TULSA PURCHASE OPTION
AGREEMENT
This Tulsa
Purchase Option Agreement is being entered into on August 1,
2009 (this “ Agreement ”), by and between Holly
Refining & Marketing — Tulsa LLC, a Delaware limited
liability company (“ Tulsa Refining ”), and HEP
Tulsa LLC, a Delaware limited liability company (“ HEP
Tulsa ”). Each of Tulsa Refining and HEP Tulsa is
individually referred to herein as a “ Party ”
and collectively as the “ Parties .”
WHEREAS, on
June 1, 2009, Tulsa Refining acquired the Tulsa Refinery,
including the Tulsa Loading Racks (each as defined below), from
Sunoco, Inc. (R&M);
WHEREAS, on the
date hereof, HEP Tulsa is acquiring the Tulsa Loading Racks from
Tulsa Refining pursuant to an Asset Purchase Agreement and will be
granted certain access and other rights with respect to the Tulsa
Loading Racks pursuant to an Equipment Sites, Access and Rail Line
License Agreement (the “ License Agreement ”);
and
WHEREAS, Tulsa
Refining and HEP Tulsa desire to enter into this Agreement to
evidence their agreement regarding certain purchase options and put
rights (some of which are summarized on Exhibit A
attached hereto) with respect to the Tulsa Loading
Racks.
NOW, THEREFORE,
the parties to this Agreement hereby agree as follows:
Capitalized terms
used throughout this Agreement and not otherwise defined herein
shall have the meanings set forth below.
“
Acquisition Proposal ” has the meaning set forth in
Section 4(b) .
“
Affiliate ” means, with respect to any Person, any
other Person that directly or indirectly through one or more
intermediaries controls, is controlled by or is under common
control with, the Person in question, excluding, in the case of
Tulsa Refining, the Partnership Group Members and excluding, in the
case of HEP Tulsa, the Holly Group Members.
“
Agreement ” has the meaning set forth in the
introduction.
“
Applicable Law ” means any applicable statute, law,
regulation, ordinance, rule, judgment, rule of law, order, decree,
permit, approval, concession, grant, franchise, license, agreement,
requirement, or other governmental restriction or any similar form
of decision of, or any provision or condition of any permit,
license or other operating authorization issued under any of the
foregoing by, or any determination by any Governmental Authority
having or asserting jurisdiction over the matter or matters in
question, whether now or hereafter in effect and in each case as
amended (including, without limitation, all of the terms and
provisions of the common law of such Governmental Authority), as
interpreted and enforced at the time in question.
“
Arbitrable Dispute ” means any and all disputes,
Claims, controversies and other matters in question between HEP
Tulsa, on the one hand, and Tulsa Refining, on the other hand,
arising out of or relating to this Agreement or the alleged breach
hereof, or in any way relating to the subject matter of this
Agreement regardless of whether (a) allegedly
extra-contractual in nature, (b) sounding in contract, tort or
otherwise, (c) provided for by Applicable Law or otherwise or
(d) seeking damages or any other relief, whether at law, in
equity or otherwise.
“
Claim ” means any existing or threatened future claim,
demand, suit, action, investigation, proceeding, governmental
action or cause of action of any kind or character (in each case,
whether civil, criminal, investigative or administrative), known or
unknown, under any theory, including those based on theories of
contract, tort, statutory liability, strict liability, employer
liability, premises liability, products liability, breach of
warranty or malpractice.
“
Control ” (including with correlative meaning, the
term “ controlled by ”) means, as used with
respect to any Person, the possession, direct or indirect, of the
power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
“
Disposition Notice ” has the meaning set forth in
Section 4(b) .
“ Fair
Market Value ” means the fair market cash value of the
Tulsa Loading Racks to a third party at the time of the proposed
sale to Tulsa Refining or its Affiliates, excluding any value
pursuant to the Tulsa Throughput Agreement or any other agreement
relating to the Tulsa Loading Racks, less the sum of the
actual amounts expended for capital expenditures and improvements
made by Tulsa Refining or its Affiliates to the Tulsa Loading Racks
during the Term.
“ First
ROFR Acceptance Deadline ” has the meaning set forth in
Section 4(b) .
“
Governmental Authority ” means any federal, state,
local or foreign government or any provincial, departmental or
other political subdivision thereof, or any entity, body or
authority exercising executive, legislative, judicial, regulatory,
administrative or other governmental functions or any court,
department, commission, board, bureau, agency, instrumentality or
administrative body of any of the foregoing.
“ HEP
Tulsa ” has the meaning set forth in the
introduction.
“
Holly ” means Holly Corporation, a Delaware
corporation.
“ Holly
Group ” means Holly Corporation, a Delaware corporation,
and Tulsa Refining and any Subsidiary of Tulsa Refining, treated as
a single consolidated entity.
“ Holly
Group Member ” means any member of the Holly
Group.
“ License
Agreement ” has the meaning set forth in the
recitals.
“ Offer
Price ” has the meaning set forth in
Section 4(b) .
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“
Partnership ” means Holly Energy Partners, L.P., a
Delaware limited partnership.
“
Partnership Group ” means the Partnership, Holly
Energy Partners — Operating, L.P. and any Subsidiary of any
such Person, treated as a single consolidated entity.
“
Partnership Group Member ” means any member of the
Partnership Group.
“
Party ” or “ Parties ” has the
meaning set forth in the introduction.
“
Permitted Encumbrances ” means (i) statutory
liens for current taxes or assessments not yet due or delinquent or
the validity of which are being contested in good faith by
appropriate proceedings; (ii) mechanics, carriers’,
workers’, repairmen’s, landlord’s and other
similar liens imposed by law arising or incurred in the ordinary
course of business with respect to charges not yet due and payable;
and (iii) such other encumbrances, if any, which were not
incurred in connection with the borrowing of money or the advance
of credit and which do not materially detract from the value of or
interfere with the present use, or any use presently anticipated by
the owner thereof, of the property subject thereto or affected
thereby, and including without limitation capital
leases.
“
Person ” means an individual or a corporation, limited
liability company, partnership, joint venture, trust,
unincorporated organization, association, government agency or
political subdivision thereof or other entity.
“
Proposed Transferee ” has the meaning set forth in
Section 4(b) .
“
Purchaser ” has the meaning set forth in
Section 3(a) .
“ Real
Property ” has the meaning set forth in
Section 6(a) .
“
Respondent ” has the meaning set forth in
Section 10(e) .
“ Sale
Assets ” has the meaning set forth in
Section 4(b) .
“ Second
ROFR Acceptance Deadline ” has the meaning set forth in
Section 4(b)
“
Subsidiary ” means with respect to any Person,
(a) a corporation of which more than 50% of the voting power
of shares entitled (without regard to the occurrence of any
contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or
more Subsidiaries of such Person or a combination thereof,
(b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of
determination, a general or limited partner of such partnership,
but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the
partnership as a single class) is owned, directly or indirectly, at
the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or
(c) any other Person (other than a corporation or a
partnership) in which such Person, one or more Subsidiaries of such
Person, or a combination thereof, directly or indirectly, at the
date of determination, has (i) at least a majority
ownership
3
interest or
(ii) the power to elect or direct the election of a majority
of the directors or other governing body of such Person.
“
Term ” has the meaning set forth in the Tulsa
Throughput Agreement.
“
Transfer ” including the correlative terms “
Transferring ” or “ Transferred ”
means any direct or indirect transfer, assignment, sale, gift,
pledge, hypothecation or other encumbrance, or any other
disposition (whether voluntary, involuntary or by operation of law)
of the Tulsa Loading Racks.
“ Tulsa
Loading Racks ” has the meaning set forth in the Tulsa
Throughput Agreement.
“ Tulsa
Refinery ” means the refinery owned by Tulsa Refining
located at 1700 S. Union Avenue, Tulsa, Oklahoma 74107.
“ Tulsa
Refining ” has the meaning set forth in the
introduction.
“ Tulsa
Throughput Agreement ” means the Tulsa Equipment and
Throughput Agreement, dated as of August 1, 2009, between
Tulsa Refining and HEP Tulsa, as amended from
time-to-time.
“ UCC
” means the Uniform Commercial Code of the State of
Delaware.
Section 2. Option to Purchase the Tulsa Loading Racks
Upon Termination of the Tulsa Throughput Agreement Due to
Non-Renewal or Extension of the Tulsa Throughput
Agreement
(a) HEP Tulsa
hereby grants to Tulsa Refining the unconditional right and option
to purchase for Fair Market Value (in accordance with this
Section 2 ) all of HEP Tulsa’s, right title and
interest in, to and under the Tulsa Loading Racks. In the event
Tulsa Refining desires to exercise its option to purchase the Tulsa
Loading Racks pursuant to this Section 2 , it shall
provide prior written notice to HEP Tulsa of its desire to so
purchase the Tulsa Loading Racks; such written notice shall be
provided not more than twenty-four (24) months and not less
than twelve (12) months prior to the date of termination of
this Agreement.
(b) If Tulsa
Refining decides to exercise the option to purchase the Tulsa
Loading Racks, it will provide written notice to HEP Tulsa of such
exercise, the Fair Market Value it proposes to pay for the Tulsa
Loading Racks, and the other terms of the purchase. If Tulsa
Refining and HEP Tulsa are unable to agree on the Fair Market Value
of the Tulsa Loading Racks or the other terms of the purchase
within 30 days following HEP Tulsa’s receipt of Tulsa
Refining’s notice of its exercise of the option to purchase
the Tulsa Loading Racks, the Parties will engage a
mutually-agreed-upon investment banking firm to determine, within
30 days of such investment banking firm’s engagement,
the Fair Market Value of the Tulsa Loading Racks and/or the other
terms on which Tulsa Refining and HEP Tulsa are unable to agree.
The fees of the investment banking firm will be split equally
between Tulsa Refining and HEP Tulsa. Once the investment banking
firm submits its determination of the Fair Market Value of the
Tulsa Loading Racks and/or the other terms on which Tulsa Refining
and HEP Tulsa are unable to agree, Tulsa Refining will have the
right, but not the obligation, to purchase the Tulsa
Loading
4
Racks on the
terms as modified by the determination of the investment banking
firm. Tulsa Refining will provide written notice of its decision to
HEP Tulsa within 30 days after the investment banking firm has
submitted its determination. Failure to provide such notice within
such 30-day period shall be deemed to constitute a decision not to
purchase the Tulsa Loading Racks.
(c) If Tulsa
Refining chooses to exercise its option to purchase the Tulsa
Loading Racks under this Section 2 , this Agreement
shall become a contract of sale and purchase for the Tulsa Loading
Racks pursuant to which HEP Tulsa shall be obligated to sell the
Tulsa Loading Racks to Tulsa Refining and Tulsa Refining shall be
obligated to purchase the Tulsa Loading Racks from HEP Tulsa. The
terms of the purchase and sale agreement, unless otherwise agreed
to by Tulsa Refining and HEP Tulsa, will include the
following:
(i) Tulsa
Refining will deliver, or cause to be delivered, a cash purchase
price (or any other consideration agreed to by Tulsa Refining and
HEP Tulsa (each in their sole discretion));
(ii) HEP
Tulsa will represent that there are no liens on the Tulsa Loading
racks (other than Permitted Encumbrances) and that it has good and
indefeasible title to the Tulsa Loading Racks, subject to all
Permitted Encumbrances, matters recorded and physical conditions
existing as of the date of this Agreement, plus any other such
matters as Tulsa Refining may approve, which approval will not be
unreasonably withheld;
(iii) unless
otherwise agreed to by the Parties, the closing date for the
purchase of the Tulsa Loading Racks shall occur on the date of
termination of this Agreement;
(iv) HEP
Tulsa shall execute, have acknowledged and deliver to Tulsa
Refining a bill of sale or comparable document and, if applicable,
a conveyance, special warranty deed, assignment of easement, or
comparable document, as appropriate, in the applicable
jurisdiction, on the closing date for the purchase of the Tulsa
Loading Racks conveying the Tulsa Loading Racks unto Tulsa Refining
free and clear of all encumbrances created or allowed by HEP Tulsa
other than those set forth in Section 2(c)(ii)
above;
(v) subject
to the requirements set forth in Section 2(c)(ii) and
Section 2(c)(iv) , the sale of the Tulsa Loading Racks shall
be made on an “as is,” “where is” and
“with all faults” basis, and the instruments conveying
the Tulsa Loading Racks shall contain appropriate
disclaimers;
(vi) neither
HEP Tulsa nor Tulsa Refining shall have any obligation to sell or
buy the Tulsa Loading Racks if any required written consents of
governmental authorities and other third parties have not been
obtained or such sale or purchase is prohibited by Applicable Law;
and
(vii) the
sale of the Tulsa Loading Racks shall be subject to the receipt of
any consents or waivers required pursuant to the Amended and
Restated Credit Agreement, dated as of August 27, 2007, among
Holly Energy Partners — Operating, L.P., the Banks party
thereto, and Union Bank, N.A., as Administrative Agent, as such
agreement may be amended, restated, otherwise modified or
refinanced from time to time.
5
(d) Tulsa
Refining and HEP Tulsa shall cooperate in good faith in obtaining
all necessary governmental and other third Person approvals,
waivers and consents required for the closing. Any such closing
shall be delayed, to the extent required, until the third business
day following the expiration of any required waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended; provided , however , that such delay shall
not exceed 120 days and, if governmental approvals and waiting
periods shall not have been obtained or expired, as the case may
be, by such 120th day, then Tulsa Refining may notify HEP Tulsa
that it is waiving its option to purchase the Tulsa Loading Racks
and thereafter neither Tulsa Refining nor HEP Tulsa shall have any
further obligation under this Section 2 with respect to
Tulsa Refining’s prior election to purchase the Tulsa Loading
Racks.
(e) Notwithstanding
anything in this Agreement to the contrary, if Tulsa Refining
chooses or is deemed to have chosen not to exercise its option to
purchase the Tulsa Loading Racks at the price determined by the
investment banking firm under Section 2(b) , such
choice shall not impact its rights to purchase the Tulsa Loading
Racks pursuant to this Section 2 in the future and such
rights shall remain in effect and shall not be extinguished until
the expiration of the term set forth in Section 2(a)
.
Section 3. Repurchase Right In Event of a Sale of the
Tulsa Refinery; Buyout of Remaining Term
(a) If during
the Term Tulsa Refining (i) shuts down the Tulsa Refinery and
such planned shut down is intended at the time of such shut down to
be permanent or (ii) sells or causes to be sold to a third
party(ies), including any Person in which Holly or its Affiliates
have a minority interest, the Tulsa Refinery, including, among
other things, any sale, merger or consolidation of the entity or
entities which own the Tulsa Refinery and related assets, then
Tulsa Refining shall be entitled to (x) assign all of its
rights and obligations under this Agreement and the Tulsa
Throughput Agreement to such third party(ies) or (y) purchase
the Tulsa Loading Racks for a cash purchase price equal to the net
present value, at a discount rate of 15%, of the remaining minimum
payments, based upon the then current base tariff, under
Section 2(a) of the Tulsa Throughput Agreement from the
date of the sale through the end of the Term, which (in the case of
(y)) will result in the termination of the Tulsa Throughput
Agreement. (The cash purchase price in clause (y) does not
include Fair Market Value and such concept shall not apply to the
cash purchase price payable pursuant to this Section 3
.) In the event Tulsa Refining elects to purchase the Tulsa Loading
Racks in accordance with this Section 3 , then this
Agreement shall become a contract of sale and purchase for the
Tulsa Loading Racks pursuant to which HEP Tulsa shall be obligated
to sell the Tulsa Loading Racks to Tulsa Refining or the third
party(ies) purchasing the Tulsa Refinery (the “
Purchaser ”). The terms of the purchase and sale
agreement, unless otherwise agreed to by Tulsa Refining and HEP
Tulsa, will include the following:
(i) Tulsa
Refining or the Purchaser, as applicable, will deliver, or cause to
be delivered, a cash purchase price (or any other consideration
agreed to by Tulsa Refining or the Purchaser, as applicable, and
HEP Tulsa (each in their sole discretion));
(ii) HEP
Tulsa will represent that there are no liens on the Tulsa Loading
Racks (other than Permitted Encumbrances) and that it has good and
indefeasible title to the Tulsa Loading Racks, subject to all
Permitted Encumbrances, matters recorded and physical
6
conditions
existing as of the date of this Agreement, plus any other such
matters as Tulsa Refining or the Purchaser may approve, which
approval will not be unreasonably withheld;
(iii) unless
otherwise agreed to by Tulsa Refining or the Purchaser, as
applicable, and HEP Tulsa, the closing date for the purchase of the
Tulsa Loading Racks shall occur no later than 90 days following
receipt by HEP Tulsa of written notice by Tulsa Refining of the
exercise of its rights under this Section 3
;
(iv) HEP
Tulsa shall execute, have acknowledged and deliver to Tulsa
Refining or the Purchaser, as applicable, a bill of sale or
comparable document and, if applicable, a conveyance, special
warranty deed, assignment of easement, or comparable document, as
appropriate, in the applicable jurisdiction, on the closing date
for the purchase of the Tulsa Loading Racks conveying the Tulsa
Loading Racks unto Tulsa Refining or the Purchaser, as applicable,
free and clear of all encumbrances created or allowed by HEP Tulsa
other than those set forth in Section 3(a)(ii)
above;
(v) subject
to the requirements set forth in Section 3(a)(ii) and
Section 3(a)(iv) , the sale of the Tulsa Loading Racks shall
be made on an “as is,” “where is” and
“with all faults” basis, and the instruments conveying
the Tulsa Loading Racks shall contain appropriate
disclaimers;
(vi) neither
HEP Tulsa nor Tulsa Refining or the Purchaser shall have any
obligation to sell or buy the Tulsa Loading Racks if any required
written consents of governmental authorities and other third
parties have not been obtained or such sale or purchase is
prohibited by Applicable Law; and
(vii) the
sale of the Tulsa Loading Racks shall be subject to the receipt of
any consents or waivers required pursuant to the Amended and
Restated Credit Agreement, dated as of August 27, 2007, among
Holly Energy Partners — Operating, L.P., the Banks party
thereto, and Union Bank, N.A., as Administrative Agent, as such
agreement may be amended, restated, otherwise modified or
refinanced from time to time.
(b) Tulsa
Refining or the Purchaser, as applicable, and HEP Tulsa shall
cooperate in good faith in obtaining all necessary governmental and
other third Person approvals, waivers and consents required for the
closing. Any such closing shall be delayed, to the extent required,
until the third business day following the expiration of any
required waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended; provided ,
however , that such delay shall not exceed 120 days
and, if governmental approvals and waiting periods shall not have
been obtained or expired, as the case may be, by such 120th day,
then Tulsa Refining or the Purchaser, as applicable, may notify HEP
Tulsa that it is waiving its right to purchase the Tulsa Loading
Racks and thereafter none of Tulsa Refining, the Purchaser or HEP
Tulsa shall have any further obligation under this
Section 3 with respect to Tulsa Refining’s prior
election to purchase the Tulsa Loading Racks.
(c) If
Purchaser does not agree to assume the License Agreement and Tulsa
Refining’s rights and obligations as “Licensor”
thereunder, then Tulsa Refining shall have been
7
deemed to have
exercised its option to purchase the Tulsa Loading Racks under this
Section 3 at a purchase price as determined under clause
(y) in Section 3(a) .
Section 4. Tulsa Refining Right of First Refusal to
Purchase the Tulsa Loading Racks
(a) HEP Tulsa
hereby grants to Tulsa Refining a right of first refusal on any
proposed Transfer (other than a grant of a security interest to a
bona fide third-party lender or a Transfer to an Affiliate) of the
Tulsa Loading Racks.
(b) If HEP
Tulsa proposes to Transfer any of the of the Tulsa Loading Racks to
any Person pursuant to a bona fide third-party offer (an “
Acquisition Proposal ”), then HEP Tulsa shall promptly
give written notice (a “ Disposition Notice ”)
thereof to Tulsa Refining. The Disposition Notice shall set forth
the following information in respect of the proposed Transfer: the
name and address of the prospective acquiror (the “
Proposed Transferee ”), the Tulsa Loading Racks
subject to the Acquisition Proposal (the “ Sale Assets
”), the purchase price offered by such Proposed Transferee
(the “ Offer Price ”), reasonable detail
concerning any non-cash portion of the proposed consideration, if
any, to allow Tulsa Refining to reasonably determine the fair
market value of such non-cash consideration, HEP Tulsa’s
estimate of the fair market value of any non-cash consideration and
all other material terms and conditions of the Acquisition Proposal
that are then known to HEP Tulsa. To the extent the Proposed
Transferee’s offer consists of consideration other than cash
(or in addition to cash) the Offer Price shall be deemed equal to
the amount of any such cash plus the fair market value of such
non-cash consideration. In the event Tulsa Refining and HEP Tulsa
agree as to the fair market value of any non-cash consideration,
Tulsa Refining will provide written notice of its decision
regarding the exercise of its right of first refusal to purchase
the Sale Assets within 30 days of its receipt of the
Disposition Notice (the “ First ROFR Acceptance
Deadline ”). Failure to provide such notice within such
30-day period shall be deemed to constitute a decision not to
purchase the Sale Assets. In the event (i) Tulsa
Refining’s determination of the fair market value of any
non-cash consideration described in the Disposition Notice
(to
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