwriters with respect to any Registrable Notes sold by or on behalf of it.

     Section 7. Indemnification

          (a) The Issuers agree to indemnify and hold harmless each Holder of Registrable Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable Period, each Person, if
any, who controls any such Person within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act, the agents, employees, officers and directors of each Holder and each
such Participating Broker-Dealer and the agents, employees, officers and directors of any such
controlling

15

 

Person (each, a “Participant”) from and against any and all losses, liabilities,
claims, damages and expenses (including, but not limited to, reasonable attorneys’ fees and any and
all reasonable out-of-pocket expenses actually 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 (in the manner set forth in clause
(c) below)) (collectively, “Losses”) to which they or any of them may become subject under
the Securities 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 any Registration Statement (or any amendment thereto) or Prospectus (as
amended or supplemented if the Issuers shall have furnished any amendments or supplements thereto),
or caused by, arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein, in the
case of the Prospectus, in the light of the circumstances under which they were made, not
misleading, provided that (i) the foregoing indemnity shall not be available to any
Participant insofar as such Losses are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information relating to such
Participant furnished to the Issuers in writing by or on behalf of such Participant expressly for
use therein, and (ii) that the foregoing indemnity with respect to any preliminary prospectus shall
not inure to the benefit of any Participant from whom the Person asserting such Losses purchased
Registrable Notes if (x) it is established in the related proceeding that such Participant failed
to send or give a copy of the Prospectus (as amended or supplemented if such amendment or
supplement was furnished to such Participant prior to the written confirmation of such sale) to
such Person with or prior to the written confirmation of such sale, if required by applicable law,
and (y) the untrue statement or omission or alleged untrue statement or omission was completely
corrected in the Prospectus (as amended or supplemented if amended or supplemented as aforesaid)
and such Prospectus does not contain any other untrue statement or omission or alleged untrue
statement or omission that was the subject matter of the related proceeding. This indemnity
agreement will be in addition to any liability that the Issuers may otherwise have, including, but
not limited to, liability under this Agreement.

          (b) Each Participant agrees, severally and not jointly, to indemnify and hold harmless the
Issuers, each Person, if any, who controls the Issuers within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, and each of its agents, employees, officers
and directors and the agents, employees, officers and directors of any such controlling Person from
and against any Losses to which they or any of them may become subject under the Securities 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
any Registration Statement (or any amendment thereto) or Prospectus (as amended or supplemented if
the Issuers shall have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by, arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein,
in the case of the Prospectus, 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 made
in reliance upon and in conformity with information relating to such Participant furnished in
writing to the Issuers by or on behalf of such Participant expressly for use therein.

          (c) Promptly after receipt by an indemnified party under subsection 7(a) or 7(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 an indemnifying party
shall not relieve such indemnifying party from any liability that it may have under this Section 7
except to the extent that it has

16

 

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
reasonably 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 party or
parties (or such indemnifying parties have assumed the defense of such action), and such
indemnified party or parties shall have reasonably concluded; based on advice of counsel 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 party 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. Any such separate firm
for the Participants shall be designated in writing by Participants who sold a majority in interest
of Registrable Notes sold by all such Participants and shall be reasonably acceptable to the
Issuers and any such separate firm for the Issuers, their affiliates, officers, directors,
representatives, employees and agents and such control Person of the Issuers shall be designated in
writing by the Issuers and shall be reasonably acceptable to the Holders. 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 includes an
unconditional release of such indemnified party from all liability on claims that are the subject
matter of such proceeding.

          (d) In order to provide for contribution in circumstances in which the indemnification
provided for in this Section 7 is for any reason held to be unavailable from the indemnifying
party, or is insufficient to hold harmless a party indemnified under this Section 7, 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 each indemnifying party, on the one hand, and each indemnified party, on the
other hand, from the sale of the Notes to the Initial Purchaser or the resale of the Registrable
Notes by such Holder, as applicable, 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 in
clause (i) above but also the relative fault of each indemnified party, on the one hand, and each
indemnifying party, 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, on the one hand, and each Participant, on the other hand, shall be deemed
to be in the same proportion as (x) the total proceeds from the sale of the Notes to the Initial
Purchaser (net of discounts and commissions but before deducting expenses) received by the Issuers
are to (y) the total net profit received by such Participant in connection with the sale of the
Registrable Notes. The relative fault of the parties 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 the Issuers or such
Participant and the parties’ relative intent, knowledge, access

17

 

to information and opportunity to correct or prevent such statement or omission or alleged
statement or omission.

          (e) The parties 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 Participant be required to contribute any amount in
excess of the amount by which the net profit received by such Participant in connection with the
sale of the Registrable Notes exceeds the amount of any damages that such Participant 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 Securities Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. 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, except to the extent that 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 this Section 7 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.

     Section 8. Rule 144A

          The Issuers covenant that they will file the reports required, if any, to be filed by them
under the Securities Act and the Exchange Act and the rules and regulations adopted by the
Commission thereunder in a timely manner in accordance with the requirements of the Securities Act
and the Exchange Act and, if at any time the Issuers are not required to file such reports, they
will, upon the request of any Holder or beneficial owner of Registrable Notes, make available such
information necessary to permit sales pursuant to Rule 144A under the Securities Act.

     Section 9. Underwritten Registrations

          If any of the Registrable Notes covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager or managers that
will manage the offering will be selected by the Holders of a majority in aggregate principal
amount of such Registrable Notes included in such offering and shall be reasonably acceptable to
the Issuers.

          No Holder of Registrable Notes may participate in any underwritten registration hereunder if
such Holder does not (a) agree to sell such Holder’s Registrable Notes on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements
and (b) complete and execute all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting arrangements.

     Section 10. Miscellaneous

          (a) No Inconsistent Agreements. The Issuers have not, as of the date hereof, and
shall not have, after the date of this Agreement, entered into any agreement with respect to any of
their securities that is inconsistent with the rights granted to the Holders of Registrable Notes in this

18

 

Agreement or otherwise conflicts with the provisions
hereof, other than the registration rights agreement dated February 28, 2005, between the Issuers,
the Guarantors and the initial purchasers of the Existing Notes. The rights granted to the Holders
hereunder do not conflict with and are not inconsistent with, in any material respect, the rights
granted to the holders of any of the Issuers’ other issued and outstanding securities under any
such agreements. The Issuers have not entered and will not enter into any agreement with respect
to any of their securities which will grant to any Person piggy-back registration rights with
respect to any Registration Statement.

          (b) Adjustments Affecting Registrable Notes. The Issuers shall not, directly or
indirectly, take any action with respect to the Registrable Notes as a class that would adversely
affect the ability of the Holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement.

          (c) Amendments and Waivers. The provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departures from the provisions hereof may not
be given except pursuant to a written agreement duly signed and delivered by (I) the Issuers and
(II)(A) the Holders of not less than a majority in aggregate principal amount of the then
outstanding Registrable Notes and (B) in circumstances that would adversely affect the
Participating Broker-Dealers, the Participating Broker-Dealers holding not less than a majority in
aggregate principal amount of the Exchange Notes held by all Participating Broker-Dealers;
provided, however, that Section 7 and this Section 10(c) may not be amended,
modified or supplemented except pursuant to a written agreement duly signed and delivered by the
Issuers and each Holder and each Participating Broker-Dealer (including any Person who was a Holder
or Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case may be, disposed
of pursuant to any Registration Statement) affected by any such amendment, modification, supplement
or waiver. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof
with respect to a matter that relates exclusively to the rights of Holders of Registrable Notes
whose securities are being sold pursuant to a Registration Statement and that does not directly or
indirectly affect, impair, limit or compromise the rights of other Holders of Registrable Notes may
be given by Holders of at least a majority in aggregate principal amount of the Registrable Notes
being sold pursuant to such Registration Statement.

          (d) Notices. All notices and other communications (including, without limitation, any
notices or other communications to the Trustee) provided for or permitted hereunder shall be made
in writing by hand-delivery, registered first-class mail, next-day air courier or telecopier:

     (i) if to a Holder of the Registrable Notes or any Participating Broker-Dealer, at the most
current address of such Holder or Participating Broker-Dealer, as the case may be, set forth
on the records of the registrar under the Indenture.

     (ii) if to the Issuers, at the address as follows:

Holly Energy Partners, L.P.

100 Crescent Court

Suite 1600

Dallas, TX 75201

Telephone: (214) 871-3555

Fax: (214) 615-9380

Attention: Chief Financial Officer

19

 

     (iii) if to the Initial Purchaser, at the address as follows:

UBS Securities LLC

677 Washington Boulevard

Stamford, CT 06901

Telephone: (203) 719-3000

Fax number: (212) 719-8819

Attention: High Yield Capital Markets

With a copy at such address to the attention of Legal Department, fax

number (203) 719-6177

          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 is acknowledged by the recipient’s telecopier machine, if
telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.

          Copies of all such notices, demands or other communications shall be concurrently delivered by
the Person giving the same to the Trustee at the address and in the manner specified in such
Indenture.

          (e) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto, the Holders and the
Participating Broker-Dealers; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the
extent such successor or assign holds Registrable Notes.

          (f) Counterparts. This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same agreement.

          (g) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

          (h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN
THE STATE OF NEW YORK.

          (i) Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or unenforceable.

          (j) Securities Held by the Issuers or Their Affiliates. Whenever the consent or
approval of Holders of a specified percentage of Registrable Notes is required hereunder,
Registrable Notes held by the Issuers or any of their affiliates (as such term is defined in Rule
405 under the

20

 

Securities Act) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.

          (k) Third-Party Beneficiaries. Holders and beneficial owners of Registrable Notes and
Participating Broker-Dealers are intended third-party beneficiaries of this Agreement, and this
Agreement may be enforced by such Persons. No other Person is intended to be, or shall be
construed as, a third-party beneficiary of this Agreement.

          (l) Entire Agreement. This Agreement, together with the Purchase Agreement and the
Indenture, is intended by the parties as a final and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained herein and therein
and any and all prior oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda between the Holders on the one hand and
the Issuers on the other, or between or among any agents, representatives, parents, subsidiaries,
affiliates, predecessors in interest or successors in interest with respect to the subject matter
hereof and thereof are merged herein and replaced hereby.

[Remainder of page intentionally left blank]

 

 

 

 

21

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above

	 	 	 	 	 	 	 	 
	 	 	HOLLY ENERGY PARTNERS, L.P.
	 
	 	 	 	 	 	 
	 	 	By:	 	HEP Logistic Holdings, L.P.,

its general partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	Holly Logistic Services, L.L.C.,

its general partner
	 
	 	 	 	 	 	 
	 	 	By:	 	 	/s/ Stephen J. McDonnell
	 	 	 	 	 
	 

	 	 	 	Name:
	Stephen McDonnell
	 

	 	 	 	Title:
Officer
	Vice President and Chief Financial
	 
	 	 	 	 	 	 
	 	 	HOLLY ENERGY FINANCE CORP.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	/s/ Stephen J. McDonnell
	 	 	 	 	 
	 

	 	 	 	Name:
	Stephen McDonnell
	 

	 	 	 	Title:
Officer
	Vice President and Chief Financial

 

 

	 	 	 	 	 	 	 	 
	 	 	GUARANTORS:
	 
	 	 	 	 	 	 
	 	 	HEP LOGISTICS GP, L.L.C., a Delaware limited

liability company
	 
	 	 	 	 	 	 
	 	 	By:	 	Holly Energy Partners, L.P., a Delaware limited

partnership, its Sole Member
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	HEP Logistics Holdings, L.P., a Delaware

limited partnership, its General Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Holly Logistic Services, L.L.C., a

Delaware limited liability company, its

General Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Stephen J. McDonnell
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Stephen McDonnell

Title: Vice President and Chief 

Financial Officer

 

 

	 	 	 	 	 	 	 	 
	 	 	HOLLY ENERGY PARTNERS-OPERATING, 

L.P., a Delaware limited partnership
	 
	 	 	 	 	 	 
	 	 	By:	 	HEP Logistics GP, L.L.C., a Delaware limited

liability company, its General Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Holly Energy Partners, L.P., a Delaware

limited partnership, its Sole Member
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	HEP Logistics Holdings, L.P., a Delaware

limited partnership, its General Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Holly Logistic Services, L.L.C., a

Delaware limited liability company, its

General Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	          /s/ Stephen J. McDonnell
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Stephen McDonnell

Title: Vice President and Chief

Financial Officer

 

 

	 	 	 	 	 	 
	 	 	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 Sole Member
	 
	 	 	 	 
	 

	 	By:
	 	HEP Logistics Holdings, L.P., a

Delaware limited partnership, its General

Partner
	 
	 	 	 	 
	 

	 	By:
	 	Holly Logistic Services, L.L.C., a

Delaware limited liability company, its

General Partner
	 
	 	 	 	 
	 

	 	By:
	 	          /s/ Stephen J. McDonnell
	 

	 	 	 	 
	 

	 	 	 	Name: Stephen McDonnell

Title: Vice President and Chief

Financial Officer

 

 

	 	 	 	 	 	 
	 	 	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 Delaware 

limited partnership
	 
	 	 	 	 
	 

	 	Each by:
	 	HEP Pipeline GP, L.L.C., a Delaware 

limited liability company and its General 
Partner
	 
	 	 	 	 
	 

	 	By:
	 	Holly Energy Partners—Operating, L.P., 
a
Delaware limited partnership, its Sole

Member
	 
	 	 	 	 
	 

	 	By:
	 	HEP Logistics GP, L.L.C., a Delaware

limited liability company, its General

Partner
	 
	 	 	 	 
	 

	 	By:
	 	Holly Energy Partners, L.P., a Delaware

limited partnership, its Sole Member
	 
	 	 	 	 
	 

	 	By:
	 	HEP Logistics Holdings, L.P., a 

Delaware limited partnership, its General 
Partner
	 
	 	 	 	 
	 

	 	By:
	 	Holly Logistic Services, L.L.C., a

Delaware limited liability company, its

General Partner
	 
	 	 	 	 
	 

	 	By:
	 	          /s/ Stephen J. McDonnell
	 

	 	 	 	 
	 

	 	 	 	Name: Stephen McDonnell

Title: Vice President and Chief

Financial Officer

 

 

	 	 	 	 	 	 	 	 
	 	 	HEP REFINING ASSETS, L.P., a Delaware 
limited
partnership
	 
	 	 	 	 	 	 
	 	 	By:	 	HEP Refining GP, L.L.C., a Delaware limited

liability company and its General Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Holly Energy Partners—Operating, L.P., 

a Delaware limited partnership, its Sole

Member
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	HEP Logistics GP, L.L.C., a Delaware

limited liability company, its General

Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Holly Energy Partners, L.P., a Delaware

limited partnership, its Sole Member
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	HEP Logistics Holdings, L.P., a 

Delaware limited partnership, its General 

Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Holly Logistic Services, L.L.C., a

Delaware limited liability company, its

General Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	          /s/ Stephen J. McDonnell
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Stephen McDonnell

Title: Vice President and Chief

Financial Officer

 

 

	 	 	 	 	 
	 	 	UBS SECURITIES, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Christopher Abbate
	 

	 	 	 	 
	 

	 	 	 	Name: Christopher Abbate
	 

	 	 	 	Title: Executive Director
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kenneth Gayron
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth Gayron
	 

	 	 	 	Title: Director

 

 

SCHEDULE I

GUARANTORS

HEP Logistics GP, L.L.C.

HEP Mountain Home, L.L.C.

HEP Navajo Southern, L.P.

HEP Pipeline Assets, L.P.

HEP Refining Assets, L.P.

HEP Pipeline GP, L.L.C.

HEP Pipeline, L.L.C.

HEP Refining, L.L.C.

HEP Refining GP, L.L.C.

HEP Woods Cross, L.L.C.

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

Holly Energy Partners-Operating, L.P.

 

 

	 	 	 
	Exhibits	 	 
	 
	 	 
	4.1

	 	Form of 6.25% Senior Note Due 2015 (incorporated by reference to Exhibit 4.2 to the Current Report of the Partnership filed with the SEC on March 4, 2005).
	 
	 	 
	4.2

	 	Form of Notation of Guarantee (incorporated by reference to Exhibit 4.3 to the Current Report of the Partnership filed with the SEC on March 4, 2005).
	 
	 	 
	4.3

	 	Registration Rights Agreement, dated June 28, 2005, among the Issuers and the Initial Purchasers.exv10w1

 

 Exhibit 10.1

CREDIT AGREEMENT

     THIS CREDIT AGREEMENT (this “Agreement”) is entered into as of June 30,
2005, by and between FIRST INTERSTATE BANCSYSTEM, INC., a Montana
corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION
(“Bank”).

RECITALS

     Borrower has requested that Bank extend or continue credit to
Borrower as described below, and Bank has agreed to provide such credit to
Borrower on the terms and conditions contained herein.

     NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower hereby
agree as follows:

ARTICLE I

CREDIT TERMS

     SECTION 1.1. LINE OF CREDIT.

     (a)      Line of Credit. Subject to the terms and conditions of this
Agreement, Bank
hereby agrees to make advances to Borrower from time to time up to and
including June 30, 2008, not to exceed at any time the aggregate principal
amount of Twenty Five Million Dollars ($25,000,000.00) (“Line of Credit”),
the proceeds of which shall be used for Borrower’s liquidity purposes.
Borrower’s obligation to repay advances under the Line of Credit shall be
evidenced by a promissory note dated as of June 30, 2005 (“Line of Credit
Note”), all terms of which are incorporated herein by this reference.

     (b)      Borrowing and Repayment. Borrower may from time to time during the
term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at
any time exceed the maximum principal amount available thereunder, as set
forth above.

     SECTION 1.1. INTEREST/FEES.

     (a)      Interest. The outstanding principal balance of each credit
subject hereto shall bear interest at the rate of interest set forth in
each promissory note or other instrument or document executed in
connection therewith.

     (b)      Computation and Payment. Interest shall be computed on the basis of
a 360-day year, actual days elapsed. Interest shall be payable at the times
and place set forth in each promissory note or other instrument or document
required hereby.

     (c)      Unused Commitment Fee. Borrower shall pay to Bank a fee equal to
onethousandths percent (0.100%) per annum (computed on the basis of a
360-day year, actual days elapsed) on the average daily unused amount of
the Line of Credit, which fee shall be calculated on a quarterly basis by
Bank and shall be due and payable by Borrower in arrears within ten (10)
days after each billing is sent by Bank.

-1-

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

     Borrower makes the following representations and warranties to Bank,
which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and
final payment, and satisfaction and discharge, of all obligations of Borrower
to Bank subject to this Agreement.

     SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of Montana, and is qualified or
licensed to do business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so licensed could
have a material adverse effect on Borrower.

     SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each
promissory note, contract, instrument and other document required hereby or
at any time hereafter delivered to Bank in connection herewith
(collectively, the “Loan Documents”) have been duly authorized, and upon
their execution and delivery in accordance with the provisions hereof will
constitute legal, valid and binding agreements and obligations of Borrower
or the party which executes the same, enforceable in accordance with their
respective terms.

     SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any
law or regulation, or contravene any provision of the Articles of
Incorporation or By-Laws of Borrower, or result in any breach of or default
under any contract, obligation, indenture or other instrument to which
Borrower is a party or by which Borrower may be bound.

     SECTION 2.4. LITIGATION. There are no pending, or to the best of
Borrower’s knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of Borrower other than those disclosed by
Borrower to Bank in writing prior to the date hereof.

     SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The financial statement
of Borrower dated March 31, 2005, a true copy of which has been delivered by
Borrower to Bank prior to the date hereof, (a) is complete and correct and
presents fairly the financial condition of Borrower, (b) discloses all
liabilities of Borrower that are required to be reflected or reserved against
under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) has been prepared in
accordance with generally accepted accounting principles consistently
applied. Since the date of such financial statement there has been no
material adverse change in the financial condition of Borrower, nor has
Borrower mortgaged, pledged, granted a security interest in or otherwise
encumbered any of its assets or properties except in favor of Bank or as
otherwise permitted by Bank in writing.

     SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any
pending assessments or adjustments of its income tax payable with respect
to any year.

-2-

 

     SECTION 2.7. NO SUBORDINATION. There is no agreement,
indenture, contract or instrument to which Borrower is a party or by which
Borrower may be bound that requires the subordination in right of payment
of any of Borrower’s obligations subject to this Agreement to any other
obligation of Borrower.

     SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required
and rights to all trademarks, trade names, patents, and fictitious names, if
any, necessary to enable it to conduct the business in which it is now
engaged in compliance with applicable law.

     SECTION 2.9. ERISA. Borrower is in compliance in all material respects
with all
applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or
recodified from time to time (“ERISA”); Borrower has not violated any
provision of any defined
employee pension benefit plan (as defined in ERISA) maintained or
contributed to by Borrower
(each, a “Plan”); no Reportable Event as defined in ERISA has occurred
and is continuing with
respect to any Plan initiated by Borrower; Borrower has met its minimum
funding requirements
under ERISA with respect to each Plan; and each Plan will be able to
fulfill its benefit obligations
as they come due in accordance with the Plan documents and under
generally accepted
accounting principles.

     SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.

ARTICLE III

CONDITIONS

     SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation
of Bank to extend any credit contemplated by this Agreement is subject to the
fulfillment to Bank’s satisfaction of all of the following conditions:

     (a)      Approval of Bank Counsel. All legal matters incidental to the extension of
credit
by Bank shall be satisfactory to Bank’s counsel.

     (b)      Documentation. Bank shall have received, in form and substance satisfactory to
Bank, each of the following, duly executed:

	 	(i)	 	This Agreement and each promissory note or other instrument or document
required hereby.
	 
	 	(ii)	 	Corporate Resolution: Borrowing.
	 
	 	(iii)	 	Certificate of Incumbency.
	 
	 	(iv)	 	Disbursement Order.
	 
	 	(v)	 	Such other documents as Bank may require under any other Section of this
Agreement.

     (c)      Financial Condition. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower, nor any material decline, as determined by Bank, in the market
value of any collateral required hereunder or a substantial or material
portion of the assets of Borrower.

-3-

 

     SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The
obligation of Bank to make each extension of credit requested by Borrower
hereunder shall be subject to the fulfillment to Bank’s satisfaction of each
of the following conditions:

     (a)      Compliance. The representations and warranties contained herein and
in each of the other Loan Documents shall be true on and as of the date of
the signing of this
Agreement and on the date of each extension of credit by Bank pursuant
hereto, with the same effect as though such representations and warranties
had been made on and as of each such date, and on each such date, no Event of
Default as defined herein, and no condition, event or act which with the
giving of notice or the passage of time or both would constitute such an
Event of Default, shall have occurred and be continuing or shall exist.

     (b)      Documentation. Bank shall have received all additional documents which may
be required in connection with such extension of credit.

ARTICLE IV

AFFIRMATIVE COVENANTS

     Borrower covenants that so long as Bank remains committed to extend
credit to Borrower
pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain outstanding, and
until payment in
full of all obligations of Borrower subject hereto, Borrower shall,
unless Bank otherwise consents
in writing:

     SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest,
fees or other liabilities due under any of the Loan Documents at the times
and place and in the manner specified therein.

     SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with generally accepted accounting principles consistently
applied, and permit any representative of Bank, at any reasonable time, to
inspect, audit and examine such books and records, to make copies of the
same, and to inspect the properties of Borrower.

     SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the
following, in form and detail satisfactory to Bank:

     (a)      contemporaneously with each annual financial statement of Borrower
required
hereby, a compliance certificate of the president or chief financial
officer of Borrower that said
financial statements are accurate, that there exists no Event of Default
nor any condition, act or
event which with the giving of notice or the passage of time or both
would constitute an Event of
Default, and demonstrating compliance with the financial covenants
contained in this
Agreement;

     (b)      as soon as available, and in any event within 50 days after the end
of each calendar quarter, the complete Consolidated Reports of Condition and
Income for a Bank With Domestic Offices Only (FFIEC 041), (the “Call
Report”), prepared by each Bank Subsidiary at the end of such calendar
quarter in compliance with the requirements of any federal or state

-4-

 

regulatory agency which has authority to examine any Bank Subsidiary,
all prepared in accordance with the requirements imposed by the applicable
regulatory authorities and applied on a basis consistent with the accounting
practices reflected in any previous Call Report(s) and similar statements
delivered to Bank prior to the date of this Agreement;

     (c)      as soon as available, and in any event no later than 50 days after
the end of each fiscal quarter, the complete Parent Company Only Financial
Statements for Large Bank Holding Companies (FR Y-9LP) required to be filed
by Borrower quarterly with the Federal Reserve Bank in the applicable
Federal Reserve District;

     (d)      as soon as available, and in any event no later than 50 days after
the end of each fiscal quarter, the complete Consolidated Financial
Statements for Bank Holding
Companies (FR Y-9C) required to be filed by Borrower quarterly with the
Federal Reserve Bank in the applicable Federal Reserve District;

     (e)      as soon as available (but without duplication of any other
requirements set forth in this Section 4.3) a copy of all reports which are
required by law to be furnished to any regulatory authority having
jurisdiction over Borrower or any Bank Subsidiary (including without
limitation Call Reports, but excluding any report which applicable law or
regulation prohibits Borrower or a Bank Subsidiary from furnishing to Bank
but excluding the following reports filed with the SEC: Forms 11-K, 13-G,
13-F, and S-8, which are all publicly filed);

     (f)      from time to time such other information as Bank may reasonably request.

     SECTION 4.4. COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for
the conduct of its
business; and comply with the provisions of all documents pursuant to
which Borrower is
organized and/or which govern Borrower’s continued existence and with
the requirements of all
laws, rules, regulations and orders of any governmental authority
applicable to Borrower and/or
its business.

     SECTION 4.5. INSURANCE. Maintain and keep in force insurance of the
types and in amounts customarily carried in lines of business similar to
that of Borrower, including but not limited to fire, extended coverage,
public liability, flood, property damage and workers’
compensation, with all such insurance carried with companies and in
amounts satisfactory to Bank, and deliver to Bank from time to time at
Bank’s request schedules setting forth all
insurance then in effect.

     SECTION 4.6. FACILITIES. Keep all properties useful or necessary to
Borrower’s
business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and
maintained.

     SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due
any and all indebtedness, obligations, assessments and taxes, both real or
personal, including without limitation federal and state income taxes and
state and local property taxes and assessments, except such (a) as Borrower
may in good faith contest or as to which a bona fide

-5-

 

dispute may arise, and (b) for which Borrower has made provision,
to Bank’s satisfaction, for eventual payment thereof in the event Borrower
is obligated to make such payment.

     SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of
any litigation pending or threatened against Borrower with a claim in
excess of $1,000,000.00.

     SECTION 4.9. BORROWER’S FINANCIAL CONDITION. Maintain Borrower’s
financial condition as follows using generally accepted accounting
principles consistently applied and used consistently with prior practices
(except to the extent modified by the definition herein):

     (a) The ratio of investment in bank subsidiaries to Consolidated Equity
for the
Borrower (the “Double Leverage Ratio”) shall not exceed 150%, determined
as of each fiscal
quarter end, with “Investment in bank subsidiaries” and “Consolidated
Equity” as reported in the
then most recent Parent Company Only Financial Statements for Bank
Holding Companies
(FRY-9LP).

     SECTION 4.10. BANK SUBSIDIARY FINANCIAL CONDITION. Cause each Bank
Subsidiary to maintain its financial condition as follows using generally
accepted accounting principles consistently applied and used consistently
with prior practices (except to the extent modified by the definitions
herein):

     (a)      Borrower and each bank subsidiary on a consolidated basis must
maintain its ROA not less than 0.75% on a rolling four quarter basis,
determined as of each fiscal quarter end, with “ROA” defined as the
percentage arrived at by dividing net income less extraordinary and/or
non-recurring items (as determined in accordance with GAAP) by Total Average
Assets, as reported in the most recent Call Report.

     (b)      Non-Performing Assets not greater than 15% of Primary Equity
Capital, for the Borrower and each bank subsidiary on a consolidated basis,
determined as of each fiscal
quarter end, with “Non-Performing Assets” defined as the sum of: (i)
all loans classified as past due 90 days or more and still accruing
interest; (ii) all loans classified as ‘non-accrual’ and no longer accruing
interest; (iii) all loans classified as ‘restructured loans and leases’; and
(iv) all other ‘non-performing assets’, including those classified as ‘other
real estate owned’ and
‘repossessed property’, as reported in the then most recent Call
Report, and with “Primary
Equity Capital” defined as the aggregate of allowance for loan and
lease losses, as reported in the then most recent Call Report, plus Equity
Capital (defined as the aggregate of perpetual preferred stock (and related
surplus), common stock, surplus (excluding all surplus related to perpetual
preferred stock), undivided profits and capital reserves, plus the net
unrealized
holding gains (or less the net unrealized holding losses) on
available-for-sale securities, less goodwill and other disallowed intangible
assets).

     (c)      Allowance for loan and lease losses for the Borrower and the Bank
Subsidiary on a consolidated basis not less than 100% of the total amount of
Non-Performing Loans,
determined as of each fiscal quarter end, with “Non-Performing Loans”
defined as the sum of: (i) all loans classified as past due 90 days or more
and still accruing interest; (ii) all loans classified as ‘non-accrual’ and
no longer accruing interest; and (iii) all loans classified as ‘restructured
loans and leases’, as reported in the then most recent Call Report.

-6-

 

     (d)      Borrower on a consolidated basis, and for bank subsidiary on an
individual basis,
must maintain its categorization as Well Capitalized as defined by
regulatory agencies having jurisdiction, which, pursuant to Section 38 of
the Federal Deposit Insurance Act (created by Section 131 of the Federal
Deposit Insurance Corporation Improvement Act (FDICIA) of 1991) (entitled
“Prompt Corrective Action”) (herein, “Section 38”), considers an institution
“Well
Capitalized”, among other things, if its Total Risk-Based Capital Ratio
equals or exceeds 10%, its Tier 1 Risk-Based Capital equals or exceeds 6%
and its Leverage equals or exceeds 5%. Additionally, the Leverage Ratio must
equal to or exceed 6.0%. As used herein, “Total RiskBased Capital Ratio”,
“Tier 1 Risk-Based Capital” and “Leverage” shall be defined and
calculated in conformity with Section 38.

     SECTION 4.11. NOTICE TO BANK. Promptly (but in no event more than five
(5) days
after the occurrence of each such event or matter) give written notice
to Bank in reasonable
detail of: (a) the occurrence of any Event of Default, or any condition,
event or act which with
the giving of notice or the passage of time or both would constitute an
Event of Default; (b) any
change in the name or the organizational structure of Borrower; (c) the
occurrence and nature of
any Reportable Event or Prohibited Transaction, each as defined in
ERISA, or any funding
deficiency with respect to any Plan; (d) any termination or cancellation
of any insurance policy
which Borrower is required to maintain, or any uninsured or partially
uninsured loss through
liability or property damage, or through fire, theft or any other cause
affecting Borrower’s
property; (e) any change in Executive Management of Borrower or of any
Bank Subsidiary, with
“Executive Management” defined as the Chief Executive Officer or Chief
Financial Officer; or (f)
any negotiations to sell any capital stock of Borrower and/or any Bank
Subsidiary except for
transactions related to directors/employees compensation and retirement
plans, provided in
aggregate they do not exceed 5% of equity, together with copies of any
proposed buy/sell
agreements; provided however, that this clause shall not be deemed
approval by Bank of any
such negotiation and shall not apply to information which under
applicable law or regulation is
prohibited from disclosure to Bank.

ARTICLE V

NEGATIVE COVENANTS

     Borrower further covenants that so long as Bank remains committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether
direct or contingent, liquidated or
unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of
Borrower subject hereto, Borrower will not without Bank’s prior written
consent:

     SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit
extended hereunder except for the purposes stated in Article I hereof.

     SECTION 5.2. OTHER INDEBTEDNESS. Create, incur, assume or permit to
exist any indebtedness or liabilities resulting from borrowings, loans or
advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to
Bank, and (b) any other liabilities of Borrower existing as of, and
disclosed to Bank prior to, the date hereof.

-7-

 

     SECTION 5.3. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Sell,
lease, transfer or otherwise dispose of all or a substantial or material
portion of Borrower’s assets except in the ordinary course of its business;
merge into or consolidate with any other entity; make any substantial change
in the nature of Borrower’s business as conducted as of the date hereof; or
acquire all or substantially all of the assets of any other entity provided,
however, that Borrower shall be permitted to acquire all or substantially all
of the shares and/or assets of depository or non-depository institutions so
long as (a) no Event of Default shall have occurred at the time of, or after
giving effect to, such acquisition (b) the total consolidated assets of each
acquired depository institution does not exceed 25% of the total consolidated
assets of the Borrower, and (c) the total consolidated assets of each
acquired non-depository institution does not exceed 10% of the total
consolidated assets of the Borrower.

     SECTION 5.4. GUARANTIES. Guarantee or become liable in any way as
surety, endorser (other than as endorser of negotiable instruments for
deposit or collection in the ordinary course of business), accommodation
endorser or otherwise for, nor pledge or hypothecate any assets of
Borrower as security for, any liabilities or obligations of any other
person or entity, except any of the foregoing in favor of Bank.

     SECTION 5.5. LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to
or investments in any person or entity, except any of the foregoing existing
as of, and disclosed to Bank prior to, the date hereof, and loans made in the
ordinary course of Borrower’s business in amounts not to exceed an aggregate
of $1,000,000.00 outstanding at any one time.

     SECTION 5.6. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower’s stock
now or hereafter outstanding, nor redeem, retire, repurchase or otherwise
acquire any shares of any class of Borrower’s stock now or hereafter
outstanding, where the aggregate amount of such dividend, distribution,
repurchase or redemption in any fiscal year is in excess of forty-five
percent (45%) of Borrower’s consolidated net income for said fiscal year.

     SECTION 5.7. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to
exist a security interest in, or lien upon, all or any portion of Borrower’s
assets now owned or hereafter acquired, except any of the foregoing in favor
of Bank or which is existing as of, and disclosed to Bank in writing prior
to, the date hereof.

ARTICLE VI

EVENTS OF DEFAULT

     SECTION 6.1. The occurrence of any of the following shall
constitute an “Event of Default” under this Agreement:

     (a)      Borrower shall fail to pay when due any principal, interest, fees or other
amounts
payable under any of the Loan Documents.

     (b)      Any financial statement or certificate furnished to Bank in
connection with, or any representation or warranty made by Borrower or any
other party under this Agreement or any other Loan Document shall prove to be
incorrect, false or misleading in any material respect when furnished or
made.

-8-

 

     (c)      Any default in the performance of or compliance with any obligation,
agreement
or other provision contained herein or in any other Loan Document (other than
those referred to in subsections (a) and (b) above), and with respect to any
such default which by its nature can be cured, such default shall continue
for a period of twenty (20) days from its occurrence.

     (d)      Any default in the payment or performance of any obligation, or
any defined event of default, under the terms of any contract or instrument
(other than any of the Loan Documents) pursuant to which Borrower, any Bank
Subsidiary, or any guarantor hereunder or any general partner in any
Borrower which is a partnership (with each such guarantor and/or general
partner referred to herein as a “Third Party Obligor”) has incurred any
debt or other liability to any person or entity, including Bank.

     (e)      The filing of a notice of judgment lien against Borrower or any Bank
Subsidiary or Third Party Obligor; or the recording of any abstract of
judgment against Borrower or any Bank Subsidiary or Third Party Obligor in
any county in which Borrower or such Bank Subsidiary or Third Party Obligor
has an interest in real property; or the service of a notice of levy and/or
of a writ of attachment or execution, or other like process, against the
assets of Borrower or any
Bank Subsidiary or Third Party Obligor; or the entry of a judgment
against Borrower or any Bank Subsidiary or Third Party Obligor.

     (f)      Borrower or any Bank Subsidiary or Third Party Obligor shall become
insolvent,
or shall suffer or consent to or apply for the appointment of a
receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to
pay its debts as they become
due, or shall make a general assignment for the benefit of creditors;
Borrower or any Bank
Subsidiary or Third Party Obligor shall file a voluntary petition in
bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with
creditors or any other relief
under the Bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified
from time to time (“Bankruptcy Code”), or under any state or federal law
granting relief to
debtors, whether now or hereafter in effect; or any involuntary petition
or proceeding pursuant to
the Bankruptcy Code or any other applicable state or federal law
relating to bankruptcy,
reorganization or other relief for debtors is filed or commenced against
Borrower or any Bank
Subsidiary or Third Party Obligor, or Borrower or any Bank Subsidiary or
Third Party Obligor
shall file an answer admitting the jurisdiction of the court and the
material allegations of any
involuntary petition; or Borrower or any Bank Subsidiary or Third Party
Obligor shall be
adjudicated a bankrupt, or an order for relief shall be entered against
Borrower or any Bank
Subsidiary or Third Party Obligor by any court of competent jurisdiction
under the Bankruptcy
Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other
relief for debtors.

     (g)      There shall exist or occur any event or condition which Bank in
good faith believes impairs, or is substantially likely to impair, the
prospect of payment or performance by Borrower of its obligations under any
of the Loan Documents.

     (h)      The death or incapacity of any individual Third Party Obligor. The
dissolution or
liquidation of Borrower, any Bank Subsidiary or any Third Party Obligor which is a corporation,
partnership, joint venture or other type of entity; or Borrower, any Bank Subsidiary or any such
Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking
to effect the dissolution or liquidation of Borrower or such Bank Subsidiary or Third Party
Obligor.

-9-

 

     (i)      The issuance or proposed issuance against Borrower, or any affiliate of
Borrower
(including without limitation, any Bank Subsidiary) of any informal or formal
administrative action, temporary or permanent, by any federal or state
regulatory agency having jurisdiction or control over Borrower or such
affiliate, such action taking the form of, but not limited to: (i) any
informal or formal directive citing conditions or activities deemed to be
unsafe or unsound or breaches of fiduciary duty or law or regulation; (ii) a
memorandum of understanding; (iii) a cease and desist order; (iv) the
termination of insurance coverage of customer deposits by the Federal Deposit
Insurance Corporation; (v) the suspension or removal of Chief Executive
Officer or Chief Financial Officer, or the prohibition of participation by
any others in the business affairs of Borrower or such affiliate; (vi) any
capital maintenance agreement; or (vii) any other regulatory action,
agreement or understanding with respect to Borrower or such affiliate.

     SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a)
all
indebtedness of Borrower under each of the Loan Documents, any term
thereof to the contrary notwithstanding, shall at Bank’s option and without
notice become immediately due and payable without presentment, demand,
protest or notice of dishonor, all of which are hereby expressly waived by
each Borrower; (b) the obligation, if any, of Bank to extend any further
credit under any of the Loan Documents shall immediately cease and terminate;
and (c) Bank shall have all rights, powers and remedies available under each
of the Loan Documents, or accorded by law, including without limitation the
right to resort to any or all security for any credit subject hereto and to
exercise any or all of the rights of a beneficiary or secured party pursuant
to applicable law. All rights, powers and remedies of Bank may be exercised
at any time by Bank and from time to time after the occurrence of an Event of
Default, are cumulative and not exclusive, and shall be in addition to any
other rights, powers or remedies provided by law or equity.

ARTICLE VII

MISCELLANEOUS

     SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive
or otherwise affect any other or further exercise thereof or the exercise of
any other right, power or remedy. Any waiver, permit, consent or approval of
any kind by Bank of any breach of or default under any of the Loan Documents
must be in writing and shall be effective only to the extent set forth in
such writing.

     SECTION 7.2. NOTICES. All notices, requests and demands which any party
is required or may desire to give to any other party under any provision of
this Agreement must be in writing delivered to each party at the following
address:

	   BORROWER:   	 	FIRST INTERSTATE BANCSYSTEM, INC.
  
401 N. 31st Street
  
Billings, MT 59116

-10-

 

	   BANK:   	 	WELLS FARGO BANK, NATIONAL ASSOCIATION

Correspondent Banking 707

Wilshire Blvd., 21st Floor Los

Angeles, CA 90017

or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3)
days after deposit in the U.S. mail, first class and postage prepaid; and (c)
if sent by telecopy,
upon receipt.

     SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all payments, advances,
charges, costs and
expenses, including reasonable attorneys’ fees (to include outside
counsel fees and all
allocated costs of Bank’s in-house counsel), expended or incurred by
Bank in connection with (a) the negotiation and preparation of this Agreement and the other Loan
Documents, Bank’s
continued administration hereof and thereof, and the preparation of any
amendments and
waivers hereto and thereto, (b) the enforcement of Bank’s rights and/or
the collection of any
amounts which become due to Bank under any of the Loan Documents, and
(c) the prosecution
or defense of any action in any way related to any of the Loan
Documents, including without
limitation, any action for declaratory relief, whether incurred at the
trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing
incurred in connection
with any bankruptcy proceeding (including without limitation, any
adversary proceeding,
contested matter or motion brought by Bank or any other person) relating
to any Borrower or
any other person or entity.

     SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however,
that Borrower may not assign or transfer its interest hereunder without
Bank’s prior written consent. Bank reserves the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, Bank’s rights and benefits under each of the Loan Documents. In
connection therewith, Bank may disclose all documents and information which
Bank now has or may hereafter acquire relating to any credit subject hereto,
Borrower, any Bank Subsidiary or any collateral required hereunder.

     SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
Loan Documents constitute the entire agreement between Borrower and Bank
with respect to each credit subject hereto and supersede all prior
negotiations, communications, discussions and correspondence concerning the
subject matter hereof. This Agreement may be amended or modified only in
writing signed by each party hereto.

     SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made
and entered into for the sole protection and benefit of the parties
hereto and their respective permitted successors and assigns, and no
other person or entity shall be a third party beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this
Agreement or any other of the Loan Documents to which it is not a party.

     SECTION 7.7. TIME. Time is of the essence of each and every
provision of this Agreement and each other of the Loan Documents.

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     SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or any
remaining provisions of this Agreement.

     SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed
to be an original, and all of which when taken together shall constitute one
and the same Agreement.

     SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.

     SECTION 7.11. ARBITRATION.

     (a)      Arbitration. The parties hereto agree, upon demand by any party, to
submit to binding arbitration all claims, disputes and controversies between
or among them (and their respective employees, officers, directors,
attorneys, and other agents), whether in tort, contract or otherwise arising
out of or relating to in any way (i) the loan and related Loan Documents
which are the subject of this Agreement and its negotiation, execution,
collateralization, administration, repayment, modification, extension,
substitution, formation, inducement, enforcement, default or termination; or
(ii) requests for additional credit.

     (b)      Governing Rules. Any arbitration proceeding will (i) proceed in a
location in
California selected by the American Arbitration Association (“AAA”);
(ii) be governed by the
Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting
choice of law provision in any of the documents between the parties; and
(iii) be conducted by
the AAA, or such other administrator as the parties shall mutually agree
upon, in accordance
with the AAA’s commercial dispute resolution procedures, unless the
claim or counterclaim is at
least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the
arbitration shall be conducted in accordance with the AAA’s optional
procedures for large,
complex commercial disputes (the commercial dispute resolution
procedures or the optional
procedures for large, complex commercial disputes to be referred to, as
applicable, as the
“Rules”). If there is any inconsistency between the terms hereof and the
Rules, the terms and
procedures set forth herein shall control. Any party who fails or
refuses to submit to arbitration
following a demand by any other party shall bear all costs and expenses
incurred by such other
party in compelling arbitration of any dispute. Nothing contained herein
shall be deemed to be a
waiver by any party that is a bank of the protections afforded to it
under 12 U.S.C. §91 or any
similar applicable state law.

     (c)      No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration
requirement does not limit the right of any party to (i) foreclose against real or personal property
collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as
setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin,
injunctive relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right
or obligation of any party to submit any dispute to arbitration or reference hereunder, including
those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this
paragraph.

-12-

 

     (d)     
Arbitrator Qualifications and Powers. Any arbitration proceeding in
which the
amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award
of greater than $5,000,000.00. Any dispute in which the amount in controversy
exceeds $5,000,000.00 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a
neutral attorney licensed in the State of California or a neutral retired
judge of the state or federal judiciary of California, in either case with a
minimum of ten years experience in the substantive law applicable to the
subject matter of the dispute to be arbitrated. The arbitrator will determine
whether or not an issue is arbitratable and will give effect to the statutes
of limitation in determining any claim. In any arbitration proceeding the
arbitrator will decide (by documents only or with a hearing at the
arbitrator’s discretion) any pre-hearing motions which are similar to motions
to dismiss for failure to state a claim or motions for summary adjudication.
The arbitrator shall resolve all disputes in accordance with the substantive
law of California and may grant any remedy or relief that a
court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award. The arbitrator
shall also have the power to award
recovery of all costs and fees, to impose sanctions and to take such other
action as the
arbitrator deems necessary to the same extent a judge could pursuant to the
Federal Rules of Civil Procedure, the California Rules of Civil Procedure or
other applicable law. Judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.

     (e)      Discovery. In any arbitration proceeding discovery will be permitted
in
accordance with the Rules. All discovery shall be expressly limited to
matters directly relevant to the dispute being arbitrated and must be
completed no later than 20 days before the hearing date and within 180 days of
the filing of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery
is essential for the party’s presentation and that no alternative means for
obtaining information is available.

     (f)      Class Proceedings and Consolidations. The resolution of any
dispute arising pursuant to the terms of this Agreement shall be
determined by a separate arbitration
proceeding and such dispute shall not be consolidated with other
disputes or included in any class proceeding.

     (g)      Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and
expenses of the arbitration proceeding.

     (h)      Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose
the existence, content or results thereof, except for disclosures of
information by a party required in the ordinary course of its business or by
applicable law or regulation. If more than one agreement for arbitration by
or between the parties potentially applies to a dispute, the arbitration
provision most directly related to the Loan Documents or the subject matter
of the

-13-

 

dispute shall control. This arbitration provision shall survive
termination, amendment or expiration of any of the Loan Documents or
any relationship between the parties.

     IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first written above.

	 	 	 	 	 	 	 
	FIRST INTERSTATE BANCSYSTEM, INC.	 	WELLS FARGO BANK,
  NATIONAL ASSOCIATION
	 
	 	 	 	 	 	 
	By:

	 	/s/ TERRILL R. MOORE
	 	By:
	 	/s/ LAUREN HOM
	 

	 	Terrill R. Moore
	 	 	 	Lauren Hom
	 

	 	Executive Vice President and
	 	 	 	Vice President
	 

	 	Chief Financial Officer	 	 	 	 

-14-

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