AMENDED AND
RESTATED
PLEDGE AGREEMENT
THIS
AMENDED AND RESTATED PLEDGE AGREEMENT dated as of August 27,
2007 (this “ Pledge Agreement ”) is by and among
HOLLY ENERGY PARTNERS — OPERATING, L.P., a Delaware limited
partnership (“ Borrower ”), each other party and
each subsidiary of the Borrower signatory hereto (together with the
Borrower, the “ Pledgors ” and individually,
each a “ Pledgor ”) and UNION BANK OF
CALIFORNIA, N.A., a national association, as Administrative Agent
(the “ Secured Party ”) for the ratable benefit
of itself, the Banks (as defined below), the Issuing Banks (as
defined below), and the Swap Counterparties (as defined below)
(together with the Administrative Agent, the Issuing Banks, the
Banks, individually a “ Beneficiary ”, and
collectively, the “ Beneficiaries ”).
A. This
Amended and Restated Pledge Agreement is entered into in connection
with that certain Amended and Restated Credit Agreement dated as of
August 27, 2007 (as it has been or may be amended,
supplemented or otherwise modified from time to time, the “
Credit Agreement ”), among the Borrower, the banks
party thereto from time to time (the “ Banks ”,
and individually, each a “ Bank ”), the Banks
issuing letters of credit thereunder from time to time (the “
Issuing Banks ”, and individually, each an “
Issuing Bank ”) and Secured Party as Administrative
Agent for such Banks and Issuing Banks, which amends in its
entirety that certain Credit Agreement dated as of July 7,
2004, as amended heretofore (as so amended, the “ Existing
Credit Agreement ”), among the Borrower, the Banks, the
Issuing Lenders and Secured Party.
B. The
obligations owing by the Borrower under the Existing Credit
Agreement were secured by, among other things, the Liens granted
pursuant to that certain Pledge Agreement dated July 13, 2004,
as amended heretofore (as so amended, the “ Existing
Pledge Agreement ”).
C. The
Grantors desire to amend and restate the Existing Pledge
Agreement.
D. Each
Pledgor (other than Borrower) is a Subsidiary of the Borrower and
will derive substantial direct and indirect benefit from
(i) the transactions contemplated by the Credit Agreement and
the other Credit Documents (as defined in the Credit Agreement) and
(ii) the Interest Rate Contracts (as defined in the Credit
Agreement) entered into by the Borrower or any of its other
Subsidiaries with a Bank or an Affiliate of a Bank (each such
counterparty, a “ Swap Counterparty
”).
E. It
is a requirement under the Credit Agreement that the Pledgors shall
secure the due payment and performance of all Obligations (as
defined in the Credit Agreement) by entering into this Pledge
Agreement.
NOW,
THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged and confessed, each Pledgor hereby agrees with
the Secured Party for the benefit of the Beneficiaries
(a) that the Existing Pledge Agreement is amended and restated
in its entirety, and (b) further agrees as follows:
Section 1.
Definitions . All capitalized terms not otherwise defined in
this Pledge Agreement that are defined in the Credit Agreement
shall have the meanings assigned to such terms by the Credit
Agreement. Any terms used in this Pledge Agreement that are defined
in the Uniform Commercial Code as adopted in the State of Texas
(“ UCC ”) shall have the meanings assigned to
those terms by the UCC as the UCC may be amended from time to time,
whether specified elsewhere in this Pledge Agreement or not. All
meanings to defined terms, unless otherwise indicated, are to be
equally applicable to both the singular and plural forms of the
terms defined. Article, Section, Schedule, and Exhibit references
are to Articles and Sections of, and Schedules and Exhibits to,
this Pledge Agreement, unless otherwise specified. All references
to instruments, documents, contracts, and agreements are references
to such instruments, documents, contracts, and agreements as the
same may be amended, supplemented, and otherwise modified from time
to time, unless otherwise specified. The words
“hereof”, “herein” and
“hereunder” and words of similar import when used in
this Pledge Agreement shall refer to this Pledge Agreement as a
whole and not to any particular provision of this Pledge Agreement.
As used herein, the term “including” means
“including, without limitation”. Paragraph headings
have been inserted in this Pledge Agreement as a matter of
convenience for reference only and it is agreed that such paragraph
headings are not a part of this Pledge Agreement and shall not be
used in the interpretation of any provision of this Pledge
Agreement.
(a)
Each Pledgor hereby pledges to the Secured Party, and grants to the
Secured Party, for the benefit of the Beneficiaries, a continuing
security interest in, the Pledged Collateral, as defined in
Section 2.02 below. This Pledge Agreement shall secure all
Obligations now or hereafter existing, including any extensions,
modifications, substitutions, amendments, and renewals thereof,
whether for principal, interest, fees, expenses, indemnifications
or otherwise. All such obligations shall be referred to in this
Pledge Agreement as the “ Secured Obligations
”.
(b)
Notwithstanding anything contained herein to the contrary, it is
the intention of each Pledgor, the Secured Party and the other
Beneficiaries that the amount of the Secured Obligations secured by
each Pledgor’s interests in any of its Property shall not
exceed the maximum amount permitted by fraudulent conveyance,
fraudulent transfer and other similar law, rule or regulation of
any Governmental Authority applicable to such Pledgor. Accordingly,
notwithstanding anything to the contrary contained in this Pledge
Agreement or any other agreement or instrument executed in
connection with the payment of any of the Secured Obligations, the
amount of the Secured Obligations
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secured by
each Pledgor’s interests in any of its Property pursuant to
this Pledge Agreement shall be limited to an aggregate amount equal
to the largest amount that would not render such Pledgor’s
obligations hereunder or the liens and security interest granted to
the Secured Party hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any
comparable provision of any other applicable law.
2.02.
Pledged Collateral . “ Pledged Collateral
” shall mean all of each Pledgor’s right, title, and
interest in the following, whether now owned or hereafter
acquired:
(a)
(i) all of the membership interests listed in the attached
Schedule 2.02(a) issued to such Pledgor and all such
additional membership interests of any issuer of such interests
hereafter acquired by such Pledgor (the “ Membership
Interests ”), (ii) the certificates representing the
Membership Interests, if any, and all such additional membership
interests, and (iii) all rights to money or Property which
such Pledgor now has or hereafter acquires in respect of the
Membership Interests, including, without limitation, (A) any
proceeds from a sale by or on behalf of such Pledgor of any of the
Membership Interests, and (B) any distributions, dividends,
cash, instruments and other property from time-to-time received or
otherwise distributed in respect of the Membership Interests,
whether regular, special or made in connection with the partial or
total liquidation of the issuer and whether attributable to
profits, the return of any contribution or investment or otherwise
attributable to the Membership Interests or the ownership thereof,
(collectively, the “ Membership Interests
Distributions ”);
(b)
(i) all of the general and limited partnership interests
listed in the attached Schedule 2.02(b) issued to such Pledgor
and all such additional limited or general partnership interests of
any issuer of such interests hereafter acquired by such Pledgor
(the “ Partnership Interests ”) and
(ii) all rights to money or Property which such Pledgor now
has or hereafter acquires in respect of the Partnership Interests,
including, without limitation, (A) any proceeds from a sale by
or on behalf of such Pledgor of any of the Partnership Interests,
and (B) any distributions, dividends, cash, instruments and
other property from time-to-time received or otherwise distributed
in respect of the Partnership Interests, whether regular, special
or made in connection with the partial or total liquidation of the
issuer and whether attributable to profits, the return of any
contribution or investment or otherwise attributable to the
Partnership Interests or the ownership thereof, (collectively, the
“ Partnership Interests Distributions
”);
(c)
(i) all of the shares of stock listed in the attached
Schedule 2.02(c) issued to such Pledgor and all such
additional shares of stock of any issuer of such shares of stock
hereafter issued to such Pledgor (the “ Pledged Shares
”), (ii) the certificates representing the Pledged
Shares and all such additional shares, and (iii) all rights to
money or Property which such Pledgor now has or hereafter acquires
in respect of the Pledged Shares, including, without limitation,
(A) any proceeds from a sale by or on behalf of such Pledgor
of any of the Pledged Shares, and (B) any distributions,
dividends, cash, instruments and other property from time-to-time
received or otherwise distributed in respect of the Pledged Shares,
whether regular, special or made in connection with the partial or
total liquidation of the issuer and whether attributable to
profits, the return of any contribution or investment or otherwise
attributable to the Pledged Shares or the
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ownership
thereof, (collectively, the “ Pledged Shares
Distributions ”; together with the Membership Interests
Distributions and the Partnership Interest Distributions, the
“ Distributions ”); and
(d)
all proceeds from the Pledged Collateral described in paragraphs
(a), (b) and (c) of this Section 2.02.
Notwithstanding
the foregoing, (i) as provided in 7.04(c) of this Pledge
Agreement, “Pledged Collateral” shall not include any
cash distributions or dividends which have been made by the
Borrower to its Equity Interest holders in compliance with the
Credit Agreement and (ii) “Pledged Collateral” shall
not include any Equity Interests in Rio Grande, Plains JV, UNEV JV
or any Future JVs, nor any right to receive Distributions
attributable to such Equity Interests.
2.03.
Delivery of Pledged Collateral . All certificates or
instruments, if any, representing the Pledged Collateral shall be
delivered to the Secured Party and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to the Secured Party. After the
occurrence and during the continuance of an Event of Default, the
Secured Party shall have the right, upon prior written notice to
the applicable Pledgor, to transfer to or to register in the name
of the Secured Party or any of its nominees any of the Pledged
Collateral, subject to the rights specified in Section 2.04.
In addition, after the occurrence and during the continuance of an
Event of Default, the Secured Party shall have the right at any
time to exchange the certificates or instruments representing the
Pledged Collateral for certificates or instruments of smaller or
larger denominations.
2.04.
Rights Retained by Pledgor . Notwithstanding the pledge in
Section 2.01, so long as no Event of Default shall have
occurred and remain uncured or unwaived:
(a)
and, if an Event of Default shall have occurred and remain uncured
or unwaived, until such time thereafter as such voting and other
consensual rights have been terminated pursuant to Section 5
hereof, each Pledgor shall be entitled to exercise any voting and
other consensual rights pertaining to its Pledged Collateral for
any purpose not inconsistent with the terms of this Pledge
Agreement or the Credit Agreement; provided , however
, that no Pledgor shall exercise nor shall it refrain from
exercising any such right if such action would have a materially
adverse effect on the value of the Pledged Collateral;
(b)
except as otherwise provided in the Credit Agreement, each Pledgor
shall be entitled to receive and retain any dividends and other
Distributions paid on or in respect of the Pledged Collateral and
the proceeds of any sale of the Pledged Collateral; and
(c)
at and after such time as voting and other consensual rights have
been terminated pursuant to Section 5 hereof, each Pledgor
shall execute and deliver (or cause to be executed and delivered)
to the Secured Party all proxies and other instruments as the
Secured Party may reasonably request to (i) enable the Secured
Party to exercise the voting and other rights which such Pledgor is
entitled to exercise pursuant to
4
paragraph
(a) of this Section 2.04, and (ii) receive any
Distributions and proceeds of sale of the Pledged Collateral which
such Pledgor is authorized to receive and retain pursuant to
paragraph (b) of this Section 2.04.
Section 3.
Pledgor’s Representations and Warranties . Each
Pledgor represents and warrants to the Secured Party and the other
Beneficiaries as follows:
(a)
The Pledged Collateral applicable to such Pledgor listed on the
attached Schedules 2.02(a), 2.02(b) and 2.02(c) have been duly
authorized and validly issued to such Pledgor and are fully paid
and nonassessable (as applicable in light of the entity type of
each individual issuer).
(b)
Such Pledgor is the legal and beneficial owner of the Pledged
Collateral free and clear of any Lien or option, except for
(i) the security interest created by this Pledge Agreement and
(ii) other Permitted Liens.
(c)
No authorization, authentication, approval, or other action by, and
no notice to or filing with, any Governmental Authority or
regulatory body is required either (a) for the pledge by such
Pledgor of the Pledged Collateral pursuant to this Pledge Agreement
or for the execution, delivery, or performance of this Pledge
Agreement by such Pledgor or (b) for the exercise by the
Secured Party or any Beneficiary of the voting or other rights
provided for in this Pledge Agreement or the remedies in respect of
the Pledged Collateral pursuant to this Pledge Agreement (except as
may be required in connection with such disposition by laws
affecting the offering and sale of securities
generally).
(d)
Such Pledgor has the full right, power and authority to deliver,
pledge, assign and transfer the Pledged Collateral to the Secured
Party.
(e)
The Membership Interests listed on the attached
Schedule 2.02(a) constitute the percentage of the issued and
outstanding membership interests of the respective issuer thereof
set forth on Schedule 2.02(a) and all of the Equity Interest
in such issuer in which the Pledgor has any ownership
interest.
(f)
The Partnership Interests listed on the attached
Schedule 2.02(b) constitute the percentage of the issued and
outstanding general and limited partnership interests of the
respective issuer thereof set forth on Schedule 2.02(b) and
all of the Equity Interest in such issuer in which the Pledgor has
any ownership interest.
(g)
The Pledged Shares listed on the attached Schedule 2.02(c)
constitute the percentage of the issued and outstanding shares of
capital stock of the respective issuer thereof set forth on
Schedule 2.02(c) and all of the Equity Interest in such issuer
in which the Pledgor has any ownership interest.
(h)
Schedule 3 sets forth its sole jurisdiction of formation, type
of organization, federal tax identification number, the
organizational number, and all names used by it during the last
five years prior to the date of this Pledge Agreement.
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Section 4.
Pledgor’s Covenants . During the term of this Pledge
Agreement and until all of the Secured Obligations (including all
Letter of Credit Obligations) have been fully and finally paid and
discharged in full, the Commitments under the Credit Agreement have
been terminated or expired, all Letters of Credit have terminated
or expired, and all obligations of the Issuing Banks and the Banks
in respect of Letters of Credit have been terminated, all Interest
Rate Contracts have been terminated and all obligations of the
Banks in respect of Interest Rate Contracts have been terminated,
each Pledgor covenants and agrees with the Secured Party
that:
4.01.
Protect Collateral; Further Assurances . Each Pledgor will
warrant and defend the rights and security interest herein granted
unto the Secured Party in and to the Pledged Collateral (and all
right, title, and interest represented by the Pledged Collateral)
against the claims and demands of all Persons whomsoever. Each
Pledgor agrees that, at the expense of such Pledgor, such Pledgor
will promptly execute and deliver all further instruments and
documents, and take all further action, that may be reasonably
necessary and that the Secured Party or any Beneficiary may
reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the
Secured Party or any Beneficiary to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral. Each
Pledgor hereby authorizes the Secured Party to file any financing
statements, amendments or continuations without the signature of
such Pledgor to the extent permitted by applicable law in order to
perfect or maintain the perfection of any security interest granted
under this Pledge Agreement, including financing statements
containing an “all assets” or “all personal
property” collateral description.
4.02.
Transfer, Other Liens, and Additional Shares . Each Pledgor
agrees that it will not (a) except as otherwise permitted by
the Credit Agreement, sell or otherwise dispose of, or grant any
option with respect to, any of the Pledged Collateral or
(b) create or permit to exist any Lien upon or with respect to
any of the Pledged Collateral, except for Permitted Liens. Each
Pledgor agrees that it will (a) cause each issuer of the
Pledged Collateral that is a Subsidiary of such Pledgor not to
issue any other Equity Interests in addition to or in substitution
for the Pledged Collateral issued by such issuer, except
(i) with respect to a Subsidiary other than a Restricted
Subsidiary, to such Pledgor or any other Pledgor, and
(ii) with respect to a Restricted Subsidiary, to such Pledgor
and to the other Equity Interest owners of such issuer existing on
the date hereof; provided that, any such issuance of Equity
Interests shall not result in such Pledgor owning a smaller
percentage of all issued and outstanding Equity Interests of such
issuer than that percentage that the Pledgor owned on the date
hereof, and (b) pledge hereunder, promptly upon its
acquisition (directly or indirectly) thereof, any additional Equity
Interests of an issuer of the Pledged Collateral. No Pledgor shall
approve any material amendment or modification of any of the
Pledged Collateral without the Secured Party’s prior written
consent.
4.03.
Jurisdiction of Formation; Name Change . Each Pledgor shall
give the Secured Party at least 30 days’ prior written
notice before it (i) in the case of a Pledgor that is not a
“registered organization” (as defined in
Section 9-102 of the UCC) changes the location of its
principal place of business and chief executive office, or
(ii) uses a trade name other than its current name used on the
date hereof. Other than as permitted by Section 6.09 of the
Credit Agreement, no Pledgor shall amend, supplement, modify or
restate its articles or certificate of incorporation, bylaws,
limited liability company agreements, or other equivalent
organizational
6
documents,
nor amend its name or change its jurisdiction of incorporation,
organization or formation without the prior written consent of the
Secured Party.
Section 5.
Remedies upon Default . If any Event of Default shall have
occurred and be continuing:
5.01.
UCC Remedies . To the extent permitted by law, the Secured
Party may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for in this Pledge
Agreement or otherwise available to it, all the rights and remedies
of a secured party under the UCC (whether or not the UCC applies to
the affected Pledged Collateral).
5.02.
Dividends and Other Rights .
(a)
All rights of the Pledgors to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to Section 2.04(a) may be exercised by the Secured
Party if the Secured Party so elects and gives written notice of
such election to the affected Pledgor and all rights of the
Pledgors to receive any Distributions on or in respect of the
Pledged Collateral and the proceeds of sale of the Pledged
Collateral which it would otherwise be authorized to receive and
retain pursuant to Section 2.04(b) shall cease.
(b)
All Distributions on or in respect of the Pledged Collateral and
the proceeds of sale of the Pledged Collateral which are received
by any Pledgor shall be received in trust for the benefit of the
Secured Party, shall be segregated from other funds of such
Pledgor, and shall be promptly paid over to the Secured Party as
Pledged Collateral in the same form as so received (with any
necessary indorsement).
5.03.
Sale of Pledged Collateral . The Secured Party may sell all
or part of the Pledged Collateral at public or private sale, at any
of the Secured Party’s offices or elsewhere, for cash, on
credit, or for future delivery, and upon such other terms as may be
commercially reasonable in accordance with applicable laws. Each
Pledgor agrees that to the extent permitted by law such sales may
be made without notice. If notice is required by law, each Pledgor
hereby deems 10 days’ advance notice of the time and
place of any public sale or the time after which any private sale
is to be made reasonable notification, recognizing that if the
Pledged Collateral threatens to decline speedily in value or is of
a type customarily sold on a recognized market shorter notice may
be reasonable. The Secured Party shall not be obligated to make any
sale of the Pledged Collateral regardless of no
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