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EXHIBIT 10.2
PREPARED BY AND WHEN
RECORDED RETURN TO:
Holly Corporation
100 Crescent Court, Suite 1600
Dallas, Texas 75201-6927
Attn: General Counsel
MORTGAGE AND DEED OF
TRUST
(WITH SECURITY AGREEMENT AND FINANCING STATEMENT)
BY
HEP PIPELINE, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY,
AS GRANTOR
TO
JOHN N. PATTERSON,
AS TRUSTEE
FOR THE BENEFIT OF
HOLLY CORPORATION,
A DELAWARE CORPORATION
AS BENEFICIARY
DATED AS OF JULY 8, 2005
THIS INSTRUMENT GRANTS A SECURITY INTEREST
BY A TRANSMITTING UTILITY.
THIS INSTRUMENT COVERS GOODS THAT ARE OR
ARE TO BECOME FIXTURES ON THE REAL
PROPERTY DESCRIBED HEREIN AND IS TO BE
FILED FOR RECORD IN THE RECORDS WHERE
MORTGAGES ON REAL ESTATE ARE RECORDED.
ADDITIONALLY, THIS INSTRUMENT SHOULD BE
APPROPRIATELY INDEXED, NOT ONLY AS A
MORTGAGE, BUT ALSO AS A FINANCING STATEMENT
COVERING GOODS THAT ARE OR ARE TO BECOME
FIXTURES ON THE REAL PROPERTY DESCRIBED
HEREIN. THE MAILING ADDRESSES OF THE
GRANTOR (DEBTOR) AND BENEFICIARY
(BENEFICIARY) ARE SET FORTH IN THIS
INSTRUMENT.
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MORTGAGE AND DEED OF TRUST
(WITH SECURITY AGREEMENT AND FINANCING STATEMENT)
THIS
MORTGAGE AND DEED OF TRUST (WITH SECURITY AGREEMENT AND
FINANCING
STATEMENT) (hereinafter referred to as this
"DEED OF TRUST"), is entered into as
of the 8th day of July, 2005, by HEP
Pipeline, L.L.C., a Delaware limited
liability company (hereinafter referred to
as "GRANTOR"), a subsidiary of Holly
Energy Partners, L.P., a Delaware limited
partnership ("HEP"), whose address for
notice hereunder is at 100 Crescent Court,
Suite 1600, Dallas, Texas 75201-6927,
Attention: General Counsel, facsimile
number (214) 871-3523, to John N.
Patterson, Trustee (hereinafter referred to
in such capacity as "TRUSTEE"),
whose address is c/o Scheuer, Yost &
Patterson, 125 Lincoln Avenue, Suite 223,
Drawer 9570, Santa Fe, New Mexico
87504-9570, for the benefit of the herein
below defined Beneficiary.
WITNESSETH:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used herein,
the following terms shall have the following
meanings:
(a)
AFFILIATE: With respect to a specified Person, any other Person
controlling, controlled by or under common control with that first
Person.
As used in
this definition, the term "control" includes (i) with respect
to any
Person having voting shares or the equivalent and elected
directors,
managers or Persons performing similar functions, the ownership
of or
power to vote, directly or indirectly, shares or the equivalent
representing more than 50% of the power to vote in the election
of
directors,
managers or Persons performing similar functions, (ii)
ownership
of more than 50% of the equity or equivalent interest in any
Person and
(iii) the ability to direct the business and affairs of any
Person by
acting as a general partner, manager or otherwise.
(b)
BENEFICIARY: Holly Corporation, a Delaware corporation whose
address
for notice
hereunder is 100 Crescent Court, Suite 1600, Dallas, Texas
75201-6927, Attention: General Counsel.
(c)
CONTRACTS: The Pipeline Contracts.
(d) DEED
OF TRUST: Shall have the meaning set forth in the introductory
paragraph
hereof.
(e)
EASEMENTS: The Pipeline Easements.
(f) EVENT
OF DEFAULT: Any happening or occurrence described in Article 7
of this
Deed of Trust.
(g)
FIXTURES: All materials, supplies, equipment, apparatus and
other
items now
or hereafter acquired by Grantor and now or hereafter attached
to,
installed in or used in
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connection
with (temporarily or permanently) the Real Property or the
Pipelines,
together with all accessions, replacements, betterments and
substitutions for any of the foregoing and the proceeds
thereof.
(h)
GOVERNMENTAL ENTITY: Any court, governmental department,
commission,
council,
board, bureau, agency or other judicial, administrative,
regulatory, legislative or other instrumentality of the United
States of
America or
any foreign country, or any state, county, municipality or
local
governmental body or political subdivision or any such other
foreign
country.
(i)
GRANTOR: The above defined Grantor, whether one or more, and any
and
all
subsequent owners of the Mortgaged Property or any part
thereof.
(j)
IMPOSITIONS: All real estate and personal property taxes; water,
gas,
sewer,
electricity and other utility rates and charges; charges for
any
easement,
license or agreement maintained for the benefit of the
Mortgaged
Property;
and all other taxes, charges and assessments and any interest,
costs or
penalties with respect thereto, general and special, ordinary
and
extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever
which at
any time prior to or after the execution hereof may be
assessed,
levied or
imposed upon the Mortgaged Property or the ownership, use,
occupancy
or enjoyment thereof.
(k)
IMPROVEMENTS: The Pipeline Improvements.
(l)
LEASES: Any and all leases, subleases, licenses, concessions or
other
agreements
(written or verbal, now or hereafter in effect) which grant a
possessory
interest in and to, or the right to use, the Mortgaged
Property,
and all other agreements, such as utility contracts,
maintenance
agreements
and service contracts, which in any way relate to the use,
occupancy,
operation, maintenance, enjoyment or ownership of the Mortgaged
Property,
save and except any and all leases, subleases or other
agreements
pursuant to which Grantor is granted a possessory interest in
the Real
Property.
(m) LEGAL
REQUIREMENTS: Shall mean any and all laws, statutes, codes,
rules,
regulations, ordinances, judgments, orders, writs, decrees,
requirements or determinations of any Governmental Entity, and (ii)
to the
extent not
covered by clause (i) immediately above, any and all
requirements of permits, licenses, certificates,
authorizations,
concessions, franchises or other approvals granted by any
Governmental
Entity.
(n)
MORTGAGED PROPERTY: The Pipeline Assets, together with:
(i) all rights, privileges, tenements, hereditaments,
rights-of-way,
easements, appendages and appurtenances in anywise appertaining
thereto, and all right, title and interest of Grantor in and to
any
streets, ways, alleys, strips or gores of land adjoining the
Real
Property or any part thereof; and
(ii) all betterments, additions, alterations, appurtenances,
substitutions, replacements and revisions thereof and thereto
and
all reversions and remainders therein; and
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(iii) all other property and rights of Grantor of every kind
and
character to the extent specifically relating to and used or to
be
used solely in connection with the foregoing property, and all
proceeds and products of any of the foregoing.
As used in
this Deed of Trust, the term "MORTGAGED PROPERTY" shall be
expressly
defined as meaning all or, where the context permits or
requires,
any portion of the above, and all or, where the context permits
or
requires, any interest therein. Notwithstanding anything to the
contrary
herein, in no event shall the term "MORTGAGED PROPERTY" include
any
Product owned by third parties that may be shipped through or
stored
at or in
any of the Mortgaged Property.
(o)
OBLIGATIONS: Shall have the meaning given such term in Section
2.1.
(p)
PERMITTED ENCUMBRANCES: Shall mean any of the following
matters:
(i) any (A) inchoate liens, security interests or similar
charges
constituting or securing the payment of expenses which were
incurred
incidental to the ownership and operation of the Pipelines
(collectively, the "OPERATIONS") or the operation, storage,
transportation, shipment, handling, repair, construction,
improvement or maintenance of the Mortgaged Property, and (B)
materialman's, mechanics', repairman's, employees',
contractors',
operators', warehousemen's, barge or ship owner's and carriers'
liens or other similar liens, security interests or charges for
liquidated amounts arising in the ordinary course of business
incidental to the conduct of the Operations or the ownership
and
operation of the Mortgaged Property, securing amounts the payment
of
which is not delinquent and that will be paid in the ordinary
course
of business or, if delinquent, that are being contested in good
faith with any action or proceeding to foreclose or attach any
of
the Mortgaged Property on account thereof properly stayed; (ii)
any
liens or security interests for Taxes not yet delinquent or, if
delinquent, that are being contested in good faith in the
ordinary
course of business with any action or proceeding to foreclose
or
attach any of the Mortgaged Property on account thereof
properly
stayed; (iii) any liens or security interests reserved in
leases,
rights of way or other real property interests for rental or
for
compliance with the terms of such leases, rights of way or
other
real property interests, provided payment of the debt secured is
not
delinquent or, if delinquent, is being contested in good faith
in
the ordinary course of business with any action or proceeding
to
foreclose or attach any of the Mortgaged Property on account
thereof
properly stayed; (iv) all prior reservations of minerals in and
under or that may be produced from any of the lands
constituting
part of the Mortgaged Property or on which any part of the
Mortgaged
Property is located; (v) all liens (other than liens for
borrowed
money), security interests, charges, easements, restrictive
covenants, encumbrances, contracts, instruments, obligations,
discrepancies, conflicts, shortages in area or boundary lines,
encroachments or protrusions, or overlapping of improvements,
defects, irregularities and other matters affecting or
encumbering
title to the Mortgaged Property which individually or in the
aggregate are not such as to unreasonably or materially
interfere
with or prevent any material operations conducted on the
Mortgaged
Property; (vi) rights reserved
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to or vested in any Governmental Entity to control or regulate
any
of the Mortgaged Property or the Operations and all Legal
Requirements of such authorities, including any building or
zoning
ordinances and all environmental laws; (vii) any contract,
easement,
instrument, lien, security instrument, permit, amendment,
extension
or other matter entered into by a party in accordance with the
terms
of the Purchase Agreement (as defined in the Pipelines Agreement)
or
in compliance with the approvals or directives of the other
party
made pursuant to such Purchase Agreement; (viii) all
Post-Closing
Consents (as defined in the Purchase Agreement); (ix) defects in
the
early chain of the title consisting of the mere failure to
recite
marital status in a document or omissions of successions of
heirship
proceedings, unless such failure or omission results in another
Person's superior claim of title to the Pipeline Easements or
relevant portion thereof; (x) any assertion of a defect based on
a
lack of a survey with respect to the Pipelines; (xi) any title
defect affecting (or the termination or expiration of) any
easement,
right of way, leasehold interest or fee interest affecting
property
over which the Pipelines pass which has been replaced prior to
the
date of this Deed of Trust by an easement, right of way,
leasehold
interest or fee interest covering substantially the same land or
the
portion thereof used by Beneficiary or its Affiliates; and (xii)
all
Senior Liens.
(q)
PERMITS: The Pipeline Permits.
(r)
PERSON: An individual, a corporation, a partnership, a limited
liability
company, an association, a trust, or any other entity or
organization, including, without limitation, any Governmental
Entity.
(s)
PERSONALTY: The Pipeline Equipment, and all other personal
property
(other
than the Fixtures) and intangible assets of any kind or
character
as defined
in and subject to the provisions of the Uniform Commercial Code
Article 9
- Secured Transactions, as the same is codified and in effect
in
New
Mexico, which are now or hereafter located or to be located
upon,
within or
about the Real Property, or which are or may be used in or
related to
the planning, development, financing or operation of the
Mortgaged
Property, together with all accessories, replacements and
substitutions thereto or therefor and the proceeds thereof.
(t)
PIPELINE ASSETS: All of the following assets, properties and
rights,
whether
real, personal or mixed, which are owned or held for use by
Grantor
solely in connection with the ownership or operation of those
certain
pipelines described on Exhibit B (the "PIPELINES"):
(i) All parcels of fee simple real property now or hereafter
owned
by Grantor on which any part of the Pipelines are located
including,
without limitation, the property held in fee by Grantor described
on
Exhibit A, if any (collectively, the "PIPELINE FEE LAND");
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(ii) All leases of real property now or hereafter entered into
or
acquired by Grantor on which all or a part of the Pipelines are
located, including, without limitation, the leases described on
Exhibit A, if any (the "PIPELINE LEASES");
(iii) All easements, rights-of-way, property use agreements,
line
rights and real property licenses (including right-of-way
permits
from railroads and road crossing permits or other right-of-way
permits from Governmental Entities) required to operate the
Pipelines now or hereafter entered into or acquired by Grantor,
including, without limitation, the easements, rights-of-way,
property use agreements, line rights and real property licenses
described on Exhibit A (the "PIPELINE EASEMENTS");
(iv) All structures, fixtures and appurtenances (A) located on
the
Pipeline Fee Land, (B) located on the land subject to the
Pipeline
Leases, or (C) located within the Pipeline Easements, and now
or
hereafter owned by Grantor, including, without limitation, any
buildings, pipelines and pumping facilities described on Exhibit
A
(collectively, the "PIPELINE IMPROVEMENTS");
(v)
To the extent same do not constitute Pipeline Improvements, any
and all fittings, cathodic protection ground beds, rectifiers,
other
cathodic or electric protection devices, machinery, engines,
pipes,
pipelines, valves, valve boxes, connections, gates, scraper
trap
extenders, telecommunication facilities and equipment
(including
microwave and other transmission towers), lines, wires,
computer
hardware, fixed or mobile machinery and equipment, vehicle
refueling
tanks, pumps, heating and non-pipeline pumping stations,
fittings,
tools, furniture and metering equipment now owned or hereafter
acquired by Grantor (the "PIPELINE EQUIPMENT");
(vi) The contracts, agreements, leases and other legally
binding
rights and obligations of Grantor described on Exhibit A, if
any,
but excluding those contracts and agreements constituting
Pipeline
Leases and Pipeline Easements (the "PIPELINE CONTRACTS");
(vii) Intellectual property rights and related computer
software;
(viii) All permits, licenses, certificates, authorizations,
registrations, orders, waivers, variances and approvals now or
hereafter granted by any Governmental Entity to Grantor or its
predecessors in interest pertaining solely to the ownership or
operation of the Pipelines, including, without limitation,
those
permits, licenses, certificates, authorizations, registrations,
orders, waivers, variances and approvals described on Exhibit A,
in
each case to the extent the same are assignable (the "PIPELINE
PERMITS"); and
(ix) All records and documents now or hereafter acquired by
Grantor
relating solely to the ownership, condition or operation of the
Pipeline Assets (the "PIPELINE RECORDS").
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(u)
PIPELINE CONTRACTS: Shall have the meaning set forth in
subsection
(vi) of
the definition of Pipeline Assets.
(v)
PIPELINE EASEMENTS: Shall have the meaning set forth in
subsection
(iii) of
the definition of Pipeline Assets.
(w)
PIPELINE EQUIPMENT: Shall have the meaning set forth in subsection
(v)
of the
definition of Pipeline Assets.
(x)
PIPELINE FEE LAND: Shall have the meaning set forth in subsection
(i)
of the
definition of Pipeline Assets.
(y)
PIPELINE IMPROVEMENTS: Shall have the meaning set forth in
subsection
(iv) of
the definition of Pipeline Assets.
(z)
PIPELINE LEASES: Shall have the meaning set forth in subsection
(ii)
of the
definition of Pipeline Assets.
(aa)
PIPELINE PERMITS: Shall have the meaning set forth in
subsection
(viii) of
the definition of Pipeline Assets.
(bb)
PIPELINE REAL PROPERTY: Collectively, the Pipeline Fee Land,
the
Pipeline
Leases, the Pipeline Improvements and the Pipeline Easements.
(cc)
PIPELINE RECORDS: Shall have the meaning set forth in subsection
(ix)
of the
definition of Pipeline Assets.
(dd)
PIPELINES: Shall have the meaning set forth in the first paragraph
of
the
definition of Pipeline Assets.
(ee)
PIPELINES AGREEMENT: That certain Pipelines Agreement dated as
of
July __,
2005 by and among Beneficiary, HEP, Navajo Refining Company,
L.P., a
Delaware limited partnership, Holly Energy Partners-Operating,
L.P., a
Delaware limited partnership, Grantor, HEP Logistics Holdings,
L.P., a Delaware
limited partnership, Holly Logistic Services, L.L.C., a
Delaware
limited liability company, and HEP Logistics GP, L.L.C., a
Delaware
limited liability company, together with any amendments,
restatements or modifications from time to time made thereto.
(ff)
PRODUCT: Crude oil, gas oil, diesel, kerosene, casinghead,
naphtha,
normal
butane and isobutane transported through the Pipelines.
(gg)
PURCHASE AGREEMENT: That certain Purchase and Sale Agreement dated
as
of July 6,
2005 by and among Beneficiary, Navajo Pipeline Co., L.P., a
Delaware
limited partnership, Navajo Refining Company, L.P., a Delaware
limited
partnership, HEP, Holly Energy Partners - Operating, L.P., a
Delaware
limited partnership, and Grantor.
(hh) REAL
PROPERTY: The Pipeline Real Property.
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(ii)
SECURITY DOCUMENTS: This Deed of Trust and any and all other
documents
now or hereafter executed by Grantor or any other Person to
evidence
or secure the performance of the Obligations.
(jj)
SENIOR BANK LIENS: Collectively, (i) each lien and security
interest
in all or
any portion of the Mortgaged Property heretofor or hereafter
granted by
Grantor or its Affiliates under the Senior Credit Agreement,
and (ii)
each lien and security interest in all or any portion of the
Mortgaged
Property hereafter granted by any Person who acquires an
interest
in all or any portion of the Mortgaged Property securing senior
debt of
such Person.
(kk)
SENIOR CREDIT AGREEMENT: That certain Credit Agreement dated as
of
July 7,
2004 (as extended, amended, supplemented, restated, replaced or
refinanced
in whole or in part, from time to time) among Holly Energy
Partners -
Operating, L.P., a Delaware limited partnership, the banks
party
thereto from time to time, and Union Bank of California, N.A.,
in
its
capacity as administrative agent (or any assignee of or successor
to
such
administrative agent).
(ll)
SENIOR LIEN: Collectively, the Senior Bank Liens and each other
lien
and
security interest as to which the lien and security interest
granted
pursuant
to this Deed of Trust has been subordinated thereto pursuant to
the terms
of a Subordination, Non-Disturbance and Attornment Agreement in
substantially the form of Attachment 1 hereto executed by the
Beneficiary
and the
holder of such lien and security interest and recorded in the
Official
Public Records of Real Property of Eddy and Lea Counties, New
Mexico and
(at the election of such holder) any or all of the other
counties
in New Mexico in which any of the Mortgaged Property is
located.
(mm) TAXES: Any
and all federal, state, local, foreign and other net
income,
gross income, gross receipts, sales, use, ad valorem, transfer,
franchise,
profits, license, leases, service, service use, withholding,
payroll,
employment, excise, severance, stamp, occupation, premium,
property,
windfall profits, customs, duties or other taxes, fees, or
assessments.
ARTICLE 2
GRANT
2.1 GRANT. To secure and enforce
the prompt performance and compliance by HEP
of all
obligations set forth for HEP in Section 2(c), Section 7, and
Section
10(c) of the Pipelines Agreement, plus all claims (as such term
is
defined in
the Bankruptcy Code) of or damages owed to the Beneficiary
against
HEP and/or the Mortgaged Property resulting from any rejection
of
the
Pipelines Agreement by HEP in any bankruptcy or insolvency
proceeding
involving
HEP, and any reasonable costs and expenses (including, but not
limited
to, attorneys' and experts' fees and court costs) incurred by
Beneficiary in enforcing and exercising its rights hereunder
(collectively, the "OBLIGATIONS"), Grantor has GRANTED, BARGAINED,
SOLD
and
CONVEYED, and by these presents does GRANT, BARGAIN, SELL and
CONVEY,
unto
Trustee the Mortgaged Property,
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subject,
however, to the Permitted Encumbrances, TO HAVE AND TO HOLD the
Mortgaged
Property unto Trustee, forever, and Grantor does hereby bind
itself,
its successors and assigns to WARRANT AND FOREVER DEFEND the
title
to the
Mortgaged Property unto Trustee against every Person whomsoever
lawfully
claiming or to claim the same or any part thereof other than
against
any holder of any Senior Lien; provided, however, that this
grant
shall
terminate upon the full performance and discharge of all of the
Obligations and in accordance with the other terms set forth
herein.
2.2 MAXIMUM SECURED
INDEBTEDNESS. THE OUTSTANDING INDEBTEDNESS SECURED BY
PROPERTY
LOCATED IN NEW MEXICO SHALL NOT AT ANY ONE TIME EXCEED THE
AGGREGATE
MAXIMUM AMOUNT OF $100,000,000, WHICH SHALL CONSTITUTE THE
MAXIMUM
AMOUNT AT ANY TIME SECURED HEREBY.
ARTICLE 3
WARRANTIES AND REPRESENTATIONS
Grantor
hereby unconditionally warrants and represents to Beneficiary
as
follows:
3.1 ORGANIZATION AND POWER.
Grantor (a) is a limited liability company duly
organized,
validly existing and in good standing under the laws of the
State of
Delaware, and has complied with all conditions prerequisite to
its doing
business in the State of New Mexico and (b) has all requisite
power and
all governmental certificates of authority, licenses, permits,
qualifications and documentation to own, lease and operate its
properties
and to
carry on its business as now being, and as proposed to be,
conducted.
3.2 VALIDITY OF SECURITY
DOCUMENTS. The execution, delivery and performance by
Grantor of
the Security Documents (a) are within Grantor's powers and have
been duly
authorized by Grantor's Manager or other necessary parties, and
all other
requisite action for such authorization has been taken; (b)
have
received
all (if any) requisite prior governmental approval in order to
be
legally
binding and enforceable in accordance with the terms thereof;
and
(c) will
not violate, be in conflict with, result in a breach of or
constitute
(with due notice or lapse of time, or both) a default under,
any Legal
Requirement or result in the creation or imposition of any
lien,
charge or
encumbrance of any nature whatsoever upon any of Grantor's
property
or assets, except as contemplated by the provisions of the
Security
Documents. The Security Documents constitute the legal, valid
and
binding
obligations of Grantor and others obligated under the terms of
the
Security
Documents, in accordance with their respective terms.
3.3 LIEN OF THIS INSTRUMENT.
Subject to the Senior Liens, this Deed of Trust
constitutes a valid and subsisting deed of trust lien on the Real
Property
and the Fixtures and a
valid, subsisting security interest in and to, and
a valid
assignment of, the Personalty and Leases, all in accordance
with
the terms
hereof.
3.4 LITIGATION. There are no
actions, suits or proceedings pending, or to the
knowledge
of Grantor threatened, against or affecting the Grantor as a
result of
or in connection with
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Grantor's
entering into this Deed of Trust, or involving the validity or
enforceability of this Deed of Trust or the priority of the liens
and
security
interests created by the Security Documents, and no event has
occurred
(including specifically Grantor's execution of the Security
Documents)
which will violate, be in conflict with, result in the breach
of, or
constitute (with due notice or lapse of time, or both) a
default
under, any
Legal Requirement or result in the creation or imposition of
any lien,
charge or encumbrance of any nature whatsoever upon any of
Grantor's
property other than the liens and security interests created by
the
Security Documents.
ARTICLE 4
AFFIRMATIVE COVENANTS OF GRANTOR
Grantor
hereby unconditionally covenants and agrees with Beneficiary
that,
except for the Permitted Encumbrances,
Grantor will protect the lien and
security interest status of this Deed of
Trust and except for the Permitted
Encumbrances, will not, without the prior
written consent of Beneficiary, place,
or permit to be placed, or otherwise
mortgage, hypothecate or encumber the
Mortgaged Property with, any other lien or
security interest of any nature
whatsoever (statutory, constitutional or
contractual) regardless of whether same
is allegedly or expressly inferior to the
lien and security interest created by
this Deed of Trust, and, if any such lien
or security interest is asserted
against the Mortgaged Property, Grantor
will promptly, at its own cost and
expense, (a) pay the underlying claim in
full or take such other action so as to
cause same to be released and (b) within
five days from the date such lien or
security interest is so asserted, give
Beneficiary notice of such lien or
security interest. Such notice shall
specify who is asserting such lien or
security interest and shall detail the
origin and nature of the underlying claim
giving rise to such asserted lien or
security interest.
ARTICLE 5
NEGATIVE COVENANTS OF GRANTOR
Grantor
hereby covenants and agrees with Beneficiary that, until the
full
performance and discharge of all of the
Obligations, Grantor will not, without
the prior written consent of Beneficiary,
create, place or permit to be created
or placed, or through any act or failure to
act, acquiesce in the placing of, or
allow to remain, any mortgage, pledge, lien
(statutory, constitutional or
contractual), security interest,
encumbrance or charge on, or conditional sale
or other title retention agreement,
regardless of whether same are expressly
subordinate to the liens of the Security
Documents, with respect to, the
Mortgaged Property, other than the
Permitted Encumbrances.
ARTICLE 6
AFFIRMATIVE COVENANTS OF BENEFICIARY
By its
acceptance hereof, Beneficiary recognizes that (a) Grantor is
obligated or may hereafter become obligated
to any of the Credit Parties (as
defined in the SNDA [defined below]) in
connection with the Senior Credit
Agreement, and (b) Grantor and any future
owner of the
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Mortgaged Property may incur additional
indebtedness or become otherwise
obligated to one or more banks, insurance
companies, investment banks or other
financial institutions regularly engaged in
commercial lending and/or bonds,
debentures, notes and similar instruments
evidencing obligations that may be
secured by liens or security interests on
some or all of Grantor's property,
including the Mortgaged Property (the
holder of such liens or security interests
being a "SECURED LENDER"). To the extent
that any such Secured Lender notifies
Beneficiary of Secured Lender's desire to
subordinate the lien and security
interest held by Beneficiary pursuant to
this Deed of Trust, Beneficiary, by its
acceptance hereof, will agree to effect
such subordination by promptly
executing, in one or more counterparts, a
Subordination, Non-Disturbance and
Attornment Agreement in substantially the
form of Attachment 1 hereto (the
"SNDA"). The subordination of this Deed of
Trust shall (i) not be effective
unless and until the SNDA has been executed
by the Secured Lender, and (ii) be
subject to compliance by the Secured Lender
with its obligations under Section 3
and Section 4 of the SNDA. Any Secured
Lender who is a party to an SNDA and who
is in compliance with its obligations under
Section 3 and Section 4 of such SNDA
is hereinafter referred to as a
"LIENHOLDER."
ARTICLE 7
EVENTS OF DEFAULT
The term
"EVENT OF DEFAULT", as used in the Security Documents, shall
mean
the occurrence or happening, at any time
and from time to time, of any one or
more of the following.
7.1 BREACH OF DEED OF TRUST. (a)
Grantor shall (i) fail to perform or observe,
in any
material respect, any covenant, condition or agreement of this
Deed
of Trust
to be performed or observed by Grantor, or (ii) breach any
warranty
or representation made by Grantor in this Deed of Trust, and
such
failure or
breach shall continue unremedied for a period of thirty (30)
days after
receipt of written notice thereof to the Grantor from the
Beneficiary; provided, however, that in the event such failure or
breach
cannot be
reasonably cured within such thirty (30) day period and Grantor
has
diligently proceeded (and continues to proceed) to cure such
breach,
Grantor
shall have an additional sixty (60) days to cure such failure
or
breach, or
(b) HEP shall fail to perform all of the Obligations in full
and on or
before the dates same are to be performed (after giving effect
to any
applicable grace and cure periods).
7.2 VOLUNTARY BANKRUPTCY.
Grantor shall (a) voluntarily be adjudicated a
bankrupt
or insolvent, (b) procure, permit or suffer the voluntary or
involuntary appointment of a receiver, trustee or liquidator for
itself or
for all or
any substantial portion of its property, (c) file any petition
seeking a
discharge, rearrangement, or reorganization of its debts
pursuant
to the bankruptcy laws or any other debtor relief laws of the
United
States or any state or any other competent jurisdiction, or (d)
make a
general assignment for the benefit of its creditors.
7.3 INVOLUNTARY BANKRUPTCY. If
(a) a petition is filed against Grantor seeking
to
rearrange, reorganize or extinguish its debts under the provisions
of
any
bankruptcy or other debtor relief law of the United States or
any
state or
other competent jurisdiction, and such petition is not
dismissed
or
withdrawn within sixty (60) days after its filing, or (b) a
court
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of
competent jurisdiction enters an order, judgment or decree
appointing,
without
the consent of Grantor a receiver or trustee for it, or for all
or
any part
of its property, and such order, judgment, or decree is not
dismissed,
withdrawn or reversed within sixty (60) days after the date of
entry of
such order, judgment or decree.
7.4 REJECTION OF PIPELINES
AGREEMENT. A rejection, by or on behalf of Grantor
or HEP, of
the Pipelines Agreement in bankruptcy.
ARTICLE 8
REMEDIES
8.1 REMEDIES. Subject, in each
case, to the rights of any Lienholder arising
under or
pursuant to the Senior Liens, and the terms and provisions of
the
SNDA, and
provided no material default by the Holly Entities (as defined
in the
Pipelines Agreement) has occurred and is continuing, if an Event
of
Default
shall occur and be continuing, Beneficiary may, at
Beneficiary's
election
and by or through Trustee or otherwise, exercise any or all of
the
following rights, remedies and recourses:
(a) ENTRY
UPON MORTGAGED PROPERTY. Enter upon the Mortgaged Property and
take
exclusive possession thereof and of all books, records and
accounts
relating
thereto. If Grantor remains in possession of all or any part of
the
Mortgaged Property after an Event of Default and without
Beneficiary's
prior
written consent thereto, Beneficiary may invoke any and all
legal
remedies
to dispossess Grantor, including specifically one or more
actions
for
forcible entry and detainer, trespass to try title and writ of
restitution. Nothing contained in the foregoing sentence shall,
however,
be
construed to impose any greater obligation or any prerequisites
to
acquiring
possession of the Mortgaged Property after an Event of Default
than would
have existed in the absence of such sentence.
(b)
OPERATION OF MORTGAGED PROPERTY. Hold, lease, manage, operate
or
otherwise
use or permit the use of the Mortgaged Property, either itself
or by
other Persons, firms or entities, in such manner, for such time
and
upon such
other terms as Beneficiary may deem to be prudent and
reasonable
under the
circumstances (making such repairs, alterations, additions and
improvements thereto and taking any and all other action with
reference
thereto,
from time to time, as Beneficiary shall deem necessary or
desirable), and apply all amounts collected by Trustee or
Beneficiary in
connection
therewith in accordance with the provisions of Section 8.8.
(c)
TRUSTEE OR RECEIVER. Prior to, upon or at any time after,
commencement
of any
legal proceedings hereunder, make application to a court of
competent
jurisdiction as a matter of strict right and without notice to
Grantor or
regard to the adequacy of the Mortgaged Property for the
satisfaction of the Obligations for appointment of a receiver of
the
Mortgaged
Property, and Grantor does hereby irrevocably consent to such
appointment. Any such receiver shall have all the usual powers and
duties
of
receivers in similar cases, including the full power to rent,
maintain
and
otherwise operate the Mortgaged Property upon such terms as may
be
approved
by the court.
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(d) OTHER.
Exercise any and all other rights, remedies and recourses
granted
under this Deed of Trust.
8.2 REMEDIES CUMULATIVE,
CONCURRENT AND NONEXCLUSIVE. Beneficiary shall have
all
rights, remedies and recourses granted in the Pipelines Agreement
and,
subject to
the rights of any Lienholder arising under or pursuant to the
Senior
Liens, and the terms and provisions of the SNDA, the Deed of
Trust
and same
(a) shall be cumulative and concurrent; (b) may be pursued
separately, successively or concurrently against Grantor or
others
obligated
under this Deed of Trust, or against the Mortgaged Property, or
against
any one or more of them, at the sole discretion of Beneficiary;
(c) may be
exercised as often as occasion therefor shall arise, it being
agreed by
Grantor that the exercise or failure to exercise any of same
shall in
no event be construed as a waiver or release thereof or of any
other
right, remedy or recourse; and (d) are intended to be, and shall
be,
nonexclusive.
8.3 OBLIGATIONS. Neither
Grantor, HEP nor any other Person hereafter obligated
for
performance or fulfillment of all or any of the Obligations shall
be
relieved
of such obligation by reason of (a) the failure of Trustee to
comply
with any request of Grantor or any other Person to enforce any
provisions
of this Deed of Trust; (b) the release, regardless of
consideration, of the Mortgaged Property or the addition of any
other
property
to the Mortgaged Property; (c) any agreement or stipulation
between
any subsequent owner of the Mortgaged Property and Beneficiary
extending,
renewing, rearranging or in any other way modifying the terms
of the
Security Documents without first having obtained the consent
of,
given
notice to or paid any consideration to Grantor or such other
Person,
and in
such event Grantor and all such other Persons shall continue to
be
liable to
make payment according to the terms of any such extension or
modification agreement unless expressly released and discharged in
writing
by
Beneficiary; or (d) by any other act or occurrence save and except
the
complete
fulfillment of all of the Obligations.
8.4 RELEASE OF AND RESORT TO
COLLATERAL. Beneficiary may release, regardless
of
consideration, any part of the Mortgaged Property without, as to
the
remainder,
in any way impairing, affecting, subordinating or releasing the
lien or
security interest created in or evidenced by this Deed of Trust
or
their
stature as a lien and security interest in and to the Mortgaged
Property.
8.5 WAIVER OF REDEMPTION, NOTICE
AND MARSHALLING OF ASSETS. To the fullest
extent
permitted by law, Grantor hereby irrevocably and
unconditionally
waives and
releases (a) all benefits that might accrue to Grantor by
virtue of
any present or future law exempting the Mortgaged Property from
attachment, levy or sale on execution or providing for any
appraisement,
valuation,
stay of execution, exemption from civil process, redemption or
extension
of time for payment; (b) all notices of any Event of Default or
of
Trustee's election to exercise or his actual exercise of any
right,
remedy or
recourse provided for under this Deed of Trust; and (c) any
right to a
marshalling of assets or a sale in inverse order of alienation.
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8.6 LIMITATION ON NEW MEXICO
REDEMPTION. Pursuant to NMSA 1978, Section
39-5-19
(1965), the redemption period after foreclosure sale for any
Mortgaged
Property situated in or otherwise subject to the laws of the
State of
New Mexico shall be limited to one (1) month.
8.7 DISCONTINUANCE OF
PROCEEDINGS. In case Beneficiary shall have proceeded to
invoke any
right, remedy or recourse permitted under this Deed of Trust
and shall
thereafter elect to discontinue or abandon same for any reason,
Beneficiary shall have the unqualified right so to do and, in such
an
event,
Grantor and Beneficiary shall be restored to their former
positions
with
respect to the Obligations, the Security Documents, the
Mortgaged
Property
and otherwise, and the rights, remedies, recourses and powers
of
Beneficiary shall continue as if same had never been invoked.
8.8 APPLICATION OF PROCEEDS.
Subject, in each case, to the rights of any
Lienholder
arising under or pursuant to the Senior Liens, and the terms
and
provisions of the SNDA (including, without limitation, the right
to
receive
payments otherwise due to HEP under the terms of the Pipelines
Agreement), the proceeds and other amounts generated by the
holding,
operating
or other use of, the Mortgaged Property shall be applied by
Trustee or
Beneficiary (or the receiver, if one is appointed) to the
extent
that funds are so available therefrom in the following orders
of
priority:
(a) first,
to the payment of the costs and expenses of taking possession
of the
Mortgaged Property and of holding, using, leasing, repairing
and
improving
the same, including without limitation (i) trustees' and
receivers'
fees, (ii) court costs, (iii) attorneys' and accountants' fees,
and (iv)
the payment of any and all Impositions, liens, security
interests
or other
rights, titles or interests equal or superior to the lien and
security
interest of this Deed of Trust (except those to which the
Mortgaged
Property has been sold subject to and without in any way
implying
Beneficiary's prior consent to the creation thereof);
(b)
second, to the payment of all amounts which may be due to
Beneficiary
with
respect to the Obligations;
(c) third,
to the extent permitted by law, funds are available therefor
out of the
proceeds generated by the holding, operating or other use of
the
Mortgaged Property and known by Beneficiary, to the payment of
any
indebtedness or obligation secured by a subordinate deed of trust
on or
security
interest in the Mortgaged Property; and
(d)
fourth, to Grantor.
8.9 INDEMNITY. IN CONNECTION
WITH ANY ACTION TAKEN BY TRUSTEE AND/OR
BENEFICIARY PURSUANT TO THIS DEED OF TRUST, TRUSTEE AND/OR
BENEFICIARY AND
THEIR
RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS,
MEMBERS,
EMPLOYEES,
AGENTS, REPRESENTATIVES, ATTORNEYS, ACCOUNTANTS AND EXPERTS
(COLLECTIVELY THE "INDEMNIFIED PARTIES") SHALL NOT BE LIABLE FOR
ANY LOSS
SUSTAINED
BY GRANTOR RESULTING FROM (i) AN
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<PAGE>
ASSERTION
THAT TRUSTEE, BENEFICIARY OR INDEMNIFIED PARTY HAS RECEIVED
FUNDS FROM
THE OPERATIONS OF THE MORTGAGED PROPERTY CLAIMED BY THIRD
PERSONS OR
(ii) ANY ACT OR OMISSION OF TRUSTEE, BENEFICIARY OR INDEMNIFIED
PARTY IN
ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE MORTGAGED
PROPERTY,
INCLUDING IN EITHER CASE SUCH LOSS WHICH MAY RESULT FROM THE
ORDINARY
NEGLIGENCE OF TRUSTEE, BENEFICIARY OR AN INDEMNIFIED PARTY OR
WHICH MAY
RESULT FROM STRICT LIABILITY, WHETHER UNDER APPLICABLE LAW OR
OTHERWISE,
UNLESS SUCH LOSS IS CAUSED BY THE GROSS NEGLIGENCE, WILLFUL
MISCONDUCT
OR BAD FAITH OF TRUSTEE, BENEFICIARY OR ANY INDEMNIFIED PARTY
NOR SHALL
TRUSTEE, BENEFICIARY AND/OR ANY INDEMNIFIED PARTY BE OBLIGATED
TO PERFORM
OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY OF GRANTOR.
GRANTOR
SHALL AND DOES HEREBY AGREE TO INDEMNIFY TRUSTEE, BENEFICIARY
AND
EACH OF
THEIR RESPECTIVE INDEMNIFIED PARTIES FOR, AND TO HOLD THEM
HARMLESS
FROM, ANY AND ALL LOSSES WHICH MAY OR MIGHT BE INCURRED BY
TRUSTEE,
BENEFICIARY OR INDEMNIFIED PARTY BY REASON OF THIS DEED OF
TRUST
OR THE
EXERCISE OF RIGHTS OR REMEDIES HEREUNDER, INCLUDING SUCH LOSSES
WHICH MAY
RESULT FROM THE ORDINARY NEGLIGENCE OF TRUSTEE, BENEFICIARY OR
AN
INDEMNIFIED PARTY OR WHICH MAY RESULT FROM STRICT LIABILITY,
WHETHER
UNDER
APPLICABLE LAW OR OTHER
