Document:

exv4w1

Exhibit 4.1

EXECUTION COPY

 

 

HOLLY ENERGY PARTNERS, L.P.,

HOLLY ENERGY FINANCE CORP.

AND EACH OF THE GUARANTORS PARTY HERETO

8.25% SENIOR NOTES DUE 2018

 

INDENTURE

Dated as of March 10, 2010

 

U.S. BANK NATIONAL ASSOCIATION

Trustee

 

 

 

 

CROSS-REFERENCE TABLE*

	 	 	 	 	 	 	 
	Trust Indenture	 	 
	Act Section	 	Indenture Section
	310

	 	(a)(1)
	 	 	7.10	 
	 

	 	(a)(2)
	 	 	7.10	 
	 

	 	(a)(3)
	 	 	N.A.	 
	 

	 	(a)(4)
	 	 	N.A.	 
	 

	 	(a)(5)
	 	 	7.10	 
	 

	 	(b)
	 	 	7.10	 
	 

	 	(c)
	 	 	N.A.	 
	311

	 	(a)
	 	 	7.11	 
	 

	 	(b)
	 	 	7.11	 
	 

	 	(c)
	 	 	N.A.	 
	312

	 	(a)
	 	 	2.05	 
	 

	 	(b)
	 	 	12.03	 
	 

	 	(c)
	 	 	12.03	 
	313

	 	(a)
	 	 	7.06	 
	 

	 	(b)(1)
	 	 	N.A	 
	 

	 	(b)(2)
	 	7.06; 7.07

	 

	 	(c)
	 	7.06; 12.02

	 

	 	(d)
	 	 	7.06	 
	314

	 	(a)
	 	4.03;12.02; 12.05

	 

	 	(b)
	 	 	N.A.	 
	 

	 	(c)(1)
	 	 	12.04	 
	 

	 	(c)(2)
	 	 	12.04	 
	 

	 	(c)(3)
	 	 	N.A.	 
	 

	 	(d)
	 	 	N.A.	 
	 

	 	(e)
	 	 	12.05	 
	 

	 	(f)
	 	 	N.A.	 
	315

	 	(a)
	 	 	7.01	 
	 

	 	(b)
	 	7.05; 12.02

	 

	 	(c)
	 	 	7.01	 
	 

	 	(d)
	 	 	7.01	 
	 

	 	(e)
	 	 	6.11	 
	316

	 	(a) (last sentence)
	 	 	2.09	 
	 

	 	(a)(1)(A)
	 	 	6.05	 
	 

	 	(a)(1)(B)
	 	 	6.04	 
	 

	 	(a)(2)
	 	 	N.A.	 
	 

	 	(b)
	 	 	6.07	 
	 

	 	(c)
	 	 	2.12	 
	317

	 	(a)(1)
	 	 	6.08	 
	 

	 	(a)(2)
	 	 	6.09	 
	 

	 	(b)
	 	 	2.04	 
	318

	 	(a)
	 	 	12.01	 
	 

	 	(b)
	 	 	N.A.	 
	 

	 	(c)
	 	 	12.01	 

 

			
	 	 	N.A. means not applicable.
	 
	*	 	This Cross Reference Table is not part of the Indenture.

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE 1

	DEFINITIONS AND INCORPORATION

	BY REFERENCE

	 
	 	 	 	 	 	 
	Section 1.01

	 	Definitions
	 	 	1	 
	Section 1.02

	 	Other Definitions
	 	 	25	 
	Section 1.03

	 	Incorporation by Reference of Trust Indenture Act
	 	 	25	 
	Section 1.04

	 	Rules of Construction
	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE 2

	THE NOTES

	 
	 	 	 	 	 	 
	Section 2.01

	 	Form and Dating
	 	 	26	 
	Section 2.02

	 	Execution and Authentication
	 	 	27	 
	Section 2.03

	 	Registrar and Paying Agent
	 	 	27	 
	Section 2.04

	 	Paying Agent to Hold Money in Trust
	 	 	28	 
	Section 2.05

	 	Holder Lists
	 	 	28	 
	Section 2.06

	 	Transfer and Exchange
	 	 	28	 
	Section 2.07

	 	Replacement Notes
	 	 	39	 
	Section 2.08

	 	Outstanding Notes
	 	 	40	 
	Section 2.09

	 	Treasury Notes
	 	 	40	 
	Section 2.10

	 	Temporary Notes
	 	 	40	 
	Section 2.11

	 	Cancellation
	 	 	41	 
	Section 2.12

	 	Defaulted Interest
	 	 	41	 
	 
	 	 	 	 	 	 
	ARTICLE 3

	REDEMPTION AND PREPAYMENT

	 
	 	 	 	 	 	 
	Section 3.01

	 	Notices to Trustee
	 	 	41	 
	Section 3.02

	 	Selection of Notes to Be Redeemed or Purchased	 	 	41	 
	Section 3.03

	 	Notice of Redemption
	 	 	42	 
	Section 3.04

	 	Effect of Notice of Redemption
	 	 	42	 
	Section 3.05

	 	Deposit of Redemption or Purchase Price
	 	 	43	 
	Section 3.06

	 	Notes Redeemed or Purchased in Part
	 	 	43	 
	Section 3.07

	 	Optional Redemption
	 	 	43	 
	Section 3.08

	 	Mandatory Redemption
	 	 	44	 
	Section 3.09

	 	Offer to Purchase by Application of Excess Proceeds
	 	 	44	 
	 
	 	 	 	 	 	 
	ARTICLE 4

	COVENANTS

	 
	 	 	 	 	 	 
	Section 4.01

	 	Payment of Notes
	 	 	46	 
	Section 4.02

	 	Maintenance of Office or Agency
	 	 	46	 
	Section 4.03

	 	Reports
	 	 	46	 
	Section 4.04

	 	Compliance Certificate
	 	 	47	 
	Section 4.05

	 	Taxes
	 	 	48	 
	Section 4.06

	 	Stay, Extension and Usury Laws
	 	 	48	 
	Section 4.07

	 	Restricted Payments
	 	 	48	 
	Section 4.08

	 	Dividend and Other Payment Restrictions Affecting Subsidiaries
	 	 	52	 
	Section 4.09

	 	Incurrence of Indebtedness and Issuance of Disqualified Equity
	 	 	53	 
	Section 4.10

	 	Asset Sales
	 	 	57	 

i

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 4.11

	 	Transactions with Affiliates
	 	 	58	 
	Section 4.12

	 	Liens
	 	 	60	 
	Section 4.13

	 	Business Activities
	 	 	60	 
	Section 4.14

	 	Corporate Existence
	 	 	60	 
	Section 4.15

	 	Offer to Repurchase Upon Change of Control
	 	 	61	 
	Section 4.16

	 	Limitation on Sale and Leaseback Transactions
	 	 	62	 
	Section 4.17

	 	Payments for Consent
	 	 	63	 
	Section 4.18

	 	Additional Guarantees
	 	 	63	 
	Section 4.19

	 	Designation of Restricted and Unrestricted Subsidiaries
	 	 	63	 
	Section 4.20

	 	Suspension of Covenants
	 	 	64	 
	 
	 	 	 	 	 	 
	ARTICLE 5

	SUCCESSORS

	 
	 	 	 	 	 	 
	Section 5.01

	 	Merger, Consolidation or Sale of Assets
	 	 	65	 
	Section 5.02

	 	Successor Corporation Substituted
	 	 	66	 
	 
	 	 	 	 	 	 
	ARTICLE 6

	DEFAULTS AND REMEDIES

	 
	 	 	 	 	 	 
	Section 6.01

	 	Events of Default
	 	 	67	 
	Section 6.02

	 	Acceleration
	 	 	69	 
	Section 6.03

	 	Other Remedies
	 	 	69	 
	Section 6.04

	 	Waiver of Past Defaults
	 	 	69	 
	Section 6.05

	 	Control by Majority
	 	 	69	 
	Section 6.06

	 	Limitation on Suits
	 	 	70	 
	Section 6.07

	 	Rights of Holders of Notes to Receive Payment
	 	 	70	 
	Section 6.08

	 	Collection Suit by Trustee
	 	 	70	 
	Section 6.09

	 	Trustee May File Proofs of Claim
	 	 	70	 
	Section 6.10

	 	Priorities
	 	 	71	 
	Section 6.11

	 	Undertaking for Costs
	 	 	71	 
	 
	 	 	 	 	 	 
	ARTICLE 7

	TRUSTEE

	 
	 	 	 	 	 	 
	Section 7.01

	 	Duties of Trustee
	 	 	71	 
	Section 7.02

	 	Rights of Trustee
	 	 	72	 
	Section 7.03

	 	Individual Rights of Trustee
	 	 	73	 
	Section 7.04

	 	Trustee’s Disclaimer
	 	 	73	 
	Section 7.05

	 	Notice of Defaults
	 	 	73	 
	Section 7.06

	 	Reports by Trustee to Holders of the Notes
	 	 	73	 
	Section 7.07

	 	Compensation and Indemnity
	 	 	74	 
	Section 7.08

	 	Replacement of Trustee
	 	 	74	 
	Section 7.09

	 	Successor Trustee by Merger, etc
	 	 	75	 
	Section 7.10

	 	Eligibility; Disqualification
	 	 	75	 
	Section 7.11

	 	Preferential Collection of Claims Against the Issuers
	 	 	76	 
	 
	 	 	 	 	 	 
	ARTICLE 8

	LEGAL DEFEASANCE AND COVENANT DEFEASANCE

	 
	 	 	 	 	 	 
	Section 8.01

	 	Option to Effect Legal Defeasance or Covenant Defeasance
	 	 	76	 
	Section 8.02

	 	Legal Defeasance and Discharge
	 	 	76	 
	Section 8.03

	 	Covenant Defeasance
	 	 	77	 
	Section 8.04

	 	Conditions to Legal or Covenant Defeasance
	 	 	77	 

ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 8.05

	 	Deposited Money and Government Securities to be Held in Trust; Other
Miscellaneous Provisions
	 	 	78	 
	Section 8.06

	 	Repayment to the Issuers
	 	 	79	 
	Section 8.07

	 	Reinstatement
	 	 	79	 
	 
	 	 	 	 	 	 
	ARTICLE 9

	AMENDMENT, SUPPLEMENT AND WAIVER

	 
	 	 	 	 	 	 
	Section 9.01

	 	Without Consent of Holders of Notes
	 	 	79	 
	Section 9.02

	 	With Consent of Holders of Notes
	 	 	80	 
	Section 9.03

	 	Compliance with Trust Indenture Act
	 	 	82	 
	Section 9.04

	 	Revocation and Effect of Consents
	 	 	82	 
	Section 9.05

	 	Notation on or Exchange of Notes
	 	 	82	 
	Section 9.06

	 	Trustee to Sign Amendments, etc.
	 	 	82	 
	 
	 	 	 	 	 	 
	ARTICLE 10

	NOTE GUARANTEES

	 
	 	 	 	 	 	 
	Section 10.01.

	 	Guarantee
	 	 	82	 
	Section 10.02.

	 	Limitation on Guarantor Liability
	 	 	83	 
	Section 10.03.

	 	Execution and Delivery of Note Guarantee
	 	 	84	 
	Section 10.04.

	 	Guarantors May Consolidate, etc., on Certain Terms
	 	 	84	 
	Section 10.05.

	 	Releases
	 	 	85	 
	 
	 	 	 	 	 	 
	ARTICLE 11

	SATISFACTION AND DISCHARGE

	 
	 	 	 	 	 	 
	Section 11.01

	 	Satisfaction and Discharge
	 	 	86	 
	Section 11.02

	 	Application of Trust Money
	 	 	87	 
	 
	 	 	 	 	 	 
	ARTICLE 12

	MISCELLANEOUS

	 
	 	 	 	 	 	 
	Section 12.01

	 	Trust Indenture Act Controls
	 	 	87	 
	Section 12.02

	 	Notices
	 	 	87	 
	Section 12.03

	 	Communication by Holders of Notes with Other Holders of Notes
	 	 	88	 
	Section 12.04

	 	Certificate and Opinion as to Conditions Precedent
	 	 	88	 
	Section 12.05

	 	Statements Required in Certificate or Opinion
	 	 	89	 
	Section 12.06

	 	Rules by Trustee and Agents
	 	 	89	 
	Section 12.07

	 	No Personal Liability of Directors, Officers, Employees and Stockholders
	 	 	89	 
	Section 12.08

	 	Governing Law
	 	 	89	 
	Section 12.09

	 	No Adverse Interpretation of Other Agreements
	 	 	89	 
	Section 12.10

	 	Successors
	 	 	90	 
	Section 12.11

	 	Severability
	 	 	90	 
	Section 12.12

	 	Counterpart Originals
	 	 	90	 
	Section 12.13

	 	Table of Contents, Headings, etc.
	 	 	90	 

EXHIBITS

	 	 	 
	Exhibit A

	 	FORM OF NOTE
	Exhibit B

	 	FORM OF CERTIFICATE OF TRANSFER
	Exhibit C

	 	FORM OF CERTIFICATE OF EXCHANGE
	Exhibit D

	 	FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
	Exhibit E

	 	FORM OF NOTATION OF GUARANTEE
	Exhibit F

	 	FORM OF SUPPLEMENTAL INDENTURE

iii

 

     INDENTURE dated as of March 10, 2010 among Holly Energy Partners, L.P., a Delaware limited
partnership (“Holly Energy Partners”), and Holly Energy Finance Corp. (“Finance Corp.” and,
together with Holly Energy Partners, the “Issuers”), the Guarantors (as defined) and U.S. Bank
National Association, as trustee.

     The Issuers, the Guarantors and the Trustee agree as follows for the benefit of each other and
for the equal and ratable benefit of the Holders (as defined) of the 8.25% Senior Notes due 2018
(the “Notes”):

ARTICLE 1

DEFINITIONS AND INCORPORATION

BY REFERENCE

Section 1.01 Definitions.

     “144A Global Note” means a Global Note substantially in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of,
and registered in the name of, the Depositary or its nominee that will be issued in a denomination
equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

     “Acquired Debt” means, with respect to any specified Person:

     (1) Indebtedness of any other Person existing at the time such other Person is merged
with or into or became a Subsidiary of such specified Person, whether or not such
Indebtedness is incurred in connection with, or in contemplation of, such other Person
merging with or into, or becoming a Restricted Subsidiary of, such specified Person, but
excluding Indebtedness which is extinguished, retired or repaid in connection with such
Person merging with or becoming a Subsidiary of such specific Person; and

     (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person.

     “Acquisition” means the acquisition by Holly Energy Partners of approximately 2 million
barrels of hydrocarbon storage tanks and rail loading rack at Holly Corporation’s Tulsa east
facility and the asphalt loading rack and terminal building at Holly Corporation’s Lovington, New
Mexico refinery from Holly Corporation.

     “Additional Notes” means additional Notes (other than the Initial Notes) issued under this
Indenture in accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the
Initial Notes.

     “Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For
purposes of this definition, “control,” as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies
of such Person, whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to
be control, provided, further, that any third Person which also beneficially owns 10% or more of
the Voting Stock of a specified Person shall not be deemed to be an Affiliate of either the
specified Person or the other Person merely because of such common ownership in such specified
Person. For purposes of this definition, the terms “controlling,” “controlled by” and “under common
control with” have correlative meanings.

1

 

     “Agent” means any Registrar, co-registrar, Paying Agent or additional paying agent.

     “Applicable Premium” means, with respect to any Note on any redemption date, the greater of:

     (1) 1.00% of the principal amount of the Note; or

     (2) the excess of: (a) the present value at such redemption date of (i) the redemption
price of the Note at March 15, 2014 (such redemption price being set forth in the table
appearing in Section 3.07 hereof) plus (ii) all required interest payments due on the Note
through March 15, 2014 (excluding accrued but unpaid interest to the redemption date),
computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50
basis points; over (b) the principal amount of the Note, if greater.

     “Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial
interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream
that apply to such transfer or exchange.

     “Asset Sale” means:

     (1) the sale, lease, conveyance or other disposition of any assets or rights; provided
that the sale, lease, conveyance or other disposition of all or substantially all of the
assets of Holly Energy Partners and its Restricted Subsidiaries taken as a whole will be
governed by Section 4.15 hereof and/or Section 5.01 hereof and not by Section 4.10 hereof;
and

     (2) the issuance of Equity Interests in any of Holly Energy Partners’ Restricted
Subsidiaries or the sale of Equity Interests in any of its Subsidiaries.

          Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

     (1) any sale, assignment, lease, license, transfer, abandonment or other disposition of
(A) damaged, worn-out, unserviceable or other obsolete or excess equipment or other property
or (B) other property no longer necessary for the proper conduct of the business of Holly
Energy Partners or any of its Restricted Subsidiaries;

     (2) any single transaction or series of related transactions that: (a) involves assets
having a Fair Market Value of less than $5.0 million or (b) results in net proceeds to Holly
Energy Partners and its Restricted Subsidiaries of less than $5.0 million;

     (3) a transfer of assets between or among Holly Energy Partners and its Restricted
Subsidiaries;

     (4) an issuance of Equity Interests by a Restricted Subsidiary of Holly Energy Partners
to Holly Energy Partners or to a Restricted Subsidiary of Holly Energy Partners;

     (5) the sale or lease of products, services or accounts receivable in the ordinary
course of business;

     (6) the sale or other disposition of cash or Cash Equivalents, Hedging Obligations or
other financial instruments in the ordinary course of business;

2

 

     (7) a Restricted Payment that does not violate Section 4.07 hereof or a Permitted
Investment;

     (8) any trade or exchange by Holly Energy Partners or any Restricted Subsidiary of
properties or assets of any type for properties or assets of any type owned or held by
another Person, including any disposition of some but not all of the Equity Interests of a
Restricted Subsidiary in exchange for assets or properties and after which the Person whose
Equity Interests have been so disposed of continues to be a Restricted Subsidiary, provided
that the fair market value of the properties or assets traded or exchanged by Holly Energy
Partners or such Restricted Subsidiary (together with any cash or Cash Equivalent together
with the liabilities assumed) is reasonably equivalent to the fair market value of the
properties or assets (together with any cash or Cash Equivalent together with liabilities
assumed) to be received by Holly Energy Partners or such Restricted Subsidiary; and provided
further that any cash received must be applied in accordance with Section 4.10 hereof;

     (9) the creation or perfection of a Lien that is not prohibited by Section 4.12 hereof;

     (10) surrender or waiver of contract rights or the settlement, release or surrender of
contract, tort or other claims of any kind;

     (11) the grant in the ordinary course of business of any non-exclusive license of
patents, trademarks, registrations therefor and other similar intellectual property; and

     (12) any disposition of defaulted receivables that arose in the ordinary course of
business for collection.

     “Attributable Debt” in respect of a sale-and-leaseback transaction means, at the time of
determination, the present value of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale-and-leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be extended. As used
in the preceding sentence, “net rental payments” under any lease for any such period shall mean the
sum of rental and other payments required to be paid with respect to such period by the lessee
thereunder, excluding any amounts required to be paid by such lessee on account of maintenance and
repairs, insurance, taxes, assessments, water rates or similar charges. In the case of any lease
that is terminable by the lessee upon payment of penalty, such net rental payment shall also
include the amount of such penalty, but no rent shall be considered as required to be paid under
such lease subsequent to the first date upon which it may be so terminated. For purposes of this
definition, present value shall be calculated using a discount rate equal to the rate of interest
implicit in the subject transaction, determined in accordance with GAAP; provided, however, that if
such sale-and-leaseback transaction results in a Capital Lease Obligation, the amount of
Indebtedness represented thereby will be determined in accordance with the definition of “Capital
Lease Obligation.”

     “Available Cash” has the meaning assigned to such term in the Partnership Agreement, as in
effect on the Issue Date.

     “Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief
of debtors.

     “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that in calculating the beneficial ownership of any particular “person”
(as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to
have beneficial

3

 

ownership of all securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is exercisable only
after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a
corresponding meaning.

     “Board of Directors” means:

     (1) with respect to a corporation, the board of directors of the corporation or any
committee thereof duly authorized to act on behalf of such board;

     (2) with respect to a partnership, the Board of Directors or Board of Managers of the
general partner of the partnership, or in the case of Holly Energy Partners, the Board of
Directors of Holly Logistic Services, L.L.C., the general partner of HEP Logistics Holdings,
L.P.;

     (3) with respect to a limited liability company, the managing member or members or any
controlling committee of managing members thereof; and

     (4) with respect to any other Person, the board or committee of such Person serving a
similar function.

     “Broker-Dealer” has the meaning set forth in the Registration Rights Agreement.

     “Business Day” means any day other than a Legal Holiday.

     “Capital Lease Obligation” means an obligation that is required to be classified and accounted
for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall be, at the time any determination thereof is to
be made, the amount of the liability in respect of a capital lease that would at such time be
required to be capitalized on a balance sheet in accordance with GAAP, and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be prepaid by the lessee without payment of a
penalty.

     “Capital Stock” means:

     (1) in the case of a corporation, corporate stock;

     (2) in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate stock;

     (3) in the case of a partnership or limited liability company, partnership interests
(whether general or limited) or membership interests; and

     (4) any other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing Person, but
excluding from all of the foregoing any debt securities convertible into Capital Stock,
whether or not such debt securities include any right of participation with Capital Stock.

     “Cash Equivalents” means:

     (1) United States dollars;

     (2) securities issued or fully guaranteed or insured by the United States government
having maturities of not more than twenty-four (24) months from the date of acquisition
thereof;

4

 

     (3) time deposits with, certificates of deposit, bankers’ acceptances or Eurodollar
time deposits of, any commercial bank that (a) is organized under the laws of the United
States of America, any state thereof or the District of Columbia or is the principal banking
subsidiary of a bank holding company organized under the laws of the United States of
America, any state thereof or the District of Columbia, and is a member of the Federal
Reserve System, (b) issues long term securities with a rating of at least A- (or then
equivalent grade, in each case with a stable outlook) by S&P and A3 (or then equivalent
grade, in each case with a stable outlook) by Moody’s at the time of acquisition and (c) has
combined capital and surplus of at least $500,000,000, in each case with maturities of not
more than twenty-four (24) months from the date of acquisition thereof;

     (4) commercial paper of an issuer rated at least “A-1” (or the then equivalent grade)
by S&P or “P-1” (or the then equivalent grade) by Moody’s at the time of acquisition or
guaranteed by a letter of credit issued by a financial institution rated at least A- (or
then equivalent grade, in each case with stable outlook) by S&P and A3 (or then equivalent
grade, in each case with stable outlook) by Moody’s at the time of acquisition and such
financial institution otherwise meets the requirements of subsections (a) and (c) of clause
(3) of this definition, in each case having a tenor of not more than 270 days;

     (5) taxable and tax-exempt municipal securities rated at least A- (or then equivalent
grade) by S&P and A3 (or then equivalent grade) by Moody’s, including variable rate
municipal securities, having maturities or put rights of not more than twenty-four (24)
months from the date of acquisition;

     (6) corporate or bank debt of an issuer rated at least A- (or then equivalent grade, in
each case with a stable outlook) by S&P and A3 (or then equivalent grade, in each case with
stable outlook) by Moody’s at the time of acquisition and having maturities of not more than
twenty-four (24) months from the date of acquisition;

     (7) repurchase agreements relating to any of the investments listed in clauses (1)
through (6) above with a market value at least equal to the consideration paid in connection
therewith, with any Person who regularly engages in the business of entering into repurchase
agreements and has a combined capital and surplus of not less than $500,000,000 whose long
term securities are rated at least A- (or then equivalent grade) by S&P and A3 (or then
equivalent grade) by Moody’s at the time of acquisition;

     (8) asset-backed securities having as the underlying asset securities issued or
guaranteed by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage
Association rated at least A- (or then equivalent grade, in each case with stable outlook)
by S&P and A3 (or then equivalent grade, in each case with case with stable outlook) by
Moody’s at the time of acquisition and having maturities of not more than twenty-four (24)
months from the date of acquisition; and

     (9) Investments, classified in accordance with GAAP as current assets of Holly Energy
Partners or any of its Subsidiaries, in money market mutual or similar funds having assets
in excess of $100,000,000, at least 95% of the assets of which are comprised of assets
specified in clauses (1) through (5) above of this definition.

5

 

     “Change of Control” means the occurrence of any of the following:

     (1) the direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related transactions, of all
or substantially all of the properties or assets of Holly Energy Partners and its
Subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d) of the
Exchange Act), which occurrence is followed by a Ratings Decline within 90 days;

     (2) the adoption of a plan relating to the liquidation or dissolution of Holly Energy
Partners or the removal of the General Partner by the limited partners of Holly Energy
Partners;

     (3) the consummation of any transaction (including, without limitation, any merger or
consolidation), the result of which is that any “person” (as defined above), other than a
Qualified Owner, becomes the Beneficial Owner, directly or indirectly, of more than 50% of
the Voting Stock of the General Partner or of Holly Logistic Services L.L.C., measured by
voting power rather than number of shares, which occurrence is followed by a Ratings Decline
within 90 days; or

     (4) the first day on which a majority of the members of the Board of Directors of the
General Partner are not Continuing Directors, which occurrence is followed by a Ratings
Decline within 90 days.

     Notwithstanding the preceding, a conversion of Holly Energy Partners from a limited
partnership to a corporation, limited liability company or other form of entity or an exchange of
all of the outstanding limited partnership interests for capital stock in a corporation, for member
interests in a limited liability company or for Equity Interests in such other form of entity shall
not constitute a Change of Control, so long as following such conversion or exchange a majority of
the members of the Board of Directors of such entity are nominees of Holly Corporation.

     “Clearstream” means Clearstream Banking, S.A.

     “Consolidated Cash Flow” means, with respect to any specified Person for any period, the
Consolidated Net Income of such Person for such period plus, without duplication:

     (1) an amount equal to the dividends or distributions paid during such period in cash
or Cash Equivalents to such Person or any of its Restricted Subsidiaries by a Person that is
not a Restricted Subsidiary of such Person; plus

     (2) an amount equal to (i) any extraordinary loss plus (ii) any net loss realized by
such Person or any of its Restricted Subsidiaries in connection with an Asset Sale or the
disposition of any securities by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries, in
each case, to the extent such losses were deducted in computing such Consolidated Net
Income; plus

     (3) provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was deducted in
computing such Consolidated Net Income; plus

     (4) the consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued (including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with aspect to Attributable
Debt, commissions, discounts and other fees and charges incurred in respect of letter of
credit or bankers’ acceptance financings, and net

6

 

payments, if any, pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income; plus

     (5) depreciation, amortization (including amortization of intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents an accrual of
or reserve for cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income; minus

     (6) non-cash items increasing such Consolidated Net Income for such period, other than
the accrual of revenue in the ordinary course of business,

in each case, on a consolidated basis and determined in accordance with GAAP.

     “Consolidated Net Income” means, with respect to any specified Person for any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a
consolidated basis, determined in accordance with GAAP; provided that:

     (1) the aggregate Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting will be included only
to the extent of the amount of dividends or similar distributions paid in cash to the
specified Person or a Restricted Subsidiary of the Person;

     (2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Restricted Subsidiary
of that Net Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly, by operation
of the terms of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, partners or members;

     (3) the cumulative effect of a change in accounting principles will be excluded;

     (4) unrealized losses and gains under derivative instruments included in the
determination of Consolidated Net Income, including, without limitation those resulting from
the application of Financial Accounting Standards Board Statement No. 133 will be excluded;

     (5) any gain or loss, together with any related provision for taxes on such gain or
loss, realized in connection with (a) any Asset Sale (including dispositions pursuant to
sale-and-leaseback transactions) or (b) the disposition of any securities by such Person or
the extinguishment of any Indebtedness of such Person shall be excluded;

     (6) any impairment charge or asset write-off pursuant to Financial Accounting Standards
Board Statement No. 142 “Goodwill and Other Intangible Assets” shall be excluded;

     (7) any non-cash compensation charge arising from any grant of stock, stock options or
other equity-based awards shall be excluded; and

     (8) any extraordinary or nonrecurring gain or loss, together with any related provision
for taxes on such extraordinary or nonrecurring gain or loss, shall be excluded.

7

 

     “Consolidated Net Tangible Assets” means, with respect to any Person at any date of
determination, the aggregate amount of total assets included in such Person’s most recent quarterly
or annual consolidated balance sheet prepared in accordance with GAAP less applicable reserves
reflected in such balance sheet, after deducting the following amounts: (a) all current liabilities
reflected in such balance sheet, and (b) all goodwill, trademarks, patents, unamortized debt
discounts and expenses and other like intangibles reflected in such balance sheet.

     “Continuing Directors” means, as of any date of determination, any member of the Board of
Directors of the General Partner who:

     (1) was a member of such Board of Directors on the Issue Date; or

     (2) was nominated for election or elected to such Board of Directors with the approval
of a majority of the Continuing Directors who were members of such Board of Directors at the
time of such nomination or election.

     “Corporate Trust Office of the Trustee” will be at the address of the Trustee specified in
Section 12.02 hereof or such other address as to which the Trustee may give notice to the Issuers.

     “Credit Agreement” means that certain Credit Agreement, dated as of August 27, 2007, by and
among HEP Operating Company, L.P., the financial institutions party thereto, Union Bank of
California, N.A., as administrative agent and sole lead arranger, Bank of America, National
Association, as syndicate agent and Guaranty Bank, as documentation agent, providing revolving
credit borrowings and letters of credit, including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, and, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from
time to time.

     “Credit Facilities” means, one or more debt facilities (including, without limitation, the
Credit Agreement) or commercial paper facilities, in each case, with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to borrow from such
lenders against such receivables) or letters of credit, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities
to institutional investors) in whole or in part from time to time.

     “Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any
successor entity thereto.

     “Default” means any event that is, or with the passage of time or the giving of notice or both
would be, an Event of Default.

     “Definitive Note” means a certificated Note registered in the name of the Holder thereof and
issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto except
that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges
of Interests in the Global Note” attached thereto.

     “Depositary” means, with respect to the Notes issuable or issued in whole or in part in global
form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and
any and all successors thereto appointed as depositary hereunder and having become such pursuant to
the applicable provision of this Indenture.

8

 

     “Disqualified Equity” means any Equity Interest that, by its terms (or by the terms of any
security into which it is convertible, or for which it is exchangeable, in each case, at the option
of the holder of the Equity Interest), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the
option of the holder of the Equity Interest, in whole or in part, on or prior to the date that is
91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any
Equity Interest that would constitute Disqualified Equity solely because the holders of the Equity
Interest have the right to require Holly Energy Partners to repurchase such Equity Interest upon
the occurrence of a change of control or an asset sale will not constitute Disqualified Equity if
the terms of such Equity Interest provide that Holly Energy Partners may not repurchase or redeem
any such Equity Interest pursuant to such provisions unless such repurchase or redemption complies
with Section 4.07 hereof.

     “Domestic Subsidiary” means any Restricted Subsidiary of Holly Energy Partners that was formed
under the laws of the United States or any state of the United States or the District of Columbia
or that Guarantees any Indebtedness of Holly Energy Partners.

     “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire
Capital Stock (but excluding any debt security that is convertible into, or exchangeable for,
Capital Stock).

     “Equity Offering” means any public or private sale of Equity Interests (other than
Disqualified Equity) made for cash on a primary basis by Holly Energy Partners after the Issue
Date.

     “Euroclear” means Euroclear Bank, S.A./N.V., as operator of the Euroclear system.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Exchange Notes” means the Notes issued in the Exchange Offer pursuant to Section 2.06(f)
hereof.

     “Exchange Offer” has the meaning set forth in the Registration Rights Agreement.

     “Exchange Offer Registration Statement” has the meaning set forth in the Registration Rights
Agreement.

     “Existing Indebtedness” means the aggregate principal amount of Indebtedness of Holly Energy
Partners and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on
the Issue Date, until such amounts are repaid.

     “Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated
willing seller in a transaction not involving distress or necessity of either party, determined in
good faith by the Board of Directors of Holly Energy Partners (unless otherwise provided in this
Indenture).

     “Fixed Charge Coverage Ratio” means with respect to any specified Person for any period, the
ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such
Person for such period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise
discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases
or redeems Disqualified Equity subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which
the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed
Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption,
Guarantee, repayment, repurchase,

9

 

redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or
redemption of Disqualified Equity, and the use of the proceeds therefrom, as if the same had
occurred at the beginning of the applicable Reference Period.

     In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

     (1) acquisitions (including, without limitation, a single asset, a division or segment
or an entire company) that have been made by the specified Person or any of its Restricted
Subsidiaries, including through mergers, asset purchase transactions or consolidations and
including any related financing transactions during the Reference Period or subsequent to
such Reference Period and on or prior to the Calculation Date will be given pro forma effect
as if they had occurred on the first day of the Reference Period, including any Consolidated
Cash Flow and any pro forma expense and cost reductions that have occurred or are reasonably
expected to occur, in the reasonable judgment of the chief financial or accounting officer
of Holly Energy Partners (regardless of whether those cost savings or operating improvements
could then be reflected in pro forma financial statements in accordance with Regulation S-X
promulgated under the Securities Act or any other regulation or policy of the SEC related
thereto);

     (2) the Consolidated Cash Flow attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses (and ownership interests therein)
disposed of prior to the Calculation Date, will be excluded;

     (3) the Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses (and ownership interests therein)
disposed of prior to the Calculation Date, will be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of the specified
Person or any of its Restricted Subsidiaries following the Calculation Date;

     (4) if any Indebtedness bears a floating rate of interest, the interest expense on such
Indebtedness will be calculated as if the average rate in effect from the beginning of the
applicable period to the Calculation Date had been the applicable rate for the entire period
(taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging
Obligation has a remaining term as at the Calculation Date in excess of 12 months); and

     (5) if any Indebtedness is incurred under a revolving credit facility and is being
given pro forma effect, the interest on such indebtedness shall be calculated based on the
average daily balance of such Indebtedness for the four fiscal quarters subject to the pro
forma calculation.

     “Fixed Charges” means, with respect to any specified Person for any period, (A) the sum,
without duplication, of:

     (1) the consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued, including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to Attributable
Debt, commissions, discounts and other fees and charges incurred in respect of letter of
credit or bankers’ acceptance financings, and net of the effect of all payments made or
received pursuant to Hedging Obligations in respect of interest rates; plus

10

 

     (2) the consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period; plus

     (3) any interest on Indebtedness of another Person that is guaranteed by such Person or
one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus

     (4) the product of (a) all dividends, whether paid or accrued and whether or not in
cash, on any series of Disqualified Equity of such Person or any of its Restricted
Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of
Holly Energy Partners (other than Disqualified Equity) or to Holly Energy Partners or a
Restricted Subsidiary of Holly Energy Partners, times (b) a fraction, the numerator of which
is one and the denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person, expressed as a decimal, in each case,
determined on a consolidated basis in accordance with GAAP; minus

(B) to the extent included in (A) above, write-off of non-recurring deferred financing costs of
such Person and its Restricted Subsidiaries during such period and any charge related to, or any
premium or penalty paid in connection with, paying any such Indebtedness of such Person and its
Restricted Subsidiaries prior to its Stated Maturity; provided, however, there shall be excluded
from Fixed Charges the amortization or write-off of fees and expenses incurred in connection with
the Acquisition.

     “GAAP” means generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a significant segment of the
accounting profession, which are in effect from time to time. Notwithstanding the foregoing, the
characterization of leases as operating or capital leases shall be determined in accordance with
GAAP as in effect on the date of entry into the applicable lease.

     “General Partner” means HEP Logistics Holdings, L.P., a Delaware limited partnership, and its
successors and permitted assigns as general partner of Holly Energy partners or as the business
entity with the ultimate authority to manage the business and operations of Holly Energy Partners.

     “Global Note Legend” means the legend set forth in Section 2.06(g)(2) hereof, which is
required to be placed on all Global Notes issued under this Indenture.

     “Global Notes” means, individually and collectively, each of the Restricted Global Notes and
the Unrestricted Global Notes deposited with or on behalf of and registered in the name of the
Depository or its nominee, substantially in the form of Exhibit A hereto and that bears the Global
Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached
thereto, issued in accordance with Section 2.01, 2.06(b)(3), 2.06(b)(4), 2.06(d)(2) or 2.06(f)
hereof.

     “Government Securities” means direct obligations of, or obligations guaranteed by, the United
States of America for the payment of which guarantee or obligations the full faith and credit of
the United States of American is pledged.

     “Guarantee” means a guarantee other than by endorsement of negotiable instruments for
collection in the ordinary course of business, direct or indirect, in any manner including, without
limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements
in respect thereof, of all or any part of any Indebtedness.

11

 

     “Guarantors” means each of:

     (1) the existing and future Domestic Subsidiaries of Holly Energy Partners other than
(a) Immaterial Subsidiaries of Holly Energy Partners, (b) Unrestricted Subsidiaries, and (c)
Subsidiaries of Holly Energy Partners that do not Guarantee Indebtedness under a Credit
Facility; and

     (2) any other Subsidiary of Holly Energy Partners that executes a Note Guarantee in
accordance with the provisions of this Indenture, and their respective successors and
assigns, in each case, until the Note Guarantee of such Person has been released in
accordance with the provisions of this Indenture.

     “Hedging Obligations” means, with respect to any specified Person, the obligations of such
Person incurred in the ordinary course of business and not for speculative purposes under:

     (1) interest rate swap agreements (whether from fixed to floating or from floating to
fixed), interest rate cap agreements and interest rate collar agreements entered into with
one or more financial institutions and designed to reduce costs of borrowing or to protect
the Person or any of its Restricted Subsidiaries entering into the agreement against
fluctuations in interest rates with respect to Indebtedness incurred;

     (2) other agreements or arrangements designed to manage interest rates or interest rate
risk; and

     (3) other agreements or arrangements designed to protect such Person against
fluctuations in currency exchange rates or commodity prices.

     “Holder” means a Person in whose name a Note is registered.

     “IAI Global Note” means a Global Note substantially in the form of Exhibit A hereto bearing
the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee that will be issued in a denomination equal
to the outstanding principal amount of the Notes transferred to Institutional Accredited Investors.

     “Immaterial Subsidiary” means, as of any date, any Restricted Subsidiary whose total assets,
as of that date, are less than $500,000 and whose total revenues for the most recent 12-month
period do not exceed $500,000; provided that a Restricted Subsidiary will not be considered to be
an Immaterial Subsidiary if it, directly or indirectly, Guarantees any Indebtedness of Holly Energy
Partners.

     “Indebtedness” means, with respect to any specified Person, any indebtedness of such Person,
whether or not contingent:

     (1) in respect of borrowed money;

     (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit
(or reimbursement agreements in respect thereof);

     (3) in respect of banker’s acceptances;

     (4) representing Capital Lease Obligations or Attributable Debt in respect of sale and
leaseback transactions;

12

 

     (5) representing the balance deferred and unpaid of the purchase price of any property
or services due more than six months after such property is acquired or such services are
completed; or

     (6) representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit, Attributable Debt
and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person
prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of
others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is
assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the
specified Person of any Indebtedness of any other Person.

     Notwithstanding the foregoing, the following shall not constitute “Indebtedness”:

     (1) accrued expenses and trade accounts payable arising in the ordinary course of
business;

     (2) the incurrence by Holly Energy Partners or any of its Restricted Subsidiaries of
Indebtedness in respect of bid, performance, surety, appeal, payment, insurance contracts
and similar bonds issued for the account of Holly Energy Partners and any of its Restricted
Subsidiaries in the ordinary course of business, including guarantees and obligations of
Holly Energy Partners or any of its Restricted Subsidiaries with respect to letters of
credit supporting such obligations (in each case other than an obligation for money
borrowed);

     (3) any Indebtedness which has been defeased in accordance with GAAP or defeased
pursuant to the deposit of cash or Government Securities (in an amount sufficient to satisfy
all such Indebtedness obligations at maturity or redemption, as applicable, and all payments
of interest and Special Interest, if any, and premium, if any) in a trust or account created
or pledged for the sole benefit of the holders of such indebtedness and subject to no other
Liens, and the other applicable terms of the instrument governing such Indebtedness;

     (4) any obligation arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument drawn against insufficient funds in the ordinary
course of business; provided, however, that such obligation is extinguished within five
Business Days of its incurrence; and

     (5) any obligation arising from any agreement providing for indemnities, guarantees,
purchase price adjustments, holdbacks, contingency payment obligations based on the
performance of the acquired or disposed assets or similar obligations (other than guarantees
of Indebtedness) incurred by any Person in connection with the acquisition or disposition of
assets.

     “Indenture” means this Indenture, as amended or supplemented from time to time.

     “Indirect Participant” means a Person who holds a beneficial interest in a Global Note through
a Participant.

     “Initial Notes” means the first $150,000,000 aggregate principal amount of Notes issued under
this Indenture on the date hereof.

13

 

     “Initial Purchasers” means UBS Securities LLC, Banc of America Securities LLC, Goldman, Sachs
& Co., BBVA Securities Inc., Capital One Southcoast, Inc., Comerica Securities, Inc., Mitsubishi
UFJ Securities (USA), Inc., PNC Capital Markets LLC and U.S. Bancorp Investments, Inc.

     “Institutional Accredited Investor” means an institution that is an “accredited investor” as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who are not also QIBs.

     “Investment Grade Rating” of the notes, means that the notes shall have been assigned a
Moody’s rating of Baa3 or higher and an S&P rating of BBB- or higher, or if one of such rating
agencies shall not make a rating on the notes publicly available for reasons outside the control of
the Issuers, then “Investment Grade Rating” shall mean that the notes shall have been assigned such
a rating by one of such rating agencies and an equivalent investment grade credit rating from any
other “nationally recognized statistical rating organization” within the meaning of Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act selected by the Issuers.

     “Investments” means, with respect to any Person, all direct or indirect investments by such
Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other
obligations), advances or capital contributions (excluding commission, travel and similar advances
to officers and employees made in the ordinary course of business), purchases or other acquisitions
for consideration of Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.
If Holly Energy Partners or any Subsidiary of Holly Energy Partners sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of Holly Energy Partners such that, after
giving effect to any such sale or disposition, such Person is no longer a Subsidiary of Holly
Energy Partners, Holly Energy Partners will be deemed to have made an Investment on the date of any
such sale or disposition equal to the Fair Market Value of Holly Energy Partners’ Investments in
such Subsidiary that were not sold or disposed of in an amount determined as provided in Section
4.07(b) hereof.

     “Issue Date” means the first date on which the notes are issued, authenticated and delivered
under this Indenture.

     “Joint Venture” means any Person that is not a direct or indirect Subsidiary of Holly Energy
Partners in which Holly Energy Partners or any of its Restricted Subsidiaries makes any Investment.

     “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in the City
of New York or at a place of payment are authorized by law, regulation or executive order to remain
closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that
place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such
payment for the intervening period.

     “Letter of Transmittal” means the letter of transmittal to be prepared by the Issuers and sent
to all Holders of the Notes for use by such Holders in connection with the Exchange Offer.

     “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title retention agreement,
any lease in the nature thereof, any option or other agreement to sell or give a security interest
in and any filing of or agreement to give any financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction. In no event shall a right of first refusal be deemed
to constitute a lien.

     “Moody’s” means Moody’s Investors Service, Inc., or any successor to the rating agency
business thereof.

14

 

     “Net Income” means, with respect to any specified Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect of preferred stock
dividends, excluding, however:

     (1) any gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with:

          (a) any Asset Sale; or

          (b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its
Restricted Subsidiaries; and

     (2) any extraordinary gain (but not loss), together with any related provision for
taxes on such extraordinary gain (but not loss).

     “Net Proceeds” means the aggregate cash proceeds received by Holly Energy Partners or any of
its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration received in any Asset
Sale), net of:

     (1) the direct costs relating to such Asset Sale, including, without limitation, legal,
accounting and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result of the Asset Sale,

     (2) taxes paid or payable as a result of the Asset Sale, in each case, after taking
into account any available tax credits or deductions and any tax sharing arrangements,

     (3) amounts required to be applied to the repayment of Indebtedness, other than
Indebtedness under a Credit Facility, secured by a Lien on the asset or assets that were the
subject of such Asset Sale and all distributions and payments required to be made to
minority interest holders in Restricted Subsidiaries as a result of such Asset Sale, and

     (4) any amounts to be set aside in any reserve established in accordance with GAAP or
any amount placed in escrow, in either case for adjustment in respect of the sale price of
such properties or assets or for liabilities associated with such Asset Sale and retained by
Holly Energy Partners or any of its Restricted Subsidiaries until such time as such reserve
is reversed or such escrow arrangement is terminated, in which case Net Proceeds shall
include only the amount of the reserve so reversed or the amount returned to Holly Energy
Partners or its Restricted Subsidiaries from such escrow arrangement, as the case may be.

     “Non-Recourse Debt” means Indebtedness:

     (1) as to which neither Holly Energy Partners nor any of its Restricted Subsidiaries
(a) provides credit support of any kind (including any undertaking, agreement or instrument
that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or
otherwise, or (c) constitutes the lender;

     (2) no default with respect to which (including any rights that the holders of the
Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would
permit upon notice, lapse of time or both any holder of any other Indebtedness of Holly
Energy Partners or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated
Maturity; and

15

 

     (3) as to which the lenders have been notified in writing that they will not have any
recourse to the stock or assets of Holly Energy Partners or any of its Restricted
Subsidiaries except as contemplated by clause (13) of the definition of Permitted Liens.

     For purposes of determining compliance with Section 4.09 hereof, in the event that any
Non-Recourse Debt of any of Holly Energy Partners’ Unrestricted Subsidiaries ceases to be
Non-Recourse Debt of such Unrestricted Subsidiary, such event will be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary of Holly Energy Partners.

     “Non-U.S. Person” means a Person who is not a U.S. Person.

     “Note Guarantee” means the Guarantee by each Guarantor of the Issuers’ obligations under this
Indenture and the Notes, executed pursuant to the provisions of this Indenture.

     “Notes” has the meaning assigned to it in the preamble to this Indenture. The Initial Notes
and the Additional Notes shall be treated as a single class for all purposes under this Indenture,
and unless the context otherwise requires, all references to the Notes shall include the Initial
Notes and any Additional Notes.

     “Obligations” means any principal, interest and Special Interest, if any, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under the documentation
governing any Indebtedness.

     “Offering Memorandum” means the final Offering Memorandum of the Issuers, dated March 5, 2010
with respect to the Notes.

     “Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer,
any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person (or, if
such Person is a limited partnership, the General Partner of such Person).

     “Officers’ Certificate” means a certificate signed on behalf of Holly Energy Partners by two
Officers of Holly Energy Partners or the General Partner, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the principal accounting
officer of Holly Energy Partners, that meets the requirements of Section 12.05 hereof.

     “Operating Surplus” has the meaning assigned to such term in the Partnership Agreement, as in
effect on the Issue Date.

     “Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable to the
Trustee, that meets the requirements of Section 12.05 hereof. The counsel may be an employee of or
counsel to Holly Energy Partners, the General Partner, any Subsidiary of Holly Energy Partners or
the General Partner or the Trustee.

     “Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who
has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to
DTC, shall include Euroclear and Clearstream).

16

 

     “Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership
of Holly Energy Partners, L.P., dated as of July 13, 2004, as such may be further amended, modified
or supplemented from time to time.

     “Permitted Business” means either (1) marketing, gathering, transporting (by barge, pipeline,
ship, truck or other modes of hydrocarbon transportation), terminalling, storing, producing,
acquiring, developing, exploring for, exploiting, producing, processing, dehydrating and otherwise
handling crude oil, gas, casinghead gas, drip gasoline, natural gasoline, condensates, distillates,
liquid hydrocarbons, asphalt, gaseous hydrocarbons and all other constituents, elements, compounds
or products refined or processed from any of the foregoing, which activities shall include, for the
avoidance of doubt, constructing pipeline, platform, dehydration, processing, storing and other
energy-related facilities, and activities or services reasonably related or ancillary thereto,
including entering into purchase and sale agreements, supply agreements and Hedging Obligations
related to these businesses, or (2) any other business that generates gross income at least 90% of
which constitutes “qualifying income” under Section 7704(d) of the Internal Revenue Code of 1986,
as amended, and business reasonably related or ancillary thereto.

     “Permitted Business Investments” means Investments by Holly Energy Partners or any of its
Restricted Subsidiaries in any Unrestricted Subsidiary of Holly Energy Partners or in any Joint
Venture, provided that:

     (1) either (a) at the time of such Investment and immediately thereafter, Holly Energy
Partners could incur $1.00 of additional Indebtedness under the Fixed Charge Coverage Ratio
test set forth in Section 4.09(a) hereof or (b) such Investment does not exceed the
aggregate amount of Incremental Funds (as defined in Section 4.07 hereof) not previously
expended at the time of making such Investment;

     (2) if such Unrestricted Subsidiary or Joint Venture has outstanding Indebtedness at
the time of such Investment, either (a) all such Indebtedness is Non-Recourse Debt or (b)
any such Indebtedness of such Unrestricted Subsidiaries or Joint Venture that is recourse to
Holly Energy Partners or any of its Restricted Subsidiaries could, at the time such
Investment is made, be incurred at that time by Holly Energy Partners and its Restricted
Subsidiaries under the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof;
and

     (3) such Unrestricted Subsidiary’s or Joint Venture’s activities are not outside the
scope of the Permitted Business.

“Permitted Investments” means:

     (1) any Investment in Holly Energy Partners or in a Restricted Subsidiary of Holly
Energy Partners;

     (2) any Investment in Cash Equivalents;

     (3) any Investment by Holly Energy Partners or any Restricted Subsidiary of Holly
Energy Partners in a Person, if as a result of such Investment:

     (a) such Person becomes a Restricted Subsidiary of Holly Energy Partners and a
Guarantor; or

17

 

     (b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into, Holly
Energy Partners or a Restricted Subsidiary of Holly Energy Partners that is a
Guarantor;

     (4) any Investment made as a result of the receipt of non-cash consideration from:

     (a) an Asset Sale that was made pursuant to and in compliance with Section 4.10
hereof; or

     (b) pursuant to clause (7) of the items deemed not to be Asset Sales under the
definition of “Asset Sale;”

     (5) any Investment in any Person solely in exchange for the issuance of Equity
Interests (other than Disqualified Equity) of Holly Energy Partners;

     (6) any Investments received in compromise or resolution of (A) obligations of trade
creditors or customers that were incurred in the ordinary course of business of Holly Energy
Partners or any of its Restricted Subsidiaries, including pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of any trade
creditor or customer, or as a result of a foreclosure, perfection or enforcement by Holly
Energy Partners or any of its Restricted Subsidiaries with respect to any secured Investment
in default; or (B) litigation, arbitration or other disputes with Persons who are not
Affiliates;

     (7) Investments represented by Hedging Obligations permitted to be incurred;

     (8) loans or advances to employees made in the ordinary course of business of Holly
Energy Partners or any Restricted Subsidiary of Holly Energy Partners in an aggregate
principal amount not to exceed $1.0 million at any one time outstanding;

     (9) repurchases of the Notes;

     (10) any Investments in prepaid expenses, negotiable instruments held for collection
and lease, utility, workers’ compensation and performance and other similar deposits and
prepaid expenses made in the ordinary course of business;

     (11) Permitted Business Investments; and

     (12) other Investments in any Person having an aggregate Fair Market Value (measured on
the date each such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to this clause (12)
that are at the time outstanding not to exceed the greater of (a) $25.0 million and (b) 5.0%
of Holly Energy Partners’ Consolidated Net Tangible Assets.

     “Permitted Liens” means:

     (1) Liens securing any Indebtedness under any of the Credit Facilities and all
Obligations and Hedging Obligations relating to such Indebtedness;

     (2) Liens in favor of Holly Energy Partners or the Guarantors;

     (3) Liens on property of a Person existing at the time such Person is merged with or
into or consolidated with Holly Energy Partners or any Subsidiary of Holly Energy Partners;
provided

18

 

that such Liens were in existence prior to such merger or consolidation and do not
extend to any assets other than those of the Person merged into or consolidated with Holly
Energy Partners or the Subsidiary and all proceeds thereof;

     (4) Liens on property existing at the time of acquisition of the property by Holly
Energy Partners or any Restricted Subsidiary of Holly Energy Partners; provided that such
Liens were in existence prior to, such acquisition, and not incurred in contemplation of,
such acquisition;

     (5) Liens and deposits to secure the performance of statutory obligations, surety or
appeal bonds, workers compensation obligations, reimbursement obligations owed to insurers,
bids, performance bonds, true leases, other types of social security or other obligations of
a like nature incurred in the ordinary course of business (including Liens to secure letters
of credit issued to assure payment of such obligations);

     (6) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by
clause (4) of Section 4.09(b) hereof covering only the assets acquired and proceeds thereof
with or financed by such Indebtedness;

     (7) Liens existing on the Issue Date (other than Liens securing the Credit Facilities);

     (8) Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided that any reserve or other appropriate
provision as is required in conformity with GAAP has been made therefor;

     (9) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s, repairman’s,
mechanics’ and other like Liens, in each case, incurred in the ordinary course of business;

     (10) defects, irregularities and deficiencies in title of any rights of way, survey
exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning
or other restrictions as to the use of real property that were not incurred in connection
with Indebtedness and that do not in the aggregate materially adversely affect the value of
said properties or materially impair their use in the operation of the business of such
Person;

     (11) inchoate Liens arising under the Employee Retirement Income Security Act of 1974,
and any amendments thereto (“ERISA”);

     (12) Liens created for the benefit of (or to secure) the Notes (or the Note
Guarantees);

     (13) Liens on any property or asset acquired, constructed or improved by Holly Energy
Partners or any of its Restricted Subsidiaries (a “Purchase Money Lien”), which (a) are in
favor of the seller of such property or assets, in favor of the Person developing,
constructing, repairing or improving such asset or property, or in favor of the Person that
provided the funding for the acquisition, development, construction, repair or improvement
cost, as the case may be, of such asset or property, (b) are created within 360 days after
the acquisition, development, construction, repair or improvement, (c) secure the purchase
price or development, construction, repair or improvement cost, as the case may be, of such
asset or property in an amount up to 100% of the Fair Market Value of such acquisition,
construction or improvement of such asset or property, and (d) are limited to the asset or
property so acquired, constructed or improved (including the proceeds thereof, accessions
thereto and upgrades thereof);

19

 

     (14) Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any
Joint Venture owned by Holly Energy Partners or any Restricted Subsidiary of Holly Energy
Partners to the extent securing Non-Recourse Debt or other Indebtedness of such Unrestricted
Subsidiary or Joint Venture otherwise permitted by the Fixed Charge Coverage Ratio test set
forth in Section 4.09(a) hereof;

     (15) Liens in favor of collecting or payor banks having a right of setoff, revocation,
refund or chargeback with respect to money or instruments of Holly Energy Partners or any of
its Restricted Subsidiaries on deposit with or in possession of such bank;

     (16) Liens to secure performance of Hedging Obligations of Holly Energy Partners or any
of its Restricted Subsidiaries;

     (17) Liens on pipelines or pipeline facilities that arise by operation of law;

     (18) Liens incurred in the ordinary course of business of Holly Energy Partners or any
Restricted Subsidiary of Holly Energy Partners with respect to obligations that at any one
time outstanding do not exceed the greater of (a) $10.0 million and (b) 2.5% of Consolidated
Net Tangible Assets;

     (19) Liens in favor of Alon USA, L.P. and/or its Affiliates pursuant to a mortgage and
deed of trust to be entered into pursuant to the Contribution Agreement which secures
certain rights pursuant to a pipelines and terminals agreement also to be entered into
pursuant to the Contribution Agreement and which are subordinated to the Obligations of the
Obligors, if any, under the Credit Agreement and substantially similar Subordinated Liens
that are incurred after the Issue Date to secure services with respect to future acquired
assets and which do not secure Indebtedness;

     (20) Liens resulting from the deposit of money or other cash equivalents in trust for
the purpose of defeasing Indebtedness of Holly Energy Partners or any of its Restricted
Subsidiaries;

     (21) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred
under the indenture; provided, however, that:

     (a) the new Lien is limited to all or part of the same property and assets
that secured or, under the written agreements pursuant to which the original Lien
arose, could secure the original Lien (plus improvements and accessions to, such
property or proceeds or distributions thereof); and

     (b) the Indebtedness secured by the new Lien is not increased to any amount
greater than the sum of (x) the outstanding principal amount, or, if greater,
committed amount, of the Indebtedness renewed, refunded, refinanced, replaced,
defeased or discharged with such Permitted Refinancing Indebtedness and (y) an
amount necessary to pay any fees and expenses, including premiums, related to such
renewal, refunding, refinancing, replacement, defeasance or discharge; and

     (22) Liens relating to future escrow arrangements securing Indebtedness incurred
in accordance with this Indenture.

20

 

     “Permitted Refinancing Indebtedness” means any Indebtedness of Holly Energy Partners or any of
its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to renew,
refund, refinance, replace, defease or discharge other Indebtedness of Holly Energy Partners or any
of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:

     (1) the principal amount of such Permitted Refinancing Indebtedness does not exceed the
principal amount of the Indebtedness renewed, refunded, refinanced, replaced, defeased or
discharged (plus all accrued interest on the Indebtedness and the amount of all fees and
expenses, including premiums, incurred in connection therewith);

     (2) such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being renewed, refunded,
refinanced, replaced, defeased or discharged;

     (3) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or
discharged is subordinated in right of payment to the Notes or the Note Guarantees, such
Permitted Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and is subordinated in right of payment to, the Notes or the Note Guarantees, on
terms at least as favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being renewed, refunded, refinanced, replaced, defeased or
discharged; and

     (4) such Indebtedness is incurred either by Holly Energy Partners or by the Restricted
Subsidiary who is the obligor on or guarantor of the Indebtedness being renewed, refunded,
refinanced, replaced, defeased or discharged.

     “Person” means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, limited liability company or government or
other entity.

     “Private Placement Legend” means the legend set forth in Section 2.06(g)(1) hereof to be
placed on all Notes issued under this Indenture except where otherwise permitted by the provisions
of this Indenture.

     “QIB” means a “qualified institutional buyer” as defined in Rule 144A.

     “Qualified Owner” means Holly Corporation and any Subsidiary of Holly Corporation as of the
Issue Date.

     “Rating Agencies” means Moody’s and S&P.

     “Rating Categories” means:

     (1) with respect to S&P, any of the following categories: AAA, AA, A, BBB, BB, B, CCC,
CC, C and D (or equivalent successor categories); and

     (2) with respect to Moody’s, any of the following categories: Aaa, Aa, A, Baa, Ba, B,
Caa, Ca, C and D (or equivalent successor categories).

     “Rating Decline” means a decrease in the rating of the Notes by either Moody’s or S&P by one
or more gradations (including gradations within Rating Categories as well as between Rating
Categories). In determining whether the rating of the Notes has decreased by one or more
gradations, gradations

21

 

within Ratings Categories, namely + or — for S&P, and 1, 2, and 3 for Moody’s, will be taken
into account; for example, in the case of S&P, a rating decline either from BB+ to BB or BB to B+
will constitute a decrease of one gradation.

     “Reference Period” means:

     (1) with respect to any date of determination on or after April 1, 2010, the four most
recent fiscal quarters of Holly Energy Partners for which internal financial statements are
available; and

     (2) with respect to any date of determination prior to April 1, 2010, the most recent
fiscal quarters, beginning with the fiscal quarter ended December 31, 2009, for which
internal financial statements are available.

     “Registration Rights Agreement” means the Registration Rights Agreement, dated as of March 10,
2010, among the Issuers, the Guarantors and the other parties named on the signature pages thereof,
as such agreement may be amended, modified or supplemented from time to time and, with respect to
any Additional Notes, one or more registration rights agreements among the Issuers, the Guarantors
and the other parties thereto, as such agreement(s) may be amended, modified or supplemented from
time to time, relating to rights given by the Issuers to the purchasers of Additional Notes to
register such Additional Notes under the Securities Act.

     “Regulation S” means Regulation S promulgated under the Securities Act.

     “Regulation S Global Note” means a Global Note substantially in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of
and registered in the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 903 of Regulation S.

     “Responsible Officer,” when used with respect to the Trustee, means any officer within the
Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other
officer of the Trustee customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of his knowledge of and familiarity with the
particular subject.

     “Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

     “Restricted Global Note” means a Global Note bearing the Private Placement Legend.

     “Restricted Investment” means an Investment other than a Permitted Investment.

     “Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an
Unrestricted Subsidiary.

     “Rule 144” means Rule 144 promulgated under the Securities Act.

     “Rule 144A” means Rule 144A promulgated under the Securities Act.

     “Rule 903” means Rule 903 promulgated under the Securities Act.

     “Rule 904” means Rule 904 promulgated under the Securities Act.

22

 

     “S&P” means Standards & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc.,
or any successor to the rating agency business thereof.

     “SEC” means the Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Senior Indebtedness” means with respect to any Person, Indebtedness of such Person, unless
the instrument creating or evidencing such Indebtedness provides that such Indebtedness is
subordinate in right of payment to the Notes or the Note Guarantee of such Person, as the case may
be.

     “Shelf Registration Statement” means the Shelf Registration Statement as defined in the
Registration Rights Agreement.

     “Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as
defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as
such Regulation is in effect on the Issue Date.

     “Stated Maturity” means, with respect to any installment of interest or principal on any
series of Indebtedness, the date on which the payment of interest or principal was scheduled to be
paid in the documentation governing such Indebtedness as of the Issue Date, and will not include
any contingent obligations to repay, redeem or repurchase any such interest or principal prior to
the date originally scheduled for the payment thereof.

     “Special Interest” has the meaning assigned to that term pursuant to the Registration Rights
Agreement.

     “Subsidiary” means, with respect to any specified Person:

     (1) any corporation, association or other business entity (other than a partnership or
limited liability company) of which more than 50% of the total voting power of shares of the
Voting Stock is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person (or a combination thereof); and

     (2) any partnership (whether general or limited) or limited liability company (a) the
sole general partner or managing member of which is such Person or a Subsidiary of such
Person, or (b) if there are more than a single general partner or member, either (x) the
only general partners or managing members of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof) or (y) such Person owns or
controls, directly or indirectly, a majority of the outstanding general partner interests,
member interests or other Voting Stock of such partnership or limited liability company,
respectively.

     “TIA” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).

     “Treasury Rate” means, as of any redemption date, the yield to maturity as of such redemption
date of United States Treasury securities with a constant maturity (as compiled and published in
the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available
at least two business days prior to the redemption date (or, if such Statistical Release is no
longer published, any publicly available source of similar market data)) most nearly equal to the
period from the redemption date to March 15, 2014; provided, however, that if the period from the
redemption date to March 15, 2014, is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one year will be used.

23

 

     “Trustee” means U.S. Bank National Association until a successor replaces it in accordance
with the applicable provisions of this Indenture and thereafter means the successor serving
hereunder.

     “Unrestricted Definitive Note” means a Definitive Note that does not bear and is not required
to bear the Private Placement Legend.

     “Unrestricted Global Note” means a Global Note that does not bear and is not required to bear
the Private Placement Legend.

     “Unrestricted Subsidiary” means any Subsidiary of Holly Energy Partners (other than Finance
Corp. or any successor to it) that is designated by the Board of Directors of the General Partner
as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but only to the
extent that such Subsidiary:

     (1) has no Indebtedness other than Non-Recourse Debt;

     (2) except as permitted under clauses (b)(3) and (b)(4) of Section 4.11 hereof, is not
party to any agreement, contract, arrangement or understanding with Holly Energy Partners or
any Restricted Subsidiary of Holly Energy Partners unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to Holly Energy Partners or
such Restricted Subsidiary than those that might be obtained at the time from Persons who
are not Affiliates of Holly Energy Partners;

     (3) is a Person with respect to which neither Holly Energy Partners nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or preserve such Person’s financial condition
or to cause such Person to achieve any specified levels of operating results; and

     (4) has not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of Holly Energy Partners or any of its Restricted Subsidiaries.

     All Subsidiaries of an Unrestricted Subsidiary shall be also Unrestricted Subsidiaries. Any
designation of a Subsidiary of Holly Energy Partners as an Unrestricted Subsidiary will be
evidenced to the Trustee by filing with the Trustee a Board Resolution giving effect to such
designation and an Officers’ Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 hereof. If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will
thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of Holly
Energy Partners as of such date and, if such Indebtedness is not permitted to be incurred as of
such date under Section 4.09 hereof, Holly Energy Partners will be in default of such covenant.

     “U.S. Person” means a U.S. Person as defined in Rule 902(k) promulgated under the Securities
Act.

     “Voting Stock” of any specified Person as of any date means the Capital Stock of such Person
that is at the time entitled (without regard to the occurrence of any contingency) to vote in the
election of the Board of Directors of such Person.

     “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the
number of years obtained by dividing:

24

 

     (1) the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect of the Indebtedness, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between such date
and the making of such payment; by

     (2) the then outstanding principal amount of such Indebtedness.

Section 1.02 Other Definitions.

	 	 	 	 	 
	 	 	Defined in
	Term	 	Section
	“Affiliate Transaction”

	 	 	4.11	 
	“Asset Sale Offer”

	 	 	3.09	 
	“Authentication Order”

	 	 	2.02	 
	“Change of Control Offer”

	 	 	4.15	 
	“Change of Control Payment”

	 	 	4.15	 
	“Change of Control Payment Date”

	 	 	4.15	 
	“Covenant Defeasance”

	 	 	8.03	 
	“DTC”

	 	 	2.03	 
	“Event of Default”

	 	 	6.01	 
	“Excess Proceeds”

	 	 	4.10	 
	“incur”

	 	 	4.09	 
	“Legal Defeasance”

	 	 	8.02	 
	“Offer Amount”

	 	 	3.09	 
	“Offer Period”

	 	 	3.09	 
	“Paying Agent”

	 	 	2.03	 
	“Permitted Debt”

	 	 	4.09	 
	“Payment Default”

	 	 	6.01	 
	“Purchase Date”

	 	 	3.09	 
	“Redemption Date”

	 	 	3.07	 
	“Registrar”

	 	 	2.03	 
	“Reinstatement Date”

	 	 	4.20	 
	“Restricted Payments”

	 	 	4.07	 
	“Suspended Covenants”

	 	 	4.20	 

Section 1.03 Incorporation by Reference of Trust Indenture Act.

     Whenever this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture.

     The following TIA terms used in this Indenture have the following meanings:

     “indenture securities” means the Notes;

     “indenture security Holder” means a Holder of a Note;

     “indenture to be qualified” means this Indenture;

     “indenture trustee” or “institutional trustee” means the Trustee; and

25

 

     “obligor” on the Notes and the Note Guarantees means the Issuers and the Guarantors,
respectively, and any successor obligor upon the Notes and the Note Guarantees, respectively.

     All other terms used in this Indenture that are defined by the TIA, defined by TIA reference
to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.

Section 1.04 Rules of Construction.

     Unless the context otherwise requires:

     (1) a term has the meaning assigned to it;

     (2) an accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;

     (3) “or” is not exclusive;

     (4) words in the singular include the plural, and in the plural include the singular;

     (5) “will” shall be interpreted to express a command;

     (6) provisions apply to successive events and transactions; and

     (7) references to sections of or rules under the Securities Act will be deemed to
include substitute, replacement of successor sections or rules adopted by the SEC from time
to time.

ARTICLE 2

THE NOTES

Section 2.01 Form and Dating.

     (a) General. The Notes and the Trustee’s certificate of authentication will be
substantially in the form of Exhibit A hereto. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note will be dated the date of
its authentication. The Notes shall be in denominations of $2,000 and integral multiples of
$1,000 in excess thereof.

     The terms and provisions contained in the Notes will constitute, and are hereby expressly
made, a part of this Indenture and the Issuers, the Guarantor and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and provisions and to be bound
thereby. However, to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be controlling.

     (b) Global Notes. Notes issued in global form will be substantially in the form
of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of
Interests in the Global Note” attached thereto). Notes issued in definitive form will be
substantially in the form of Exhibit A hereto (but without the Global Note Legend thereon and
without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each
Global Note will represent such of the outstanding Notes as will be specified therein and each
shall provide that it represents the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a

26

 

Global Note to reflect the amount of any increase or decrease in the aggregate principal
amount of outstanding Notes represented thereby will be made by the Trustee or the Custodian, at
the direction of the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.

     (c) Euroclear and Clearstream Procedures Applicable. The provisions of the
“Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of
Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook”
of Clearstream will be applicable to transfers of beneficial interests in the Regulation S Global
Notes that are held by Participants through Euroclear or Clearstream.

Section 2.02 Execution and Authentication.

     At least one Officer must sign the Notes for each of the Issuers by manual or facsimile
signature.

     If an Officer whose signature is on a Note no longer holds that office at the time a Note is
authenticated, the Note will nevertheless be valid.

     A Note will not be valid until authenticated by the manual signature of the Trustee. The
signature will be conclusive evidence that the Note has been authenticated under this Indenture.

     The Trustee will, upon receipt of a written order of the Issuers signed by two Officers of
each Issuer (an “Authentication Order”), authenticate Notes for original issue that may be validly
issued under this Indenture, including any Additional Notes and Exchange Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed the aggregate principal amount of
Notes authorized for issuance by the Issuers pursuant to one or more Authentication Orders, except
as provided in Section 2.07 hereof.

     The Trustee may appoint an authenticating agent acceptable to the Issuers to authenticate
Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes authentication by such agent.
An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of
the Issuers.

Section 2.03 Registrar and Paying Agent.

     The Issuers will maintain an office or agency where Notes may be presented for
registration of transfer or for exchange (“Registrar”) and an office or agency where Notes may be
presented for payment (“Paying Agent”). The Registrar will keep a register of the Notes and of
their transfer and exchange. The Issuers may appoint one or more co-registrars and one or more
additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying
Agent” includes any additional paying agent. The Issuers may change any Paying Agent or Registrar
without notice to any Holder. The Issuers will notify the Trustee in writing of the name and
address of any Agent not a party to this Indenture. If the Issuers fail to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. Holly Energy Partners,
Finance Corp. or any of Holly Energy Partners’ Subsidiaries may act as Paying Agent or Registrar.

     The Issuers initially appoint The Depository Trust Company (“DTC”) to act as Depositary with
respect to the Global Notes.

     The Issuers initially appoint the Trustee to act as the Registrar and Paying Agent and to act
as Custodian with respect to the Global Notes.

27

 

Section 2.04 Paying Agent to Hold Money in Trust.

     The Issuers will require each Paying Agent other than the Trustee to agree in writing
that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held
by the Paying Agent for the payment of principal, premium, if any, or interest and Special
Interest, if any, on the Notes, and will notify the Trustee of any default by the Issuers in making
any such payment. While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Issuers at any time may require a Paying Agent to pay all
money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than
Holly Energy Partners or a Subsidiary) will have no further liability for the money. If Holly
Energy Partners or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to Holly Energy Partners, the Trustee will serve
as Paying Agent for the Notes.

Section 2.05 Holder Lists.

     The Trustee will preserve in as current a form as is reasonably practicable the most
recent list available to it of the names and addresses of all Holders and shall otherwise comply
with TIA § 312(a). If the Trustee is not the Registrar, the Issuers will furnish to the Trustee at
least seven Business Days before each interest payment date and at such other times as the Trustee
may request in writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Notes and the Issuers shall otherwise comply
with TIA § 312(a).

Section 2.06 Transfer and Exchange.

     (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred except
as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to
the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be
exchanged by the Issuers for Definitive Notes if:

     (1) the Issuers deliver to the Trustee notice from the Depositary that it is unwilling
or unable to continue to act as Depositary or that it is no longer a clearing agency
registered under the Exchange Act and, in either case, a successor Depositary is not
appointed by the Issuers within 120 days after the date of such notice from the Depositary;

     (2) the Issuers in their sole discretion determines that the Global Notes (in whole but
not in part) should be exchanged for Definitive Notes and delivers a written notice to such
effect to the Trustee; or

     (3) there has occurred and is continuing a Default or Event of Default with respect to
the Notes.

     Upon the occurrence of either of the preceding events in (1) or (2) above, Definitive Notes
shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every
Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion
thereof, pursuant to this Section 2.06 or Sections 2.07 or 2.10 hereof, shall be authenticated and
delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for
another Note other than as provided in this Section 2.06(a), however, beneficial interests in a
Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.

28

 

     (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes will be effected through the
Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures.
Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also will require compliance with either subparagraph
(1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as
applicable:

     (1) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in
any Restricted Global Note may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend. Beneficial interests in
any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(1).

     (2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In
connection with all transfers and exchanges of beneficial interests that are not subject to
Section 2.06(b)(1) above, the transferor of such beneficial interest must deliver to the
Registrar either:

     (A) both:

     (i) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged; and

     (ii) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to be
credited with such increase; or

     (B) both:

     (i) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to cause to be issued a Definitive Note
in an amount equal to the beneficial interest to be transferred or
exchanged; and

     (ii) instructions given by the Depositary to the Registrar
containing information regarding the Person in whose name such Definitive
Note shall be registered to effect the transfer or exchange referred to in
(1) above.

Upon consummation of an Exchange Offer by the Issuers in accordance with Section 2.06(f) hereof,
the requirements of this Section 2.06(b)(2) shall be deemed to have been satisfied upon receipt by
the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of
such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust
the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof.

29

 

     (3) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial
interest in any Restricted Global Note may be transferred to a Person who takes delivery
thereof in the form of a beneficial interest in another Restricted Global Note if the
transfer complies with the requirements of Section 2.06(b)(2) above and the Registrar
receives the following:

     (A) if the transferee will take delivery in the form of a beneficial interest
in the 144A Global Note, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (1) thereof;

     (B) if the transferee will take delivery in the form of a beneficial interest
in the Regulation S Global Note, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in item (2) thereof; and

     (C) if the transferee will take delivery in the form of a beneficial interest
in the IAI Global Note, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable.

     (4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for
Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any
Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in
an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer
complies with the requirements of Section 2.06(b)(2) above and:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of the beneficial
interest to be transferred, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal that it is not
(i) a Broker-Dealer, (ii) a Person participating in the distribution of the Exchange
Notes or (iii) a Person who is an affiliate (as defined in Rule 144) of the Issuers;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;

     (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (i) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item (1)(a)
thereof; or

     (ii) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of a beneficial interest
in an Unrestricted Global Note, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4) thereof;

30

 

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.

     If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an
Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above.

     Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to
Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global
Note.

     (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

     (1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If
any holder of a beneficial interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:

     (A) if the holder of such beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Restricted Definitive Note, a
certificate from such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;

     (B) if such beneficial interest is being transferred to a QIB in accordance
with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;

     (C) if such beneficial interest is being transferred to a Non-U.S. Person in an
offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item (2)
thereof;

     (D) if such beneficial interest is being transferred pursuant to an exemption
from the registration requirements of the Securities Act in accordance with Rule
144, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;

     (E) if such beneficial interest is being transferred to an Institutional
Accredited Investor in reliance on an exemption from the registration requirements
of the Securities Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3) thereof, if
applicable;

     (F) if such beneficial interest is being transferred to Holly Energy Partners
or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(b) thereof; or

31

 

     (G) if such beneficial interest is being transferred pursuant to an effective
registration statement under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Issuers shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in
a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names
and in such authorized denomination or denominations as the holder of such beneficial interest
shall instruct the Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(1) shall bear the Private
Placement Legend and shall be subject to all restrictions on transfer contained therein.

     (2) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes.
A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial
interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of such beneficial
interest, in the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (i) a
Broker-Dealer, (ii) a Person participating in the distribution of the Exchange Notes
or (iii) a Person who is an affiliate (as defined in Rule 144) of the Issuers;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;

     (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (i) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for an
Unrestricted Definitive Note, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b) thereof; or

     (ii) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of an Unrestricted
Definitive Note, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on transfer
contained herein and in the

32

 

Private Placement Legend are no longer required in order to maintain compliance with
the Securities Act.

     (3) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes.
If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange
such beneficial interest for a Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction
of the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause the
aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant
to Section 2.06(h) hereof, and the Issuers will execute and the Trustee will authenticate
and deliver to the Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(3) will be registered in such name or names and in
such authorized denomination or denominations as the holder of such beneficial interest
requests through instructions to the Registrar from or through the Depositary and the
Participant or Indirect Participant. The Trustee will deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(3) will not bear the Private
Placement Legend.

     (d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

     (1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If
any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial
interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a
Person who takes delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following documentation:

     (A) if the Holder of such Restricted Definitive Note proposes to exchange such
Note for a beneficial interest in a Restricted Global Note, a certificate from such
Holder in the form of Exhibit C hereto, including the certifications in item (2)(b)
thereof;

     (B) if such Restricted Definitive Note is being transferred to a QIB in
accordance with Rule 144A, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;

     (C) if such Restricted Definitive Note is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;

     (D) if such Restricted Definitive Note is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in accordance
with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;

     (E) if such Restricted Definitive Note is being transferred to an Institutional
Accredited Investor in reliance on an exemption from the registration requirements
of the Securities Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3) thereof, if
applicable;

33

 

     (F) if such Restricted Definitive Note is being transferred to Holly Energy
Partners or any of its Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b) thereof; or

     (G) if such Restricted Definitive Note is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item (3)(c)
thereof,

the Trustee will cancel the Restricted Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above, the
appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global
Note, in the case of clause (C) above, the Regulation S Global Note, and in all
other cases, the IAI Global Note.

          (2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes.
A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in
an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who
takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the Holder, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person
participating in the distribution of the Exchange Notes or (iii) a Person who is an
affiliate (as defined in Rule 144) of the Issuers;

     (B) such transfer is effected pursuant to the Shelf Registration Statement in
accordance with the Registration Rights Agreement;

     (C) such transfer is effected by a Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration Rights Agreement; or

     (D) the Registrar receives the following:

     (i) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof; or

     (ii) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the form
of a beneficial interest in the Unrestricted Global Note, a certificate from
such Holder in the form of Exhibit B hereto, including the certifications in
item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.

34

 

     Upon satisfaction of the conditions of any of the subparagraphs in this Section
2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or cause to be
increased the aggregate principal amount of the Unrestricted Global Note.

     (3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes.
A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial
interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note
at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will
cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.

     If any such exchange or transfer from a Definitive Note to a beneficial interest is
effected pursuant to subparagraphs (2)(B), (2)(D) or (3) above at a time when an
Unrestricted Global Note has not yet been issued, the Issuers will issue and, upon receipt
of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will
authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to
the principal amount of Definitive Notes so transferred.

          (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request
by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section
2.06(e), the Registrar will register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder must present or surrender to the
Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer
in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly
authorized in writing. In addition, the requesting Holder must provide any additional
certifications, documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).

     (1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted
Definitive Note may be transferred to and registered in the name of Persons who take
delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the
following:

     (A) if the transfer will be made pursuant to Rule 144A, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;

     (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the
transferor must deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and

     (C) if the transfer will be made pursuant to any other exemption from the
registration requirements of the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if applicable.

     (2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted
Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note
or transferred to a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Note if:

35

 

     (A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the Holder, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (i) a Broker-Dealer, (ii) a Person
participating in the distribution of the Exchange Notes or (iii) a Person who is an
affiliate (as defined in Rule 144) of the Issuers;

     (B) any such transfer is effected pursuant to the Shelf Registration Statement
in accordance with the Registration Rights Agreement;

     (C) any such transfer is effected by a Broker-Dealer pursuant to the Exchange
Offer Registration Statement in accordance with the Registration Rights Agreement;
or

     (D) the Registrar receives the following:

     (i) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or

     (ii) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery thereof
in the form of an Unrestricted Definitive Note, a certificate from such
Holder in the form of Exhibit B hereto, including the certifications in item
(4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so
requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the Securities
Act.

     (3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of
Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof
in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such
a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof.

     (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with
the Registration Rights Agreement, the Issuers will issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee will authenticate:

     (1) one or more Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of the beneficial interests in the Restricted Global Notes accepted for
exchange in the Exchange Offer by Persons that certify in the applicable Letters of
Transmittal that (A) they are not Broker-Dealers, (B) they are not participating in a
distribution of the Exchange Notes and (C) they are not affiliates (as defined in Rule 144)
of the Issuers; and

     (2) Unrestricted Definitive Notes in an aggregate principal amount equal to the
principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange
Offer by Persons that certify in the applicable Letters of Transmittal that (A) they are not
Broker-Dealers,

36

 

     (B) they are not participating in a distribution of the Exchange Notes and (C) they are
not affiliates (as defined in Rule 144) of the Issuers.

     Concurrently with the issuance of such Notes, the Trustee will cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and the Issuers will
execute and the Trustee will authenticate and deliver to the Persons designated by the Holders of
Definitive Notes so accepted Unrestricted Definitive Notes in the appropriate principal amount.

     (g) Legends. The following legends will appear on the face of all Global Notes
and Definitive Notes issued under this Indenture unless specifically stated otherwise in the
applicable provisions of this Indenture.

     (1) Private Placement Legend.

     (A) Except as permitted by subparagraph (B) below, each Global Note and each
Definitive Note (and all Notes issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF
ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER
SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS ONE YEAR (IN
THE CASE OF RULE 144A SECURITIES) AFTER THE LATER OF THE ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) OR 40 DAYS (IN THE CASE OF REGULATION S SECURITIES), ONLY (A) TO THE
ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER”
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED
INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT

37

 

TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER OR THE ISSUERS ON OR AFTER THE RESALE RESTRICTION TERMINATION DATE.”

     (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued
pursuant to subparagraphs (b)(4), (c)(2), (c)(3), (d)(2), (d)(3), (e)(2), (e)(3) or
(f) of this Section 2.06 (and all Notes issued in exchange therefor or substitution
thereof) will not bear the Private Placement Legend.

     (2) Global Note Legend. Each Global Note will bear a legend in substantially the
following form:

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR
ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE
DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
ISSUERS.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE ISSUERS OR THEIR AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.”

     (h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a
particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each
such Global Note will be returned to or retained and canceled by the Trustee in accordance with
Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a
Global Note is exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note or for Definitive Notes, the principal
amount of Notes represented by such Global Note will be reduced accordingly and an endorsement
will be made on such Global Note by the Trustee or by the Depositary at the direction of the
Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or
transferred to a Person who will take delivery thereof in the form of a beneficial interest in
another Global Note, such other Global Note will be increased accordingly and an

38

 

endorsement will be made on such Global Note by the Trustee or by the Depositary at the
direction of the Trustee to reflect such increase.

     (i) General Provisions Relating to Transfers and Exchanges.

     (1) To permit registrations of transfers and exchanges, the Issuers will execute and
the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an
Authentication Order in accordance with Section 2.02 hereof or at the Registrar’s request.

     (2) No service charge will be made to a Holder of a beneficial interest in a Global
Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but
the Issuers may require payment of a sum sufficient to cover any transfer or exchange tax or
similar governmental charge payable in connection therewith (other than any such transfer or
exchange taxes or similar governmental charge payable upon exchange or transfer pursuant to
Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).

     (3) The Registrar will not be required to register the transfer of or exchange of any
Note selected for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.

     (4) All Global Notes and Definitive Notes issued upon any registration of transfer or
exchange of Global Notes or Definitive Notes will be the valid obligations of the Issuers,
evidencing the same debt, and entitled to the same benefits under this Indenture, as the
Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

     (5) Neither the Registrar nor the Issuers will be required:

     (A) to issue, to register the transfer of or to exchange any Notes during a
period beginning at the opening of business 15 days before the day of any selection
of Notes for redemption under Section 3.02 hereof and ending at the close of
business on the day of selection;

     (B) to register the transfer of or to exchange any Note selected for redemption
in whole or in part, except the unredeemed portion of any Note being redeemed in
part; or

     (C) to register the transfer of or to exchange a Note between a record date and
the next succeeding interest payment date.

     (6) Prior to due presentment for the registration of a transfer of any Note, the
Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is
registered as the absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and none of the Trustee,
any Agent or the Issuers shall be affected by notice to the contrary.

     (7) The Trustee will authenticate Global Notes and Definitive Notes in accordance with
the provisions of Section 2.02 hereof.

     (8) All certifications, certificates and Opinions of Counsel required to be submitted
to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or
exchange may be submitted by facsimile.

39

 

Section 2.07 Replacement Notes.

     If any mutilated Note is surrendered to the Trustee or the Issuers and the Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuers
will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a
replacement Note if the Trustee’s requirements are met. If required by the Trustee or the Issuers,
an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee
and the Issuers to protect the Issuers, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Issuers may charge for their
expenses in replacing a Note.

     Every replacement Note is an additional obligation of each of the Issuers and will be entitled
to all of the benefits of this Indenture equally and proportionately with all other Notes duly
issued hereunder.

Section 2.08 Outstanding Notes.

     The Notes outstanding at any time are all the Notes authenticated by the Trustee except
for those canceled by it, those delivered to it for cancellation, those reductions in the interest
in a Global Note effected by the Trustee in accordance with the provisions hereof, and those
described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a
Note does not cease to be outstanding because the Issuers or an Affiliate of the Issuers holds the
Note; however, Notes held by Holly Energy Partners or a Subsidiary of Holly Energy Partners shall
not be deemed to be outstanding for purposes of Section 3.07(a) hereof.

     If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

     If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to
be outstanding and interest on it ceases to accrue.

     If the Paying Agent (other than Holly Energy Partners, a Subsidiary or an Affiliate of any
thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on
that date, then on and after that date such Notes will be deemed to be no longer outstanding and
will cease to accrue interest.

Section 2.09 Treasury Notes.

     In determining whether the Holders of the required principal amount of Notes have
concurred in any direction, waiver or consent, Notes owned by the Issuers or any Guarantor, or by
any Person directly or indirectly controlling or controlled by or under direct or indirect common
control with the Issuers or any Guarantor, will be considered as though not outstanding, except
that for the purposes of determining whether the Trustee will be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned will be so
disregarded.

Section 2.10 Temporary Notes.

     Until certificates representing Notes are ready for delivery, the Issuers may prepare and
the Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes. Temporary
Notes will be substantially in the form of certificated Notes but may have variations that the
Issuers consider appropriate for temporary Notes and as may be reasonably acceptable to the
Trustee. Without unreasonable delay, the Issuers will prepare and the Trustee will authenticate
definitive Notes in exchange for temporary Notes.

     Holders of temporary Notes will be entitled to all of the benefits of this Indenture.

40

 

Section 2.11 Cancellation.

     The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar
and Paying Agent will forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else will cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and will destroy canceled
Notes (subject to the record retention requirement of the Exchange Act). Certification of the
destruction of all canceled Notes will be delivered to the Issuers. The Issuers may not issue new
Notes to replace Notes that they have paid or that have been delivered to the Trustee for
cancellation.

Section 2.12 Defaulted Interest.

     If the Issuers default in a payment of interest on the Notes, they will pay the defaulted
interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date, in each case at the
rate provided in the Notes and in Section 4.01 hereof. The Issuers will notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and the date of the
proposed payment. The Issuers will fix or cause to be fixed each such special record date and
payment date; provided that no such special record date may be less than 10 days prior to the
related payment date for such defaulted interest. At least 15 days before the special record date,
the Issuers (or, upon the written request of the Issuers, the Trustee in the name and at the
expense of the Issuers) will mail or cause to be mailed to Holders a notice that states the special
record date, the related payment date and the amount of such interest to be paid.

ARTICLE 3

REDEMPTION AND PREPAYMENT

Section 3.01 Notices to Trustee.

     If the Issuers elect to redeem Notes pursuant to the optional redemption provisions of
Section 3.07 hereof, it must furnish to the Trustee, at least 30 days but not more than 60 days
before a redemption date, an Officers’ Certificate setting forth:

     (1) the clause of this Indenture pursuant to which the redemption shall occur;

     (2) the redemption date;

     (3) the principal amount of Notes to be redeemed; and

     (4) the redemption price.

Section 3.02 Selection of Notes to Be Redeemed or Purchased.

     If less than all of the Notes are to be redeemed or purchased in an offer to purchase at
any time, the Trustee will select Notes for redemption or purchase on a pro rata basis except if
the Notes are listed on any national securities exchange, in compliance with the requirements of
the principal national securities exchange on which the Notes are listed.

     No Notes of $2,000 or less can be redeemed in part. In the event of partial redemption or
purchase by lot, the particular Notes to be redeemed or purchased will be selected, unless
otherwise

41

 

provided herein, not less than 30 nor more than 60 days prior to the redemption or purchase
date by the Trustee from the outstanding Notes not previously called for redemption or purchase.

     The Trustee will promptly notify the Issuers in writing of the Notes selected for redemption
or purchase and, in the case of any Note selected for partial redemption or purchase, the principal
amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in
amounts of $2,000 or whole multiples of $1,000 in excess thereof; except that if all of the Notes
of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such
Holder, even if not a multiple of $1,000, shall be redeemed or purchased. Except as provided in
the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or
purchase also apply to portions of Notes called for redemption or purchase.

Section 3.03 Notice of Redemption.

     Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60
days before a redemption date, the Issuers will mail or cause to be mailed, by first class mail, a
notice of redemption to each Holder whose Notes are to be redeemed at its registered address,
except that redemption notices may be mailed more than 60 days prior to a redemption date if the
notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of
this Indenture pursuant to Articles 8 or 11 hereof.

     The notice will identify the Notes to be redeemed and will state:

     (1) the redemption date;

     (2) the redemption price;

     (3) if any Note is being redeemed in part, the portion of the principal amount of such
Note to be redeemed and that, after the redemption date upon surrender of such Note, a new
Note or Notes in principal amount equal to the unredeemed portion will be issued upon
cancellation of the original Note;

     (4) the name and address of the Paying Agent;

     (5) that Notes called for redemption must be surrendered to the Paying Agent to collect
the redemption price;

     (6) that, unless the Issuers default in making such redemption payment, interest on
Notes called for redemption ceases to accrue on and after the redemption date;

     (7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the
Notes called for redemption are being redeemed; and

     (8) that no representation is made as to the correctness or accuracy of the CUSIP
number, if any, listed in such notice or printed on the Notes.

     At the Issuers’ request, the Trustee will give the notice of redemption in the Issuers’ names
and at their expense; provided, however, that the Issuers have delivered to the Trustee, at least
45 days prior to the redemption date, an Officers’ Certificate requesting that the Trustee give
such notice and setting forth the information to be stated in such notice as provided in the
preceding paragraph.

42

 

Section 3.04 Effect of Notice of Redemption.

     Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called
for redemption become irrevocably due and payable on the redemption date at the redemption price.
A notice of redemption may not be conditional.

Section 3.05 Deposit of Redemption or Purchase Price.

     On or prior to the redemption or purchase date, the Issuers will deposit with the Trustee
or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued
interest and Special Interest, if any, on all Notes to be redeemed or purchased on that date. The
Trustee or the Paying Agent will promptly return to the Issuers any money deposited with the
Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the redemption
or purchase price of, and accrued interest and Special Interest, if any, on, all Notes to be
redeemed or purchased.

     If the Issuers comply with the provisions of the preceding paragraph, on and after the
redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes
called for redemption or purchase. If a Note is redeemed or purchased on or after an interest
record date but on or prior to the related interest payment date, then any accrued and unpaid
interest shall be paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption or purchase is not so paid upon
surrender for redemption or purchase because of the failure of the Issuers to comply with the
preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or
purchase date until such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.

Section 3.06 Notes Redeemed or Purchased in Part.

     Upon surrender of a Note that is redeemed or purchased in part, the Issuers will issue
and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the
expense of the Issuers a new Note equal in principal amount to the unredeemed or unpurchased
portion of the Note surrendered.

Section 3.07 Optional Redemption.

     (a) At any time prior to March 15, 2013, the Issuers may on any one or more occasions
redeem up to 35% of the aggregate principal amount of Notes (including any Additional Notes)
issued under this Indenture at a redemption price of 108.25% of the principal amount thereof,
plus accrued and unpaid interest and Special Interest, if any, to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest due on an interest
payment date that is on or prior to the Redemption Date), with the net cash proceeds of one or
more Equity Offerings by Holly Energy Partners; provided that:

     (1) at least 65% of the aggregate principal amount of Notes (including any Additional
Notes) issued under this Indenture (excluding Notes held by Holly Energy Partners and its
Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and

     (2) the redemption occurs within 90 days of the date of the closing of such Equity
Offering.

     (b) Except pursuant to the preceding paragraph and subsection (d) of this section,
the Notes will not be redeemable at the Issuers’ option prior to March 15, 2014.

43

 

     (c) On or after March 15, 2014, the Issuers may redeem all or a part of the Notes
upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid interest and Special
Interest, if any, on the Notes redeemed to the applicable Redemption Date, if redeemed during the
twelve-month period beginning on March 15 of each year indicated below, subject to the rights of
Holders of Notes on the relevant record date to receive interest on the relevant interest payment
date:

	 	 	 	 	 
	Year	 	Percentage	 
	2014
	 	 	104.125	%
	2015
	 	 	102.063	%
	2016 and thereafter
	 	 	100.000	%

     Unless the Issuers default in the payment of the redemption price, interest will cease to
accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

     (d) At any time prior to March 15, 2014, the Issuers may also redeem all or a part
of the Notes, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class
mail to each Holder’s registered address, at a redemption price equal to 100% of the principal
amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and
Special Interest, if any, to the date of redemption (the “Redemption Date”), subject to the
rights of Holders on the relevant record date to receive interest due on the relevant interest
payment date.

     (e) Any redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.

Section 3.08 Mandatory Redemption.

     The Issuers are not required to make mandatory redemption or sinking fund payments with
respect to the Notes.

Section 3.09 Offer to Purchase by Application of Excess Proceeds.

     In the event that, pursuant to Section 4.10 hereof, the Issuers are required to commence
an offer to all Holders to purchase Notes (an “Asset Sale Offer”), it will follow the procedures
specified below.

     The Asset Sale Offer shall be made to all Holders and all holders of other Indebtedness that
is pari passu with the Notes containing provisions similar to those set forth in this Indenture
with respect to offers to purchase or redeem with the proceeds of sales of assets. The Asset Sale
Offer will remain open for a period of at least 20 Business Days following its commencement and not
more than 30 Business Days, except to the extent that a longer period is required by applicable law
(the “Offer Period”). No later than three Business Days after the termination of the Offer Period
(the “Purchase Date”), the Issuers will apply all Excess Proceeds (the “Offer Amount”) to the
purchase of Notes and such other pari passu Indebtedness (on a pro rata basis, if applicable) or,
if less than the Offer Amount has been tendered, all Notes and other Indebtedness tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased will be made in the same
manner as interest payments are made.

     If the Purchase Date is on or after an interest record date and on or before the related
interest payment date, any accrued and unpaid interest and Special Interest, if any, will be paid
to the Person in whose name a Note is registered at the close of business on such record date, and
no additional interest will be payable to Holders who tender Notes pursuant to the Asset Sale
Offer.

44

 

     Upon the commencement of an Asset Sale Offer, the Issuers will send, by first class mail, a
notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice will contain
all instructions and materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The notice, which will govern the terms of the Asset Sale Offer, will state:

     (1) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section
4.10 hereof and the length of time the Asset Sale Offer will remain open;

     (2) the Offer Amount, the purchase price and the Purchase Date;

     (3) that any Note not tendered or accepted for payment will continue to accrue
interest;

     (4) that, unless the Issuers default in making such payment, any Note accepted for
payment pursuant to the Asset Sale Offer will cease to accrue interest after the Purchase
Date;

     (5) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may
elect to have Notes purchased in integral multiples of $1,000 only;

     (6) that Holders electing to have Notes purchased pursuant to any Asset Sale Offer will
be required to surrender the Note, with the form entitled “Option of Holder to Elect
Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the
Issuers, a Depositary, if appointed by the Issuers, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;

     (7) that Holders will be entitled to withdraw their election if the Issuers, the
Depositary or the Paying Agent, as the case may be, receives, not later than the expiration
of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note purchased;

     (8) that, if the aggregate principal amount of Notes and other pari passu Indebtedness
surrendered by holders thereof exceeds the Offer Amount, the Issuers will select the Notes
and other pari passu Indebtedness to be purchased on a pro rata basis based on the principal
amount of Notes and such other pari passu Indebtedness surrendered (with such adjustments as
may be deemed appropriate by the Issuers so that only Notes in denominations of $2,000, or
integral multiples of $1,000 in excess thereof, will be purchased); and

     (9) that Holders whose Notes were purchased only in part will be issued new Notes equal
in principal amount to the unpurchased portion of the Notes surrendered (or transferred by
book-entry transfer).

     On or before the Purchase Date, the Issuers will, to the extent lawful, accept for payment, on
a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and will deliver or cause to be delivered to the Trustee the Notes properly accepted
together with an Officers’ Certificate stating that such Notes or portions thereof were accepted
for payment by the Issuers in accordance with the terms of this Section 3.09. The Issuers, the
Depositary or the Paying Agent, as the case may be, will promptly (but in any case not later than
five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the
purchase price of the Notes tendered by such Holder and accepted by the Issuers for purchase, and
the Issuers will promptly issue a new Note, and the Trustee, upon written request from the Issuers,
will authenticate and mail or deliver (or cause to be transferred by book entry) such new Note to
such Holder, in a principal amount equal to any unpurchased

45

 

portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Issuers to the Holder thereof. The Issuers will publicly announce the results of
the Asset Sale Offer on the Purchase Date.

     Other than as specifically provided in this Section 3.09, any purchase pursuant to this
Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

ARTICLE 4

COVENANTS

Section 4.01 Payment of Notes.

     The Issuers will pay or cause to be paid the principal of, premium, if any, and interest
and Special Interest, if any, on, the Notes on the dates and in the manner provided in the Notes.
Principal, premium, if any, and interest and Special Interest, if any, will be considered paid on
the date due if the Paying Agent, if other than the Holly Energy Partners or a Subsidiary thereof,
holds as of 11:00 a.m. Eastern Time on the due date money deposited by the Issuers in immediately
available funds and designated for and sufficient to pay all principal, premium, if any, and
interest then due. The Issuers will pay all Special Interest, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.

     The Issuers will pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal at a rate that is 1.00% higher than the applicable interest
rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and Special Interest
(without regard to any applicable grace period) at the same rate to the extent lawful.

Section 4.02 Maintenance of Office or Agency.

     The Issuers will maintain in the Borough of Manhattan, the City of New York, an office or
agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Issuers in respect of the Notes and this Indenture may be
served. The Issuers will give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Issuers fail to maintain any such
required office or agency or fails to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office
of the Trustee.

     The Issuers may also from time to time designate one or more other offices or agencies where
the Notes may be presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or rescission will in any
manner relieve the Issuers of their obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Issuers will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the location of any such
other office or agency.

     The Issuers hereby designate the Corporate Trust Office of the Trustee as one such office or
agency of the Issuers in accordance with Section 2.03 hereof.

46

 

Section 4.03 Reports.

     (a) Whether or not required by the rules and regulations of the SEC, so long as any
Notes are outstanding, Holly Energy Partners shall furnish (whether through hard copy or internet
access) to the Holders of Notes or cause the Trustee to furnish to the Holders of Notes, within
the time periods specified in the SEC’s rules and regulations:

     (1) all quarterly and annual reports that would be required to be filed with the SEC on
Forms 10-Q and 10-K if Holly Energy Partners were required to file such reports; and

     (2) all current reports that would be required to be filed with the SEC on Form 8-K if
Holly Energy Partners were required to file such reports.

     All such reports will be prepared in all material respects in accordance with all of the rules
and regulations applicable to such reports. Each annual report on Form 10-K will include a report
on Holly Energy Partners’ consolidated financial statements by Holly Energy Partners’ independent
registered public accounting firm. In addition, Holly Energy Partners will file a copy of each of
the reports referred to in clauses (1) and (2) above with the SEC for public availability within
the time periods specified in the rules and regulations applicable to such reports (unless the SEC
will not accept such a filing) and will post the reports on its website within those time periods.

     If, at any time Holly Energy Partners is no longer subject to the periodic reporting
requirements of the Exchange Act for any reason, Holly Energy Partners will nevertheless continue
filing the reports specified in the preceding paragraphs with the SEC within the time periods
specified above unless the SEC will not accept such a filing; provided that, for so long as Holly
Energy Partners is not subject to the periodic reporting requirements of the Exchange Act for any
reason, the time period for filing reports on Form 8-K shall be five (5) Business Days after the
event giving rise to the obligation to file such report. Holly Energy Partners will not take any
action for the purpose of causing the SEC not to accept any such filings. If, notwithstanding the
foregoing, the SEC will not accept Holly Energy Partners’ filings for any reason, Holly Energy
Partners will post the reports referred to in the preceding paragraphs on its website within the
time periods that would apply if Holly Energy Partners were required to file those reports with the
SEC.

     (b) For so long as any Notes remain outstanding, if at any time they are not
required to file with the SEC the reports required by paragraphs (a) and (b) of this Section
4.03, Holly Energy Partners and the Guarantors will furnish to the Holders of Notes and to
securities analysts and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Section 4.04 Compliance Certificate.

     (a) The Issuers and each Guarantor (to the extent that such Guarantor is so required
under the TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an
Officers’ Certificate stating that a review of the activities of the Issuers and Holly Energy
Partners’ Subsidiaries during the preceding fiscal year has been made under the supervision of
the signing Officers with a view to determining whether the Issuers have kept, observed,
performed and fulfilled their obligations under this Indenture, and further stating, as to each
such Officer signing such certificate, that to the best of his or her knowledge the Issuers have
kept, observed, performed and fulfilled each and every covenant contained in this Indenture and
is not in default in the performance or observance of any of the terms, provisions and conditions
of this Indenture (or, if a Default or Event of Default has occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what action the Issuers
are taking or propose to take with respect thereto) and that to the best of his or her knowledge
no event has occurred and remains in existence by reason of which payments on

47

 

account of the principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Issuers are taking or propose to
take with respect thereto.

     (b) So long as not contrary to the then current recommendations of the American
Institute of Certified Public Accountants, the year-end financial statements delivered pursuant
to Section 4.03 above shall be accompanied by a written statement of Holly Energy Partners’
independent public accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements, nothing has come
to their attention that would lead them to believe that the Issuers have violated any provisions
of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature
and period of existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any such violation.

	(c)	 	So long as any of the Notes are outstanding, the Issuers will deliver to the
Trustee, promptly upon any Officer becoming aware of any Default or Event of Default, an
Officers’ Certificate specifying such Default or Event of Default and what action the Issuers are
taking or propose to take with respect thereto.

     Section 4.05 Taxes.

     The Issuers will pay, and will cause each of Holly Energy Partners’ Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies except such as are
contested in good faith and by appropriate proceedings or where the failure to effect such payment
is not adverse in any material respect to the Holders of the Notes.

Section 4.06 Stay, Extension and Usury Laws.

     The Issuers and each of the Guarantors covenant (to the extent that they may lawfully do
so) that they will not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this Indenture; and the
Issuers and each of the Guarantors (to the extent that they may lawfully do so) hereby expressly
waive all benefit or advantage of any such law, and covenants that they will not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law has been enacted.

Section 4.07 Restricted Payments.

     (a) Holly Energy Partners will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:

     (1) declare or pay any dividend or make any other payment or distribution on account of
Holly Energy Partners’ or any of its Restricted Subsidiaries’ Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation involving
Holly Energy Partners or any of its Restricted Subsidiaries) or to the direct or indirect
holders of Holly Energy Partners’ or any of its Restricted Subsidiaries’ Equity Interests in
their capacity as such (other than distributions or dividends payable in Equity Interests of
Holly Energy Partners (other than Disqualified Equity) and other than distributions or
dividends payable to Holly Energy Partners or a Restricted Subsidiary);

48

 

     (2) purchase, redeem or otherwise acquire or retire for value (including without
limitation, in connection with any merger or consolidation involving Holly Energy Partners)
any Equity Interests of Holly Energy Partners or any direct or indirect parent of Holly
Energy Partners;

     (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness of Holly Energy Partners or any Guarantor that
is contractually subordinated to the Notes or to any Note Guarantee (excluding intercompany
Indebtedness between or among Holly Energy Partners and any of its Restricted Subsidiaries),
except a payment of interest or principal within one month of the Stated Maturity thereof;
or

     (4) make any Restricted Investment (all such payments and other actions set forth in
these clauses (1) through (4) above being collectively referred to as “Restricted
Payments”),

unless, at the time of and after giving effect to such Restricted Payment, no
Default or Event of Default has occurred and is continuing or would occur as a
consequence of such Restricted Payment and either:

     (1) if the Fixed Charge Coverage Ratio for Holly Energy Partners’ Reference Period is
not less than 1.75 to 1.00, such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by Holly Energy Partners and its Restricted Subsidiaries
(excluding Restricted Payments permitted by clauses (2), (3), (4) (to the extent, in the
case of clause (4), payments are made other than to Holly Energy Partners or a Restricted
Subsidiary), (5), (6) and (7) of Section 4.07(b) hereof) during the quarter in which such
Restricted Payment is made, is less than the sum, without duplication of:

     (A) Available Cash from Operating Surplus as of the end of the immediately
preceding quarter; plus

     (B) 100% of the aggregate net cash proceeds received by Holly Energy Partners
(including the Fair Market Value of any Permitted Business or long-term assets that
are used or useful in a Permitted Business to the extent acquired in consideration
of Equity Interests of Holly Energy Partners (other than Disqualified Equity)) since
the Issue Date as a contribution to its common equity capital or from the issue or
sale of Equity Interests of Holly Energy Partners (other than Disqualified Equity)
or from the issue or sale of convertible or exchangeable Disqualified Equity or
convertible or exchangeable debt securities of Holly Energy Partners that have been
converted into or exchanged for such Equity Interests (other than Equity Interests
(or Disqualified Equity or debt securities) sold to a Subsidiary of Holly Energy
Partners); plus

     (C) to the extent that any Restricted Investment that was made after the Issue
Date is sold for cash or Cash Equivalents or otherwise liquidated or repaid for cash
or Cash Equivalents, the lesser of (i) the return of capital or similar payment made
in cash or Cash Equivalents with respect to such Restricted Investment (less the
cost of disposition, if any) and (ii) the initial amount of such Restricted
Investment; plus

     (D) the net reduction in Restricted Investments resulting from dividends,
repayments of loans or advances, or other transfers of assets in each case to Holly
Energy Partners or any of its Restricted Subsidiaries from any Person (including,
without limitation, Unrestricted Subsidiaries) or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries, to the extent such amounts
have not been included in

49

 

Available Cash from Operating Surplus for any period commencing on or after the
Issue Date (items (b), (c) and (d) being referred to as “Incremental Funds”); minus

     (E) the aggregate amount of Incremental Funds previously expended pursuant to
this clause (1) and clause (2) below; or

     (2) if the Fixed Charge Coverage Ratio for Holly Energy Partners’ Reference Period is
less than 1.75 to 1.00, such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Holly Energy Partners and its Restricted Subsidiaries
(excluding Restricted Payments permitted by clauses (2), (3), (4) (to the extent, in the
case of clause (4), payments are made other than to Holly Energy Partners or a Restricted
Subsidiary), (5), (6) and (7) of Section 4.07(b) hereof) during the quarter in which such
Restricted Payment is made (such Restricted Payments for purposes of this clause (2) meaning
only distributions on common units and subordinated units of Holly Energy Partners, plus the
related distribution on the general partner interest), is less than the sum, without
duplication, of:

     (A) $80.0 million less the aggregate amount of all Restricted Payments made by
Holly Energy Partners and its Restricted Subsidiaries pursuant to this clause (2)(A)
during the period ending on the last day of the fiscal quarter immediately preceding
the date of such Restricted Payment and beginning on the Issue Date; plus

     (B) Incremental Funds to the extent not previously expended to this clause (2)
or clause (1) above.

     (b) The provisions of Section 4.07(a) hereof will not prohibit:

     (1) the payment of any dividend or distribution within 60 days after the date of its
declaration, if at the date of declaration the payment would have complied with the
provisions of this Indenture;

     (2) the making of any Restricted Payment in exchange for, or out of the net cash
proceeds of, a substantially concurrent (a) capital contribution to Holly Energy Partners
from any Person (other than a Restricted Subsidiary of Holly Energy Partners) or (b) sale
(other than to a Restricted Subsidiary of Holly Energy Partners) of Equity Interests (other
than Disqualified Equity) of Holly Energy Partners, with a sale being deemed substantially
concurrent if such Restricted Payment occurs not more than 120 days after such sale;
provided that the amount of any such net cash proceeds that are utilized for any such
Restricted Payment will be excluded or deducted from the calculation of Available Cash from
Operating Surplus and Incremental Funds;

     (3) the defeasance, redemption, repurchase or other acquisition of any subordinated
Indebtedness of Holly Energy Partners or any Guarantor with the net cash proceeds from an
incurrence of, or in exchange for, Permitted Refinancing Indebtedness;

     (4) the payment of any distribution or dividend by a Restricted Subsidiary of Holly
Energy Partners to the holders of its Equity Interests (other than Disqualified Equity) on a
pro rata basis;

     (5) so long as no Default has occurred and is continuing or would be caused thereby,
the repurchase, redemption or other acquisition or retirement for value of any Equity
Interests of Holly Energy Partners or any Restricted Subsidiary of Holly Energy Partners
held by any current or former officer, director, consultant or employee of the General
Partner, Holly Energy Partners or any of Holly Energy Partners’ Restricted Subsidiaries
pursuant to any equity subscription

50

 

agreement or plan, stock or unit option agreement, shareholders’ agreement, employment
agreement or similar agreement; provided, that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests may not exceed $3.0 million in
any twelve-month period; provided further, that Holly Energy Partners may carry over and
make in subsequent twelve-month periods, in addition to the amounts permitted for such
twelve-month period, up to $1.0 million of unutilized capacity under this clause (5)
attributable to the immediately preceding twelve-month period; provided further, that such
amount in any calendar year may be increased by an amount not to exceed (a) the cash
proceeds received by Holly Energy Partners from the sale of Equity Interests of Holly Energy
Partners to members of management, employees or directors of the General Partner, Holly
Energy Partners or its Restricted Subsidiaries that occurs after the Issue Date (to the
extent the cash proceeds from the sale of such Equity Interests have not otherwise been
applied to the payment of Restricted Payments by virtue of clauses 1(B) or 2(B) of Section
4.07(a) hereof), plus (b) the cash proceeds of key man life insurance policies received by
Holly Energy Partners after the Issue Date, less (c) the amount of any Restricted Payments
made pursuant to clauses (a) and (b) of this clause (5);

     (6) so long as no Default has occurred and is continuing or would be caused thereby,
payments of dividends on Disqualified Equity issued pursuant to Section 4.09 hereof;

     (7) repurchases of Capital Stock deemed to occur upon exercise of stock options,
warrants or other convertible securities if such Capital Stock represents a portion of the
exercise price of such options, warrants or other convertible securities;

     (8) cash payments in lieu of the issuance of fractional shares in connection with the
exercise of warrants, options or other securities convertible into or exchangeable for
Capital Stock of Holly Energy Partners; or arising from stock dividends, splits or business
combinations;

     (9) in connection with an acquisition by Holly Energy Partners or any of its Restricted
Subsidiaries, the return to Holly Energy Partners or any of its Restricted Subsidiaries of
Equity Interests of Holly Energy Partners or any of its Restricted Subsidiaries constituting
a portion of the purchase consideration in settlement of any indemnification claims or
pursuant to any purchase price adjustments under the acquisition agreement;

     (10) so long as no Default or Event of Default has occurred and is continuing, the
repurchase, redemption or other acquisition or retirement for value of any Subordinated
Obligations pursuant to Sections 4.10 or 4.15; provided that all Notes tendered by Holders
in connection with a Change of Control Offer or Asset Sale Offer, as applicable, have been
repurchased, redeemed or acquired for value; and

     (11) payment of reasonable and customary directors’ fees provided that such fees are
consistent with past practice or current requirements.

     The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the
date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued
by Holly Energy Partners or such Restricted Subsidiary, as the case may be, pursuant to the
Restricted Payment. The Fair Market Value of any assets or securities that are required to be
valued by this Section 4.07 will be determined, in the case of amounts under $15.0 million, by an
officer of the General Partner and, in the case of amounts over $15.0 million, by the Board of
Directors of the General Partner, whose resolution with respect thereto shall be delivered to the
trustee. For the purposes of determining compliance with this Section 4.07, in the event that a
Restricted Payment meets the criteria of more than one of the categories of Restricted Payments
described in the preceding clauses (1) — (11), Holly Energy Partners will be

51

 

permitted to classify (or reclassify in whole or in part in its sole discretion) such
Restricted Payment in any manner that complies with this Section 4.07.

Section 4.08 Dividend and Other Payment Restrictions Affecting Subsidiaries.

     (a) Holly Energy Partners will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

     (1) pay dividends or make any other distributions on its Equity Interests to Holly
Energy Partners or any of its Restricted Subsidiaries, or with respect to any other interest
or participation in, or measured by, its profits, or pay any indebtedness owed to Holly
Energy Partners or any of its Restricted Subsidiaries; provided that priority of any
preferred equity or similar Equity Interest in receiving dividends or liquidating
distributions prior to the payment of dividends or liquidating distributions on common
equity shall not be deemed to be a restriction on the ability to make distributions on
Capital Stock;

     (2) make loans or advances to Holly Energy Partners or any of its Restricted
Subsidiaries; or

     (3) sell, lease or transfer any of its properties or assets to Holly Energy Partners or
any of its Restricted Subsidiaries.

     (b) The restrictions in Section 4.08(a) hereof will not apply to encumbrances or
restrictions existing under or by reason of:

     (1) agreements as in effect on the Issue Date and any amendments, restatements,
modifications, renewals, supplements, refundings, replacements or refinancings of those
agreements or the Indebtedness to which they relate; provided that the amendments,
restatements, modifications, renewals, supplements, refundings, replacements or refinancings
are not materially more restrictive, taken as a whole, with respect to such dividend,
distribution and other payment restrictions than those contained in those agreements on the
Issue Date;

     (2) this Indenture, the Notes and the Note Guarantees;

     (3) agreements governing other Indebtedness permitted to be incurred under the
provisions of the covenant described above under Section 4.09 and any amendments,
restatements, modifications, renewals, supplements, refundings, replacements or refinancings
of such agreements; provided that the restrictions therein are not materially more
restrictive, taken as a whole, than those contained in this Indenture, the Notes and the
Note Guarantees;

     (4) applicable law, rule, regulation or order;

     (5) any instrument governing Indebtedness or Equity Interest of a Person acquired by
Holly Energy Partners or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness or Equity Interest was incurred in
connection with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person, other than the
Person, or the property or assets of the Person, so acquired; provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred;

52

 

     (6) customary non-assignment provisions in transportation agreements or purchase and
sale or exchange agreements, pipeline and terminals agreements, or similar operational
agreements or in licenses or leases, in each case entered into in the ordinary course of
business;

     (7) purchase money obligations for property acquired in the ordinary course of business
and Capital Lease Obligations that impose restrictions on the property purchased or leased
of the nature described in clause (3) of Section 4.08(a) hereof;

     (8) any agreement for the sale or other disposition of a Restricted Subsidiary that
contains any such restrictions on that Restricted Subsidiary pending its sale or other
disposition;

     (9) Permitted Refinancing Indebtedness; provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are not materially more
restrictive, taken as a whole, than those contained in the agreements governing the
Indebtedness being refinanced;

     (10) Liens permitted to be incurred under the provisions of Section 4.12 hereof that
limit the right of the debtor to dispose of the assets subject to such Liens;

     (11) provisions limiting the disposition or distribution of assets or property in joint
venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements
and other similar agreements entered into in the ordinary course of business;

     (12) any agreement or instrument relating to any property or assets acquired after the
Issue Date, so long as such encumbrance or restriction relates only to the property or
assets so acquired and is not and was not created in anticipation of such acquisitions;

     (13) restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business; and

     (14) secured Indebtedness that limits the right of the debtor to dispose of the assets
securing such Indebtedness and any related encumbrance or restriction contained in security
agreements, mortgages or purchase money agreements.

Section 4.09 Incurrence of Indebtedness and Issuance of Disqualified Equity.

     (a) Holly Energy Partners will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to (collectively,
“incur”) any Indebtedness (including Acquired Debt), and Holly Energy Partners will not issue any
Disqualified Equity and will not permit any of its Restricted Subsidiaries to issue any
Disqualified Equity; provided, however, that Holly Energy Partners and any Restricted Subsidiary
may incur Indebtedness (including Acquired Debt) and Holly Energy Partners and the Restricted
Subsidiaries may issue Disqualified Equity, if the Fixed Charge Coverage Ratio for the Holly
Energy Partners’ Reference Period immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Equity is issued, as the case may be, would have
been at least 2.00 to 1.00, determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional Indebtedness had been incurred or the
Disqualified Equity had been issued, as the case may be, at the beginning of such Reference
Period.

53

 

     (b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of
any of the following items of Indebtedness (collectively, “Permitted Debt”):

     (1) the incurrence by Holly Energy Partners and any Guarantor of additional
Indebtedness and letters of credit and the guarantees thereof under Credit Facilities in an
aggregate principal amount at any one time outstanding under this clause (1) (with letters
of credit being deemed to have a principal amount equal to the maximum potential liability
of Holly Energy Partners and its Restricted Subsidiaries thereunder) not to exceed the
greater of (a) $370.0 million and (b) the sum of $300.0 million and 15% of Consolidated Net
Tangible Assets, in each case, less the aggregate amount of all Net Proceeds of Asset Sales
or casualty events applied by Holly Energy Partners or any of its Restricted Subsidiaries
since the Issue Date to repay any term Indebtedness under a Credit Facility or to repay any
revolving credit Indebtedness under a Credit Facility and effect a corresponding commitment
reduction thereunder pursuant to Section 4.10 hereof;

     (2) the incurrence by Holly Energy Partners and its Restricted Subsidiaries of the
Existing Indebtedness;

     (3) the incurrence by the Issuers and the Guarantors of Indebtedness represented by the
Notes and the related Note Guarantees to be issued on the Issue Date and the Exchange Notes
and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;

     (4) the incurrence by Holly Energy Partners or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case, incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property, plant or equipment used
in the business of Holly Energy Partners or any of its Restricted Subsidiaries, in an
aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to
renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant
to this clause (4), at any time outstanding not to exceed the greater of (a) $20.0 million
and (b) 5.0% of Consolidated Net Tangible Assets;

     (5) the incurrence by Holly Energy Partners or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to
refund, refinance or replace any Indebtedness (other than intercompany Indebtedness) that
was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2),
(3) or (4) of this Section 4.09(b) or this clause (5);

     (6) the incurrence by Holly Energy Partners or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among Holly Energy Partners and any of its Restricted
Subsidiaries; provided, however, that:

     (A) if Holly Energy Partners or any Guarantor is the obligor on such
Indebtedness and the payee is not Holly Energy Partners or a Guarantor, such
Indebtedness must be unsecured and expressly subordinated to the prior payment in
full in cash of all Obligations then due with respect to the Notes, in the case of
Holly Energy Partners, or the Note Guarantee, in the case of a Guarantor; and

     (B) (1) any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than Holly Energy Partners or a
Restricted Subsidiary of Holly Energy Partners and (2) any sale or other transfer of
any

54

 

such Indebtedness to a Person that is not either Holly Energy Partners or a
Restricted Subsidiary of Holly Energy Partners,

will be deemed, in each case, to constitute an incurrence of such Indebtedness by Holly
Energy Partners or such Restricted Subsidiary, as the case may be, that was not permitted by
this clause (6);

     (7) the incurrence by Holly Energy Partners or any of its Restricted Subsidiaries of
Hedging Obligations;

     (8) the guarantee by Holly Energy Partners, or any of the Guarantors of Indebtedness of
Holly Energy Partners, or a Restricted Subsidiary of Holly Energy Partners that was
permitted to be incurred by another provision of this Section 4.09; provided that if the
Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the
Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the
Indebtedness guaranteed;

     (9) the incurrence by Holly Energy Partners or any of its Restricted Subsidiaries of
Indebtedness in respect of workers’ compensation claims, health or other types of social
security benefits, unemployment or other insurance or self-insurance obligations, insurance
contracts, reclamation, statutory obligations, bankers’ acceptances, and performance,
payment, appeal and surety bonds in the ordinary course of business, including guarantees
and obligations respecting standby letters of credit supporting such obligations, to the
extent not drawn (in each case other than an obligation for money borrowed) and replacements
of any of the foregoing;

     (10) the incurrence by Holly Energy Partners or any of its Restricted Subsidiaries of
Indebtedness arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently drawn against insufficient funds, so long as such
Indebtedness is covered within five business days;

     (11) the issuance by Holly Energy Partners or any of its Restricted Subsidiaries of
Disqualified Equity to Holly Energy Partners or any of its Restricted Subsidiaries;
provided, however, that:

(a) any subsequent issuance or transfer of Equity Interests of a Restricted
Subsidiary that results in any such Disqualified Equity being held, directly or
indirectly, by a Person other than Holly Energy Partners or a Restricted Subsidiary
of Holly Energy Partners; and

(b) any sale or other transfer of any such Disqualified Equity to a Person that is
not either Holly Energy Partners or a Restricted Subsidiary of Holly Energy
Partners;

Will be deemed, in each case, to constitute an issuance of such Disqualified Equity by Holly
Equity Partners or such Restricted Subsidiary that was not permitted by this clause:

     (12) the incurrence by Holly Energy Partners or any of its Restricted Subsidiaries
of Indebtedness in the ordinary course of business under documentary letters of credit which
are to be repaid in full not more than one year after the date on which such Indebtedness
was originally incurred to finance the purchase of goods by Holly Energy Partners or any of
its Restricted Subsidiaries;

     (13) the incurrence of Indebtedness arising from agreements with Holly Energy Partners
or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase
price,

55

 

earn-outs, or similar obligations, in each case, incurred or assumed in connection with
the disposition or acquisition of any business, assets or a Subsidiary in accordance with
the terms of the indenture, other than guarantees of Indebtedness incurred or assumed by any
Person acquiring all or any portion of such business, assets or Subsidiary for the purpose
of financing such acquisition; and

     (14) the incurrence by Holly Energy Partners or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount at any time outstanding, not to
exceed the greater of (a) $40.0 million and (b) 5.0% of Consolidated Net Tangible Assets.

     Holly Energy Partners will not incur, and will not permit any Guarantor to incur, any
Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to
any other Indebtedness of Holly Energy Partners or such Guarantor unless such Indebtedness is also
contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on
substantially identical terms; provided, however, that no Indebtedness shall be deemed to be
contractually subordinated in right of payment to any other Indebtedness of Holly Energy Partners
solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis.

     For purposes of determining compliance with this Section 4.09, in the event that an item of
proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt
described in clauses (1) through (14) above, or is entitled to be incurred pursuant to Section
4.09(a) hereof, Holly Energy Partners will be permitted to classify such item of Indebtedness on
the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in
any manner that complies with this Section 4.09. Indebtedness under Credit Facilities outstanding
on the date on which Notes are first issued and authenticated under this Indenture will initially
be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of
the definition of Permitted Debt.

     The accrual of interest, the accretion or amortization of original issue discount, the payment
of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the
reclassification of preferred stock as Indebtedness due to a change in accounting principles, and
the payment of dividends on Disqualified Equity in the form of additional shares of the same class
of Disqualified Equity will not be deemed to be an incurrence of Indebtedness or an issuance of
Disqualified Equity for purposes of this Section 4.09; provided, in each such case, that the amount
of any such accrual, accretion or payment is included in Fixed Charges of Holly Energy Partners as
accrued. Notwithstanding any other provision of this Section 4.09, the maximum amount of
Indebtedness that Holly Energy Partners or any Restricted Subsidiary may incur pursuant to this
Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange
rates or currency values.

     The amount of any Indebtedness outstanding as of any date will be:

     (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with
original issue discount;

     (2) the principal amount of the Indebtedness, in the case of any other Indebtedness;
and

     (3) in respect of Indebtedness of another Person secured by a Lien on the assets of the
specified Person, the lesser of:

     (A) the Fair Market Value of such assets at the date of determination; and

     (B) the amount of the Indebtedness of the other Person.

56

 

Section 4.10 Asset Sales.

     Holly Energy Partners will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:

     (1) Holly Energy Partners (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of the Asset Sale at least equal to the Fair Market Value of the
assets or Equity Interests issued or sold or otherwise disposed of;

     (2) such Fair Market Value is determined by (a) an executive Officer of the General
Partner if the value is less than $15.0 million, as evidenced by an Officers’ Certificate
delivered to the Trustee, or (b) the Board of Directors of the General Partner if the value
is $15.0 million or more, as evidenced by a resolution of such Board of Directors of the
General Partners; and

     (3) at least 75% of the consideration received in the Asset Sale by Holly Energy
Partners or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For
purposes of this provision, each of the following shall be deemed to be cash:

     (A) any liabilities, as shown on Holly Energy Partners’ most recent
consolidated balance sheet, of Holly Energy Partners or any Restricted Subsidiary
(other than contingent liabilities and liabilities that are by their terms
subordinated to the Notes or any Note Guarantee) that are assumed by the transferee
of any such assets pursuant to a customary novation agreement that releases Holly
Energy Partners or such Restricted Subsidiary from further liability;

     (B) any securities, notes or other obligations received by Holly Energy
Partners or any such Restricted Subsidiary from such transferee that are within 90
days after the Asset Sale (subject to ordinary settlement periods), converted by
Holly Energy Partners or such Restricted Subsidiary into cash, to the extent of the
cash received in that conversion; and

     (C) any stock or assets of the kind referred to in clauses (2) or (4) of the
next succeeding paragraph.

     Within 365 days after the receipt of any Net Proceeds from an Asset Sale, Holly Energy
Partners (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds:

     (1) to repay Senior Indebtedness of Holly Energy Partners and/or its Restricted
Subsidiaries (or to make an offer to repurchase or redeem such Indebtedness, provided that
such repurchase or redemption closes within 45 days after the end of such 365-day period)
and, if the Senior Indebtedness repaid is revolving credit Indebtedness, to correspondingly
reduce commitments with respect thereto;

     (2) to acquire all or substantially all of the assets of, or any Capital Stock of,
another Permitted Business, if, after giving effect to any such acquisition of Capital
Stock, the Permitted Business is or becomes a Restricted Subsidiary of Holly Energy
Partners;

     (3) to make a capital expenditure; or

     (4) to acquire other assets that are not classified as current assets under GAAP and
that are used or useful in a Permitted Business.

57

 

     Notwithstanding the foregoing, if within 365 days after the receipt of any Net Proceeds from
an Asset Sale, Holly Energy Partners (or the applicable Restricted Subsidiary, as the case may be)
enters into a binding written agreement irrevocably committing Holly Energy Partners or such
Restricted Subsidiary to an application of funds of the kind described in clause (2), (3) or (4) of
the preceding paragraph, and as to which the only condition to closing is the receipt of required
governmental approvals or, in the case of clause (3), the completion of required construction of
the applicable asset(s), Holly Energy Partners or such Restricted Subsidiary shall be deemed not to
be in violation of the preceding paragraph. Any Net Proceeds that are applied pursuant to clause
(2) or (4) of the preceding paragraph pursuant to any such binding agreement shall be deemed to
have been applied for such purpose within such 365-day period so long as they are so applied within
two years after the date of receipt of such Net Proceeds.

     Pending the final application of any Net Proceeds, Holly Energy Partners or the applicable
Restricted Subsidiary may temporarily reduce revolving credit borrowings or otherwise invest the
Net Proceeds in any manner that is not prohibited by this Indenture.

     Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second
paragraph of this Section 4.10 will constitute “Excess Proceeds.” When the aggregate amount of
Excess Proceeds exceeds $20.0 million, within five days thereof, the Issuers will make an Asset
Sale Offer to all Holders of Notes and all holders of other Indebtedness that is pari passu with
the Notes containing provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount
of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds.
The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued
and unpaid interest and Special Interest, if any, to the date of purchase, and will be payable in
cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, Holly Energy
Partners may use those Excess Proceeds for any purpose not otherwise prohibited by this Indenture.
If the aggregate principal amount of Notes and other pari passu Indebtedness tendered into such
Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such
other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds will be reset at zero.

     Holly Energy Partners will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws and regulations
are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the
extent that the provisions of any securities laws or regulations conflict with the provisions of
Section 3.09 hereof or this Section 4.10, Holly Energy Partners will comply with the applicable
securities laws and regulations and will not be deemed to have breached its obligations under
Section 3.09 hereof or this Section 4.10 by virtue of such compliance.

Section 4.11 Transactions with Affiliates.

     (a) Holly Energy Partners will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into or make or amend
any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of Holly Energy Partners (each an “Affiliate Transaction”), unless:

     (1) the Affiliate Transaction is on terms that are no less favorable to Holly Energy
Partners or the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by Holly Energy Partners or such Restricted Subsidiary with an
unrelated Person; and

58

 

     (2) Holly Energy Partners delivers to the Trustee:

     (A) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $25.0 million, a
resolution of the Board of Directors of the General Partner set forth in an
Officers’ Certificate certifying that such Affiliate Transaction complies with
clause (1) of this Section 4.11(a) and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors of
Holly Energy Partners; and

     (B) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $50.0 million, an
opinion as to the fairness to Holly Energy Partners or such Subsidiary of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.

     (b) The following items will not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of Section 4.11(a) hereof:

     (1) reasonable fees and compensation paid to or for the benefit of any employee,
officer or director of Holly Energy Partners, any of its Restricted Subsidiaries or the
General Partner, and any employment agreement, employee benefit plan, officer or director
indemnification agreement or any similar arrangement entered into by Holly Energy Partners
or any of its Restricted Subsidiaries existing on the Issue Date, or entered into thereafter
in the ordinary course of business, and any indemnities or other transactions permitted or
required by bylaw, statutory provisions or any of the foregoing agreements, plans or
arrangements;

     (2) transactions between or among Holly Energy Partners and/or its Restricted
Subsidiaries;

     (3) transactions with a Person (other than an Unrestricted Subsidiary of Holly Energy
Partners) that is an Affiliate of Holly Energy Partners solely because Holly Energy Partners
owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such
Person;

     (4) any issuance of Equity Interests (other than Disqualified Equity) of Holly Energy
Partners to Affiliates of Holly Energy Partners;

     (5) Restricted Payments or Permitted Investments that do not violate Section 4.07
hereof;

     (6) customary compensation, indemnification and other benefits made available to
officers, directors or employees of Holly Energy Partners, a Restricted Subsidiary of Holly
Energy Partners or the General Partner, including reimbursement or advancement of
out-of-pocket expenses and provisions of officers’ and directors’ liability insurance;

     (7) in the case of gathering, transportation, marketing, hedging, production handling,
operating, construction, terminalling, storage, lease, platform use, or other operational
contracts, any such contracts are entered into in the ordinary course of business on terms
substantially similar to those contained in similar contracts entered into by Holly Energy
Partners or any Restricted Subsidiary and third parties, or if neither Holly Energy Partners
nor any Restricted Subsidiary has entered into a similar contract with a third party, that
the terms are no less favorable than those available from third parties on an arm’s-length
basis, as determined by the Board of Directors of the General Partner;

59

 

     (8) loans or advances to employees in the ordinary course of business not to exceed
$1.0 million in the aggregate at any one time outstanding;

     (9) the existence of, or the performance by Holly Energy Partners or any Restricted
Subsidiary of its obligations under the terms of, any agreements that are described in the
Offering Memorandum under the heading “Certain relationships and related party transactions”
to which it is a party as of the closing date of the Acquisition on the terms described in
the Offering Memorandum and any amendments thereto and any similar agreements which it may
enter into thereafter; provided, however, that the existence of, or the performance by Holly
Energy Partners or any Restricted Subsidiary of its obligations under, any future amendment
to such agreements or under any such similar agreements shall only be permitted by this
clause (9) to the extent that the terms of any such amendment or new agreement, taken as a
whole, are not less favorable to the Holders in any material respect as determined by the
Board of Directors of the General Partner in its reasonable good faith judgment upon a
recommendation of Holly Energy Partners’ Conflicts Committee; and

     (10) guarantees of performance by Holly Energy Partners or any of its Restricted
Subsidiaries in the ordinary course of business, except for guarantees of Indebtedness in
respect of borrowed money.

Section 4.12 Liens.

     Holly Energy Partners will not and will not permit any of its Restricted Subsidiaries to,
create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any
kind (other than Permitted Liens) securing Indebtedness, Attributable Debt or trade payables upon
any of their property or assets, now owned or hereafter acquired, unless all payments due under
this Indenture and the Notes are secured on an equal and ratable basis with the obligations so
secured until such time as such obligations are no longer secured by a Lien.

Section 4.13 Business Activities.

     Holly Energy Partners will not, and will not permit any of its Restricted Subsidiaries
to, engage in any business other than Permitted Businesses, except to such extent as would not be
material to Holly Energy Partners and its Restricted Subsidiaries taken as a whole.

     Finance Corp. will not hold any material assets, become liable for any material obligations or
engage in any significant business activities; provided, that Finance Corp. may be a co-obligor or
guarantor with respect to Indebtedness if Holly Energy Partners is an obligor on such Indebtedness
and the net proceeds of such Indebtedness are received by Holly Energy Partners, Finance Corp. or
one or more Guarantors. At any time after Holly Energy Partners is a corporation, Finance Corp. may
consolidate or merge with or into Holly Energy Partners or any Restricted Subsidiary.

Section 4.14 Corporate Existence.

     Subject to Article 5 hereof, Holly Energy Partners shall do or cause to be done all
things necessary to preserve and keep in full force and effect:

     (1) its limited partnership existence, and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of Holly Energy Partners or any
such Subsidiary; and

60

 

     (2) the rights (charter and statutory), licenses and franchises of Holly Energy
Partners and its Subsidiaries; provided, however, that Holly Energy Partners shall not be
required to preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Subsidiaries, if the Board of Directors shall determine that
the preservation thereof is no longer desirable in the conduct of the business of Holly
Energy Partners and its Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders of the Notes.

Section 4.15 Offer to Repurchase Upon Change of Control.

     (a) Upon the occurrence of a Change of Control, the Issuers will make an offer (a
“Change of Control Offer”) to each Holder of Notes to repurchase all or any part (equal to $2,000
or an integral multiple of $1,000 in excess thereof) of that Holder’s Notes at a purchase price
in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and
unpaid interest and Special Interest, if any, on the Notes repurchased to, but excluding, the
date of purchase, subject to the rights of Holders of Notes on the relevant record date to
receive interest due on the relevant interest payment date (the “Change of Control Payment”).
Within 30 days following any Change of Control, the Issuers will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of Control and stating:

     (1) that the Change of Control Offer is being made pursuant to this Section 4.15 and
that all Notes tendered will be accepted for payment;

     (2) the purchase price and the purchase date, which shall be no earlier than 30 days
and no later than 60 days from the date such notice is mailed (the “Change of Control
Payment Date”);

     (3) that any Note not tendered will continue to accrue interest;

     (4) that, unless the Issuers Default in the payment of the Change of Control Payment,
all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue
interest after the Change of Control Payment Date;

     (5) that Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will be required to surrender the Notes, with the form entitled “Option of Holder to
Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the
Paying Agent at the address specified in the notice prior to the close of business on the
third Business Day preceding the Change of Control Payment Date;

     (6) that Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have the Notes purchased; and

     (7) that Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $2,000 in principal amount or an integral multiple of
$1,000 in excess thereof.

     The Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent those laws and regulations are
applicable in

61

 

connection with the repurchase of the Notes as a result of a Change in Control. To the extent
that the provisions of any securities laws or regulations conflict with the provisions of this
Section 4.15, the Issuers will comply with the applicable securities laws and regulations and will
not be deemed to have breached its obligations under this Section 4.15 by virtue of such
compliance.

     (b) On the Change of Control Payment Date, the Issuers will, to the extent lawful:

     (1) accept for payment all Notes or portions of Notes properly tendered pursuant to the
Change of Control Offer;

     (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Notes or portions of Notes properly tendered; and

     (3) deliver or cause to be delivered to the Trustee the Notes properly accepted
together with an Officers’ Certificate stating the aggregate principal amount of Notes or
portions of Notes being purchased by the Issuers.

     The Paying Agent will promptly mail to each Holder of Notes properly tendered the Change of
Control Payment for such Notes (or, if all the Notes are then in global form, it will make such
payment through the facilities of DTC), and the Trustee will promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided, that each new Note will be in a
principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. The Issuers will
publicly announce the results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.

     The provisions described above that require the Issuers to make a Change of Control Offer
following a Change of Control will be applicable whether or not any other provisions of this
Indenture are applicable.

     (c) Notwithstanding anything to the contrary in this Section 4.15, the Issuers
will not be required to make a Change of Control Offer upon a Change of Control if (1) a third
party makes the Change of Control Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in this Section 4.15 and purchases all Notes properly tendered
and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given
pursuant to Section 3.07 hereof, unless and until there is a default in payment of the applicable
redemption price.

Section 4.16 Limitation on Sale and Leaseback Transactions.

     Holly Energy Partners will not, and will not permit any of its Restricted Subsidiaries
to, enter into any sale and leaseback transaction; provided that Holly Energy Partners or any
Guarantor may enter into a sale and leaseback transaction if:

     (1) Holly Energy Partners or that Guarantor, as applicable, could have (a) incurred
Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback
transaction under the Fixed Charge Coverage Ratio test in Section 4.09(a) hereof and (b)
incurred a Lien to secure such Indebtedness pursuant to the provisions of Section 4.12
hereof;

     (2) the gross cash proceeds of that sale and leaseback transaction are at least equal
to the Fair Market Value, as determined in good faith by the Board of Directors of the
General Partner and set forth in an Officers’ Certificate delivered to the Trustee, of the
property that is the subject of that sale and leaseback transaction; and

62

 

     (3) the transfer of assets in that sale and leaseback transaction is permitted by, and
Holly Energy Partners applies the proceeds of such transaction in compliance with, Section
4.10 hereof.

Section 4.17 Payments for Consent.

     Holly Energy Partners will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any
Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered to be paid and is
paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth
in the solicitation documents relating to such consent, waiver or agreement.

Section 4.18 Additional Guarantees.

     If Holly Energy Partners or any of its Restricted Subsidiaries acquires or creates
another Domestic Subsidiary after the Issue Date that Guarantees Indebtedness of Holly Energy
Partners or any of its Subsidiaries under a Credit Facility, then that newly acquired or created
Domestic Subsidiary will become a Guarantor and execute a supplemental indenture and deliver an
Opinion of Counsel satisfactory to the Trustee within 30 days of the date on which it was acquired
or created; provided that any Domestic Subsidiary that constitutes an Immaterial Subsidiary need
not become a Guarantor until such time as it ceases to be an Immaterial Subsidiary. Each Note
Guarantee of a Domestic Subsidiary shall provide by its terms that it shall be automatically
released if (i) that Domestic Subsidiary does not Guarantee Indebtedness of Holly Energy Partners
or any of its Subsidiaries under a Credit Facility or (ii) that Domestic Subsidiary becomes an
Unrestricted Subsidiary. The form of such Note Guarantee is attached as Exhibit E hereto.

Section 4.19 Designation of Restricted and Unrestricted Subsidiaries.

     The Board of Directors of the General Partner may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary
is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding
Investments owned by Holly Energy Partners and its Restricted Subsidiaries in the Subsidiary
designated as Unrestricted will be deemed to be an Investment made as of the time of the
designation and will reduce the amount available for Restricted Payments under Section 4.07 hereof
or under one or more clauses of the definition of Permitted Investments, as determined by Holly
Energy Partners; provided that any designation will only be permitted if the Investment would be
permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary.

     Any designation of a Subsidiary of Holly Energy Partners as an Unrestricted Subsidiary will be
evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board
of Directors giving effect to such designation and an Officers’ Certificate certifying that such
designation complied with the preceding conditions and was permitted by Section 4.07 hereof. If,
at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of
this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a
Restricted Subsidiary of Holly Energy Partners as of such date and, if such Indebtedness is not
permitted to be incurred as of such date under Section 4.09 hereof, Holly Energy Partners will be
in default of such covenant. The Board of Directors of the General Partner may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary of Holly Energy Partners;
provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of Holly Energy Partners of any outstanding Indebtedness of such Unrestricted
Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under

63

 

Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at
the beginning of the Reference Period; and (2) no Default or Event of Default would be in existence
following such designation.

Section 4.20 Suspension of Covenants.

     (a) During any period when the Notes have an Investment Grade Rating from both
Rating Agencies and no Default or Event of Default has occurred and is continuing under this
Indenture, then, beginning on that day and subject to the provisions of Section 4.20(c), Holly
Energy Partners and its Restricted Subsidiaries will not be subject to the following provisions of
this Indenture:

(1) Section 4.10;

(2) Section 4.07;

(3) Section 4.09;

(4) Section 4.19;

(5) Section 4.11;

(6) Section 4.13;

(7) Clause 4(B) of Section 5.01;

(8) Section 4.08; and

(9) Clauses 1(A) and (3) of Section 4.16 (collectively, the “Suspended
Covenants”).

     (b) During any period that the covenants listed in Section 4.20(a) have been
suspended, the Board of Directors of the General Partner may not designate any of Holly Energy
Partners’ Subsidiaries as Unrestricted Subsidiaries pursuant to Section 4.19 or clause (2) of the
definition of Unrestricted Subsidiary.

     (c) In the event that Holly Energy Partners and its Restricted Subsidiaries are not
subject to the Suspended Covenants for any period of time as a result of the foregoing, and
subsequently either of the Rating Agencies withdraws its ratings or downgrades the ratings assigned
to the Notes below the Investment Grade Ratings so that the Notes do not have an Investment Grade
Rating from both Rating Agencies, or a Default (other than with respect to the Suspended Covenants)
occurs and is continuing, Holly Energy Partners and its Restricted Subsidiaries will thereafter
again be subject to the Suspended Covenants (unless subsequently suspended pursuant to the previous
paragraph), subject to the terms, conditions and obligations set forth in this Indenture (each such
date of reinstatement being the “Reinstatement Date”). Compliance with the Suspended Covenants with
respect to Restricted Payments made after the Reinstatement Date will be calculated in accordance
with Section 4.07 hereof as though such section had been in effect during the entire period of time
from which the Notes are issued. Notwithstanding that the Suspended Covenants shall have been
reinstated, no default will be deemed to have occurred as a result of failure to comply with the
Suspended Covenants during any period in which Holly Energy Partners and its Restricted
Subsidiaries are not subject to the Suspended Covenants.

64

 

ARTICLE 5

SUCCESSORS

Section 5.01 Merger, Consolidation or Sale of Assets.

     (a) Neither of the Issuers may, directly or indirectly: (1) consolidate or merge with
or into another Person (whether or not such Issuer is the surviving entity); or (2) sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the properties or
assets of the Issuers and the Restricted Subsidiaries, taken as a whole, in one or more related
transactions, to another Person, unless:

     (1) either:

     (A) such Issuer is the surviving entity; or

     (B) the Person formed by or surviving any such consolidation or merger (if
other than such Issuer) or to which such sale, assignment, transfer, conveyance or
other disposition has been made is a Person organized or existing under the laws of
the United States, any state of the United States or the District of Columbia;
provided, however, that Finance Corp. may not consolidate or merge with or into any
Person other than a corporation satisfying such requirement so long as Holly Energy
Partners is not a corporation;

     (2) the Person formed by or surviving any such consolidation or merger (if other than
such Issuer) or the Person to which such sale, assignment, transfer, lease, conveyance or
other disposition has been made assumes all the obligations of such Issuer under the Notes,
this Indenture and the Registration Rights Agreement pursuant to agreements reasonably
satisfactory to the Trustee;

     (3) immediately after such transaction, no Default or Event of Default exists; and

     (4) in the case of a transaction involving Holly Energy Partners and not Finance Corp.,
Holly Energy Partners or the Person formed by or surviving any such consolidation or merger
(if other than Holly Energy Partners), or to which such sale, assignment, transfer, lease,
conveyance or other disposition has been made, will:

     (A) on the date of such transaction after giving pro forma effect thereto and
any related financing transactions as if the same had occurred at the beginning of
the applicable Reference Period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section
4.09(a); or

     (B) have a Fixed Charge Coverage Ratio, on the date of such transaction and
after giving pro forma effect thereto and any related financing transactions as if
the same had occurred at the beginning of the applicable Reference Period, not less
than the Fixed Charge Coverage Ratio of Holly Energy Partners immediately prior to
such transaction; and

     (5) such Issuer has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or disposition and such supplemental
indenture (if any) comply with this Indenture and all conditions precedent therein relating
to such transaction have been satisfied.

65

 

provided that this Section 5.01 will not apply to any sale, assignment, transfer, conveyance, lease
or other disposition of assets between or among Holly Energy Partners and its Restricted
Subsidiaries, provided further that Sections 5.01(a)(3) and (4) will not apply to any merger or
consolidation of Holly Energy Partners (A) with or into one of its Restricted Subsidiaries for any
purpose or (B) with or into an Affiliate solely for the purpose of reincorporating Holly Energy
Partners in another jurisdiction.

     (b) Notwithstanding Section 5.01(a), Holly Energy Partners is permitted to
reorganize as any other form of entity in accordance with the procedures established in this
Indenture; provided that:

     (1) the reorganization involves the conversion (by merger, sale, contribution or
exchange of assets or otherwise) of Holly Energy Partners into a form of entity other than a
limited partnership formed under Delaware law;

     (2) the entity so formed by or resulting from such reorganization is an entity
organized or existing under the laws of the United States, any state thereof or the District
of Columbia;

     (3) the entity so formed by or resulting from such reorganization assumes all the
Obligations of Holly Energy Partners under the Notes, this Indenture and the Registration
Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee;

     (4) immediately after such reorganization no Default or Event of Default exists; and

     (5) such reorganization is not adverse to the Holders of the Notes (for purposes of
this clause (5) it is stipulated that such reorganization shall not be considered adverse to
the Holders of the Notes solely because the successor or survivor of such reorganization (a)
is subject to federal or state income taxation as an entity or (b) is considered to be an
“includible corporation” of an affiliated group of corporations within the meaning of
Section 1504(b)(i) of the Code or any similar state or local law).

     (c) A Guarantor may not sell or otherwise dispose of all or substantially all of
its properties or assets to, or consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person), another Person, other than Holly Energy Partners or another
Guarantor, unless:

     (1) immediately after giving effect to such transaction, no Default or Event of Default
exists; and

     (2) either:

     (A) the Person acquiring the properties or assets in any such sale or other
disposition or the Person formed by or surviving any such consolidation or merger
(if other than Holly Energy Partners or the Guarantor) unconditionally assumes all
the obligations of that Guarantor, pursuant to a supplemental indenture
substantially in the form specified in this Indenture, under the Notes, this
Indenture and its Subsidiary Guarantee on terms set forth herein and therein; or

     (B) the Net Proceeds of such sale or other disposition are applied in
accordance with Section 4.10 hereof.

Section 5.02 Successor Corporation Substituted.

     Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the properties or assets of Holly Energy Partners
in a transaction

66

 

that is subject to, and that complies with the provisions of, Section 5.01 hereof, the
successor Person formed by such consolidation or into or with which Holly Energy Partners is merged
or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such consolidation, merger,
sale, assignment, transfer, lease, conveyance or other disposition, the provisions of this
Indenture referring to the “Holly Energy Partners” shall refer instead to the successor Person and
not to Holly Energy Partners), and may exercise every right and power of Holly Energy Partners
under this Indenture with the same effect as if such successor Person had been named as Holly
Energy Partners herein.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01 Events of Default.

     Each of the following is an “Event of Default”:

     (1) default for 30 days in the payment when due of interest and Special Interest, if
any, with respect to, the Notes;

     (2) default in the payment when due (at maturity, upon redemption or otherwise) of the
principal of, or premium, if any, on, the Notes;

     (3) failure by Holly Energy Partners or any of its Restricted Subsidiaries to make a
Change of Control Offer or an Asset Sale Offer within the timer periods set forth, or
consummate a purchase of Notes when required pursuant to the terms described in Sections
4.15 or 4.10 or comply with the provisions of Section 5.01 hereof;

     (4) failure by Holly Energy Partners for 90 days after written notice to Holly Energy
Partners by the Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding voting as a single class to comply with Section 4.03;

     (5) failure by Holly Energy Partners or any of its Restricted Subsidiaries for 60 days
after written notice to Holly Energy Partners by the trustee or the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding voting as a single class to
comply with any of the other agreements in the Indenture; or

     (6) default under any mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any Indebtedness for money borrowed by Holly
Energy Partners or any of its Restricted Subsidiaries (or the payment of which is guaranteed
by Holly Energy Partners or any of its Restricted Subsidiaries), whether such Indebtedness
or Guarantee now exists, or is created after the Issue Date, if that default:

     (A) is caused by a failure to pay principal of, or interest or premium, if any,
on, such Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a “Payment Default”); or

     (B) results in the acceleration of such Indebtedness prior to its express
maturity,

and, in each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $20.0 million
or

67

 

more, provided, however, that if, prior to any acceleration of the Notes, (i) any
such Payment Default is cured or waived, (ii) any such acceleration is rescinded, or
(iii) such Indebtedness is repaid during the 10 Business Day period commencing upon
the end of any applicable grace period for such Payment Default or the occurrence of
such acceleration, as applicable, any Default or Event of Default (but not any
acceleration) caused by such Payment Default or acceleration shall automatically be
rescinded, so long as such rescission does not conflict with any judgment, decree or
applicable law;

     (7) failure by an Issuer or any of Holly Energy Partners’ Restricted Subsidiaries to
pay final judgments entered by a court or courts of competent jurisdiction aggregating in
excess of $20.0 million, which judgments are not paid, discharged or stayed for a period of
60 days;

     (8) an Issuer or any of Holly Energy Partners’ Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries of Holly Energy Partners
that, taken together, would constitute a Significant Subsidiary pursuant to or within the
meaning of Bankruptcy Law:

     (A) commences a voluntary case,

     (B) consents to the entry of an order for relief against it in an involuntary
case,

     (C) consents to the appointment of a custodian of it or for all or
substantially all of its property,

     (D) makes a general assignment for the benefit of its creditors, or

     (E) generally is not paying its debts as they become due;

     (9) a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:

     (A) is for relief against an Issuer or any of Holly Energy Partners’ Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries of the Holly Energy Partners that, taken together, would constitute a
Significant Subsidiary in an involuntary case;

     (B) appoints a custodian of an Issuer or any of Holly Energy Partners’
Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries of Holly Energy Partners that, taken together, would constitute a
Significant Subsidiary or for all or substantially all of the property of an Issuer
or any of Holly Energy Partners’ Restricted Subsidiaries that is a Significant
Subsidiary or any group of Restricted Subsidiaries of Holly Energy Partners that,
taken together, would constitute a Significant Subsidiary; or

     (C) orders the liquidation of an Issuer or any of Holly Energy Partners’
Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries of Holly Energy Partners that, taken together, would constitute a
Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 consecutive days; and

     (10) except as permitted by this Indenture, any Note Guarantee is held in any judicial
proceeding to be unenforceable or invalid or ceases for any reason to be in full force and
effect,

68

 

or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms
its obligations under its Note Guarantee.

Section 6.02 Acceleration.

     In the case of an Event of Default specified in clause (8) or (9) of Section 6.01 hereof,
with respect to Finance Corp., Holly Energy Partners or any Restricted Subsidiary of Holly Energy
Partners that is a Significant Subsidiary or any group of Restricted Subsidiaries of Holly Energy
Partners that, taken together, would constitute a Significant Subsidiary, all outstanding Notes
will become due and payable immediately without further action or notice. If any other Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.

     Upon any such declaration, the Notes shall become due and payable immediately.

     The Holders of a majority in aggregate principal amount of the then outstanding Notes by
notice to the Trustee may, on behalf of the Holders of all of the Notes, rescind an acceleration or
waive any existing Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest, and Special Interest, if any, or
premium, if any, on, or the principal of, the Notes.

Section 6.03 Other Remedies.

     If an Event of Default occurs and is continuing, the Trustee may pursue any available
remedy to collect the payment of principal, premium and interest and Special Interest, if any, on
the Notes or to enforce the performance of any provision of the Notes or this Indenture.

     The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not
produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note
in exercising any right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

Section 6.04 Waiver of Past Defaults.

     Holders of not less than a majority in aggregate principal amount of the then outstanding
Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing
Default or Event of Default and its consequences hereunder, except a continuing Default or Event of
Default in the payment of the principal of, premium or interest and Special Interest, if any, on,
the Notes (including in connection with an offer to purchase); provided, however, that the Holders
of a majority in aggregate principal amount of the then outstanding Notes may rescind an
acceleration and its consequences, including any related payment default that resulted from such
acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

Section 6.05 Control by Majority.

     Holders of a majority in aggregate principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising any remedy available
to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction

69

 

that conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal
liability.

Section 6.06 Limitation on Suits.

     A Holder may pursue a remedy with respect to this Indenture or the Notes only if:

     (1) such Holder gives to the Trustee written notice that an Event of Default is
continuing;

     (2) Holders of at least 25% in aggregate principal amount of the then outstanding Notes
make a written request to the Trustee to pursue the remedy;

     (3) such Holder or Holders offer and, if requested, provide to the Trustee security or
indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;

     (4) the Trustee does not comply with the request within 60 days after receipt of the
request and the offer of security or indemnity; and

     (5) during such 60-day period, Holders of a majority in aggregate principal amount of
the then outstanding Notes do not give the Trustee a direction inconsistent with such
request.

     A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a
Note or to obtain a preference or priority over another Holder of a Note.

     The Issuers and the Guarantors are required to deliver to the Trustee annually a statement
regarding compliance with this Indenture. Upon becoming aware of any Default or Event of Default,
the Issuers and the Guarantors are required to deliver to the Trustee a statement specifying such
Default or Event of Default.

Section 6.07 Rights of Holders of Notes to Receive Payment.

     Notwithstanding any other provision of this Indenture, the right of any Holder of a Note
to receive payment of principal, premium and interest and Special Interest, if any, on the Note, on
or after the respective due dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.

Section 6.08 Collection Suit by Trustee.

     If an Event of Default specified in Section 6.01(1) or (2) hereof occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Issuers for the whole amount of principal of, premium and interest and
Special Interest, if any, remaining unpaid on, the Notes and interest on overdue principal and, to
the extent lawful, interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel.

Section 6.09 Trustee May File Proofs of Claim.

     The Trustee is authorized to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel) and the

70

 

Holders of the Notes allowed in any judicial proceedings relative to the Issuers (or any other
obligor upon the Notes), their creditors or their property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or deliverable on any such
claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder
in any such proceeding.

Section 6.10 Priorities.

     If the Trustee collects any money pursuant to this Article 6, it shall pay out the money
in the following order:

     First: to the Trustee, its agents and attorneys for amounts due under Section 7.07
hereof, including payment of all compensation, expenses and liabilities incurred, and all
advances made, by the Trustee and the costs and expenses of collection;

     Second: to Holders of Notes for amounts due and unpaid on the Notes for principal,
premium and interest and Special Interest, if any, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes for principal, premium,
if any, and interest and Special Interest, if any, respectively; and

     Third: to the Issuers or to such party as a court of competent jurisdiction shall
direct.

     The Trustee may fix a record date and payment date for any payment to Holders of Notes
pursuant to this Section 6.10.

Section 6.11 Undertaking for Costs.

     In any suit for the enforcement of any right or remedy under this Indenture or in any
suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an undertaking to pay the
costs of the suit, and the court in its discretion may assess reasonable costs, including
reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits
and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not
apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a
suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.

71

 

ARTICLE 7

TRUSTEE

Section 7.01 Duties of Trustee.

     (a) If an Event of Default has occurred and is continuing, the Trustee will exercise
such of the rights and powers vested in it by this Indenture, and use the same degree of care and
skill in its exercise, as a prudent person would exercise or use under the circumstances in the
conduct of such person’s own affairs.

     (b) Except during the continuance of an Event of Default:

     (1) the duties of the Trustee will be determined solely by the express provisions of
this Indenture and the Trustee need perform only those duties that are specifically set
forth in this Indenture and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and

     (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee will examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.

     (c) The Trustee may not be relieved from liabilities for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:

     (1) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

     (2) the Trustee will not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts; and

     (3) the Trustee will not be liable with respect to any action it takes or omits to take
in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.

     (d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of
this Section 7.01.

     (e) No provision of this Indenture will require the Trustee to expend or risk its
own funds or incur any liability. The Trustee will be under no obligation to exercise any of its
rights and powers under this Indenture at the request of any Holders, unless such Holder has
offered to the Trustee security and indemnity satisfactory to it against any loss, liability or
expense.

     (f) The Trustee will not be liable for interest on any money received by it except
as the Trustee may agree in writing with the Issuers. Money held in trust by the Trustee need
not be segregated from other funds except to the extent required by law.

Section 7.02 Rights of Trustee.

     (a) The Trustee may conclusively rely upon any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not investigate any
fact or matter stated in the document.

     (b) Before the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it
takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of
Counsel. The Trustee may consult

72

 

with counsel and the written advice of such counsel or any Opinion of Counsel will be full
and complete authorization and protection from liability in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon.

     (c) The Trustee may act through its attorneys and agents and will not be
responsible for the misconduct or negligence of any agent appointed with due care.

     (d) The Trustee will not be liable for any action it takes or omits to take in
good faith that it believes to be authorized or within the rights or powers conferred upon it by
this Indenture.

     (e) Unless otherwise specifically provided in this Indenture, any demand, request,
direction or notice from the Issuers will be sufficient if signed by an Officer of each of the
Issuers.

     (f) The Trustee will be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of the Holders unless
such Holders have offered to the Trustee reasonable indemnity or security against the losses,
liabilities and expenses that might be incurred by it in compliance with such request or
direction.

Section 7.03 Individual Rights of Trustee.

     The Trustee in its individual or any other capacity may become the owner or pledgee of
Notes and may otherwise deal with the Issuers or any Affiliate of the Issuers with the same rights
it would have if it were not Trustee. However, in the event that the Trustee acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee (if this Indenture has been qualified under the TIA) or resign.
Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections
7.10 and 7.11 hereof.

Section 7.04 Trustee’s Disclaimer.

     The Trustee will not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the Issuers’ use of the
proceeds from the Notes or any money paid to the Issuers or upon the Issuers’ direction under any
provision of this Indenture, it will not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it will not be responsible for any
statement or recital herein or any statement in the Notes or any other document in connection with
the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

Section 7.05 Notice of Defaults.

     If a Default or Event of Default occurs and is continuing and if it is known to the
Trustee, the Trustee will mail to Holders of Notes a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, or interest and Special Interest, if any, on, any Note, the Trustee
may withhold the notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of the Notes.

Section 7.06 Reports by Trustee to Holders of the Notes.

     (a) Within 60 days after each May 15 beginning with the May 15 following the date of
this Indenture, and for so long as Notes remain outstanding, the Trustee will mail to the Holders
of the Notes a brief report dated as of such reporting date that complies with TIA § 313(a) (but
if no event

73

 

described in TIA § 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also will comply with TIA § 313(b)(2). The
Trustee will also transmit by mail all reports as required by TIA § 313(c).

     (b) A copy of each report at the time of its mailing to the Holders of Notes will
be mailed by the Trustee to the Issuers and filed by the Trustee with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA § 313(d). The Issuers will
promptly notify the Trustee when the Notes are listed on any stock exchange.

Section 7.07 Compensation and Indemnity.

     (a) The Issuers will pay to the Trustee from time to time reasonable compensation for
its acceptance of this Indenture and services hereunder. The Trustee’s compensation will not be
limited by any law on compensation of a trustee of an express trust. The Issuers will reimburse
the Trustee promptly upon request for all reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation for its services. Such expenses will
include the reasonable compensation, disbursements and expenses of the Trustee’s agents and
counsel.

     (b) The Issuers and the Guarantors will indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the costs and expenses
of enforcing this Indenture against the Issuers and the Guarantors (including this Section 7.07)
and defending itself against any claim (whether asserted by the Issuers, the Guarantors, any
Holder or any other Person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee will notify the Issuers promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuers will not
relieve the Issuers or any of the Guarantors of their obligations hereunder. The Issuers or such
Guarantor will defend the claim and the Trustee will cooperate in the defense. The Trustee may
have separate counsel and the Issuers will pay the reasonable fees and expenses of such counsel.
Neither the Issuers nor any Guarantor need pay for any settlement made without its consent, which
consent will not be unreasonably withheld.

     (c) The obligations of the Issuers and the Guarantors under this Section 7.07 will
survive the satisfaction and discharge of this Indenture.

     (d) To secure the Issuers’ and the Guarantors’ payment obligations in this Section
7.07, the Trustee will have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on particular Notes.
Such Lien will survive the satisfaction and discharge of this Indenture.

     (e) When the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.01(8) or (9) hereof occurs, the expenses and the compensation for the
services (including the fees and expenses of its agents and counsel) are intended to constitute
expenses of administration under any Bankruptcy Law.

     (f) The Trustee will comply with the provisions of TIA § 313(b)(2) to the extent
applicable.

74

 

Section 7.08 Replacement of Trustee.

     (a) A resignation or removal of the Trustee and appointment of a successor Trustee will
become effective only upon the successor Trustee’s acceptance of appointment as provided in this
Section 7.08.

     (b) The Trustee may resign in writing at any time and be discharged from the trust
hereby created by so notifying the Issuers. The Holders of a majority in aggregate principal
amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the
Issuers in writing. The Issuers may remove the Trustee if:

     (1) the Trustee fails to comply with Section 7.10 hereof;

     (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law;

     (3) a custodian or public officer takes charge of the Trustee or its property; or

     (4) the Trustee becomes incapable of acting.

     (c) If the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Issuers will promptly appoint a successor Trustee. Within one year
after the successor Trustee takes office, the Holders of a majority in aggregate principal amount
of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee
appointed by the Issuers.

     (d) If a successor Trustee does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Issuers, or the Holders of at least 10%
in aggregate principal amount of the then outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

     (e) If the Trustee, after written request by any Holder who has been a Holder for
at least six months, fails to comply with Section 7.10 hereof, such Holder may petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

     (f) A successor Trustee will deliver a written acceptance of its appointment to
the retiring Trustee and to the Issuers. Thereupon, the resignation or removal of the retiring
Trustee will become effective, and the successor Trustee will have all the rights, powers and
duties of the Trustee under this Indenture. The successor Trustee will mail a notice of its
succession to Holders. The retiring Trustee will promptly transfer all property held by it as
Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid
and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Issuers’ obligations under Section 7.07 hereof will
continue for the benefit of the retiring Trustee.

Section 7.09 Successor Trustee by Merger, etc.

     If the Trustee consolidates, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the successor corporation without any
further act will be the successor Trustee.

Section 7.10 Eligibility; Disqualification.

     There will at all times be a Trustee hereunder that is a corporation organized and doing
business under the laws of the United States of America or of any state thereof that is authorized
under such laws

75

 

to exercise corporate trustee power, that is subject to supervision or examination by federal
or state authorities and that has a combined capital and surplus of at least $100.0 million as set
forth in its most recent published annual report of condition.

     This Indenture will always have a Trustee who satisfies the requirements of TIA § 310(a)(1),
(2) and (5). The Trustee is subject to TIA § 310(b).

Section 7.11 Preferential Collection of Claims Against the Issuers.

     The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA
§ 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the
extent indicated therein.

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.

     The Issuers may at their option and at any time, elect to have either Section 8.02 or
8.03 hereof be applied to all outstanding Notes and Note Guarantees upon compliance with the
conditions set forth below in this Article 8.

Section 8.02 Legal Defeasance and Discharge.

     Upon the Issuers’ exercise under Section 8.01 hereof of the option applicable to this
Section 8.02, the Issuers and each of the Guarantors will, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their
obligations with respect to all outstanding Notes (including the Note Guarantees) on the date the
conditions set forth below are satisfied (hereinafter, “Legal Defeasance”). For this purpose,
Legal Defeasance means that the Issuers and the Guarantors will be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes (including the Note
Guarantees), which will thereafter be deemed to be “outstanding” only for the purposes of Section
8.05 hereof and the other Sections of this Indenture referred to in clauses (1) and (2) below, and
to have satisfied all their other obligations under such Notes, the Note Guarantees and this
Indenture (and the Trustee, on demand of and at the expense of the Issuers, shall execute proper
instruments acknowledging the same), except for the following provisions which will survive until
otherwise terminated or discharged hereunder:

     (1) the rights of Holders of outstanding Notes to receive payments in respect of the
principal of, or interest and Special Interest, if any, or premium, if any, on, such Notes
when such payments are due from the trust referred to in Section 8.04 hereof;

     (2) the Issuers’ obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance
of an office or agency for payment and money for security payments held in trust;

     (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Issuers’ and the Guarantors’ obligations in connection therewith; and

     (4) this Article 8.

76

 

     Subject to compliance with this Article 8, the Issuers may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.

Section 8.03 Covenant Defeasance.

     Upon the Issuers’ exercise under Section 8.01 hereof of the option applicable to this
Section 8.03, the Issuers and each of the Guarantors will, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, be released from each of their obligations under the
covenants contained in Sections 4.03, 4.04, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16,
4.17, 4.18, 4.19 and 4.20 hereof and clause (4) of Section 5.01 hereof with respect to the
outstanding Notes, and the Guarantors will be released from their obligations with respect to the
Note Guarantees, on and after the date the conditions set forth in Section 8.04 hereof are
satisfied (hereinafter, “Covenant Defeasance”), and the Notes will thereafter be deemed not
“outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders
(and the consequences of any thereof) in connection with such covenants, but will continue to be
deemed “outstanding” for all other purposes hereunder (it being understood that such Notes will not
be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that,
with respect to the outstanding Notes and Note Guarantees, the Issuers and the Guarantors may omit
to comply with and will have no liability in respect of any term, condition or limitation set forth
in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein
to any such covenant or by reason of any reference in any such covenant to any other provision
herein or in any other document and such omission to comply will not constitute a Default or an
Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes and Note Guarantees will be unaffected thereby. In addition, upon the
Issuers’ exercise under Section 8.01 hereof of the option applicable to this Section 8.03, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(3) through
6.01(7) inclusive hereof will not constitute Events of Default.

Section 8.04 Conditions to Legal or Covenant Defeasance.

     In order to exercise either Legal Defeasance or Covenant Defeasance under either Section
8.02 or 8.03 hereof:

     (1) the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a
combination of cash in U.S. dollars and non-callable Government Securities, in amounts as
will be sufficient, in the opinion of a nationally recognized investment bank, appraisal
firm or firm of independent public accountants, to pay the principal of, or interest and
Special Interest, if any, and premium, if any, on the outstanding Notes on the stated date
for payment thereof or on the applicable redemption date, as the case may be, and the
Issuers must specify whether the Notes are being defeased to such stated date for payment or
to a particular redemption date;

     (2) in the case of an election under Section 8.02 hereof, the Issuers must deliver to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that:

     (A) the Issuers have received from, or there has been published by, the
Internal Revenue Service a ruling; or

     (B) since the Issue Date, there has been a change in the applicable federal
income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the outstanding Notes will not recognize income, gain
or loss for

77

 

federal income tax purposes as a result of such Legal Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;

     (3) in the case of an election under Section 8.03 hereof, the Issuers must deliver to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the
Holders of the outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;

     (4) no Default or Event of Default shall have occurred and be continuing on the date of
such deposit (other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit) and the deposit will not result in a breach or violation of,
or constitute a default under, any other instrument to which the Issuers or any Guarantor is
a party or by which the Issuers or any Guarantor is bound;

     (5) such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under, any material agreement or instrument (other
than this Indenture) to which Holly Energy Partners or any of its Subsidiaries is a party or
by which Holly Energy Partners or any of its Subsidiaries is bound;

     (6) the Issuers must deliver to the Trustee an Officers’ Certificate stating that the
deposit was not made by the Issuers with the intent of preferring the Holders of Notes over
the other creditors of the Issuers with the intent of defeating, hindering, delaying or
defrauding any creditors of the Issuers or others; and

     (7) the Issuers must deliver to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.

Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other
Miscellaneous Provisions.

     Subject to Section 8.06 hereof, all money and non-callable Government Securities
(including the proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04 hereof in
respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance
with the provisions of such Notes and this Indenture, to the payment, either directly or through
any Paying Agent (including either Issuer acting as Paying Agent) as the Trustee may determine, to
the Holders of such Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest and Special Interest, if any, but such money need not be segregated
from other funds except to the extent required by law.

     The Issuers will pay and indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against the cash or non-callable Government Securities deposited pursuant to Section
8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the outstanding Notes.

     Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to
the Issuers from time to time upon the request of the Issuers any money or non-callable Government
Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized

78

 

firm of independent public accountants expressed in a written certification thereof delivered
to the Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in excess of
the amount thereof that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.

Section 8.06 Repayment to the Issuers.

     Any money deposited with the Trustee or any Paying Agent, or then held by the Issuers, in
trust for the payment of the principal of, premium, if any, or interest and Special Interest, if
any, on, any Note and remaining unclaimed for two years after such principal, premium, if any, or
interest and Special Interest, if any, has become due and payable shall be paid to the Issuers on
their request or (if then held by the Issuers) will be discharged from such trust; and the Holder
of such Note will thereafter be permitted to look only to the Issuers for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money, and all liability
of the Issuers as trustee thereof, will thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the expense of the
Issuers cause to be published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date specified therein, which
will not be less than 30 days from the date of such notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Issuers.

Section 8.07 Reinstatement.

     If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable
Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason
of any order or judgment of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Issuers’ and the Guarantors’ obligations under this
Indenture and the Notes and the Note Guarantees will be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent
is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case
may be; provided, however, that, if the Issuers make any payment of principal of, premium, if any,
or interest and Special Interest, if any, on, any Note following the reinstatement of its
obligations, the Issuers will be subrogated to the rights of the Holders of such Notes to receive
such payment from the money held by the Trustee or Paying Agent.

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders of Notes.

     Notwithstanding Section 9.02 of this Indenture, the Issuers, the Guarantors and the
Trustee may amend or supplement this Indenture or the Notes or the Note Guarantees without the
consent of any Holder of Note:

     (1) to cure any ambiguity, defect or inconsistency;

     (2) to provide for uncertificated Notes in addition to or in place of certificated
Notes;

     (3) to provide for the assumption of the Issuers’ or a Guarantor’s obligations to the
Holders of the Notes and Note Guarantees in the case of a merger or consolidation or sale of
all or substantially all of the Issuers’ or such Guarantors’ assets, as applicable;

79

 

     (4) to make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights hereunder of any
such Holder;

     (5) to comply with requirements of the SEC in order to effect or maintain the
qualification of this Indenture under the TIA;

     (6) to conform the text of this Indenture or the Note Guarantees to any provision of
the “Description of Notes” section of the Issuers’ Offering Memorandum to the extent that
such provision was intended to be a verbatim recitation of a provision of this Indenture or
the Note Guarantees;

     (7) to provide for the issuance of Additional Notes in accordance with the limitations
set forth in this Indenture as of the Issue Date;

     (8) to allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee
with respect to the Notes or to reflect the release of a Note Guarantee in accordance with
this Indenture;

     (9) to secure the Notes and/or the Note Guarantees;

     (10) to comply with the rules of any applicable securities depository; or

     (11) to provide for the reorganization of Holly Energy Partners as any other form of
entity, in accordance with Section 5.01(a).

     Upon the request of the Issuers accompanied by a resolution of their Boards of Directors
authorizing the execution of any such amended or supplemental indenture, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Issuers
and the Guarantors in the execution of any amended or supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee will not be obligated to enter into
such amended or supplemental indenture that affects its own rights, duties or immunities under this
Indenture or otherwise.

Section 9.02 With Consent of Holders of Notes.

     Except as provided below in this Section 9.02, the Issuers and the Trustee may amend or
supplement this Indenture (including, without limitation, Sections 3.09, 4.10 and 4.15 hereof) and
the Notes and the Note Guarantees with the consent of the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes (including, without limitation, Additional
Notes, if any) voting as a single class (including, without limitation, consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or
Event of Default in the payment of the principal of, premium or interest and Special Interest, if
any, on, the Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes or the Note Guarantees
may be waived with the consent of the Holders of a majority in aggregate principal amount of the
then outstanding Notes (including, without limitation, Additional Notes, if any) voting as a single
class (including, without limitation, consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes
are considered to be “outstanding” for purposes of this Section 9.02.

80

 

     Upon the request of the Issuers accompanied by a resolution of their Boards of Directors
authorizing the execution of any such amended or supplemental indenture, and upon the filing with
the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the
Trustee will join with the Issuers and the Guarantors in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s
own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion, but will not be obligated to, enter into such amended or supplemental Indenture.

     It is not be necessary for the consent of the Holders of Notes under this Section 9.02 to
approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient
if such consent approves the substance thereof.

     After an amendment, supplement or waiver under this Section 9.02 becomes effective, the
Issuers will mail to the Holders of Notes affected thereby a notice briefly describing the
amendment, supplement or waiver. Any failure of the Issuers to mail such notice, or any defect
therein, will not, however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a single class may
waive compliance in a particular instance by the Issuers with any provision of this Indenture or
the Notes or the Note Guarantees. However, without the consent of each Holder affected, an
amendment, supplement or waiver under this Section 9.02 may not (with respect to any Notes held by
a non-consenting Holder):

     (1) reduce the principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver;

     (2) reduce the principal of or change the fixed maturity of any Note or alter the
provisions with respect to the redemption of the Notes; provided, however, that any purchase
or repurchase of Notes, including pursuant to Sections 4.10 or 4.15 hereof, shall not be
deemed a redemption of the Notes;

     (3) reduce the rate of or change the time for payment of interest, including default
interest or Special Interest, if any, on any Note;

     (4) waive a Default or Event of Default in the payment of principal of, or interest,
and Special Interest, if any, or premium on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount of the then
outstanding Notes and a waiver of the payment default that resulted from such acceleration);

     (5) make any Note payable in money other than that stated in the Notes;

     (6) make any change in the provisions of this Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of, principal of, or interest
and Special Interest, if any, or premium, if any, on, the Notes (other than as permitted by
clause (7) below);

     (7) waive a redemption payment with respect to any Note (other than a payment required
by Sections 4.10 or 4.15 hereof);

     (8) release any Guarantor from any of its obligations under its Note Guarantee or this
Indenture, except in accordance with the terms of this Indenture; or

81

 

     (9) make any change in the preceding amendment and waiver provisions.

Section 9.03 Compliance with Trust Indenture Act.

     Every amendment or supplement to this Indenture or the Notes will be set forth in a
amended or supplemental indenture that complies with the TIA as then in effect.

Section 9.04 Revocation and Effect of Consents.

     Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder
of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of
the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written notice of revocation
before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds every Holder.

Section 9.05 Notation on or Exchange of Notes.

     The Trustee may place an appropriate notation about an amendment, supplement or waiver on
any Note thereafter authenticated. The Issuers in exchange for all Notes may issue and the Trustee
shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.

     Failure to make the appropriate notation or issue a new Note will not affect the validity and
effect of such amendment, supplement or waiver.

Section 9.06 Trustee to Sign Amendments, etc.

     The Trustee will sign any amended or supplemental indenture authorized pursuant to this
Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. The Issuers may not sign an amended or supplemental indenture until
the Boards of Directors of each of the Issuers approves it. In executing any amended or
supplemental indenture, the Trustee will be entitled to receive and (subject to Section 7.01
hereof) will be fully protected in relying upon, in addition to the documents required by Section
12.04 hereof, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such
amended or supplemental indenture is authorized or permitted by this Indenture.

ARTICLE 10

NOTE GUARANTEES

Section 10.01. Guarantee.

     (a) Subject to this Article 10, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Notes or the obligations of the Issuers hereunder or
thereunder, that:

     (1) the principal of, premium, if any, and interest and Special Interest, if any, on,
the Notes will be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of and interest on the Notes,
if any, if lawful, and

82

 

all other obligations of the Issuers to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and

     (2) in case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.

     Failing payment when due of any amount so guaranteed or any performance so guaranteed for
whatever reason, the Guarantors will be jointly and severally obligated to pay the same
immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.

     (b) The Guarantors hereby agree that their obligations hereunder are
unconditional, irrespective of the validity, regularity or enforceability of the Notes or this
Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of
the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against
the Issuers, any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuers, any right to require a proceeding first against the
Issuers, protest, notice and all demands whatsoever and covenant that this Note Guarantee will
not be discharged except by complete performance of the obligations contained in the Notes and
this Indenture.

     (c) If any Holder or the Trustee is required by any court or otherwise to return
to the Issuers, the Guarantors or any custodian, trustee, liquidator or other similar official
acting in relation to either the Issuers or the Guarantors, any amount paid by either to the
Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, will be
reinstated in full force and effect.

     (d) Each Guarantor agrees that it will not be entitled to any right of subrogation
in relation to the Holders in respect of any obligations guaranteed hereby until payment in full
of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity
of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the
purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the
event of any declaration of acceleration of such obligations as provided in Article 6 hereof,
such obligations (whether or not due and payable) will forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee. The Guarantors will have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right does not impair
the rights of the Holders under the Note Guarantee.

Section 10.02. Limitation on Guarantor Liability.

     Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the
intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors
hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum
amount that will, after giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other

83

 

Guarantor under this Article 10, result in the obligations of such Guarantor under its Note
Guarantee not constituting a fraudulent transfer or conveyance.

Section 10.03. Execution and Delivery of Note Guarantee.

     To evidence its Note Guarantee set forth in Section 10.01 hereof, each Guarantor hereby agrees
that a notation of such Note Guarantee substantially in the form attached as Exhibit E hereto will
be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee
and that this Indenture will be executed on behalf of such Guarantor by one of its Officers.

     Each Guarantor hereby agrees that its Note Guarantee set forth in Section 10.01 hereof will
remain in full force and effect notwithstanding any failure to endorse on each Note a notation of
such Note Guarantee.

     If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds
that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed,
the Note Guarantee will be valid nevertheless.

     The delivery of any Note by the Trustee, after the authentication thereof hereunder, will
constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the
Guarantors.

     In the event that the Issuers or any of Holly Energy Partners’ Restricted Subsidiaries creates
or acquires any Domestic Subsidiary after the date of this Indenture, if required by Section 4.18
hereof, the Issuers will cause such Domestic Subsidiary to comply with the provisions of Section
4.18 hereof and this Article 10, to the extent applicable.

Section 10.04. Guarantors May Consolidate, etc., on Certain Terms.

     Except as otherwise provided in Section 10.05 hereof, no Guarantor may sell or otherwise
dispose of all or substantially all of its assets to, or consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person) another Person, other than the Issuers or
another Guarantor, unless:

     (1) immediately after giving effect to such transaction, no Default or Event of Default
exists; and

     (2) either:

          (a) subject to Section 10.05 hereof, the Person acquiring the property in any such sale
or disposition or the Person formed by or surviving any such consolidation or merger is a
Guarantor, or unconditionally assumes all the obligations of that Guarantor under this
Indenture, its Note Guarantee and the Registration Rights Agreement on the terms set forth
herein or therein, pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee; or

          (b) the Net Proceeds of such sale or other disposition are applied in accordance with
the applicable provisions of this Indenture, including without limitation, Section 4.10
hereof.

     In case of any such consolidation, merger, sale or conveyance and upon the assumption by the
successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Note Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be performed by the
Guarantor, such successor Person will succeed to and be substituted for the Guarantor with the same
effect as if it

84

 

had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Issuers and delivered to the Trustee. All the Note
Guarantees so issued will in all respects have the same legal rank and benefit under this Indenture
as the Note Guarantees theretofore and thereafter issued in accordance with the terms of this
Indenture as though all of such Note Guarantees had been issued at the date of the execution
hereof.

     Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses 2(a) and (b)
above, nothing contained in this Indenture or in any of the Notes will prevent any consolidation or
merger of a Guarantor with or into the Issuers or another Guarantor, or will prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the
Issuers or another Guarantor.

Section 10.05. Releases.

     (a) In the event of any sale or other disposition of all or substantially all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all
of the Capital Stock of any Guarantor, in each case to a Person that is not (either before or after
giving effect to such transactions) Holly Energy Partners or a Restricted Subsidiary of Holly
Energy Partners, then such Guarantor (in the event of a sale or other disposition, by way of
merger, consolidation or otherwise, of all of the Capital Stock of such Guarantor) or the
corporation acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) will be released and relieved of any obligations
under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of this Indenture, including without
limitation Section 4.10 hereof. Upon delivery by the Issuers to the Trustee of an Officers’
Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by
the Issuers in accordance with the provisions of this Indenture, including without limitation
Section 4.10 hereof, the Trustee will execute any documents reasonably required in order to
evidence the release of any Guarantor from its obligations under its Note Guarantee.

     (b) Upon designation of any Guarantor as an Unrestricted Subsidiary in accordance with the
terms of this Indenture, such Guarantor will be released and relieved of any obligations under its
Note Guarantee.

     (c) Upon release of any Guarantor from its Guarantee for Indebtedness under a Credit Facility,
such Guarantor will be released and relieved of any obligations under its Note Guarantee; provided,
however, that if, at any time following such release, that Guarantor incurs a Guarantee under a
Credit Facility, then such Guarantor shall be required to provide a Note Guarantee at such time.

     (d) Upon Legal or Covenant Defeasance in accordance with Article 8 hereof or satisfaction and
discharge of this Indenture in accordance with Article 11 hereof, each Guarantor will be released
and relieved of any obligations under its Note Guarantee.

     Any Guarantor not released from its obligations under its Note Guarantee as provided in this
Section 10.05 will remain liable for the full amount of principal of and interest and Special
Interest, if any, and premium, if any, on the Notes and for the other obligations of any Guarantor
under this Indenture as provided in this Article 10.

85

 

ARTICLE 11

SATISFACTION AND DISCHARGE

Section 11.01 Satisfaction and Discharge.

     This Indenture will be discharged and will cease to be of further effect as to all Notes
issued hereunder, when:

          (1) either:

          (a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that
have been replaced or paid and Notes for whose payment money has theretofore been deposited
in trust and thereafter repaid to the Issuers, have been delivered to the Trustee for
cancellation; or

          (b) all Notes that have not been delivered to the Trustee for cancellation have become
due and payable by reason of the mailing of a notice of redemption or otherwise or will
become due and payable within one year and the Issuers or any Guarantor has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust solely for the
benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a
combination of cash in U.S. dollars and non-callable Government Securities, in amounts as
will be sufficient, without consideration of any reinvestment of interest, to pay and
discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation
for principal, premium, if any, and accrued interest and Special Interest, if any, to the
date of maturity or redemption;

     (2) no Default or Event of Default has occurred and is continuing on the date of such
deposit (other than a Default or Event of Default resulting from the borrowing of funds to
be applied to such deposit) and the deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which any Issuer or any Guarantor is a
party or by which any Issuer or any Guarantor is bound;

     (3) the Issuers or any Guarantor has paid or caused to be paid all sums payable by it
under this Indenture; and

     (4) the Issuers have delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of the Notes at maturity or on the
redemption date, as the case may be.

In addition, the Issuers must deliver (a) an Officers’ Certificate stating that all conditions
precedent set forth in clauses (1) through (4) above have been satisfied, and (b) an Opinion of
Counsel to the Trustee (which Opinion of Counsel may be subject to customary assumptions and
qualifications), stating that all conditions precedent to satisfaction and discharge set forth in
Section 11.01(2) and (4) have been satisfied; provided that the Opinion of Counsel with respect to
11.01(2) above may be to the knowledge of such counsel.

     Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited
with the Trustee pursuant to subclause (b) of clause (1) of this Section 11.01, the provisions of
Sections 11.02 and 8.06 hereof will survive. In addition, nothing in this Section 11.01 will be
deemed to discharge those provisions of Section 7.07 hereof, that, by their terms, survive the
satisfaction and discharge of this Indenture.

86

 

Section 11.02 Application of Trust Money.

     Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee
pursuant to Section 11.01 hereof shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including either Issuer acting as Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium and Special Interest, if any) and interest for
whose payment such money has been deposited with the Trustee; but such money need not be segregated
from other funds except to the extent required by law.

     If the Trustee or Paying Agent is unable to apply any money or Government Securities in
accordance with Section 11.01 hereof by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Issuers’ and any Guarantor’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof;
provided that if the Issuers have made any payment of principal of, premium, if any, or interest
and Special Interest, if any, on, any Notes because of the reinstatement of its obligations, the
Issuers shall be subrogated to the rights of the Holders of such Notes to receive such payment from
the money or Government Securities held by the Trustee or Paying Agent.

ARTICLE 12

MISCELLANEOUS

Section 12.01 Trust Indenture Act Controls.

     If any provision of this Indenture limits, qualifies or conflicts with the duties imposed
by TIA §318(c), the imposed duties will control.

Section 12.02 Notices.

     Any notice or communication by the Issuers, any Guarantor or the Trustee to the others is
duly given if in writing and delivered in Person or by first class mail (registered or certified,
return receipt requested), facsimile transmission or overnight air courier guaranteeing next day
delivery, to the others’ address:

If to the Issuers and/or any Guarantor:

Holly Energy Partners, L.P.

Holly Energy Finance Corp.

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Facsimile No.: (214) 615-9380

Attention: Chief Financial Officer

With a copy to:

Fulbright & Jaworski L.L.P

2200 Ross Avenue, Suite 2800

Dallas, Texas 75201-2784

Facsimile No.: (214) 855-8200

Attention: Glen J. Hettinger

87

 

If to the Trustee:

U.S. Bank National Association

5555 San Felipe Street, Suite 1150

Houston, TX 77056

Facsimile No.: (713) 235-9213

Attention: Corporate Trust Services

     The Issuers, any Guarantor or the Trustee, by notice to the others, may designate additional
or different addresses for subsequent notices or communications.

     All notices and communications (other than those sent to Holders) will be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by
facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.

     Any notice or communication to a Holder will be mailed by first class mail, certified or
registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to
its address shown on the register kept by the Registrar. Any notice or communication will also be
so mailed to any Person described in TIA § 313(c), to the extent required by the TIA. Failure to
mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with
respect to other Holders.

     If a notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.

     If the Issuers mail a notice or communication to Holders, they will mail a copy to the Trustee
and each Agent at the same time.

Section 12.03 Communication by Holders of Notes with Other Holders of Notes.

     Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their
rights under this Indenture or the Notes. The Issuers, the Trustee, the Registrar and anyone else
shall have the protection of TIA § 312(c).

Section 12.04 Certificate and Opinion as to Conditions Precedent.

     Upon any request or application by the Issuers to the Trustee to take any action under
this Indenture, the Issuers shall furnish to the Trustee:

     (1) an Officers’ Certificate in form and substance reasonably satisfactory to the
Trustee (which must include the statements set forth in Section 12.05 hereof) stating that,
in the opinion of the signers, all conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have been satisfied; and

     (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee
(which must include the statements set forth in Section 12.05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants have been satisfied.

88

 

Section 12.05 Statements Required in Certificate or Opinion.

     Each certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) must
comply with the provisions of TIA § 314(e) and must include:

     (1) a statement that the Person making such certificate or opinion has read such
covenant or condition;

     (2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;

     (3) a statement that, in the opinion of such Person, he or she has made such
examination or investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been satisfied; and

     (4) a statement as to whether or not, in the opinion of such Person, such condition or
covenant has been satisfied.

Section 12.06 Rules by Trustee and Agents.

     The Trustee may make reasonable rules for action by or at a meeting of Holders. The
Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its
functions.

Section 12.07 No Personal Liability of Directors, Officers, Employees and Stockholders.

     No past, present or future director, officer, partner, member, employee, incorporator,
manager or unit holder or other owner of Equity Interest of the Issuers, the General Partner or any
Guarantor, as such, will have any liability for any obligations of the Issuers or the Guarantors
under the Notes, this Indenture, the Note Guarantees or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the consideration for issuance
of the Notes and the Note Guarantees. The waiver may not be effective to waive liabilities under
the federal securities laws.

Section 12.08 Governing Law.

     THE LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE
NOTES AND THE NOTE GUARANTEES.

Section 12.09 No Adverse Interpretation of Other Agreements.

     This Indenture may not be used to interpret any other indenture, loan or debt agreement
of Holly Energy Partners or its Subsidiaries or of any other Person. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.

89

 

Section 12.10 Successors.

     All agreements of the Issuers and the Guarantors in this Indenture and the Notes will
bind their successors. All agreements of the Trustee in this Indenture will bind its successors.
All agreements of each Guarantor in this Indenture will bind its successors, except as otherwise
provided in Section 10.05 hereof.

Section 12.11 Severability.

     In case any provision in this Indenture or in the Notes is invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions will not in
any way be affected or impaired thereby.

Section 12.12 Counterpart Originals.

     The parties may sign any number of copies of this Indenture. Each signed copy will be an
original, but all of them together represent the same agreement.

Section 12.13 Table of Contents, Headings, etc.

     The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to be considered a
part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.

[Signatures on following page]

90

 

SIGNATURES

Dated as of the date first written above.

	 	 	 	 	 
	 	HOLLY ENERGY PARTNERS, L.P.

 	 
	 	By:  	HEP Logistics Holdings, L.P., its general partner
 	 
	 
	 	By:  	Holly Logistic Services L.L.C., its general partner
 	 
	 
	 	By:  	/s/ Stephen D. Wise
 	 
	 	 	Name:  	Stephen D. Wise 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	HOLLY ENERGY FINANCE CORP.

 	 
	 	By:  	/s/ Stephen D. Wise
 	 
	 	 	Name:  	Stephen D. Wise 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 

[Signature Page to the Indenture]

 

 

	 	 	 	 	 
	 	GUARANTORS:

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

liability company

 	 
	 	By:  	Holly Energy Partners, L.P., a Delaware limited partnership, its Sole Member
 	 
	 
	 	By:  	HEP Logistics Holdings, L.P., a Delaware limited partnership, its general partner
 	 
	 
	 	By:  	Holly Logistic Services, L.L.C., a Delaware limited liability company, its general partner
 	 

	 	 	 	 	 
	 	By:  	/s/ Stephen D. Wise
 	 
	 	 	Name:  	Stephen D. Wise 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 

[Signature Page to the Indenture]

 

 

	 	 	 	 	 
	 	HOLLY ENERGY PARTNERS-OPERATING, L.P.,

 a Delaware
limited partnership
 	 
	 
	 	By:  	HEP Logistics GP, L.L.C., a Delaware limited liability company, its General Partner
 	 

	 	 	 	 	 
	 	By:  	                                                   Holly Energy Partners, L.P., a Delaware limited partnership, its sole member
 	 
	 
	 	By:  	                                                   HEP Logistics Holdings, L.P., a Delaware limited partnership, its general partner
 	 
	 
	 	By:  	                                                   Holly Logistic Services, L.L.C., a Delaware limited liability company, its general partner
 	 

	 	 	 	 	 
	 	By:  	                /s/ Stephen D. Wise
 	 
	 	 	Name:  	Stephen D. Wise 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 

[Signature Page to the Indenture]

 

 

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

company 

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

company 

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

liability company 

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

company 

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

company 

HEP WOODS CROSS, L.L.C., a Delaware limited 
liability
company 

LOVINGTON-ARTESIA, L.L.C., a Delaware limited

liability company 

HEP SLC, LLC, a Delaware limited liability company 

HEP TULSA LLC, a Delaware limited liability company 

ROADRUNNER PIPELINE, L.L.C., a Delaware limited

liability company

 	 
	 	Each by:  	Holly Energy Partners--Operating, L.P., a Delaware limited partnership and its sole member
 	 

	 	 	 	 	 
	 	By:  	                                                   HEP Logistics GP, L.L.C., a Delaware limited liability company, its general partner
 	 
	 
	 	By:  	                                                   Holly Energy Partners, L.P., a Delaware limited partnership, its sole member
 	 
	 
	 	By:  	                                                   HEP Logistics Holdings, L.P., a Delaware limited partnership, its general partner
 	 
	 
	 	By:  	                                                   Holly Logistic Services, L.L.C., a Delaware limited liability company, its general partner
 	 

	 	 	 	 	 
	 	By:  	                                                         /s/ Stephen D. Wise
 	 
	 	 	Name:  	Stephen D. Wise 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 

[Signature Page to the Indenture]

 

 

	 	 	 	 	 
	 	HEP FIN-TEX/TRUST-RIVER, L.P., a Texas limited

partnership

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

partnership

HEP PIPELINE ASSETS, LIMITED PARTNERSHIP,

 a Delaware
limited partnership
 	 
	 
	 	Each by:  	HEP Pipeline GP, L.L.C., a Delaware limited liability company and its general partner
 	 

	 	 	 	 	 
	 	By:  	                                                   Holly Energy Partners--Operating, L.P., a Delaware limited partnership, its sole member
 	 
	 
	 	By:  	                                                   HEP Logistics GP, L.L.C., a Delaware limited liability company, its general partner
 	 
	 
	 	By:  	                                                   Holly Energy Partners, L.P., a Delaware limited partnership, its sole member
 	 
	 
	 	By:  	                                                   HEP Logistics Holdings, L.P., a Delaware limited partnership, its general partner
 	 
	 
	 	By:  	                                                   Holly Logistic Services, L.L.C., a Delaware limited liability company, its general partner
 	 

	 	 	 	 	 
	 	By:  	                                                         /s/ Stephen D. Wise
 	 
	 	 	Name:  	Stephen D. Wise 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 

[Signature Page to the Indenture]

 

 

	 	 	 	 	 
	 	HEP REFINING ASSETS, L.P., a Delaware limited

partnership

 	 
	 	By:  	HEP Refining GP, L.L.C., a Delaware limited liability company and its general partner
 	 

	 	 	 	 	 
	 	By:  	                                                   Holly Energy Partners--Operating, L.P., a Delaware limited partnership, its sole member
 	 
	 
	 	By:  	                                                   HEP Logistics GP, L.L.C., a Delaware limited liability company, its general partner
 	 
	 
	 	By:  	                                                   Holly Energy Partners, L.P., a Delaware limited partnership, its sole member
 	 
	 
	 	By:  	                                                   HEP Logistics Holdings, L.P., a Delaware limited partnership, its general partner
 	 
	 
	 	By:  	                                                   Holly Logistic Services, L.L.C., a Delaware limited liability company, its general partner
 	 

	 	 	 	 	 
	 	By:  	                                                         /s/ Stephen D. Wise
 	 
	 	 	Name:  	Stephen D. Wise 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 

[Signature Page to the Indenture]

 

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION	 
	 
	 	By:  	                       /s/ Steven A. Finklea
 	 
	 	 	Name:  	Steven A. Finklea 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page to the Indenture]

 

 

[Face of Note]

 

CUSIP 435765AC6/U4377TAB6

8.25% Senior Notes due 2018

			
	No.                     
	 	$                                        

HOLLY ENERGY PARTNERS, L.P.

and

HOLLY ENERGY FINANCE CORP.

promises to pay to                                                             , or registered assigns,

the principal sum of                                                                     
                                                     DOLLARS on March
15, 2018.

Interest Payment Dates: March 15 and September 15

Record Dates: March 1 and September 1

Dated:                                         , 20                    

	 	 	 	 	 
	 	HOLLY ENERGY PARTNERS, L.P.

 	 
	 	By:  	HEP Logistics Holdings, L.P.,
 	 
	 	 	its general partner 	 
	 
	 	 	By:  	                                                   Holly Logistic Services, L.L.C.,
 	 
	 	 	 	its general partner 	 
	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HOLLY ENERGY FINANCE CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

This is one of the Notes referred to

in the within-mentioned Indenture:

	 	 	 	 	 
	U.S. BANK NATIONAL ASSOCIATION,

as Trustee

 	 
	By:  	 	 
	 	Authorized Signatory 	 
	 	 	 
	 

 

	 	 	 	 	 

 

 

	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

8.25% Senior Notes due 2018

          THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE)
OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE
TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE
DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
ISSUERS.

          UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE ISSUERS OR THEIR AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

          THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

          THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF
OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER
SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS ONE YEAR (IN
THE CASE OF RULE 144A SECURITIES) AFTER THE LATER OF THE ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) OR 40 DAYS (IN THE CASE OF REGULATION S SECURITIES), ONLY (A) TO THE
ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER”
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM

3

 

NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER OR THE ISSUERS ON OR AFTER THE RESALE RESTRICTION TERMINATION DATE.

     Capitalized terms used herein have the meanings assigned to them in the Indenture referred to
below unless otherwise indicated.

          (1) Interest. 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”), promise to pay interest on the principal
amount of this Note at 8.25% per annum from March 10, 2010 until maturity and shall pay the Special
Interest, if any, payable pursuant to Section 4 of the Registration Rights Agreement referred to
below. The Issuers will pay interest and Special Interest, if any, semi-annually in arrears on
March 15 and September 15 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment of interest, and if
this Note is authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided further that the first Interest Payment Date shall be September 15, 2010. The
Issuers will pay interest (including post-petition interest in any proceeding under any Bankruptcy
Law) on overdue principal and premium, if any, from time to time on demand at the rate then in
effect to the extent lawful; it will pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at a rate that is 1.00% higher than the
applicable interest rate on the Notes to the extent lawful; it will pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Special Interest (without regard to any applicable grace period) at the same rate to
the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.

          (2) Method of Payment. The Issuers will pay interest on the Notes (except
defaulted interest) and Special Interest, if any, to the Persons who are registered Holders of
Notes at the close of business on the March 1 or September 1 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before such Interest Payment
Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The
Notes will be payable as to principal, premium and Special Interest, if any, and interest at the
office or agency of the Issuers maintained for such purpose within or without the City and State of
New York, or, at the option of the Issuers, payment of interest and Special Interest, if any, may
be made by check mailed to the Holders at their addresses set forth in the register of Holders;
provided that payment by wire transfer of immediately available funds will be required with respect
to principal of and interest, premium and Special Interest, if any, on, all

4

 

Global Notes and all other Notes the Holders of which will have provided wire transfer
instructions to the Issuers or the Paying Agent. Such payment will be in such coin or currency of
the United States of America as at the time of payment is legal tender for payment of public and
private debts.

          (3) Paying Agent and Registrar. Initially, U.S. Bank National Association,
the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change
any Paying Agent or Registrar without notice to any Holder. Holly Energy Partners or any of its
Subsidiaries may act in any such capacity.

          (4) Indenture. The Issuers issued the Notes under an Indenture dated as of
March 10, 2010 (the “Indenture”) among the Issuers, the Guarantors and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the Indenture by reference
to the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. To the extent any provision of this Note conflicts with
the express provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are unsecured obligations of the Issuers. The Indenture does not limit the
aggregate principal amount of Notes that may be issued thereunder.

          (5) Optional Redemption.

     (a) Except pursuant to paragraphs (b) and (c) of this Section 5, the Notes will not be
redeemable at the Issuers’ option prior to March 15, 2014. On or after March 15, 2014, the Issuers
may redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice, at the
redemption prices (expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Special Interest, if any, on the Notes redeemed to the applicable Redemption
Date, if redeemed during the twelve-month period beginning on March 15 of each year indicated
below, subject to the rights of Holders of Notes on the relevant record date to receive interest on
the relevant interest payment date:

	 	 	 	 	 
	Year	 	Percentage	 
	2014
	 	 	104.125	%
	2015
	 	 	102.063	%
	2016 and thereafter
	 	 	100.000	%

          Unless the Issuers default in the payment of the redemption price, interest will cease to
accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

     (b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any time prior
to March 15, 2013, the Issuers may on any one or more occasions redeem up to 35% of the aggregate
principal amount of Notes (including any Additional Notes) issued under this Indenture at a
redemption price of 108.25% of the principal amount thereof, plus accrued and unpaid interest and
Special Interest, if any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on an interest payment date that is on or prior to the
Redemption Date), with the net cash proceeds of one or more Equity Offerings by Holly Energy
Partners; provided that at least 65% of the aggregate principal amount of Notes (including any
Additional Notes) issued under this Indenture (excluding Notes held by Holly Energy Partners and
its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and the
redemption occurs within 90 days of the date of the closing of such Equity Offering.

     (c) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5, at any
time prior to March 15, 2014, the Issuers may also redeem all or a part of the Notes, upon not less
than 30 nor more

5

 

than 60 days’ prior notice mailed by first-class mail to each Holder’s registered address, at
a redemption price equal to 100% of the principal amount of Notes redeemed plus the Applicable
Premium as of, and accrued and unpaid interest and Special Interest, if any, to the Redemption
Date, subject to the rights of Holders on the relevant record date to receive interest due on the
relevant interest payment date.

     For purposes of this Paragraph 5, “Applicable Premium” means, with respect to any Note on any
redemption date, the greater of: (1) 1.00% of the principal amount of the Note; or (2) the excess
of: (a) the present value at such redemption date of (i) the redemption price of the Note at March
15, 2014 (such redemption price being set forth in the table appearing in Section 3.07 of the
Indenture) plus (ii) all required interest payments due on the Note through March 15, 2014
(excluding accrued but unpaid interest to the redemption date), computed using a discount rate
equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the principal
amount of the Note, if greater. “Treasury Rate” means, as of any redemption date, the yield to
maturity as of such redemption date of United States Treasury securities with a constant maturity
(as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that
has become publicly available at least two business days prior to the redemption date (or, if such
Statistical Release is no longer published, any publicly available source of similar market data))
most nearly equal to the period from the redemption date to March 15, 2014; provided, however, that
if the period from the redemption date to March 15, 2014, is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a constant maturity of one
year will be used.

          (6) Mandatory Redemption.

     The Issuers are not required to make mandatory redemption or sinking fund payments with
respect to the Notes.

          (7) Repurchase at the Option of Holder.

     (a) If there is a Change of Control, the Issuers will be required to make an offer (a “Change
of Control Offer”) to each Holder to repurchase all or any part (equal to $2,000 or an integral
multiple of $1,000 in excess thereof) of each Holder’s Notes at a purchase price in cash equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest and Special
Interest, if any, to the date of purchase, subject to the rights of Holders on the relevant record
date to receive interest due on the relevant interest payment date (the “Change of Control
Payment”). Within 30 days following any Change of Control, the Issuers will mail a notice to each
Holder setting forth the procedures governing the Change of Control Offer as required by the
Indenture.

     (b) If the Issuers or a Restricted Subsidiary of Holly Energy Partners consummates any Asset
Sales, within five days of each date on which the aggregate amount of Excess Proceeds exceeds $20.0
million, the Issuers will commence an offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in
the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an
“Asset Sale Offer”) pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the principal amount plus accrued
and unpaid interest and Special Interest, if any, to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount of Notes and other
pari passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Holly Energy Partners (or such Restricted Subsidiary) may use such deficiency for any purpose
not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other
pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds,
the Trustee shall select the Notes and such

6

 

other pari passu Indebtedness to be purchased on a pro rata basis. Holders of Notes that are
the subject of an offer to purchase will receive an Asset Sale Offer from the Issuers prior to any
related purchase date and may elect to have such Notes purchased by completing the form entitled
“Option of Holder to Elect Purchase” attached to the Notes.

          (8) Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose Notes are to be
redeemed at its registered address, except that redemption notices may be mailed more than 60 days
prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or
a satisfaction or discharge of the Indenture. Notes in denominations larger than $2,000 may be
redeemed in part but only in whole multiples of $1,000 and in excess of $2,000, unless all of the
Notes held by a Holder are to be redeemed.

          (9) Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The
transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Issuers may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture. The Issuers need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for the unredeemed
portion of any Note being redeemed in part. Also, the Issuers need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during
the period between a record date and the corresponding Interest Payment Date.

          (10) Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.

          (11) Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes or the Note Guarantees may be amended or supplemented with the consent of
the Holders of at least a majority in aggregate principal amount of the then outstanding Notes
including Additional Notes, if any, voting as a single class, and any existing Default or Event of
Default or compliance with any provision of the Indenture or the Notes or the Note Guarantees may
be waived with the consent of the Holders of a majority in aggregate principal amount of the then
outstanding Notes including Additional Notes, if any, voting as a single class. Without the
consent of any Holder of a Note, the Indenture or the Notes or the Note Guarantees may be amended
or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption of the Issuers’ or
a Guarantor’s obligations to Holders of the Notes and Note Guarantees in the case of a merger or
consolidation or sale of all or substantially all of the Issuers’ or such Guarantor’s assets, as
applicable, to make any change that would provide any additional rights or benefits to the Holders
of Notes or that does not adversely affect the legal rights under the Indenture of any such Holder,
to comply with the requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA, to conform the text of the Indenture or the Note Guarantees to any
provision of the “Description of Notes” section of the Issuers’ Offering Memorandum to the extent
that such provision was intended to be a verbatim recitation of a provision of the Indenture or
Note Guarantee, to provide for the issuance of Additional Notes in accordance with the limitations
set forth in the Indenture as of the Issue Date, to secure the Notes and/or the Note Guarantees, or
to provide for the reorganization of Holly Energy Partners as any other form of entity, in
accordance with Section 5.01 of the Indenture.

          (12) Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest on, and Special Interest, if any, with respect to the
Notes; (ii) default in the payment when due (at maturity, upon redemption or otherwise) of the
principal of, or premium, if any, on the Notes; (iii) failure by Holly Energy Partners or any of
its Restricted Subsidiaries to timely

7

 

consummate repurchase offers under Section 4.10 or 4.15 of the Indenture or to comply with
Section 5.01 of the Indenture; (iv) failure by Holly Energy Partners for 90 days after written
notice to Holly Energy Partners by the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding voting as a single class to comply with Section
4.03, (v) failure by Holly Energy Partners or any of its Restricted Subsidiaries for 60 days after
written notice to Holly Energy Partners by the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding voting as a single class to comply with any of the
other agreements in the Indenture; (vi) default under certain other agreements relating to
Indebtedness of the Issuers which default (A) is caused by a failure to pay principal of, or
interest or premium, if any, on, such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a “Payment Default”) or (B) results in
the acceleration of such Indebtedness prior to its express maturity; (vii) certain final judgments
for the payment of money that remain undischarged for a period of 60 days; (viii) certain events of
bankruptcy or insolvency with respect to the Issuers or any of Holly Energy Partners’ Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary; and (ix) except as permitted by the Indenture,
any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for
any reason to be in full force and effect or any Guarantor or any Person acting on its behalf
denies or disaffirms its obligations under such Guarantor’s Note Guarantee. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to Finance Corp., Holly Energy Partners or any Restricted
Subsidiary of Holly Energy Partners that is a Significant Subsidiary or any group of Restricted
Subsidiaries of Holly Energy Partners that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable immediately without further action or
notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in aggregate principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of Default if it
determines that withholding notice is in their interest, except a Default or Event of Default
relating to the payment of principal, interest and Special Interest, if any, or premium, if any.
The Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to
the Trustee may, on behalf of the Holders of all of the Notes, rescind an acceleration or waive any
existing Default or Event of Default and its consequences under the Indenture except a continuing
Default or Event of Default in the payment of interest and Special Interest, if any, or premium, if
any, on, or the principal of, the Notes. The Issuers and the Guarantors are required to deliver to
the Trustee annually a statement regarding compliance with the Indenture, and the Issuers and the
Guarantors are required, upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.

          (13) Trustee Dealings with the Issuers. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform services for the Issuers
or their Affiliates, and may otherwise deal with the Issuers or their Affiliates, as if it were not
the Trustee.

          (14) No Recourse Against Others. A director, officer, partner, member,
employee, incorporator, manager or unit holder or other owner of Equity Interest of the Issuers,
the General Partner or any Guarantor, as such, will not have any liability for any obligations of
the Issuers or the Guarantors under the Notes, the Indenture, the Note Guarantees or for any claim
based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes
by accepting a Note waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes and the Note Guarantees. The waiver may not be
effective to waive liabilities under the federal securities laws.

8

 

          (15) Authentication. This Note will not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.

          (16) Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

          (17) Additional Rights of Holders of Restricted Global Notes and Restricted
Definitive Notes. In addition to the rights provided to Holders of Notes under the Indenture,
Holders of Restricted Global Notes and Restricted Definitive Notes will have all the rights set
forth in the Registration Rights Agreement dated as of March 10, 2010, among the Issuers, the
Guarantors and the other parties named on the signature pages thereof or, in the case of Additional
Notes, Holders of Restricted Global Notes and Restricted Definitive Notes will have the rights set
forth in one or more registration rights agreements, if any, among the Issuers, the Guarantors and
the other parties thereto, relating to rights given by the Issuers and the Guarantors to the
purchasers of any Additional Notes (collectively, the “Registration Rights Agreement”).

          (18) CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to
be printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a
convenience to Holders. No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption, and reliance may be placed only
on the other identification numbers placed thereon.

          (19) GOVERNING LAW. THE LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE
USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES.

     The Issuers will furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement. Requests may be made to:

Holly Energy Partners, L.P.

Holly Energy Finance Corp.

100 Crescent Court, Suite 1600

Dallas, Texas 75201

Attention: Chief Financial Officer

9

 

Assignment Form

     To assign this Note, fill in the form below:

	 	 	 
	(I) or (we) assign and transfer this Note to:
	 	 
	 

	 	 
	 

	 	(Insert assignee’s legal name)

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

(Print or type assignee’s name, address and zip code)

and irrevocably appoint  
                
               
               
                
               
     
               
               
               
                
                 

to transfer this Note on the books of the Issuers. The agent may substitute another to act for
him.

Date:                                         

Your Signature:                                                                  
   

(Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:                                                             

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).

A-1

 

Option of Holder to Elect Purchase

     If you want to elect to have this Note purchased by the Issuers pursuant to Section 4.10
or 4.15 of the Indenture, check the appropriate box below:

	 	 	 
	o Section 4.10

	 	o Section 4.15

     If you want to elect to have only part of the Note purchased by the Issuers pursuant to
Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased:

$                                        

Date:                                         

Your Signature:                                                             
         

(Sign exactly as your name appears on the face of this Note)

Tax Identification No.:                                                             

Signature Guarantee*:                                                             

 

			
	*	 	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor
acceptable to the Trustee).

A-2

 

Schedule of Exchanges of Interests in the Global Note *

     The following exchanges of a part of this Global Note for an interest in another Global
Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for
an interest in this Global Note, have been made:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Principal Amount	 	 
	 	 	 	 	Amount of decrease	 	Amount of increase	 	of this Global Note	 	Signature of
	 	 	 	 	in Principal Amount	 	in Principal Amount	 	following such	 	authorized officer
	 	 	 	 	of	 	of	 	decrease	 	of Trustee or
	Date of Exchange	 	this Global Note	 	this Global Note	 	(or increase)	 	Custodian

 

			
	*	 	This schedule should be included only if the Note is issued in global form.

A-3

 

EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

Holly Energy Partners, L.P.

Holly Energy Finance Corp.

100 Crescent Court, Suite 1600

Dallas, Texas 75201

U.S. Bank National Association

5555 San Felipe Street, Suite 1150

Houston, TX 77056

          Re: 8.25% Senior Notes due 2018

          Reference is hereby made to the Indenture, dated as of March 10, 2010 (the “Indenture”), among
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”), the Guarantors party thereto and U.S. Bank National Association, as
trustee. Capitalized terms used but not defined herein shall have the meanings given to them in
the Indenture.

                              , (the “Transferor”) owns and proposes to transfer the Note[s] or interest
in such Note[s] specified in Annex A hereto, in the principal amount of $                     in such
Note[s] or interests (the “Transfer”), to                      (the “Transferee”), as
further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby
certifies that:

[CHECK ALL THAT APPLY]

          1. o Check if Transferee will take delivery of a beneficial interest in the 144A
Global Note or a Restricted Definitive Note pursuant to Rule 144A. The Transfer is being
effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended
(the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believes is purchasing the beneficial interest or Definitive Note for its own account,
or for one or more accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a “qualified institutional buyer” within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in
compliance with any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Restricted
Definitive Note and in the Indenture and the Securities Act.

          2. o Check if Transferee will take delivery of a beneficial interest in the
Regulation S Global Note or a Restricted Definitive Note pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer
is not being made to a Person in the United States and (x) at the time the buy order was
originated, the Transferee was outside the United States or such Transferor and any Person acting
on its behalf reasonably believed and believes that the Transferee was outside the United States or
(y) the transaction was executed in, on or through the facilities of a designated offshore
securities market and neither such Transferor nor any Person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation

B-1

 

S under the Securities Act and (iii) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act. Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed
on the Regulation S Global Note and/or the Restricted Definitive Note and in the Indenture and the
Securities Act.

          3. o Check and complete if Transferee will take delivery of a beneficial interest
in the IAI Global Note or a Restricted Definitive Note pursuant to any provision of the Securities
Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with
the transfer restrictions applicable to beneficial interests in Restricted Global Notes and
Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any
applicable blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):

     (a) o such Transfer is being effected pursuant to and in accordance with Rule
144 under the Securities Act;

or

     (b) o such Transfer is being effected to the Issuers or a subsidiary thereof;

or

     (c) o such Transfer is being effected pursuant to an effective registration
statement under the Securities Act and in compliance with the prospectus delivery
requirements of the Securities Act;

or

     (d) o such Transfer is being effected to an Institutional Accredited Investor
and pursuant to an exemption from the registration requirements of the Securities Act
other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further
certifies that it has not engaged in any general solicitation within the meaning of
Regulation D under the Securities Act and the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global Note or Restricted
Definitive Notes and the requirements of the exemption claimed, which certification is
supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the
time of transfer of less than $250,000, an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that such Transfer is in compliance with the Securities Act.
Upon consummation of the proposed transfer in accordance with the terms of the Indenture,
the transferred beneficial interest or Definitive Note will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the IAI Global Note
and/or the Restricted Definitive Notes and in the Indenture and the Securities Act.

          4. o Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.

          (a) o Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected
pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the
transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement

B-2

 

Legend are not required in order to maintain compliance with the Securities Act.
Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on
Restricted Definitive Notes and in the Indenture.

          (b) o Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in
compliance with the transfer restrictions contained in the Indenture and any applicable blue sky
securities laws of any state of the United States and (ii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to maintain compliance
with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms
of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject
to the restrictions on transfer enumerated in the Private Placement Legend printed on the
Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

          (c) o Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being
effected pursuant to and in compliance with an exemption from the registration requirements of the
Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities laws of any State of
the United States and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.

          This certificate and the statements contained herein are made for your benefit and the benefit
of the Issuers.

	 	 	 	 	 
	 	
[Insert Name of Transferor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated:                     

	 	 	 	 	 

B-3

 

	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

ANNEX A TO CERTIFICATE OF TRANSFER

	 	1.	 	The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

	 	(a)	 	o a beneficial interest in the:

	 	(i)	 	o 144A Global Note (CUSIP                     ), or
	 
	 	(ii)	 	o Regulation S Global Note (CUSIP                     ), or
	 
	 	(iii)	 	o IAI Global Note (CUSIP                     ); or

	 	(b)	 	o a Restricted Definitive Note.

	 	2.	 	After the Transfer the Transferee will hold:

[CHECK ONE]

	 	(a)	 	o a beneficial interest in the:

	 	(i)	 	o 144A Global Note (CUSIP                     ), or
	 
	 	(ii)	 	o Regulation S Global Note (CUSIP                     ), or
	 
	 	(iii)	 	o IAI Global Note (CUSIP                     ); or
	 
	 	(iv)	 	o Unrestricted Global Note (CUSIP                     ); or

	 	(b)	 	o a Restricted Definitive Note; or
	 
	 	(c)	 	o an Unrestricted Definitive Note,
	 
	 	in accordance with the terms of the Indenture.

B-4

 

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Holly Energy Partners, L.P.

Holly Energy Finance Corp.

100 Crescent Court, Suite 1600

Dallas, Texas 75201

U.S. Bank National Association

5555 San Felipe Street, Suite 1150

Houston, TX 77056

          Re: 8.25% Senior Notes due 2018

(CUSIP 435765AC61)

          Reference is hereby made to the Indenture, dated as of March 10, 2010 (the “Indenture”), among
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”), the Guarantors party thereto and U.S. Bank National Association, as
trustee. Capitalized terms used but not defined herein shall have the meanings given to them in
the Indenture.

                              , (the “Owner”) owns and proposes to exchange the Note[s] or
interest in such Note[s] specified herein, in the principal amount of $                     in such Note[s]
or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:

          1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global
Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note

          (a) o Check if Exchange is from beneficial interest in a Restricted Global Note to
beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global
Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in
accordance with the Securities Act of 1933, as amended (the “Securities Act”), (iii) the
restrictions on transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the beneficial interest
in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.

          (b) o Check if Exchange is from beneficial interest in a Restricted Global Note to
Unrestricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest
in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Definitive Note is being acquired for the Owner’s own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend
are not required in order to maintain compliance with the Securities Act and (iv) the Definitive
Note is being acquired in compliance with any applicable blue sky securities laws of any state of
the United States.

 

			
	1	 	The CUSIP No. is U4377TAB62 for the
Regulation S Note

C-1

 

          (c) o Check if Exchange is from Restricted Definitive Note to beneficial interest in an
Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note
for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions
on transfer contained in the Indenture and the Private Placement Legend are not required in order
to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired
in compliance with any applicable blue sky securities laws of any state of the United States.

          (d) o Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive
Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired
for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.

          2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global
Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes

          (a) o Check if Exchange is from beneficial interest in a Restricted Global Note to
Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in
a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner
hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account
without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the
Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and
in the Indenture and the Securities Act.

          (b) o Check if Exchange is from Restricted Definitive Note to beneficial interest in a
Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note
for a beneficial interest in the [CHECK ONE] o 144A Global Note, o Regulation S Global
Note, o IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with the
Securities Act, and in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Exchange in accordance with the terms of the
Indenture, the beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in
the Indenture and the Securities Act.

          This certificate and the statements contained herein are made for your benefit and the benefit
of the Issuers.

	 	 	 	 	 
	 	
[Insert Name of Transferor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated:                     

	 	 	 	 	 

C-2

 

	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 

EXHIBIT D

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Holly Energy Partners, L.P.

Holly Energy Finance Corp.

100 Crescent Court, Suite 1600

Dallas, Texas 75201

U.S. Bank National Association

5555 San Felipe Street, Suite 1150

Houston, TX 77056

          Re: 8.25% Senior Notes due 2018

          Reference is hereby made to the Indenture, dated as of March 10, 2010 (the “Indenture”), among
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”), the Guarantors party thereto and U.S. Bank National Association, as
trustee. Capitalized terms used but not defined herein shall have the meanings given to them in
the Indenture.

          In connection with our proposed purchase of $                     aggregate principal amount of:

          (a) o a beneficial interest in a Global Note, or

          (b) o a Definitive Note,

          we confirm that:

          1. We understand that any subsequent transfer of the Notes or any interest therein is subject
to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be
bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except
in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended
(the “Securities Act”).

          2. We understand that the offer and sale of the Notes have not been registered under the
Securities Act, and that the Notes and any interest therein may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for
which we are acting as hereinafter stated, that if we should sell the Notes or any interest
therein, we will do so only (A) to Holly Energy Partners or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined
therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Issuers a signed letter substantially in the form of this letter and, if such transfer is in
respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion
of Counsel in
form reasonably acceptable to the Issuers to the effect that such transfer is in compliance
with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S
under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act, and we further agree
to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note
from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a
notice advising such purchaser that resales thereof are restricted as stated herein.

D-1

 

          3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we
will be required to furnish to you and the Issuers such certifications, legal opinions and other
information as you and the Issuers may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.

          4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act) and have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to bear the economic risk of
our or its investment.

          5. We are acquiring the Notes or beneficial interest therein purchased by us for our own
account or for one or more accounts (each of which is an institutional “accredited investor”) as to
each of which we exercise sole investment discretion.

          You and the Issuers are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.

	 	 	 	 	 
	 	
[Insert Name of Accredited Investor]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated:                     

D-2

 

EXHIBIT E

[FORM OF NOTATION OF GUARANTEE]

          For value received, each Guarantor (which term includes any successor Person under the
Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the
Indenture and subject to the provisions in the Indenture, dated as of March 10, 2010 (the
“Indenture”), among 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”), the Guarantors party thereto and U.S. Bank National
Association, as trustee (the “Trustee”), (a) the due and punctual payment of the principal of,
premium, if any, and interest, and Special Interest, if any, on, the Notes, whether at maturity, by
acceleration, redemption or otherwise, the due and punctual payment of interest on overdue
principal of and interest on the Notes, if any, if lawful, and the due and punctual performance of
all other obligations of the Issuers to the Holders or the Trustee all in accordance with the terms
of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, that the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise. The obligations of the Guarantors to the Holders of Notes and to the Trustee
pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 10 of the
Indenture and reference is hereby made to the Indenture for the precise terms of the Note
Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such
provisions (b) authorizes and directs the Trustee, on behalf of such Holder, to take such action as
may be necessary or appropriate to effectuate the subordination as provided in the Indenture and
(c) appoints the Trustee attorney-in-fact of such Holder for such purpose.

          Capitalized terms used but not defined herein have the meanings given to them in the
Indenture.

	 	 	 	 	 
	 	[Name of Guarantor(s)]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

E-1

 

[FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

     Supplemental Indenture (this “Supplemental Indenture”), dated as of                     ,
200  , among                      (the “Guaranteeing Subsidiary”), Holly Energy Partners, L.P., a
Delaware limited partnership (“Holly Energy Partners”), and Holly Energy Finance Corp. (“Finance
Corp.” and, together with Holly Energy Partners, the “Issuers”), the other Guarantors (as defined
in the Indenture referred to herein) and U.S. Bank National Association, as trustee under the
Indenture referred to below (the “Trustee”).

W I T N E S S E T H

     WHEREAS, the Issuers have heretofore executed and delivered to the Trustee an indenture (the
“Indenture”), dated as of March 10, 2010 providing for the issuance of 8.25% Senior Notes due 2018
(the “Notes”);

     WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary
shall execute and deliver to the Trustee a supplemental indenture pursuant to which the
Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuers’ Obligations under the
Notes and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”); and

     WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and
deliver this Supplemental Indenture.

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the
Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes
as follows:

     1. Capitalized Terms. Capitalized terms used herein without definition shall have
the meanings assigned to them in the Indenture.

     2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees to provide an
unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee
and in the Indenture including but not limited to Article 10 thereof.

     4. No Recourse Against Others. No past, present or future director, officer,
employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have
any liability for any obligations of the Issuers or any Guaranteeing Subsidiary under the Notes,
any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by
accepting a Note waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the SEC that such a waiver is against
public policy.

     5. NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS SUPPLEMENTAL INDENTURE.

     6. Counterparts. The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together represent the same
agreement.

F-1

 

EXHIBIT F

     7. Effect of Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.

     8. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of
the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary
and the Issuers.

F-2

 

EXHIBIT F

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly
executed and attested, all as of the date first above written.

     Dated:                     , 20   

	 	 	 	 	 
	 	[Guaranteeing Subsidiary]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 	 	 
	 	 	HOLLY ENERGY PARTNERS, L.P.
	 
	 	 	 	 	 	 
	 	 	By:	 	HEP Logistics Holdings, L.P.,
	 	 	 	 	its general partner
	 
	 

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

	 	 	 	 	 	its general partner

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HOLLY ENERGY FINANCE CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[Existing Guarantors]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 

F-3exv10w1

Exhibit 10.1

HOLLY ENERGY PARTNERS, L.P.

HOLLY ENERGY FINANCE CORP.

$150,000,000 8.25% Senior Notes due 2018

 

Purchase Agreement

March 5, 2010

New York, New York

UBS Securities LLC

     As representative of the several Initial Purchasers

     named in Schedule I hereto,

c/o UBS Securities LLC

299 Park Avenue

New York, New York 10171

Ladies and Gentlemen:

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

          1. Issuance of Notes. The Issuers propose to issue and sell to UBS Securities LLC
(the “Representative”) and the other initial purchasers listed on Schedule I hereto
(together with the Representative, the “Initial Purchasers”) $150,000,000 in aggregate principal
amount of 8.25% Senior Notes due 2018 (the “Original Notes”). The Issuers’ obligations under the
Original Notes and the Indenture (as defined below) will be, jointly and severally, unconditionally
guaranteed (the “Guarantees” and, together with the Original Notes, the “Securities”), on a senior
basis, by each of the Subsidiaries (as defined below) listed on the signature pages hereto (each
individually, a “Guarantor” and collectively, the “Guarantors”). The Securities will be issued
pursuant to an indenture (the “Indenture”), to be dated as of the Closing Date (as defined herein)
by and among the Issuers, the Guarantors and U.S. Bank National Association, as trustee (the
“Trustee”).

          The Securities will be offered and sold to the Initial Purchasers pursuant to an exemption
from the registration requirements under the Securities Act of 1933, as amended (the “Act”). The
Issuers have prepared a preliminary offering memorandum, dated as of March 3, 2010 (the
“Preliminary Offering Memorandum”), and a pricing supplement thereto dated the date hereof (the
“Pricing Supplement”). The Preliminary Offering Memorandum and the Pricing Supplement are herein
referred to as the “Pricing Disclosure Package.” Promptly after the execution of this Purchase
Agreement (this “Agreement”), the Issuers will prepare a final offering memorandum dated the date
hereof (the “Final Offering Memorandum”). Unless stated to the contrary, any references herein to
the terms “Pricing Disclosure Package” and “Final Offering Memorandum” shall be deemed to refer to
and include any information filed under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), prior to the date hereof and incorporated by reference therein, and any references
herein to the terms “amend”, “amendment” or “supplement” with respect to the Final Offering
Memorandum shall be deemed to refer to and include any information filed under the Exchange Act
subsequent to the date hereof that is incorporated by reference therein. All references in this
Agreement to financial statements and schedules

 

 

and other information which is “contained,” “included” or “stated” (or other references of
like import) in the Pricing Disclosure Package (including the Preliminary Offering Memorandum) or
Final Offering Memorandum shall be deemed to mean and include all such financial statements and
schedules and other information which are incorporated by reference in the Pricing Disclosure
Package or Final Offering Memorandum, as the case may be.

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

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

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

          2. Agreements to Sell and Purchase. On the basis of the representations, warranties
and covenants contained in this Agreement, the Issuers and Guarantors agree to issue and sell to
the Initial Purchasers, and on the basis of the representations, warranties and covenants contained
in this Agreement, and subject to the terms and conditions contained in this Agreement, each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the Issuers and Guarantors,
the aggregate principal amount of the Securities set forth opposite its name on Schedule I
attached hereto. The purchase price for the Securities shall be 98.375% of their principal amount.

          3. Delivery and Payment. Delivery of, and payment of the purchase price for, the
Securities shall be made at 10:00 A.M., New York time, on March 10, 2010 (such date and time, the

2

 

“Closing Date”) at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, New York
10022. The Closing Date and the location of delivery of and the form of payment for the Securities
may be varied by mutual agreement between the Initial Purchasers and the Issuers.

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

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

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

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

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

3

 

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

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

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

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

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

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

4

 

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

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

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

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

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

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

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

     (q) Not to, and not to permit any of its affiliates or anyone acting on its or its
affiliates’ behalf to (other than the Initial Purchasers and their affiliates), distribute
prior to the Closing Date any offering material in connection with the offer and sale of the
Securities other than the Preliminary Offering Memorandum, the Pricing Supplement, any
electronic roadshow and the Final Offering Memorandum. Before making, preparing, using,
authorizing, approving or referring to any Issuer Written Communication (as defined below),
the Partnership will furnish to the Representative and counsel for the Initial Purchasers a
copy of such written communication for review and will not make, prepare, use, authorize,
approve or refer to any such written communication to which the Representative reasonably
objects, or any amendment or supplement thereto prepared in accordance with Section 4(b).

5

 

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

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

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

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

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

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

6

 

to state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.

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

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

     (iv) The capitalization of the Issuers as of the Closing Date will be as set forth in
the as adjusted column under the heading “Capitalization” in the Offering Memorandum.
Attached as Schedule II is a true and complete list of each entity in which the
Partnership has a direct or indirect majority equity or voting interest (each a “Subsidiary”
and, together, the “Subsidiaries”), their jurisdictions of organization, name of
equityholder(s) and percentage held by each equityholder. All of the issued and outstanding
equity interests of each Subsidiary have been duly and validly authorized and issued, are
fully paid (to the extent required by such Subsidiary’s limited liability company or
partnership agreement) and (except (i) as such nonassessability may be affected by the
Delaware LLC Act or the DRULPA and (ii) with respect to any general partner interests)
nonassessable, were not issued in violation of any preemptive or similar right and, except
as set forth in the Offering Memorandum, are owned, directly or indirectly through
Subsidiaries, by the Issuers free and clear of all liens (other than transfer restrictions
imposed by the Act, the securities or Blue Sky laws of certain jurisdictions and security
interests granted pursuant to the Amended and Restated Credit Agreement, dated as of August
27, 2007, as amended by the Agreement and Amendment No. 1 to Amended and Restated Credit
Agreement, dated as of February 25, 2008 and Amendment No. 2 to Amended and Restated Credit
Agreement, dated as of September 8, 2008 (as so amended, the “Credit Agreement”), each among
the Holly Energy Partners—Operating, L.P., a Delaware limited partnership (the “Operating
Partnership”), the Subsidiaries party thereto as guarantors and the financial institutions
party thereto). Except as set forth in the Offering Memorandum, there are no outstanding
options, warrants or other rights to acquire or purchase, or instruments convertible into or
exchangeable for, any equity interests of the Issuers, or any of the Subsidiaries.

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

7

 

     (vi) The Issuers and the Subsidiaries, as the case may be, have good and indefeasible
title to all real property and good title to all personal property described in the Offering
Memorandum as owned by the Operating Partnership and the Subsidiaries, as the case may be,
free and clear of all (A) liens and security interests or (B) other claims and other
encumbrances (other than liens or security interests) except as set forth in the Offering
Memorandum.

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

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

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

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

     (xi) All of the issued and outstanding partnership interests of the General Partner
have been duly authorized and validly issued and are fully paid (to the extent required
under the General Partner’s partnership agreement) and the limited partner interests in the
General Partner

8

 

are nonassessable (except as such nonassessability may be affected by Sections 17-607
and 17-804 of the DRULPA and as otherwise described in the Offering Memorandum).

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

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

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

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

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

     (xvii) The Indenture has been duly and validly authorized by each Issuer and each
Guarantor and, when duly executed and delivered by the Issuers and each Guarantor (assuming
the due authorization, execution and delivery thereof by the Trustee), will be a legally
binding and valid obligation of each such Issuer and Guarantor, enforceable against it in
accordance with its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by general principles of equity and the
discretion of the court

9

 

before which any proceeding therefor may be brought (the “Bankruptcy Exceptions”). The
Indenture, when executed and delivered, will conform in all material respects to the
description thereof in the Offering Memorandum.

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

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

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

     (xxi) Neither Issuer nor any Subsidiary is in (A) violation of its certificate or
agreement of limited partnership, limited liability company agreement, certificate or
articles of incorporation or bylaws or other organizational documents, (B) violation of any
law, statute, ordinance, administrative or governmental rule or regulation applicable to it
or of any decree of any court or governmental agency or body having jurisdiction over it or
(C) breach, default (or an event which, with notice or lapse of time or both, would
constitute such default) or violation in performance of any obligation, agreement, covenant
or condition contained in any bond, debenture, note or any other evidence of indebtedness or
in any agreement, indenture, lease or other instrument to which it is a party or by which it
or any of its properties may be bound, which

10

 

breach, default or violation, in the case of clauses (B) or (C), would, if continued,
reasonably be expected to have a Material Adverse Effect. To the knowledge of the Issuers,
no third party to any indenture, mortgage, deed of trust, loan agreement or other agreement
to which either Issuer or any Subsidiary is a party or by which any of them is bound or to
which any of their properties is subject, is in default under any such agreement, which
breach, default or violation would, if continued, reasonably be expected to have a Material
Adverse Effect.

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

     (xxiii) No consent, approval, authorization, order, registration, filing or
qualification of or with any court, governmental agency or body is required for the
offering, issuance and sale by the Issuers of the Notes, the issuance of the Guarantees by
the Guarantors, the execution, delivery and performance of this Agreement and the other Note
Documents by the Issuers and the Guarantors, or the consummation by the Issuers and the
Guarantors of the transactions contemplated hereby or thereby, except (i) for such consents,
approvals and similar authorizations required under the Registration Rights Agreement, the
Securities Act, the Exchange Act and state securities or “Blue Sky” laws and (ii) for such
consents which, if not obtained would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

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

     (xxv) Since the date as of which information is given in the Offering Memorandum,
except as set forth or contemplated in the Offering Memorandum, (A) neither either Issuer
nor

11

 

any Subsidiary has (1) incurred any liabilities or obligations, direct or contingent,
that, individually or in the aggregate, would reasonably be expected to have a Material
Adverse Effect, or (2) entered into any material transaction not in the ordinary course of
business and (B) other than regular quarterly distributions in an amount not to exceed
$0.805 per unit, there has been no dividend or distribution of any kind declared, paid or
made by the Partnership on any of its equity interests.

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

     (xxvii) The statistical and market-related data and forward-looking statements (within
the meaning of Section 27A of the Act and Section 21E of the Exchange Act) included in the
Offering Memorandum are based on or derived from sources that the Issuers believe to be
reliable and accurate in all material respects and represent their good faith estimates that
are made on the basis of data derived from such sources. The Issuers have obtained the
written consent to the use of such data from such sources to the extent required or as would
be required if the offering of the Securities was being registered pursuant to the rules and
regulations of the Commission.

     (xxviii) As of the date hereof and as of the Closing Date, immediately prior to and
immediately following the consummation of the Offering, the Partnership and its
Subsidiaries, taken as a whole, are and will be Solvent. As used herein, “Solvent” shall
mean, for any person on a particular date, that on such date (A) the fair value of the
property of such person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such person, (B) the present fair salable value of
the assets of such person is not less than the amount that will be required to pay the
probable liability of such person on its debts as they become absolute and matured, (C) such
person does not intend to, and does not believe that it will, incur debts and liabilities
beyond such person’s ability to pay as such debts and liabilities mature, (D) such person is
not engaged in a business or a transaction, and is not about to engage in a business or a
transaction, for which such person’s property would constitute an unreasonably small capital
and (E) such person is able to pay its debts as they become due and payable.

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

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

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

12

 

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

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

     (xxxiv) The Partnership and the Subsidiaries have such consents, easements,
rights-of-way, permits or licenses from each person (collectively, “rights-of-way”) as are
necessary to conduct its business in the manner described, and subject to the limitations
contained, in the Offering Memorandum, except for (A) qualifications, reservations and
encumbrances which would not reasonably be expected to have a Material Adverse Effect upon
the ability of the Issuers and the Subsidiaries, taken as a whole, to conduct their
businesses in all material respects as currently conducted and as contemplated by the
Offering Memorandum to be conducted and (B) such rights-of-way that, if not obtained, would
not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect upon the ability of the Issuers and the Subsidiaries, taken as a whole, to conduct
their businesses in all material respects as currently conducted and as contemplated by the
Offering Memorandum to be conducted; other than as set forth, and subject to the limitations
contained, in the Offering Memorandum, each of the Issuers and the Subsidiaries has
fulfilled and performed all its material obligations with respect to such

13

 

rights-of-way and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or would result in any impairment of the
rights of the holder of any such rights-of-way, except for such revocations, terminations
and impairments that would not have a Material Adverse Effect upon the ability of the
Issuers and the Subsidiaries, taken as a whole, to conduct their businesses in all material
respects as currently conducted and as contemplated by the Offering Memorandum to be
conducted; and, except as described in the Offering Memorandum, none of such rights-of-way
contains any restriction that is materially burdensome to the Issuers and the Subsidiaries,
taken as a whole.

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

     (xxxvi) Except as described in the Offering Memorandum, neither either Issuer nor any
Subsidiary has any liability for, or knowledge of any existing circumstances that could
reasonably be expected to result in, any prohibited transaction (within the meaning of
Section 406 of ERISA), any accumulated funding deficiency (within the meaning of Section 304
of ERISA or Section 431 of the Internal Revenue Code), any unpaid minimum required
contribution under Sections 302 and 303 of ERISA or Sections 412 and 430 of the Code, or any
tax resulting from failure to pay any such minimum required contributions under Section 4971
of the Code, or any complete or partial withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to ERISA, to either Issuer nor any Subsidiary
makes or has ever been required to make any contributions or has any liability whether
absolute or contingent (the “Plans”). With respect to the Plans, each Issuer and each
Subsidiary is in compliance in all material respects with all applicable provisions of ERISA
and the Code and no Plans are currently, or to either Issuer or any Subsidiary’s knowledge
will be, at-risk (within the meaning of Section 303 of ERISA) or in endangered or critical
status (within the meaning of Section 305 of ERISA).

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

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

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

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

14

 

     (xli) The statements in the Preliminary Offering Memorandum and the Final Offering
Memorandum under the headings “Certain Material United States federal tax considerations”,
“Plan of Distribution,” “Description of notes” and “Legal matters” fairly summarize the
matters therein described in all material respects.

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

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

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

15

 

effort (as defined by Regulation S) with respect to the Securities, and each of them
has complied with the offering restrictions requirement of Regulation S.

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

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

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

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

     (xlix) The Partnership will be treated as a partnership for U.S. federal income tax
purposes.

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

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

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

16

 

registration requirements of the Act. Each Initial Purchaser, severally and not jointly,
represents, warrants and covenants to the Issuers and Guarantors that:

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

     (ii) With respect to offers and sales outside the United States, such Initial
Purchaser has offered the Securities and will offer and sell the Securities (1) as part of
its distribution at any time and (2) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the Closing Date, only in accordance
with Rule 903 of Regulation S or another exemption from the registration requirements of
the Act. Accordingly, neither such Initial Purchasers nor any person acting on their
behalf has engaged or will engage in any directed selling efforts (within the meaning of
Regulation S) with respect to the Securities, and any such persons have complied and will
comply with the offering restrictions requirements of Regulation S. Terms used in this
Section 5(b)(ii) have the meanings given to them by Regulation S.

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

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

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

          6. Indemnification. (a) The Issuers and Guarantors, jointly and severally, agree to
indemnify and hold harmless the Initial Purchasers, each person, if any, who controls any Initial
Purchaser within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, the
agents,

17

 

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

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

          (c) Promptly after receipt by an indemnified party under subsection 6(a) or 6(b) above of
notice of the commencement of any action, suit or proceeding (collectively, an “action”), such
indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party
under such subsection, notify each party against whom indemnification is to be sought in writing of
the commencement of such action (but the failure so to notify an indemnifying party shall not
relieve such indemnifying party from any liability that it may have under this Section 6 except to
the extent that it has been prejudiced in any material respect by such failure). In case any such
action is brought against any indemnified party, and it notifies an indemnifying party of the
commencement of such action, the indemnifying party will be entitled to participate in such action,
and to the extent it may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the defense of such action
with counsel satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own counsel in any such
action, but the reasonable fees and expenses of such counsel shall be at

18

 

the expense of such indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel to take charge of the
defense of such action within a reasonable time after notice of commencement of the action, or
(iii) the named parties to such action (including any impleaded parties) include such indemnified
party and the indemnifying parties (or such indemnifying parties have assumed the defense of such
action), and such indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them that are different from or additional to those available to one or
all of the indemnifying parties (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party or parties), in any of which
events such reasonable fees and expenses of counsel shall be borne by the indemnifying parties. In
no event shall the indemnifying parties be liable for the fees and expenses of more than one
counsel (together with appropriate local counsel) at any time for all indemnified parties in
connection with any one action or separate but substantially similar or related actions arising in
the same jurisdiction out of the same general allegations or circumstances. An indemnifying party
shall not be liable for any settlement of any claim or action effected without its written consent,
which consent may not be unreasonably withheld. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such settlement (x) includes an
unconditional release of such indemnified party from all liability on claims that are the subject
matter of such proceeding and (y) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

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

          The Issuers and Guarantors and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by
any other method of allocation that does not take into account the equitable considerations
referred to above. Notwithstanding the provisions of this Section 7, (i) in no case shall any
Initial Purchaser be required to contribute any amount in excess of the amount by which the total
discount and commissions applicable to the Securities purchased by such Initial Purchaser pursuant
to this Agreement exceeds the amount of any damages that such Initial Purchaser has otherwise been
required to pay by reason of any untrue or alleged

19

 

untrue statement or omission or alleged omission and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 7, each person, if any, who controls any Initial Purchaser within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as the Initial Purchasers, and each person, if any, who controls an Issuer or a
Guarantor within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and each
director, officer, employee and agent of an Issuer or a Guarantor shall have the same rights to
contribution as the Issuers and Guarantors. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action against such party in respect of which a
claim for contribution may be made against another party or parties under this Section 7, notify
such party or parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 7 or otherwise, 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 Section 6
for purposes of indemnification. Anything in this section to the contrary notwithstanding, no
party shall be liable for contribution with respect to any action or claim settled without its
written consent; provided, however, that such written consent was not unreasonably withheld. The
contribution obligations of the Initial Purchasers under this Section 7 are several in proportion
to their respective purchase obligations with respect to the Securities and not joint.

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

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

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

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

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

     (e) The Initial Purchasers shall have received on the Closing Date an opinion dated the
Closing Date of Latham & Watkins LLP, counsel to the Initial Purchasers, in form and
substance satisfactory to the Representative. Such counsel shall have been furnished with
such

20

 

certificates and documents as they may reasonably request to enable them to review or
pass upon the matters referred to in this Section 8 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the representations,
warranties or conditions contained in this Agreement;

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

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

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

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

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

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

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

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

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

21

 

          10. Survival of Representations and Agreements. All representations and warranties,
covenants and agreements contained in this Agreement, including the agreements contained in
Sections 4(f) and 11(d), the indemnity agreements contained in Section 6 and the contribution
agreements contained in Section 7, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of the Initial Purchasers or any controlling person
thereof or by or on behalf of the Partnership or any controlling person thereof, and shall survive
delivery of and payment for the Original Notes to and by the Initial Purchasers. The agreements
contained in Sections 4(f), 6, 7, 9 and 11(d) shall survive the termination of this Agreement,
including pursuant to Section 11.

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

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

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

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

          (e) If any one or more Initial Purchasers shall fail to purchase and pay for any of the
Securities agreed to be purchased by such Initial Purchaser hereunder and such failure to purchase
shall constitute a default in the performance of its or their obligations under this Agreement, the
remaining Initial Purchasers shall be obligated severally to take up and pay for (in the respective
proportions which

22

 

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

          12. Notice. All communications with respect to or under this Agreement, except as may
be otherwise specifically provided in this Agreement, shall be in writing and, if sent to the
Initial Purchasers, shall be mailed, delivered or telecopied and confirmed in writing to c/o UBS
Securities LLC, 677 Washington Blvd., Stamford, CT 06901 (fax number: 203-719-1075), Attention:
High Yield Syndicate Department, with a copy for information purposes only to (i) UBS Securities
LLC, 677 Washington Blvd., Stamford, CT 06901 (fax number: 203-719-3667), Attention: Legal and
Compliance Department and (ii) Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022 (fax
number: 212-751-4864), Attention: Jonathan R. Rod, Esq.; and if sent to the Issuers and Guarantors,
shall be mailed, delivered or telecopied and confirmed in writing to Holly Energy Partners, L.P.,
100 Crescent Court, Suite 1600, Dallas, Texas, 75201, (telephone: 214-871-3555, fax:
214-615-9380), Attention: General Counsel, with a copy for information purposes only to Fulbright &
Jaworski LLP, 1301 McKinney, Suite 5100, Houston, TX 77010-3095 (fax number: 713-651-5246),
Attention: Kevin Trautner, Esq.

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

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

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

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

23

 

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

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

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

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

[Signature Pages Follow]

24

 

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

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	HOLLY ENERGY PARTNERS, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	HEP Logistics Holdings, L.P.,
	 

	 	 	 	its general partner

	 	 	 	 	 
	 

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

	 	 	 	its general partner

	 	 	 	 	 
	 	 	 
	 	By:  	                                                     /s/ Bruce R. Shaw
 	 
	 	 	Name:  	Bruce R. Shaw 	 
	 	 	Title:  	Senior Vice President and Chief
Financial Officer 	 
	 
	 	HOLLY ENERGY FINANCE CORP.

 	 
	 	By:  	/s/ Bruce R. Shaw
 	 
	 	 	Name:  	Bruce R. Shaw 	 
	 	 	Title:  	Senior Vice President and Chief
Financial Officer 	 
	 

[Signature Page to Purchase Agreement]

 

 

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/ Bruce R. Shaw
 	 
	 	 	Name:  	Bruce R. Shaw 	 
	 	 	Title:  	Senior Vice President and Chief
Financial Officer 
	 

[Signature Page to Purchase Agreement]

 

 

	 	 	 	 	 	 	 
	 	 	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/ Bruce R. Shaw
 	 
	 	 	Name:  	Bruce R. Shaw 	 
	 	 	Title:  	Senior Vice President and Chief
Financial Officer 
	 

[Signature Page to Purchase Agreement]

 

 

	 	 	 	 	 
	 	 	HEP PIPELINE GP, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 
	 	 	HEP REFINING GP, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 
	 	 	HEP MOUNTAIN HOME, L.L.C., a Delaware limited
liability company
	 
	 	 	 	 
	 	 	HEP PIPELINE, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 
	 	 	HEP REFINING, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 
	 	 	HEP WOODS CROSS, L.L.C., a Delaware limited liability
company
	 
	 	 	 	 
	 	 	LOVINGTON-ARTESIA, L.L.C., a Delaware limited
liability company
	 
	 	 	 	 
	 	 	HEP SLC, LLC, a Delaware limited liability company
	 
	 	 	 	 
	 	 	HEP TULSA LLC, a Delaware limited liability company
	 
	 	 	 	 
	 	 	ROADRUNNER PIPELINE, L.L.C., a Delaware limited
liability company
	 
	 	 	 	 
	 

	 	Each by:
	 	Holly Energy Partners—Operating, L.P., a
Delaware limited partnership and its sole member
	 
	 	 	 	 
	 

	 	 By:
	 	HEP Logistics GP, L.L.C., a Delaware
limited liability company, its general
partner
	 
	 	 	 	 
	 

	 	By:
	 	Holly Energy Partners, L.P., a Delaware
limited partnership, its sole member
	 
	 	 	 	 
	 

	 	By:
	 	HEP Logistics Holdings, L.P., a Delaware
limited partnership, its general partner
	 
	 	 	 	 
	 

	 	 By:
	 	Holly Logistic Services, L.L.C., a
Delaware limited liability company, its
general partner

	 	 	 	 	 
	 	 	 
	 	By:  	                 /s/ Bruce R. Shaw
 	 
	 	 	Name:  	Bruce R. Shaw 	 
	 	 	Title:  	Senior Vice President and Chief
Financial Officer 	 
	 

[Signature Page to Purchase Agreement]

 

 

	 	 	 	 	 
	 	 	HEP FIN-TEX/TRUST RIVER, L.P., a Texas limited
partnership
	 
	 	 	 	 
	 	 	HEP NAVAJO SOUTHERN, L.P., a Delaware limited
partnership
	 
	 	 	 	 
	 	 	HEP PIPELINE ASSETS, LIMITED PARTNERSHIP, a Delaware

limited partnership
	 
	 	 	 	 
	 

	 	Each by:
	 	HEP Pipeline GP, L.L.C., a Delaware limited
liability company and its general partner
	 
	 	 	 	 
	 

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

	 	By:
	 	HEP Logistics GP, L.L.C., a Delaware
limited liability company, its general
partner
	 
	 	 	 	 
	 

	 	By:
	 	Holly Energy Partners, L.P., a Delaware
limited partnership, its sole member
	 
	 	 	 	 
	 

	 	By:
	 	HEP Logistics Holdings, L.P., a Delaware
limited partnership, its general partner
	 
	 	 	 	 
	 

	 	By:
	 	Holly Logistic Services, L.L.C., a
Delaware limited liability company, its
general partner

	 	 	 	 	 
	 	 	 
	 	By:  	  /s/ Bruce R. Shaw
 	 
	 	 	Name:  	Bruce R. Shaw 	 
	 	 	Title:  	Senior Vice President and Chief
Financial Officer 	 
	 

[Signature Page to Purchase Agreement]

 

 

	 	 	 	 	 	 	 
	 	 	HEP REFINING ASSETS, L.P., a Delaware limited
partnership
	 
	 	 	 	 	 	 
	 	 	By:	 	HEP Refining GP, L.L.C., a Delaware limited
liability company and its general partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Holly Energy Partners—Operating, L.P., a
Delaware limited partnership, 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/ Bruce R. Shaw
 	 
	 	 	Name:  	Bruce R. Shaw 	 
	 	 	Title:  	Senior Vice President and Chief
Financial Officer 	 
	 

[Signature Page to Purchase Agreement]

 

 

Accepted as of the date hereof on its own behalf
and as Representative of the several Initial Purchasers
listed on Schedule I:

UBS SECURITIES LLC

	 	 	 	 	 
	 	 
	By:  	/s/ Francisco Pinto-Leite
 	 
	 	Name/Title Francisco
Pinto-Leite, Managing Director 	 
	 	 	 
	 
	 	 
	By:  	/s/ Michael Lawton
 	 
	 	Name/Title Michael Lawton, Director 	 
	 	 	 
	 

[Signature Page to Purchase Agreement]

 

 

SCHEDULE I

	 	 	 	 	 
	 	 	Principal Amount	 
	 	 	of	 
	 	 	Notes	 
	Initial Purchaser	 	to be Purchased	 
	UBS Securities LLC
	 	$	67,500,000	 
	 
	 	 	 	 
	Banc of America Securities LLC
	 	$	30,000,000	 
	 
	 	 	 	 
	Goldman, Sachs & Co.
	 	$	30,000,000	 
	 
	 	 	 	 
	BBVA Securities Inc.
	 	$	3,750,000	 
	 
	 	 	 	 
	Capital One Southcoast, Inc.
	 	$	3,750,000	 
	 
	 	 	 	 
	Comerica Securities, Inc.
	 	$	3,750,000	 
	 
	 	 	 	 
	Mitsubishi UFJ Securities (USA), Inc.
	 	$	3,750,000	 
	 
	 	 	 	 
	PNC Capital Markets LLC
	 	$	3,750,000	 
	 
	 	 	 	 
	U.S. Bancorp Investments, Inc.
	 	$	3,750,000	 
	 
	 	 	 
	Total
	 	$	150,000,000	 
	 
	 	 	 

 

 

SCHEDULE II

	 	 	 	 	 
	 	 	Jurisdiction of	 	 
	Subsidiary	 	Organization	 	Equity Holder and % Held by Each
	HEP Fin-Tex/Trust-River, L.P.

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

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

	 	Delaware
	 	Holly Energy Partners, L.P. (100%)
	 
	 	 	 	 
	HEP Mountain Home, L.L.C.

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

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

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

	 	Delaware
	 	Holly Energy Partners—Operating, L.P. (100%)
	 
	 	 	 	 
	HEP Pipeline Assets, Limited Partnership

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

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

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

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

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

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

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

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

	 	Delaware
	 	Holly Energy Partners—Operating, L.P. (100%)
	 
	 	 	 	 
	HEP Woods Cross, L.L.C.

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

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

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

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

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

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

 

 

ANNEX I

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

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

 

 

ANNEX II(a)

FORM OF OPINION OF COUNSEL TO THE INITIAL PURCHASERS

[See attached].

 

 

ANNEX II(b)

FORM OF OPINION OF COUNSEL TO THE ISSUERS

     The opinion of Fulbright & Jaworski L.L.P., counsel for the Issuers (capitalized terms
not otherwise defined herein shall have the meanings provided in the Purchase Agreement, to which
this is an Annex), to be delivered pursuant to Section 8(d) of the Purchase Agreement shall be to
the effect that:

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

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

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

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

     5. (i) OLP GP is the sole general partner of the Operating Partnership, owning of record, and
to our knowledge, beneficially, a 0.001% general partner interest in the Operating Partnership;
(ii) such general partner interest has been duly authorized and validly issued in accordance with
the partnership agreement of the Operating Partnership (the “Operating Partnership
Agreement”); (iii) such general partner interest is free and clear of all Liens that may be
perfected solely by the filing, with the

 

 

Secretary of State of the State of Delaware pursuant to the Delaware UCC, of a financing
statement, naming OLP GP as “debtor” and properly describing such general partner interest, except
for those arising or created in connection with the Amended and Restated Credit Agreement, dated as
of August 27, 2007, as amended by the Agreement and Amendment No. 1 to Amended and Restated Credit
Agreement, dated as of February 25, 2008, and Amendment No. 2 to Amended and Restated Credit
Agreement, dated as of September 8, 2008 (as so amended, the “Credit Agreement”); and, (iv)
to our knowledge, such general partner interest is not subject to any other restrictions on
transfer, except (A) as may arise under applicable federal or state securities laws (as to which we
express no opinion), (B) for restrictions created by or arising under the DRULPA and restrictions
on transferability set forth in the Operating Partnership Agreement, and (C) for restrictions
arising in connection with the Credit Agreement.

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

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

     8. (i) GP LLC is the sole general partner of the General Partner, owning of record, and to our
knowledge, beneficially, a 0.001% general partner interest in the General Partner; (ii) such
general partner interest has been duly authorized and validly issued in accordance with the
partnership agreement of the General Partner (the “General Partner Partnership Agreement”);
(iii) such general partner interest is free and clear of all Liens that may be perfected solely by
the filing, with the Secretary of State of the State of Delaware pursuant to the Delaware UCC, of a
financing statement, naming GP LLC as “debtor” and properly describing such general partner
interest; and (iv) to our knowledge, such general partner interest is not subject to any other
restrictions on transfer, except (A) as may arise under applicable federal or state securities laws
(as to which we express no opinion) and (B) for restrictions created by or arising under the DRULPA
and restrictions on transferability set forth in the General Partner Partnership Agreement.

     9. (i) Navajo Pipeline is the sole limited partner of the General Partner, owning of record,
and to our knowledge, beneficially, a 99.999% limited partner interest in the General Partner; (ii)
such

 

 

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

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

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

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

 

 

under applicable federal or state securities laws (as to which we express no opinion), and (C)
for restrictions arising in connection with the Credit Agreement.

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

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

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

     16. (i) The Operating Partnership is the sole limited partner of Fin-Tex, owning of record,
and to our knowledge, beneficially, a 99.999% limited partner interest in Fin-Tex; (ii) such
limited partner interest has been duly authorized and validly issued in accordance with the
partnership agreement of Fin-Tex and is fully paid (to the extent required under the partnership
agreement of Fin-Tex) and

 

 

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

     17. Each Issuer and each Guarantor has all requisite corporate, partnership, or limited
liability company power and authority (as applicable) to execute, deliver, and perform all of its
obligations under the Note Documents to which it is a party and to consummate the transactions
contemplated thereby and, without limitation, each Issuer and Guarantor has all requisite
corporate, partnership, or limited liability company power and authority (as applicable) to issue,
sell and deliver and perform its obligations under the Notes and Guarantees.

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

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

     20. The Notes have been duly and validly authorized for issuance and sale to the Initial
Purchasers by the Issuers, and when the Notes are duly issued, authenticated by the Trustee and
executed and delivered by the Issuers against payment by the Initial Purchasers in accordance with
the terms of the Purchase Agreement and the Indenture, the Notes will be legally binding and valid
obligations of the Issuers, entitled to the benefits of the Indenture and enforceable against the
Issuers in accordance with their terms.

     21. The Exchange Notes have been duly and validly authorized for issuance by the Issuers, and
when the Exchange Notes are duly issued, authenticated by the Trustee and executed and delivered by
the Issuers in accordance with the terms of the Registration Rights Agreement, the Exchange Offer
and the Indenture, the Exchange Notes will be legally binding and valid obligations of the Issuers,
entitled to the benefits of the Indenture and enforceable against the Issuers in accordance with
their terms.

     22. The Guarantees have been duly and validly authorized by each of the Guarantors and, when
the Notes are duly issued, authenticated by the Trustee and executed and delivered by the Issuers
against payment by the Initial Purchasers in accordance with the terms of the Purchase Agreement
and the Indenture, will be legally binding and valid obligations of the Guarantors, enforceable
against each of them in accordance with their terms. The guarantees of the Exchange Notes have
been duly and validly authorized by each of the Guarantors and, when the Exchange Notes are duly
issued, authenticated by the Trustee and executed and delivered by the Issuers in accordance with
the terms of the Registration Rights Agreement, the Exchange Offer and the Indenture, will be
legally binding and valid obligations of the Guarantors, enforceable against each of them in
accordance with their terms.

     23. The Registration Rights Agreement has been duly and validly authorized, executed and
delivered by each Issuer and is the valid and legally binding obligation of each Issuer,
enforceable against each of them in accordance with its terms.

 

 

     24. The execution, delivery, and performance of the Note Documents and the consummation of the
transactions contemplated thereby do not and will not (A) violate the certificate of limited
partnership, agreement of limited partnership, certificate of formation, limited liability company
agreement, certificate or articles of incorporation, or bylaws of the Issuers or any Guarantor or
Subsidiary, (B) conflict with or constitute a breach of or a default under (or an event that with
notice or the lapse of time, or both, would constitute a default), any indenture, mortgage, deed of
trust, loan agreement, lease, or other agreement or instrument filed by the Partnership as an
exhibit to its Annual Report on Form 10-K for the year ended December 31, 2009 or any Current
Report on Form 8-K filed during 2010 and prior to the delivery of this opinion and to which either
Issuer or any Guarantor or Subsidiary is a party or by which any of them or any of their respective
properties may be bound, (C) violate the DRULPA, the Delaware LLC Act, the DGCL, the TRLPA, or
other laws of the State of Texas, the laws of the State of New York, or the United States federal
law (other than federal and state securities laws or “Blue Sky” laws, as to which we express no
opinion (except as specifically set forth in paragraphs (aa) and (bb))), which breach or default in
the cases of clauses (B) or (C) would reasonably be expected to have a Material Adverse Effect.

     25. No consent, approval, authorization, order, registration, filing, or qualification
(“Consent”) under the DRULPA, the Delaware LLC Act, the DGCL, the TRLPA or any other Texas
law, New York law or federal law is required for the offering, issuance, and sale by the Issuers of
the Notes; the execution, delivery, and performance of the Purchase Agreement and the Note
Documents by the Issuers and the Guarantors or the consummation by the Issuers and the Guarantors
of the transactions contemplated thereby, except (i) for such Consents required under the
Securities Act, the Exchange Act and state securities or “Blue Sky” laws, as to which we express no
opinion, (ii) for such Consents that have been obtained or made, (iii) for such Consents that (A)
are of a routine or administrative nature; (B) are not customarily obtained or made prior to the
consummation of transactions such as those contemplated by the Purchase Agreement; or (C) are
expected in the reasonable judgment of the General Partner to be obtained or made in the ordinary
course of business subsequent to the consummation of the transactions contemplated by the Purchase
Agreement; or (iv) for such Consents that, if not obtained, would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

     26. The statements set forth in the Pricing Disclosure Package and the Final Offering
Memorandum under the caption “Description of Notes,” insofar as they purport to constitute a
summary of the terms of the Notes, and under the captions “Certain Material U.S. Federal Income Tax
Considerations” and “Plan of Distribution” insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate and complete in all material respects.

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

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

     In addition, such counsel shall state that they have participated in conferences with officers
and other representatives of Holly Logistic Services, L.L.C., the general partner of HEP Logistics
Holdings, L.P., the general partner of the Partnership, representatives of Ernst & Young LLP, the
current independent registered public accounting firm of the Partnership, and representatives of
and counsel for

 

 

the Initial Purchasers, at which the contents of the Pricing Disclosure Package and the Final
Offering Memorandum, and related matters, were discussed. Although such counsel is not passing
upon and do not assume any responsibility for or express any opinion regarding, the accuracy,
completeness or fairness of the statements contained in the Pricing Disclosure Package and the
Final Offering Memorandum, except for those referred to in paragraph (z) of their opinion letter of
even date herewith, based on such counsel’s participation described above (relying with respect to
factual matters to the extent such counsel deemed appropriate upon statements by officers and other
representatives of the Partnership, the General Partner, or GP LLC), no facts have come to such
counsel’s attention to cause such counsel to believe that any part of the Pricing Disclosure
Package, as of March 5, 2010, or the Final Offering Memorandum, as of its date and as of the date
of this letter, contained or contains an untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; provided that such counsel may
express no view, belief, or comment with respect to the financial statements and related schedules
and the other financial or accounting data included or incorporated by reference in or omitted from
the Pricing Disclosure Package or the Final Offering Memorandum.

 

 

ANNEX II(c)

FORM OF OPINION OF GENERAL COUNSEL FOR THE ISSUERS

General Counsel Opinion

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

     1. The offering, issuance, and sale by the Issuers and the Guarantors of the Notes
and Guarantees, respectively, the compliance by the Issuers and the Guarantors with the Note
Documents, and the consummation of the transactions contemplated thereby do not and will not (A)
violate the certificate of limited partnership, agreement of limited partnership, certificate of
formation, limited liability company agreement, certificate or articles of incorporation, or bylaws
of either Issuer or any Guarantor or Subsidiary; (B) conflict with or constitute a breach of or
violation of, or a default under (or an event which, with notice or the lapse of time or both,
would constitute such a default) any indenture, mortgage, deed of trust, loan agreement, lease, or
other agreement or instrument filed by the Partnership as an exhibit to its Annual Report on Form
10-K for the year ended December 31, 2009 or any Current Report on Form 8-K filed during 2010 and
prior to the delivery of this opinion, or otherwise known to me, to which either Issuer or any
Guarantor or Subsidiary is a party or by which any of them or any of their respective properties
may be bound; (C) to my knowledge, violate any statute, law, or regulation, or any order, judgment,
decree, or injunction of any court or governmental agency or body having authority over either
Issuer or any Guarantor or Subsidiary or any of their properties in a proceeding to which any of
them or their property is a party; or (D) result in the creation or imposition of any lien, charge,
or encumbrance upon any property or assets of either Issuer or any Guarantor or Subsidiary, which
breach, violation, or default, in the case of clauses (B), (C), or (D) would individually or in the
aggregate reasonably be expected to have a Material Adverse Effect.

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

     3. To my knowledge, each of the Issuers and the Subsidiaries have such permits, consents,
licenses, franchises, certificates, and authorizations of governmental or regulatory authorities
(“Permits”) as are necessary to own its properties and to conduct its business in the
manner described in the Pricing Disclosure Package and the Final Offering Memorandum, subject to
such qualifications as may be set forth in the Pricing Disclosure Package and the Final Offering
Memorandum and except for such Permits that, if not obtained, would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect upon the ability of the Issuers
and the Subsidiaries, taken as a whole, to conduct

 

 

their businesses in all material respects as currently conducted or as contemplated by the
Pricing Disclosure Package and the Final Offering Memorandum to be conducted; and, to my knowledge,
the Issuers and the Subsidiaries have not received any notice of proceedings relating to the
revocation or modification of any such Permits that, individually or in the aggregate, would
reasonably be expected to have a material adverse effect upon the ability of the Issuers and the
Subsidiaries, taken as a whole, to conduct their businesses in all material respects as currently
conducted or as contemplated by the Pricing Disclosure Package and the Final Offering Memorandum to
be conducted.

     4. Except as described in the Pricing Disclosure Package and the Final Offering Memorandum, to
my knowledge, there is no litigation, proceeding, or governmental investigation pending or
threatened against either Issuer or to which either Issuer is a party or to which any of its
respective properties is subject that would reasonably be expected to have a Material Adverse
Effect..

 

 

EXHIBIT A

HOLLY ENERGY PARTNERS, L.P.

HOLLY ENERGY FINANCE CORP.

Pricing Term Sheet

	 	 	 
	Aggregate Principal Amount:
	 	$150,000,000
	 
	 	 
	Maturity Date:
	 	March 15, 2018
	 
	 	 
	Issue Price:
	 	100.00%
	 
	 	 
	Gross Proceeds:
	 	$150,000,000.00
	 
	 	 
	Coupon:
	 	8.25%
	 
	 	 
	Yield to Maturity:
	 	8.25%
	 
	 	 
	Spread to Treasury:
	 	491 bps
	 
	 	 
	Benchmark Treasury:
	 	3.50% UST due February 15, 2018
	 
	 	 
	Interest Payment Dates:
	 	March 15 and September 15, commencing on September 15, 2010
	 
	 	 
	Record Dates:
	 	March 1 and September 1
	 
	 	 
	Optional Redemption:
	 	Make-whole call at T+50 basis points prior to March 15, 2014 and then:

	 	 	 	 	 
	Year	 	Price	 
	2014
	 	 	104.125	%
	2015
	 	 	102.063	%
	2016 and thereafter
	 	 	100.000	%

	 	 	 
	Equity Clawback:
	 	Up to 35% at 108.25% prior to March 15, 2013
	 
	 	 
	Change of Control:
	 	Put at 101% of principal plus accrued interest
	 
	 	 
	Use of Proceeds:
	 	We estimate receiving net proceeds of approximately $146.9
	 
	 	million from this offering after deducting initial purchasers’
	 
	 	discounts and commissions and our estimated offering expenses.
	 
	 	We intend to use a portion of the net proceeds of this offering
	 
	 	to fund our payment of approximately $93.0 million for the
	 
	 	pending Acquisition, to repay approximately $41.0 million of
	 
	 	outstanding borrowings under our revolving credit agreement and
	 
	 	the remainder for general partnership purposes.  If the
	 
	 	Acquisition does not close, we intend to use the portion of the
	 
	 	net proceeds that would have otherwise been used for the
	 
	 	Acquisition to repay additional indebtedness under our revolving
	 
	 	credit agreement and for general partnership purposes, including
	 
	 	working capital, capital expenditures and possible future
	 
	 	acquisitions.
	 
	 	 
	Book-Runners:
	 	UBS Securities LLC
	 
	 	Banc of America Securities LLC
	 
	 	Goldman, Sachs & Co.

 

 

	 	 	 
	Co-Managers
	 	BBVA Securities Inc.
	 
	 	Capital One Southcoast, Inc.
	 
	 	Comerica Securities, Inc.
	 
	 	Mitsubishi UFJ Securities (USA), Inc.
	 
	 	PNC Capital Markets LLC
	 
	 	U.S. Bancorp Investments, Inc.
	 
	 	 
	Trade Date:
	 	March 5, 2010
	 
	 	 
	Settlement Date:
	 	T+3; March 10, 2010
	 
	 	 
	144A/Reg S CUSIP:
	 	435765 AC6 / U4377T AB6
	144A/Reg S ISIN:
	 	US435765AC66 / USU4377TAB62

This term sheet is qualified in its entirety by reference to Holly Energy Partner L.P.’s and
Holly Energy Finance Corp.’s Preliminary Offering Memorandum dated March 3, 2010. The information
in this term sheet supplements the Preliminary Offering Memorandum and supersedes the information
in the Preliminary Offering Memorandum to the extent inconsistent with the information in the
Preliminary Offering Memorandum.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}]]