Exhibit 10.4
Execution Version
CONSENT, WAIVER AND AMENDMENT NO.
2
This CONSENT,
WAIVER AND AMENDMENT NO. 2 (this “ Agreement ”)
dated as of February 28, 2005 is among Holly Energy Partners
— Operating, L.P., successor to HEP Operating Company, L.P.
(the “ Borrower ”), the Existing Guarantors (as
defined below), the Banks (as defined in the Credit Agreement (as
defined below)), and Union Bank of California, N.A., as
administrative agent for such Banks (in such capacity, the “
Administrative Agent ”).
RECITALS
A. The
Borrower, the Banks, and the Administrative Agent are parties to
the Credit Agreement dated as of July 7, 2004, as amended by
the Consent and Omnibus Amendment dated as of July 30, 2004
(as so amended, the “ Credit Agreement
”).
B. In
connection with such Credit Agreement, the undersigned Subsidiaries
of the Borrower (the “ Existing Guarantors ”)
executed and delivered a Guaranty Agreement dated as of
July 13, 2004 (the “ Guaranty ”) in favor
of the Administrative Agent for the benefit of the Beneficiaries
(as defined therein).
C. The
Borrower and Holly Energy Partners, L.P. (the “ Limited
Partner ”) have entered into a Contribution Agreement
dated as of January 25, 2005 (the “ Acquisition
Agreement ”) with T & R Assets, Inc., Fin-Tex Pipe
Line Company, and Alon USA Refining, Inc., as transferors, and Alon
Pipeline Assets, LLC, Alon Pipeline Logistics, LLC, Alon USA, Inc.,
and Alon USA, LP, pursuant to which the Limited Partner and/or
certain of its Subsidiaries will acquire (the “
Acquisition ”) certain pipelines and related assets
(the “ Acquired Assets ”), which Acquired Assets
will be contributed to and owned by HEP Fin-Tex/Trust-River, L.P.,
a Texas limited partnership and successor by conversion from Alon
Pipeline Assets, LLC (“ HEP Pipeline ”),
immediately after the Acquisition and the transactions contemplated
in the Acquisition Agreement occur.
D. Concurrently
with the closing of, and to partially finance, the Acquisition, the
Limited Partner and Holly Energy Finance Corp. (“ Finance
Corp ”) plan to issue up to $150,000,000 of unsecured
6.25% Senior Notes due 2015 (“ High-Yield Notes
”) that will be guaranteed by all wholly owned domestic
subsidiaries of the Limited Partner and Finance Corp, the proceeds
of which, prior to the consummation of the Acquisition, may be
deposited and held in a securities escrow account of the Limited
Partner (the “ Escrow Account ”) held by U.S.
Bank National Association in its capacity as escrow agent and
trustee (in such capacities, the “ Escrow Agent
” and the “ Trustee ”, respectively), for
the sole benefit of the Limited Partner and the holders of the
High-Yield Notes on the terms set forth in an Escrow and Security
Agreement to be executed by the Limited Partner and the Escrow
Agent and Trustee in connection with the issuance of the High-Yield
Notes (the “ Escrow Agreement ”).
E. The
Borrower has requested that the Banks (i) expressly consent to
the Acquisition, (ii) waive the requirement for the delivery of an
Approved Consultants Report in
connection with the Acquisition,
and (iii) amend the Credit Agreement to (a) permit a
junior security interest in the Acquired Assets in favor of the
sellers of the Acquired Assets, (b) permit the Borrower and
the other Subsidiaries of the Limited Partner other than Finance
Corp to guarantee the High-Yield Notes referenced above, and
(c) make certain other changes to the Credit
Agreement.
F. Subject to
the terms and conditions set forth herein, the Banks are willing to
make the consent, waiver, and amendments set forth
herein.
THEREFORE, the
Borrower, the Existing Guarantors, the Banks, and the
Administrative Agent hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01 Terms Defined Above . As used in
this Agreement, each of the terms defined in the opening paragraph
and the Recitals above shall have the meanings assigned to such
terms therein.
Section 1.02 Terms Defined in the Credit
Agreement . Each term defined in the Credit Agreement and
used herein without definition shall have the meaning assigned to
such term in the Credit Agreement, unless expressly provided to the
contrary.
Section 1.03 Other Definitional Provisions . The
words “hereby”, “herein”,
“hereinafter”, “hereof”,
“hereto” and “hereunder” when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular Article, Section, subsection or provision of this
Agreement. Section, subsection and Exhibit references herein are to
such Sections, subsections and Exhibits to this Agreement unless
otherwise specified. All titles or headings to Articles, Sections,
subsections or other divisions of this Agreement or the exhibits
hereto, if any, are only for the convenience of the parties and
shall not be construed to have any effect or meaning with respect
to the other content of such Articles, Sections, subsections, other
divisions or exhibits, such other content being controlling as the
agreement among the parties hereto. Whenever the context requires,
reference herein made to the single number shall be understood to
include the plural; and likewise, the plural shall be understood to
include the singular. Words denoting sex shall be construed to
include the masculine, feminine and neuter, when such construction
is appropriate; and specific enumeration shall not exclude the
general but shall be construed as cumulative. Definitions of terms
defined in the singular or plural shall be equally applicable to
the plural or singular, as the case may be, unless otherwise
indicated.
ARTICLE II.
CONSENT, WAIVER AND AMENDMENTS
Section 2.01 Consent . To the extent necessary
and provided that (a) the Acquisition is in compliance with
the terms of the Credit Agreement and (b) the conditions set
forth in Article IV below are met, the Banks hereby consent to the
Acquisition and the transactions contemplated by the Acquisition
Agreement.
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Section 2.02 Waiver . Subject to the conditions
set forth in Article IV below, the Banks hereby waive the
requirement, contained in the definition of “EBITDA” in
the Credit Agreement, for the preparation and delivery of an
Approved Consultant’s Report in connection with the
Acquisition.
Section 2.03 Amendments to Credit Agreement .
Effective as of the Effective Date, the Credit Agreement shall
hereby be amended as follows:
(a) The
following definitions shall be inserted in alphabetical order in
Section 1.01 of the Credit Agreement:
“ Alon
Acquisition Closing Date ” means the date upon which the
“Acquisition” as defined in Amendment No. 2 is
consummated.
“ Alon
Mortgage ” means the Mortgage and Deed of Trust (with
Security Agreement and Financing Statement) dated as of the Alon
Acquisition Closing Date made by HEP Pipeline, to Harlin R. Dean,
as Trustee for the benefit of Alon USA, LP.
“ Alon
Pipelines and Terminals Agreement ” means the Pipelines
and Terminals Agreement dated as of the Alon Acquisition Closing
Date between the Limited Partner and Alon USA, LP.
“
Amendment No. 2 ” means the Consent, Waiver and
Amendment No. 2 to this Agreement dated as of
February 28, 2005.
“ Finance
Corp ” means Holly Energy Finance Corp., a Delaware
corporation.
“ HEP
Pipeline ” means HEP Fin-Tex/Trust-River, L.P., a Texas
limited partnership and successor by conversion from Alon Pipeline
Assets, LLC.
“
Permitted Note Debt ” means Debt in connection with
unsecured senior notes issued by the Limited Partner and Finance
Corp or any of their wholly owned Subsidiaries; provided
that (a) after giving effect to the issuance of such notes,
there would be no Default under this Agreement, (b) such
notes’ scheduled maturity is no earlier than July 7,
2010, (c) such notes are rated no lower than B+ by S&P and
Ba3 by Moody’s at the time of their issuance, and (d) no
indenture or other agreement governing such notes contains
(i) maintenance financial covenants or (ii) covenants or
events of default that are more restrictive on the Limited Partner
or any of its Subsidiaries than those contained in this Agreement
are on the Borrower and its Subsidiaries.
(b) The
definition of “Consolidated” in
Section 1.01 of the Credit Agreement is amended to
replace the reference therein to “the Borrower” with a
reference to “a Person”.
(c) The
definition of “EBITDA” in Section 1.01 of
the Credit Agreement is amended (i) to delete the words
“twenty percent (20%)” and replace them with the words
“thirty
-3-
percent (30%)” and
(ii) to replace each reference therein to the
“Borrower” with a reference to the “Limited
Partner”.
(d) The
definition of “Guarantor” in Section 1.01
of the Credit Agreement is amended and restated to read in its
entirety as follows:
“
Guarantor ” means, as of the Effective Date (as
defined in Amendment No. 2), each of the Persons listed on
Schedule 1.01(d) , and thereafter, (a) each of the
present and future direct and indirect Subsidiaries of the Limited
Partner other than the Borrower and the Restricted Subsidiary, and
(b) each direct obligor or guarantor of Permitted Note Debt.
“Guarantors” means all such guarantors
collectively.
(e) The
definition of “Interest Coverage Ratio” in
Section 1.01 of the Credit Agreement is amended to
replace the reference therein to the “Borrower” with a
reference to the “Limited Partner”.
(f) The
definition of “Interest Expense” in
Section 1.01 of the Credit Agreement is amended to
replace the reference therein to “the Borrower” with a
reference to “a Person”.
(g) The
definition of “Leverage Ratio” in
Section 1.01 of the Credit Agreement is amended to
replace each reference to the “Borrower” therein with a
reference to the “Limited Partner”.
(h) The
definition of “Material Contracts” in
Section 1.01 of the Credit Agreement is amended and
restated to read in its entirety as follows:
“
Material Contracts ” means, collectively, (a) the
Borrower Partnership Agreement, the Intercompany Pipelines and
Terminals Agreement, the Omnibus Agreement, the Contribution
Agreement, the Alon Mortgage, and the Alon Pipelines and Terminals
Agreement and (b) any other material documents, agreements or
instruments related to any of the foregoing (i) to which the
Borrower or any of its Subsidiaries is a party, and
(ii) which, if terminated or cancelled, could reasonably be
expected to have a Material Adverse Effect.
(i) The
definition of “Net Income” in Section 1.01
of the Credit Agreement is amended to replace the reference therein
to “the Borrower” with a reference to “a
Person”.
(j) The
definition of “Pipeline Lease Agreement” is deleted
from Section 1.01 of the Credit Agreement.
(k) The
definition of “Pipeline Systems” in
Section 1.01 of the Credit Agreement is amended and
restated to read in its entirety as follows:
“
Pipeline Systems ” means (a) the approximately
780 miles of Refined Products pipelines located in New Mexico,
Texas and Utah that are owned or leased by Borrower or any of its
Subsidiaries and that are used by Borrower and its Subsidiaries in
the Business, (b) the 249-mile Refined Products pipeline
owned
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by
the Restricted Subsidiary which is used in the Business to
transport liquid petroleum gases from the western part of the state
of Texas to the border between the state of Texas and Mexico near
El Paso, (c) the Refined Product Pipelines (as defined and
described in the Alon Pipelines and Terminals Agreement) that are
owned by HEP Pipeline and that are used in the Business, and
(d) any other pipelines owned or leased by the Borrower or any
Subsidiary of the Borrower that are used in the
Business.
(l) The
defined term “Pipelines and Terminals Agreement” in
Section 1.01 of the Credit Agreement is amended to be
the defined term “Intercompany Pipelines and Terminals
Agreement”, and such defined term shall be realphabetized.
The rest of such definition shall remain unchanged.
(m) The
definition of “Reserve Amount” is deleted from
Section 1.01 of the Credit Agreement.
(n) The
definition of “Terminals” in Section 1.01
of the Credit Agreement is amended and restated to read in its
entirety as follows.
“
Terminals ” means, collectively, (a) the five
Refined Products terminals owned in whole or in part by the
Borrower that are used in the Business that are integrated with the
Pipeline Systems and are located in and between (i) El Paso,
Texas; (ii) Moriarty, New Mexico; (iii) Bloomfield, New
Mexico; (iv) Albuquerque, New Mexico; and (v) Tucson, Arizona,
(b) the three Refined Products terminals owned in whole or in
part by the Borrower that are used in the Business that serve
third-party common carrier pipelines and are located in Boise and
Burley, Idaho and Spokane, Washington, (c) the Refined
Products terminal that is owned by the Borrower and that serves a
United States Air Force Base that is located near Mountain Home,
Idaho, (d) the two Refined Products truck loading racks owned
by the Borrower that are used in the Business, one of which is
located within the Navajo Refinery and one of which is located
within the Woods Cross Refinery, (e) the Refined Product
Terminals (as defined and described in the Alon Pipelines and
Terminals Agreement) that are owned by HEP Pipeline and that are
used in the Business, and (f) any other terminals and loading
racks owned or leased by the Borrower or any Subsidiary of the
Borrower that are used in the Business.
(o) The
definition of “Trigger Event” is deleted from
Section 1.01 of the Credit Agreement.
(p) The
following phrase is deleted from Section 2.01(a) of the
Credit Agreement: “ plus , if a Trigger Event shall
have occurred and be continuing, the Reserve
Amount”.
(q) The
following phrase is deleted from Section 2.04(b)(i) of
the Credit Agreement: “ plus , if a Trigger Event
shall have occurred and be continuing, the Reserve
Amount”.
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(r) Clause
(i) of Section 2.14(b) of the Credit Agreement is
deleted, and clauses (ii), (iii), (iv), and (v) of
Section 2.14(b) of the Credit Agreement shall become clauses
(i), (ii), (iii), and (iv) thereof.
(s)
Section 2.14(c) of the Credit Agreement is amended to
replace each reference to “clause (iii) of
Section 2.14(b)” or “subsection (iii) of
clause (b) of this Section 2.14” with a reference
to “ Section 2.14(b)(ii) ”.
(t)
Section 5.15 is deleted from Article V of
the Credit Agreement.
(u) The
following clause (j) is added to the end of
Section 6.01 of the Credit Agreement:
(j) In favor of
Alon USA, LP (or any assignee or successor thereto) securing
certain obligations under the Alon Pipelines and Terminals
Agreement, pursuant to the Alon Mortgage, so long as such Liens are
subordinated to the Liens on the same assets securing the
Obligations on terms not less advantageous to the Administrative
Agent and the Banks than those contained in the Subordination,
Non-Disturbance and Attornment Agreement executed by the
Administrative Agent and Alon USA, LP as of the date of the
consummation of the Acquisition (as defined in Amendment
No. 2).
(v) The
following clause (j) is added to Section 6.02 of
the Credit Agreement after clause (i), and the existing clause
(j) shall become clause (k):
(j) Permitted Note
Debt, including, without limitation, any guaranty thereof;
and
(w)
Section 6.10 of the C
