PLEDGE AND SECURITY AGREEMENT by and between HOLLY LOGISTICS LIMITED LLC and SUNOCO PARTNERS MARKETING & TERMINALS L.P. February 4, 2011
Exhibit 10.2
EXECUTION VERSION
by and between
XXXXX LOGISTICS LIMITED LLC
and
SUNOCO PARTNERS MARKETING & TERMINALS L.P.
February 4, 2011
TABLE OF CONTENTS
| 1. | Definitions | 1 | ||||||||
| 2. | Pledge of Collateral | 5 | ||||||||
| 3. | Representations and Warranties of Pledgor | 8 | ||||||||
| 4. | Covenants of Pledgor | 10 | ||||||||
| 4.1. | Collateral. | 10 | ||||||||
| 4.2. | Voting Rights | 10 | ||||||||
| 4.3. | Perfected Security Interest | 11 | ||||||||
| 4.4. | Proceeds of Collateral | 11 | ||||||||
| 4.5. | Financing Statements; Certificates | 11 | ||||||||
| 4.6. | No Liability | 11 | ||||||||
| 4.7. | Transfer of Pledged HEP Xxxxx | 00 | ||||||||
| 0. | Xxxxx xx Xxxxxxxx | 00 | ||||||||
| 0. | Third Party Waivers | 12 | ||||||||
| 6.1. | Rights of Secured Party | 12 | ||||||||
| 6.2. | Absolute Obligations | 13 | ||||||||
| 6.3. | Pledgor’s Waivers | 13 | ||||||||
| 6.4. | Waiver of Subrogation and Other Rights | 14 | ||||||||
| 7. | Miscellaneous | 15 | ||||||||
| 7.1. | Notices | 15 | ||||||||
| 7.2. | Entire Agreement | 16 | ||||||||
| 7.3. | Reimbursement; Indemnification | 16 | ||||||||
| 7.4. | Transfer and Assignment. | 16 | ||||||||
| 7.5. | Release | 16 | ||||||||
| 7.6. | Substitution of Collateral. | 17 | ||||||||
| 7.7. | Applicable ROFR | 17 | ||||||||
| 7.8. | No Waiver | 18 | ||||||||
| 7.9. | Amendments | 18 | ||||||||
| 7.10. | Severability | 18 | ||||||||
| 7.11. | Relationship of Parties | 18 | ||||||||
| 7.12. | Remedies Not Exclusive | 18 | ||||||||
| 7.13. | Governing Law; Venue | 18 | ||||||||
| 7.14. | No Third Party Beneficiaries | 19 | ||||||||
| 7.15. | Specific Performance | 19 | ||||||||
| 7.16. | Waiver of Jury Trial | 19 | ||||||||
| 7.17. | Counterparts | 19 | ||||||||
THIS PLEDGE AND SECURITY AGREEMENT (as the same may be amended, restated, supplemented, or
otherwise modified from time to time, this “Pledge Agreement”) is entered into as of the
4th day of February, 2011 (the “Effective Date”), by and between XXXXX LOGISTICS LIMITED
LLC, a Delaware limited partnership (together with its successors and/or assigns, the
“Pledgor”), and SUNOCO PARTNERS MARKETING & TERMINALS L.P. a Delaware limited partnership
(together with its successors and/or assigns, the “Secured Party”).
RECITALS
A. Holly Refining & Marketing Company, a Delaware corporation (“Buyer”) and Secured
Party have entered into and may in the future enter into crude oil supply agreements, including but
not limited to the two crude oil supply agreements, dated as of May 28, 2009 (all such crude oil
supply agreements entered into between Buyer and Secured Party, including those entered into in the
future, as amended, restated, supplemented or otherwise modified from time to time, the “Crude
Supply Agreements”).
B. Buyer has
requested that Secured Party extend credit to Buyer in connection with certain
purchases to be made by Buyer pursuant to the Crude Supply Agreements, and as a condition thereof
(and to Secured Party’s agreement to extend credit to Buyer thereunder), Pledgor has agreed to
grant a security interest in the Collateral (defined below) to Secured Party as collateral security
for the Secured Obligations (defined below).
C. In consideration of the grant of the foregoing security interest, Secured Party has agreed
to extend to Buyer secured credit in an amount up to the Unit Secured Credit Limit (defined below).
For the avoidance of doubt, the Unit Secured Credit Limit is in addition to Buyer’s Open Credit
Limit (as defined herein), and in addition to credit secured by Letters of Credit or Cash
Collateral (both as defined herein).
D. Pledgor and Buyer are each wholly owned by Xxxxx Corporation, a Delaware corporation, or
its Affiliates.
E. Buyer and Pledgor are engaged in related businesses, and Pledgor derives benefit from the
extensions of credit by Secured Party to Buyer under the Crude Supply Agreements.
F. NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor hereby agrees
with Secured Party as follows:
AGREEMENT
1. Definitions. Capitalized terms not otherwise defined herein shall have the following
respective meanings:
(a) “Affiliate” means, as to the Person specified, any Person controlling, controlled
by or under common control with such specified Person. The concept of control, controlling or
controlled as used in the aforesaid context means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of another, whether through
the ownership of voting securities, by contract or otherwise. No Person shall be deemed an
Affiliate of any Person by reason of the exercise or existence of rights, interests or remedies
under this Pledge Agreement.
(b) “Applicable ROFR” has the meaning set forth in Section 7.7.
(c) “Business Day” means any day other than a Saturday, a Sunday or a day on which the
New York Stock Exchange is authorized or required by law to be closed.
(d) “Buyer” has the meaning set forth in Recital A above.
(e) “Cash Collateral” means the amount of any cash collateral delivered to the Secured
Party pursuant to any of the Crude Supply Agreements.
(f) “Code” means the Uniform Commercial Code, as in effect from time to time in the
State of Texas or of any other state the laws of which are required as a result thereof to be
applied in connection with the attachment, perfection or priority of, or remedies with respect to,
Secured Party’s security interest in the Collateral.
(g) “Collateral” means (i) the Pledged Units, (ii) all Proceeds of the Pledged Units,
including without limitation, Securities Proceeds and Extraordinary Proceeds, (iii) the Letters of
Credit, and (iv) Cash Collateral.
(h) “Collateral Value” means, as of the date of determination, the sum of (i) the
Letters of Credit, plus (ii) the amount of any Cash Collateral, plus (iii) the Fair Market Value of
the Pledged HEP Units.
(i) “Crude Supply Agreements” has the meaning set forth in Recital A above.
(j) “Discharge of Obligations” occurs upon the later of (i) the indefeasible
satisfaction in full of all the Secured Obligations (other than any Surviving Obligations) and (ii)
the termination of the Crude Supply Agreements.
(k) “Effective Date” has the meaning set forth in the initial paragraph hereof.
(l) “Event of Default” means any one or more of the following: (i) a failure by Buyer
to pay when due amounts owed by Buyer to Secured Party one (1) Business Day following notice of
non-payment by Secured Party under, or Buyer’s failure to purchase or accept delivery of any crude
oil in accordance with, the provisions of the Crude Supply Agreements after the expiration of all
applicable notice and cure periods provided for therein, (ii) a failure by Pledgor to perform its
obligations under this Pledge Agreement and in the case of a failure under this clause (ii)
(except in the case of a monetary default by Pledgor hereunder, or except as otherwise expressly
provided in clause (iii) of this definition), Pledgor has failed to cure such failure within ten
(10) days of the earlier of (x) its obtaining knowledge of such default and (y) receipt of written
notice of such default from Secured Party or (iii) (A) a breach of a representation or warranty of
Pledgor set forth in Section 3 hereof in any material respect (or, with respect to any such
representation or warranty that is qualified as to materiality, in any respect) or (B) a breach of
any of the covenants set forth in Sections 4.1(a) or 4.3 hereof. Notwithstanding
the foregoing, an Event of Default shall not occur under clause (ii) of this subsection (l) so long
as Pledgor is diligently pursuing the cure of a non-monetary default that is not reasonably capable
of being cured within such ten (10) day period.
(m) “Excess Collateral Amount” has the meaning set forth in Section 7.5
hereof.
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(n) “Extraordinary Proceeds” means any sums of money paid upon or in respect of, or
property distributed in respect of, any Pledged Units upon the recapitalization, merger,
consolidation or other change in structure of HEP or the reorganization, liquidation or dissolution
of HEP or constituting an extraordinary distribution with respect to the Pledged Units.
(o) “Fair Market Value of Pledged HEP Units” means the fair market value of the
Pledged HEP Units subject to this Pledge Agreement in which Secured Party has a perfected first
priority security interest at the time of determination, based on the average closing price of the
HEP Units reported by the New York Stock Exchange (or any other exchange or market upon which the
HEP Units are principally listed or registered in the event that the HEP Units are no longer listed
on the New York Stock Exchange) for the immediately preceding 10 consecutive Business Day period.
(p) “HEP General Partner Interest” means the interest of the general partner in HEP
that is owned by Pledgor from time to time.
(q) “HEP” means Xxxxx Energy Partners, L.P., a Delaware limited partnership and any
successors thereto.
(r) “HEP Units” means limited partnership units of HEP. For avoidance of doubt, “HEP
Units” as used herein does not include any of the HEP General Partner Interests held by Pledgor (or
any rights, distributions or proceeds arising out or derived from such HEP General Partner
Interests).
(s) “Letters of Credit” means the sum of the undrawn amounts of any letters of credit
delivered to Secured Party pursuant to any of the Crude Supply Agreements or this Pledge Agreement.
(t) “Limited Partnership Agreement” means the First Amended and Restated Agreement of
Limited Partnership of HEP, dated as of July 13, 2004 (as amended, restated, supplemented or
otherwise modified from time to time).
(u) “Netting Agreement” means that certain Crude Oil and/or Condensate Net-Out
Amendment Agreement, dated as of December 1, 2010, between Buyer and Secured Party (as amended,
restated, supplemented or otherwise modified from time to time).
(v) “Open Credit Limit” means the aggregate amount of unsecured credit extended, if
any, to Buyer by Secured Party, as such amount is reasonably determined by Secured Party.
(w) “Operating Agreements” means the Limited Partnership Agreement and any other
limited partnership agreement or other formation documents and all other agreements, certificates
and other documents which from time to time govern the existence, operation and ownership of HEP
(as such limited partnership agreement or other formation documents and other agreements,
certificates and other documents may be amended, restated, supplemented or otherwise modified from
time to time).
(x) “Partnership Securities” has the meaning set forth in the Limited Partnership
Agreement.
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(y) “Person” means any individual, corporation (including any nonprofit corporation),
general or limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or governmental authority.
(z) “Pledge Agreement” has the meaning set forth in the initial paragraph hereof.
(aa) “Pledged Units” means all of Pledgor’s right, title and interest in and to: (i)
the Pledged HEP Units; (ii) any and all now existing and hereafter arising rights of Pledgor to
receive distributions or payments from HEP pursuant to the Pledged HEP Units, whether in cash or in
kind or in the form of other Partnership Securities, and all options, rights, warrants,
appreciation rights and other economic rights and interests of any nature of Pledgor as a limited
partner in HEP arising out of any Pledged HEP Units; (iii) any and all now existing and hereafter
acquired voting rights of Pledgor arising out of any Pledged HEP Units, whether provided for under
the Operating Agreements, applicable law or otherwise; (iv) if any Pledged Units are now or in the
future evidenced in certificate form, the Pledged Units shall include all such certificates; and
(v) all Proceeds of all of the foregoing. For avoidance of doubt, the “Pledged Units” do not
include any HEP General Partner Interests (or any rights, distributions or proceeds arising out or
derived from such HEP General Partner Interest), and Secured Party shall have no recourse against
such HEP General Partner Interest arising out of or related in any way to this Pledge Agreement.
(bb) “Pledged HEP Units” means the HEP Units described on Schedule 1 attached
hereto (as such schedule may be supplemented or otherwise modified from time to time pursuant to a
supplement hereto or other written agreement executed by Pledgor and Secured Party).
(cc) “Pledgor’s Conditional Rights” shall have the meaning set forth in Section
6.4(b) hereof.
(dd) “Preferential Payment” shall have the meaning set forth in Section 6.4(d)
hereof.
(ee) “Preferential Payment Provisions” shall have the meaning set forth in Section
2(c) hereof.
(ff) “Proceeds” means (i) all “proceeds” (as such term is defined in the Code) and
“products” with respect to the Collateral and (ii) (A) whatever is receivable or received when
Collateral is sold, collected, exchanged or otherwise disposed of, whether such disposition is
voluntary or involuntary; (B) all rights to payment, including return premiums, with respect to any
insurance relating thereto; (C) all interest, dividends and other property receivable or received
on account of the Collateral or proceeds thereof (including, without limitation, all distributions
or other income from the Pledged Units, all collections thereon or all distributions with respect
thereto), (D) all Partnership Securities distributed in connection with any subdivision or
combination in respect of any Pledged HEP Units or other Collateral, (E) all Securities Proceeds
and (F) all Extraordinary Proceeds.
(gg) “Reimbursement Obligations” shall have the meaning set forth in Section
7.3 hereof.
(hh) “Secured Obligations” means as of any date of determination (i) the full and
timely payment of amounts owed by Buyer to Secured Party pursuant to the provisions of the Crude
Supply Agreements, but only to the extent such payment obligations exceed the Open Credit Limit
after the application of the Netting Agreement, and (ii) the full and timely payment, performance
and
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observance by Pledgor of all of the terms, covenants and provisions of this Pledge Agreement
(including, without limitation, all reimbursement and indemnification provisions herein and any
payment made, or costs or expenses incurred, pursuant to Section 2(h) hereof).
(ii) “Secured Party” has the meaning set forth in the initial paragraph hereof.
(jj) “Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.
(kk) “Securities Laws” has the meaning set forth in Section 3(h) hereof.
(ll) “Securities Proceeds” means Proceeds of Pledged Units that constitute equity
interests, including, without limitation, (i) shares, interests, participations, or other
equivalents (however designated) of capital stock of a corporation and any and all equivalent
ownership interests in a Person (other than a corporation), including partnership interests and
membership interests, and any and all warrants, rights or options to purchase or other arrangements
or rights to acquire any of the foregoing, (ii) any certificate in respect of any Pledged Units or
such Proceeds (including, without limitation, in connection with any reclassification,
distribution, subdivision or combination or any increase or reduction of capital) or any
certificate issued in connection with any reorganization, liquidation or dissolution or in
substitution of any certificate representing any Pledged Units and (iii) subscriptions, warrants,
and options to purchase (whether in addition to, in substitution of, as conversion of, in exchange
for or otherwise in respect of) any such Pledged Units.
(mm) “Surviving Obligations” means inchoate indemnity obligations and other
obligations not due and payable at the time all other Secured Obligations are paid in full and the
Crude Supply Agreements are terminated which, by the terms of the Crude Supply Agreements or this
Pledge Agreement, survive payment or performance in full of the other Secured Obligations, and for
which no written claim has been made at the time all such other Secured Obligations have been paid
in full and the Crude Supply Agreements terminated.
(nn) “Unit Secured Credit Limit” means initial credit limit in an amount equal to
fifty percent (50%) of the Fair Market Value of Pledged HEP Units, up to a maximum of $25 million
($25,000,000), to be secured by the Collateral, or (A) if Buyer or Secured Party has submitted by
written notice to the other party instructions to lower the credit limit, the lower credit limit
specified in such instructions, or (B) if Buyer has submitted by written notice to Secured Party a
request for a higher credit limit, such higher credit limit as may be approved in writing by
Secured Party and subject to such other terms as are required by the Secured Party. For avoidance
of doubt, the Unit Secured Credit Limit does not include the Open Credit Limit or any credit
secured by Cash Collateral or Letters of Credit. In the event of an increase or decrease in the
Fair Market Value of the Pledged HEP Units affecting the Unit Secured Credit Limit, Secured Party
shall notify Pledgor in writing of such change in Fair Market Value and of the new Unit Secured
Credit Limit.
2. Pledge of Collateral.
(a) As collateral security for the due and punctual payment and performance of all of the
Secured Obligations (whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise), whether allowed or allowable as claims, Pledgor hereby (i) pledges,
transfers, hypothecates and assigns to Secured Party the Collateral in which Pledgor now or
5
hereafter has rights, and (ii) grants to Secured Party a continuing first priority lien on and
security interest in and to the Collateral whether now owned or hereafter acquired.
(b) For the better perfection of Secured Party’s rights in and to the Collateral, on or prior
to the Effective Date Pledgor shall deliver to Secured Party (i) a UCC-1 financing statement with
respect to the Collateral, (ii) the certificate(s) issued by HEP representing the Pledged Units,
and (iii) an executed stock power in blank in the form attached hereto as Exhibit A.
Secured Party hereby agrees that, except upon the occurrence of and during the continuance of an
Event of Default, Secured Party will not give any instructions as to the transfer, redemption or
disposition of any of the Collateral to HEP.
(c) Secured Party shall retain a valid and perfected first priority security interest in the
Collateral until the Discharge of Obligations shall have occurred (other than Collateral released
from the security interest hereunder pursuant to Section 7.6 hereof). Any Surviving
Obligations shall be subject to the “Preferential Payments” provisions of Sections 6.4(d)
and 6.4(e) hereof (the “Preferential Payment Provisions”).
(d) Until an Event of Default has occurred Pledgor shall retain all voting and other rights,
including, without limitation, the right to exercise any options, subscriptions or warrants, with
respect to the Pledged Units, and all cash dividends, payments and other cash distributions made
upon and with respect to the Pledged Units shall belong to Pledgor and all rights to exercise any
options, subscriptions or warrants with respect to the Pledged Units; provided, however, if Pledgor
receives any dividends, payments or other distributions constituting Securities Proceeds or
Extraordinary Proceeds, such Securities Proceeds or Extraordinary Proceeds shall be held and
applied in accordance with Section 2(j)hereof.
(e) Upon the occurrence and during the continuance of an Event of Default, subject to the
limitations set forth in Section 2(k) hereof, Secured Party may without demand of
performance or other demand, presentment, protest, advertisement or notice of any kind (except as
required by law, hereunder or pursuant to any of the Crude Supply Agreements) to or upon Pledgor,
Buyer or any other Person (all and each of which demands, defenses, advertisements and notices,
except those required by law or the Crude Supply Agreements, are hereby waived) exercise, in
addition to its other rights and remedies hereunder or under any other instrument of agreement
securing or evidencing or relating to the Secured Obligations, all rights and remedies of a secured
party under the Code or otherwise available by action or actions at law or in equity, including,
without limitation:
(i) to sell, assign and effectively transfer the Collateral either at public or private
sale, at the option of Secured Party, without recourse to judicial proceedings and without
either demand, appraisement, advertisement or notice of any kind, all of which are expressly
waived;
(ii) to proceed by way of appropriate judicial proceedings to have the Collateral sold
at judicial sale, with or without appraisement;
(iii) to seek an injunction of the prohibited action; or
(iv) to pursue any other available legal remedy; and, out of the Proceeds of the sale
of the Collateral, Secured Party shall be entitled to receive, by preference and priority
over all Persons whatsoever, the full remaining and unpaid balance of the Secured
Obligations, together with all interest, costs, reasonable attorneys’ fees and other charges
incurred by Secured Party in connection with any such exercise of its remedies;
6
provided, however, that Secured Party shall provide Pledgor with not less than ten
(10) days written notice prior to conducting any public or private sale of the Collateral, and
Pledgor hereby agrees and stipulates that such notice shall be deemed to be commercially reasonable
notice in satisfaction of the requirements of the Code.
(f) In addition to the remedies described in Section 2(e) above, if any Event of
Default shall occur and immediately upon the occurrence thereof and for so long as such Event of
Default shall be continuing: (i) Secured Party shall have the right to receive any and all
dividends, payments and other distributions made upon and with respect to the Pledged Units and the
other Collateral, as applicable, and make application thereof in accordance with this Pledge
Agreement, and (ii) at Secured Party’s election, the amount of the Pledged Units required to
satisfy the Secured Obligations shall be transferred to Secured Party or its nominee and registered
in the name of Secured Party or its nominee and recorded in the books and records of HEP and
Secured Party or its nominee may in the name of Pledgor or in Secured Party’s or such nominee’s own
name, collect all payments and assets due Pledgor pursuant to the Pledged Units and/or the
applicable Operating Agreements, and Secured Party or its nominee may thereafter exercise (A) all
voting and other rights of a limited partner pertaining to the Pledged Units under the Operating
Agreements and (B) any and all rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to the Pledged Units as if it was the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any and all of the Pledged
Units upon the merger, consolidation, reorganization, recapitalization or other change in the
structure of HEP), or upon the exercise by Pledgor or Secured Party of any right, privilege or
option pertaining to such Pledged Units, and, in connection therewith, the right to deposit and
deliver evidences of the Pledged Units with any committee, depository, transfer agent, registrar or
other designated agency (upon such terms and conditions as Secured Party may determine), all
without liability except to account for property actually received by it, but Secured Party shall
not have any duty to exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing. For the avoidance of doubt, for so long as no Event of
Default has occurred and is continuing, the rights described in clauses (i) and (ii) of the
preceding sentence shall accrue to Pledgor; provided that any Securities Proceeds or Extraordinary
Proceeds issued or received in connection with such rights shall constitute Collateral hereunder
and shall be turned over to Secured Party in accordance with Section 2(j) below.
(g) After the occurrence and during the continuance of an Event of Default, Secured Party is
hereby authorized to and shall apply the net proceeds of such sale of, or other realization upon,
any or all of the Collateral, after first deducting all actual out-of-pocket and documented costs
and expenses of sale or other exercise of remedies provided for herein, including reasonable
attorneys’ fees, to the payment of all other Secured Obligations, it being understood that this
Pledge Agreement shall remain in full force and effect and Secured Party shall retain all rights
hereunder, until the Discharge of Obligations shall have occurred. If, after any sale of the
Collateral pursuant to this Section 2 there shall be a balance remaining after the
satisfaction in full of all of the Secured Obligations, such balance shall be paid to Pledgor or to
whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may
direct.
(h) Following the occurrence and during the continuance of an Event of Default, Secured Party
may, at its election, and in addition to any other remedies available hereunder, pay, purchase,
contest or compromise any claim, encumbrance, charge or lien which is prior or superior to its
security interest in the Collateral and pay all expenses incurred therewith (any payment, cost or
expense so incurred shall be deemed Secured Obligations and shall be immediately due and payable
and secured hereby), all of which shall be deemed authorized by Pledgor.
(i) All remedies of Secured Party hereunder are cumulative and are in addition to any other
remedies provided for at law or in equity and may, to the extent permitted by law,
7
be exercised concurrently or separately, and the exercise of any one remedy shall not be
deemed an election of such remedy or to preclude the exercise of any other remedy. No failure on
the part of Secured Party to exercise and no delay in exercising any right or remedy shall operate
as a waiver thereof or in any way modify or be deemed to modify the terms of this Pledge Agreement
or of the obligations secured hereby, nor shall any single or partial exercise by Secured Party of
any right or remedy preclude any other or further exercise of the same or any other right or
remedy.
(j) In the event that Pledgor purchases or otherwise acquires or obtains any Securities
Proceeds or Extraordinary Proceeds, Pledgor shall promptly notify Secured Party of such purchase or
other acquisition, all such Securities Proceeds and Extraordinary Proceeds shall automatically be
deemed to be a part of the Collateral pledged by Pledgor and Pledgor shall accept the same as the
agent of Secured Party, hold the same in trust for Secured Party and deliver the same forthwith to
Secured Party in the exact form received to be held as a part of the Collateral. If any such
Securities Proceeds are to be evidenced by a certificate, such certificates shall be promptly
delivered to Secured Party, together with undated stock powers related thereto executed in blank,
substantially in the form attached hereto as Exhibit A, or, if requested by Secured Party,
other instruments appropriate to a certificate representing such Securities Proceeds, duly executed
in blank. If any such Securities Proceeds are sums of money or securities entitlements, such sums
of money or securities entitlements certificates shall be held pursuant to an account control
agreement reasonably acceptable to Secured Party and Pledgor. Pledgor shall take all actions and
execute and deliver such documents and agreements (including, without limitation, account control
agreements) as Secured Party may reasonably require to perfect its security interest in such
Extraordinary Proceeds.
(k) Secured Party agrees that in consideration of the grant of the security interest in the
Pledged HEP Units hereunder, prior to the Discharge of Obligations or any release of the pledge of
the Pledged HEP Units pursuant to Section 7.5 below or substitution of other Collateral for the
Pledge HEP Units pursuant to Section 7.6 below, Secured Party shall at all times, in addition to
the Open Credit Limit and in addition to credit secured by Letters of Credit or Cash Collateral,
extend credit to Buyer under the Crude Supply Agreements in an amount at least equal to the Unit
Secured Credit Limit, as such limit is determined from time to time.
(l) NOTWITHSTANDING ANYTHING IN THIS PLEDGE AGREEMENT TO THE CONTRARY, IN THE EVENT OF DEFAULT
HEREUNDER, SECURED PARTY’S ONLY RECOURSE AS TO PLEDGOR SHALL BE TO THE COLLATERAL HEREUNDER AND
NEITHER PLEDGOR NOR ANY OF PLEDGOR’S PROPERTY OTHER THAN THE COLLATERAL SHALL BE CHARGEABLE OR
LIABLE FOR THE SECURED OBLIGATIONS.
3. Representations and Warranties of Pledgor. Pledgor hereby represents and warrants, as
of the Effective Date, that:
(a) All the shares of, and other interests constituting, the Pledged Units have been duly and
validly issued and are fully paid and nonassessable, except as such non-assessability may be
affected by Section 17-607 of the Delaware Act (as defined in the Limited Partnership Agreement).
(b) Pledgor (i) is the record and beneficial owner of and sole holder of the Pledged Units and
all of the other Collateral, (ii) will be the record and beneficial owner of any Pledged HEP Units
that become Collateral after the Effective Date and all other Collateral hereafter acquired, in
each case of clause (i) and (ii), free and clear of all claims, liens, options and encumbrances of
any kind, except for the security interests arising under this Pledge Agreement and any Applicable
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ROFR, and (iii) has the right and authority to pledge and assign the Collateral and grant a
security interest therein as herein.
(c) The execution, delivery and performance of this Pledge Agreement by Pledgor will not cause
a violation of or a default under the Operating Agreements. Further, the execution, delivery and
performance of this Pledge Agreement by Pledgor will not cause a violation of or a default under
(i) any mortgage, lease or other agreement, oral or written, to which Pledgor is a party or by
which any of its assets are subject, or (ii) any pending litigation, judgment, decree, arbitration
award, governmental order, statute, law, treaty, rule or regulation to which Pledgor is subject,
nor will this Pledge Agreement cause a dissolution or other termination of Pledgor or HEP.
(d) The pledge, assignment, lien and security interest granted pursuant to this Pledge
Agreement constitutes a valid, perfected first priority pledge, assignment, lien and security
interest of or in all of the Collateral owned by Pledgor, enforceable as such against Pledgor, all
creditors of Pledgor and any Person or entity purporting to purchase or otherwise acquire any
Collateral from Pledgor (subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights of creditors generally and to general
principles of equity).
(e) The state of formation of Pledgor, together with the principal place of business of
Pledgor, is listed on Schedule 2. Pledgor will not change its state of formation or
principal place of business except upon at least thirty (30) days’ prior written notice to Secured
Party and the delivery to Secured Party of such financing statements and other documents as Secured
Party may require in connection therewith.
(f) No approval by, authorization of, or filing with any federal, state or other governmental
commission, agency or authority is necessary in connection with the execution, delivery and
performance by Pledgor, or the validity or enforceability, of this Pledge Agreement.
(g) No approval by or authorization or consent of any other Person is necessary to authorize
or validate the execution and delivery of this Pledge Agreement, or if such approval,
authorization, or consent is necessary, it has been otherwise obtained and is in full force and
effect.
(h) The grant of the security interest contemplated by this Pledge Agreement does not violate
and does not require that any filing, registration or other act be taken with respect to any and
all laws pertaining to the registration or transfer of securities, including without limitation the
Securities Act and the Securities and Exchange Act of 1934, and any and all rules and regulations
promulgated thereunder (collectively, the “Securities Laws”), as such laws are amended and
in effect from time to time, and the Pledged Units in HEP are represented by a “certificated
security” as that term is defined in the Code. Nothing herein shall constitute a representation or
warranty by Pledgor that the issuance by HEP of the Pledged HEP Units complies with Securities
Laws.
(i) Pledgor has the requisite organizational power and authority, and the legal right, to
make, deliver and perform this Pledge Agreement and to grant the liens and security interests
provided for herein. Pledgor has taken all necessary organizational action to authorize the
execution, delivery and performance of this Pledge Agreement and to grant the liens and security
interests provided for herein. This Pledge Agreement has been duly executed and delivered on
behalf of Pledgor. This Pledge Agreement constitutes a legal, valid and binding obligation of
Pledgor, enforceable against Pledgor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights
9
generally and by general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
(j) All actions and other requirements under the Operating Agreements (including, without
limitation, those set forth or referenced in Section 6.7(b) of the Limited Partnership
Agreement) necessary to permit Pledgor to transfer the HEP Units (other than the recording of such
transfer in the books and records of HEP) have been satisfied and the HEP Units are fully
transferable under the provisions of the Limited Partnership Agreement and any other Operating
Agreements.
(k) Pledgor has delivered to Secured Party a certificate, dated the Effective Date, from
the chief financial officer (or comparable officer) of Pledgor, in the form attached hereto as
Exhibit B, as to the solvency of the Pledgor as of the Effective Date.
4. Covenants of Pledgor.
4.1. Collateral. Pledgor hereby covenants as follows:
(a) Except as provided in Sections 7.6 and 7.7 hereof, without the prior written
consent of Secured Party, Pledgor shall not, either directly or indirectly, mortgage, sell or
otherwise dispose of (whether directly or indirectly) or hypothecate, pledge, create or permit to
exist a security interest or lien upon (other than the liens and security interests in favor of
Secured Party), grant any option with respect to, encumber, give or place in trust, or enter into
any agreement or undertaking restricting the right or ability of Pledgor or Secured Party to sell,
assign or transfer, any of the Pledged Units or any other Collateral, until the Discharge of
Obligations shall have occurred.
(b) Pledgor shall defend, at Pledgor’s cost, Secured Party’s security interest in and to the
Pledged Units or any other Collateral as applicable, against all Persons and against all claims and
demands whatsoever, other than claims that Secured Party has voluntarily or involuntarily pledged,
assigned, sold, conveyed, encumbered or otherwise transferred its interest in the Collateral or
this Pledge Agreement.
(c) Pledgor shall promptly notify Secured Party, in writing, of the imposition at any time of
any claim, option, lien or encumbrance upon or against all or any portion of the Pledged Units
and/or any other Collateral.
(d) Pledgor shall, on Secured Party’s reasonable demand, furnish further reasonable assurance
of its record and beneficial ownership of the Pledged Units, or any other Collateral, execute any
written agreement or do any other act reasonably necessary to effectuate the purposes and
provisions of this Pledge Agreement and execute any instrument or statement required by law or
otherwise in order to perfect, continue or terminate the security interest of Secured Party in the
Pledged Units and the other Collateral.
4.2. Voting Rights. So long as an Event of Default shall not have occurred and be
continuing, Pledgor shall be permitted to exercise all voting and other rights with respect to the
Pledged Units as long as no vote shall be cast, or right exercised or other action taken which,
would impair the liens created by this Pledge Agreement or result in a default under this Pledge
Agreement; provided, however, (a) on or before the Effective Date, Secured Party shall execute and
deliver (or cause to be executed and delivered) to Pledgor a proxy in the form attached hereto as
Exhibit C, which proxy shall only be revocable upon the occurrence and during the
continuance of an Event of Default, and (b) after the Effective Date, Secured Party shall execute
and deliver (or cause to be executed and delivered) to
10
Pledgor all such proxies and other instruments as Pledgor may reasonably request for the purpose of
enabling Pledgor to exercise the voting and other rights which it is entitled to exercise and to
receive the cash distributions or interest payments which it is authorized to receive and retain
pursuant to this Section 4.
4.3. Perfected Security Interest. In no event shall Pledgor do or permit any of its
Affiliates to do, or omit to do or permit any of its Affiliates to omit to do, any act or thing,
the doing or omission of which, would impair the validity, enforceability, perfection or priority
of the security interests granted herein; provided, however, the foregoing shall not prevent
Pledgor or its Affiliates from exercising any rights or remedies under this Pledge Agreement, the
Crude Supply Agreements or otherwise at law or in equity if Secured Party is in breach of its
obligations hereunder or under the Crude Supply Agreements.
4.4. Proceeds of Collateral. Upon the occurrence and during the continuance of an Event of
Default, all Proceeds of the Collateral received by Pledgor shall be promptly delivered to Secured
Party, in the same form as received and, with respect to any certificates, together with undated
stock powers executed in blank related thereto substantially in the form attached hereto as
Exhibit A (or otherwise satisfactory to Secured Party), with the addition of such other
endorsements and assignments as may be reasonably required by Secured Party following a foreclosure
by Secured Party to transfer title to Secured Party, and pending such foreclosure and delivery,
such Proceeds shall be held in trust for Secured Party; and such Proceeds shall constitute
Collateral hereunder and be applied to the Secured Obligations.
4.5. Financing Statements; Certificates. Pledgor authorizes Secured Party and its agents
and representatives, at the expense of Pledgor, to execute and file any financing statement or
statements deemed reasonably necessary or desirable by Secured Party to perfect its security
interest in the Collateral. Pledgor will sign and deliver any financing statements and other
documents and perform such other acts as Secured Party deems reasonably necessary or desirable from
time to time to establish and maintain in favor of Secured Party a valid and perfected first
priority security interest in the Collateral, free of all other liens, encumbrances, security
interests and claims. Pledgor shall also furnish to Secured Party all certificates or other
instruments and papers evidencing or constituting any of the Collateral, together with appropriate
endorsements and assignments and any information relating thereto, and shall take such actions as
Secured Party may deem reasonably necessary from time to time to establish valid security interests
in and to further protect and perfect its interest in the Collateral.
4.6. No Liability. Pledgor hereby covenants and agrees that in the event that Secured
Party forecloses on, or otherwise exercises rights or remedies with respect to, the Collateral,
notwithstanding anything to the contrary in the Operating Agreements, Secured Party shall have no
liability for (and, subject to Section 2(k) hereof, Pledgor shall indemnify and hold
harmless Secured Party from) any matters in connection with the Pledged Units arising or occurring,
directly or indirectly, prior to Secured Party’s (or Secured Party’s nominee) becoming an owner of
the Pledged HEP Units (as recorded in the books and records of HEP), all of which shall remain the
sole responsibility of Pledgor.
4.7. Transfer of Pledged HEP Units. Pledgor hereby covenants and agrees, upon the exercise
of remedies by Secured Party pursuant to this Pledge Agreement after the occurrence of an Event of
Default, to take all such action as shall be necessary or reasonably requested by Secured Party in
order to promptly exchange any certificates representing such Pledged Units for one or more validly
issued certificates in the name of Secured Party or its designee, provided, the foregoing shall not
require Pledgor or HEP to cause the Pledged Units to be registered under Securities Laws.
5. Power of Attorney. Effective immediately and automatically upon the occurrence and
during the continuance of an Event of Default, Pledgor hereby irrevocably appoints and
11
instructs Secured Party as its attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor, Secured Party or otherwise, from time to time in Secured
Party’s discretion to take any and all actions necessary and proper, to carry out the intent of
this Pledge Agreement and to perfect and protect the lien, pledge, assignment and security interest
of Secured Party created hereunder. Neither Secured Party nor any said Secured Party or
attorney-in-fact or their Affiliates, agents or advisors will be liable for any acts of commission
or omission nor for any error of judgment or mistake of fact or law with respect to its dealings
with the Collateral unless such liability arises out of or from the negligence or willful
misconduct of such party. This power of attorney, being coupled with an interest, is irrevocable
until the Discharge of Obligations shall have occurred. Without limiting the foregoing, if Pledgor
fails to perform any agreement or obligation contained herein, Secured Party may itself perform, or
cause performance of, where reasonably necessary in the name or on behalf of Pledgor, and at the
expense of Pledgor, as applicable.
6. Third Party Waivers.
6.1. Rights of Secured Party. Pledgor authorizes Secured Party to perform any or all of
the following acts at any time, and from time to time, all without notice to Pledgor, without
affecting Pledgor’s obligations under this Pledge Agreement and without affecting the liens and
encumbrances against the Collateral in favor of Secured Party:
(a) Secured Party may agree to alter any terms of the Secured Obligations or any part thereof
or any collateral security or guarantee therefor, including renewing, compromising, extending,
accelerating, compromising, waiving, surrendering or releasing, the Secured Obligations or any part
thereof or any collateral security or guarantee therefore and any demand for payment of any of the
Secured Obligations made by Secured Party may be rescinded by Secured Party and any of the Secured
Obligations continued and the Crude Supply Agreements and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or
in part, as Secured Party and, with respect to amendments, modifications and supplements to the
Crude Supply Agreements, Buyer may agree upon from time to time.
(b) Secured Party may take and hold other collateral or other security for the Secured
Obligations, accept additional or substituted collateral or other security, and subordinate,
exchange, enforce, waive, release, compromise, fail to perfect and sell or otherwise dispose of any
such collateral or security.
(c) Secured Party shall apply any payments or recoveries from HEP, Buyer, Pledgor or any other
source, and any proceeds of any collateral or other security (including, without limitation, the
Collateral), to the Secured Obligations and any other obligations under the Crude Supply Agreements
in such manner, order and priority as Secured Party may elect.
(d) Secured Party may release any Person or entity of its liability for the Secured
Obligations or any part thereof and any collateral or security at any time held by Secured Party
for the payment of the Secured Obligations may be sold, exchanged, waived, surrendered or released.
Secured Party shall have no obligation to protect, secure, perfect or insure any lien or security
interest at any time held by it as security for the Secured Obligations.
(e) Secured Party may substitute, add or release any one or more guarantors or endorsers.
(f) In addition to the Secured Obligations, Secured Party may extend other credit to Buyer,
and may take and hold collateral or other security for the credit so extended,
12
all without affecting Pledgor’s obligations hereunder and without affecting the liens and
encumbrances against the Collateral hereunder.
6.2. Absolute Obligations. Pledgor expressly agrees that until the Discharge of
Obligations shall have occurred, or unless otherwise expressly agreed in writing between Pledgor
and Secured Party, Pledgor shall not be released of its obligations, waivers and agreements set
forth herein nor shall the validity, enforceability or priority of the liens and encumbrances
against the Collateral in favor of Secured Party be affected in any manner by or because of:
(a) Any act or event which might otherwise discharge, reduce, limit or modify Pledgor’s
obligations hereunder or Buyer’s obligations under the Crude Supply Agreements or the liens and
encumbrances against the Collateral in favor of Secured Party;
(b) Any waiver, extension, modification, forbearance, delay or other act or omission of
Secured Party or any failure to proceed promptly or otherwise as against HEP, Pledgor, Buyer or any
other Person or entity or any collateral or other security;
(c) Any action, omission or circumstance which might increase the likelihood that Secured
Party might enforce the rights granted under this Pledge Agreement or under the Crude Supply
Agreements or which might affect the rights or remedies of Pledgor as against HEP; or
(d) Any dealings occurring at any time between HEP, Buyer or Pledgor and Secured Party,
whether relating to the Secured Obligations or otherwise.
Pledgor has knowledge and assumes all responsibility for being and keeping itself informed of
the Buyer’s financial condition, affairs and assets, and of all other circumstances bearing upon
the risk of nonpayment of the Secured Obligations and the nature, scope and extent of the risks
which Pledgor assumes and incurs hereunder, and has adequate means to obtain from the Buyer on an
ongoing basis information relating thereto and the Buyer’s ability to pay and perform its
obligations under the Crude Supply Agreements and otherwise, and agrees to assume the
responsibility for keeping, and to keep, so informed for so long as this Pledge Agreement is in
effect. Pledgor acknowledges and agrees that (x) Secured Party shall have no obligation to
investigate the financial condition or affairs of the Buyer for the benefit of Pledgor nor to
advise Pledgor of any fact respecting, or any change in, the financial condition, assets or affairs
of the Buyer that might become known to Secured Party at any time, whether or not Secured Party
knows or believes or has reason to know or believe that any such fact or change is unknown to
Pledgor, or might (or does) increase the risk of Pledgor hereunder and (y) Secured Party shall have
no duty to advise Pledgor of information known to it regarding any of the aforementioned
circumstances or risks.
Notwithstanding the foregoing to the contrary, nothing herein shall prevent Pledgor from
asserting against Secured Party the defense of payment or performance of the Secured Obligations by
Buyer under the Crude Supply Agreements.
6.3. Pledgor’s Waivers. To the fullest extent permitted by law, Pledgor waives:
(a) Any defense: (i) based on any legal disability of any other Person, (ii) based on any
release, discharge, modification, impairment or limitation of the liability of any other Person to
Secured Party from any cause, whether consented to by Secured Party or arising by operation of law,
(iii) arising out of or able to be asserted as a result of any case, action or proceeding before
any court or other governmental authority relating to bankruptcy, reorganization, insolvency,
13
liquidation, receivership, dissolution, winding-up or relief of any other Person or any of
their Affiliates, or any general assignment for the benefit of creditors, composition, marshaling
of assets for creditors or other, similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; in each case as undertaken under any U.S. Federal or State
law (each of the foregoing described in this clause (iii) being referred to herein as an
“Insolvency Proceeding”); or (iv) arising from any rejection or disaffirmance of the
Secured Obligations, or any part thereof, or any collateral or other security held therefor, in any
such Insolvency Proceeding;
(b) Any defense based on any action taken or omitted by Secured Party in any insolvency
proceeding involving any other Person, including any election to have Secured Party’s claim allowed
as being secured, partially secured or unsecured, any extension of credit by Secured Party to any
other Person in any insolvency proceeding, and the taking and holding by Secured Party of any
collateral or other security for any such extension of credit;
(c) All presentments, demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, notices of intention to accelerate, notices of acceleration, notices
of acceptance of this Pledge Agreement and of the existence, creation, or incurring of new or
additional indebtedness, and demands and notices of every kind; and
(d) any failure of Secured Party to marshal assets in favor of Pledgor or any other Person
(including Buyer), to exhaust any collateral for all or any part of the Secured Obligations, to
pursue or exhaust any right, remedy, power or privilege it may have against the Buyer or any other
Person or to take any action whatsoever to mitigate or reduce such or any other liability of
Pledgor hereunder or with respect to the Secured Obligations, Secured Party being under no
obligation to take any such action notwithstanding the fact that all or any part of the Secured
Obligations may be due and payable and that the Buyer may be in default of its obligations under
the Crude Supply Agreements;
Notwithstanding the foregoing to the contrary, nothing herein shall prevent Pledgor from
asserting against Secured Party the defense or right which Buyer may have, including but not
limited to, the defense of payment or performance of the Secured Obligations by Buyer, or default
by Secured Party, under the Crude Supply Agreements.
6.4. Waiver of Subrogation and Other Rights.
(a) Upon the occurrence and during the continuance of any Event of Default, without prior
notice to or consent of Pledgor, Secured Party may elect to (subject to the terms of this Pledge
Agreement): (i) foreclose against any Collateral for the Secured Obligations, (ii) accept a
transfer of any such Collateral for the Secured Obligations in lieu of foreclosure, (iii)
compromise or adjust the Secured Obligations or any part thereof or make any other accommodation
with HEP, Buyer, Pledgor or any Person, or (iv) exercise any other remedy available under this
Pledge Agreement, the Crude Supply Agreements, at law or in equity against HEP, Buyer, Pledgor or
any other Person or any Collateral or any other collateral for the Secured Obligations.
(b) Regardless of whether Buyer may have made any payments to Secured Party, until the
Discharge of Obligations shall have occurred, Pledgor waives, to the fullest extent permitted by
law and, subject to Section 6.4(c) below, (all of the following rights, collectively,
“Pledgor’s Conditional Rights”): (i) all rights of subrogation, all rights of indemnity,
and any other rights to collect reimbursement from Buyer, whether contractual or arising by
operation of law (including the United States Bankruptcy Code or any successor or similar statute)
or otherwise; and (ii) all rights to enforce any remedy that Secured Party may have against HEP,
Buyer, Pledgor or any other Person granting collateral or security for, or guaranteeing, the
Secured Obligations.
14
(c) Subject to the prior payment in full in immediately available funds of all Secured
Obligations to Secured Party, other than the Surviving Obligations (which shall be subject to the
Preferential Payment Provisions), Pledgor shall retain its rights to seek contribution and
reimbursement from, and rights of subrogation with respect to, any obligor with respect to the
Secured Obligations to the extent the Secured Obligations hereunder render Buyer insolvent. Such
rights of subrogation, contribution and reimbursement shall be subordinate to the Secured
Obligations, and Pledgor shall not enforce any such rights until the Discharge of Obligations shall
have occurred.
(d) If, notwithstanding the provisions of Section 6.4(b) above, any amount shall be
paid to Pledgor on account of Pledgor’s Conditional Rights and either (i) such amount is paid to
Pledgor at any time when the Secured Obligations (including, without limitation, any outstanding
Surviving Obligations) shall not have been paid or performed in full, or (ii) regardless of when
such amount is paid to Pledgor, any payment made by HEP or Pledgor or Buyer to Secured Party is
subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be
repaid by Secured Party or paid over to a trustee, receiver or any other entity, whether under any
bankruptcy act or otherwise (such payment, a “Preferential Payment”), then such amount paid
to Pledgor shall be held in trust for the benefit of Secured Party and shall forthwith be paid to
Secured Party to be credited and applied upon the Secured Obligations (and any outstanding
Surviving Obligations), whether matured or unmatured, in such order as Secured Party shall
determine.
(e) To the extent that any of the provisions of Section 6.4(d) above shall not be
enforceable, Pledgor agrees that until such time as Discharge of Obligations shall have occurred
and the period of time has expired during which any payment made by HEP, Buyer or Pledgor to
Secured Party may be determined to be a Preferential Payment, Pledgor’s Conditional Rights to the
extent not validly waived shall be subordinate to Secured Party’s right to full payment and
performance of the Secured Obligations, and Pledgor shall not enforce Pledgor’s Conditional Rights
during such period.
7. Miscellaneous.
7.1. Notices. All notices, requests, demands, claims, and other communications hereunder
shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be
addressed to the intended recipient as set forth below:
If to Pledgor to:
Xxxxx Logistics Limited LLC
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Email: Xxxxxx.Xxxxxxx@xxxxxxxxx.xxx
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Email: Xxxxxx.Xxxxxxx@xxxxxxxxx.xxx
With a copy to:
Xxxxx Logistics Limited LLC
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
Email: xxxxxxxxxxxxxx@xxxxxxxxx.xxx
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
Email: xxxxxxxxxxxxxx@xxxxxxxxx.xxx
15
If to Secured Party to:
Sunoco Partners Marketing & Terminals L.P.
c/o Sunoco Partners LLC
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: General Counsel
Email: xxxxxxxx@xxxxxxxxxxxxxxx.xxx
c/o Sunoco Partners LLC
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: General Counsel
Email: xxxxxxxx@xxxxxxxxxxxxxxx.xxx
Any party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the addresses set forth above using any means (including registered or
certified mail, return receipt requested, postage prepaid, personal delivery, expedited courier,
messenger service, ordinary mail, or electronic mail where receipt thereof is confirmed, but
specifically excluding telecopy), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it actually is received or
refused by the intended recipient. Any party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
7.2. Entire Agreement. This Pledge Agreement and the Crude Supply Agreements (including
any attachments, exhibits or addenda hereto and thereto), constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all prior agreements
and understandings, oral and written, between the parties with respect to the subject matter
hereof.
7.3. Reimbursement; Indemnification. Pledgor agrees subject to Section 2(k) above,
to pay promptly (and in any event within 10 Business Days of Secured Party’s delivery of written
demand together with documentation evidencing such costs and expenses) all actual out of pocket
document costs and expenses, including reasonable attorneys’ fees and costs of settlement, incurred
by Secured Party in enforcing any Secured Obligations of or in collecting any payments due from
Pledgor hereunder by reason of such Event of Default (including in connection with the sale of,
collection from, or other realization on any of the Collateral) or in connection with any “work
out” or pursuant to any insolvency or bankruptcy cases or proceedings (all such reimbursement
obligations of Pledgor set forth in this Section 7.3 (the “Reimbursement
Obligations”) shall constitute Secured Obligations hereunder.
7.4. Transfer and Assignment.
(a) This Pledge Agreement shall extend to and be binding upon the parties, their
successors and assigns; provided, neither party shall assign this Pledge Agreement without
the written consent of the other party, not to be unreasonably withheld, conditioned or delayed.
(b) Upon the Discharge of Obligations, the security interest granted hereby shall terminate
and all rights to the Collateral shall revert to Pledgor, and, at the request of Pledgor, Secured
Party shall execute and deliver to Pledgor a written release and termination of this Pledge
Agreement.
7.5. Release. If on the 25th day (or, if such day is not a Business Day, the
next succeeding Business Day) of any calendar month (any such date a “Collateral Release
Date”), the Fair Market Value of Pledged HEP Units exceeds two times the Unit Secured Credit
Limit (such excess, the “Excess Collateral Amount”), then Pledgor may, within three (3)
16
Business Days of such Collateral Release Date, request the release of Pledged HEP Units
(including all Pledged Units related thereto) with a Fair Market Value of Pledged HEP Units (as
determined on such Collateral Release Date) of up the Excess Collateral Amount by submitting a
written request to Secured Party. Upon receipt of such request, Secured Party shall have five (5)
Business Days to either approve such request and release such Collateral from the liens and
security interests under this Pledge Agreement, or notify Pledgor of any dispute in the
calculations or information set forth in such request (in which case Secured Party and Pledgor
shall negotiate in good faith to resolve any such dispute).
7.6. Substitution of Collateral.
(a) Pledgor. So long as no Event of Default has occurred and is continuing,
Pledgor shall have the right to substitute all or a part of the Pledged HEP Units with letters of
credit or cash collateral with value equivalent to 50% of the Pledged HEP Units for which
substitution is being made. If Pledgor desires to deliver any such substitute collateral to secure
the Secured Obligations, Pledgor shall execute and deliver letters of credit or deliver cash
collateral, as desired by Pledgor (including reasonable documentation providing therefor), and
Secured Party shall execute and deliver such additional documents as are reasonably required to
release the applicable Collateral from the pledge created hereby and, without limitation, Secured
Party shall return promptly any applicable certificates and stock powers to Pledgor (and Secured
Party shall in any event make such certificates and stock powers available for Buyer to take into
its physical possession within three (3) Business Days after Secured Party’s receipt of such
documentation). Any actual out-of-pocket and document costs and expenses, including reasonable
attorneys’ fees, incurred by Secured Party relating to such request and substitution shall be
reimbursed by Pledgor within ten (10) Business Days of Secured Party’s delivery of written demand
together with documentation evidencing such costs and expenses. Pledgor shall bear its own expenses
with respect to any such substitution.
(b) Secured Party. With 30 days prior written notice to Pledgor, Secured
Party shall have the right to require Pledgor to substitute all or a part of the Collateral with
letters of credit or cash collateral with value equivalent to the Collateral for which substitution
is being made. If Secured Party desires to require any such substitute collateral to secure the
Secured Obligations, Pledgor shall execute and deliver letters of credit or deliver cash
collateral, as reasonably requested by Secured Party (including reasonable documentation providing
therefore), and Secured Party shall execute and deliver such additional documents as are reasonably
required to release the applicable Collateral from the pledge created hereby and, without
limitation, Secured Party shall return any applicable certificates and stock powers to Pledgor.
Pledgor and Secured Party shall each bear their own expenses with respect to any such substitution.
7.7. Applicable ROFR. So long as no Event of Default has occurred and is
continuing, Pledgor shall have the right to grant to any Person an option or right of first refusal
(each, an “Applicable ROFR”) to purchase all or any part of the Pledged Units in the event
that either the HEP General Partner Interests or a direct or indirect controlling interest in the
general partner of HEP is sold or otherwise transferred by Pledgor. Any Applicable ROFR must (a) be
exercisable for a price not less than the Fair Market Value of the Pledged HEP Units on the
applicable transfer date, and (b) must provide for the exercise of the Applicable ROFR within five
(5) Business Days after written notice of the intention to sell or otherwise transfer such Pledged
Units is given to such Person by Pledgor or Secured Party, as the
17
case may be. Pledgor shall give written notice to Secured Party within ten (10) Business Days
after entering into any Applicable ROFR; provided that the failure to provide such notice shall not
affect the validity of any ROFR except to the extent that is has actually prejudiced any action
taken by Secured Party. If the Applicable ROFR is exercised, the Pledged Units shall be sold free
and clear of the pledge and security interest, or any other right, obligation or encumbrance
created by this Agreement and the Proceeds therefrom shall remain a part of the pledged Collateral
hereunder, and shall be applied to the Secured Obligations.
7.8. No Waiver. Failure of Secured Party or Pledgor to require performance of any
provision of this Pledge Agreement shall not affect either party’s right to full performance
thereof at any time thereafter, and the waiver by any such parties of a breach of any provision
hereof shall not constitute a waiver of a similar breach in the future or of any other breach or
nullify the effectiveness of such provision. Nothing contained in this Pledge Agreement shall
limit or impair any right of Secured Party to require cash payments or letters of credit pursuant
to the Crude Supply Agreements (or any other agreement enabling Secured Party to demand or require
other collateral) nor require Pledgor to deliver additional HEP Units as collateral for the
Obligations if additional collateral is required under the Crude Supply Agreements.
7.9. Amendments. No amendments, additions to, alterations, modifications or waivers of all
or any part of this Pledge Agreement shall be of any effect, unless in writing and signed by
Pledgor and Secured Party.
7.10. Severability. If any clause or provision of this Pledge Agreement is illegal,
invalid, or unenforceable under present or future laws effective during the term of this Pledge
Agreement, then and in that event, it is the intention of the parties hereto that the remainder of
this Pledge Agreement shall not be affected thereby.
7.11. Relationship of Parties. Nothing in this Pledge Agreement is intended nor shall be
construed to constitute Pledgor and Secured Party as partners or joint venturers with respect to
the subject matter of this Pledge Agreement, this being an agreement for the granting of the
security interest herein.
7.12. Remedies Not Exclusive. Except as expressly limited herein, the specific remedies
provided in this Pledge Agreement are not intended to be exclusive, and the exercise of any such
specific remedy shall not be deemed to be an election of an exclusive remedy. Except as expressly
limited herein, the specific remedies provided in this Pledge Agreement are cumulative of all other
remedies available to the parties at law or in equity.
7.13. Governing Law; Venue. This Pledge Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect to any choice or
conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State of Delaware. Each
of the Parties hereto irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the State or Federal Courts located in New Castle County, Delaware, for any
actions, suits or proceedings arising out of or relating to this Pledge Agreement and the
transactions contemplated hereby and further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding brought in such court
has been brought in an inconvenient forum. Nothing in this Pledge Agreement shall be deemed or
operate to preclude the parties from bringing suit or taking other legal action in any other
jurisdiction to realize on property or to enforce a judgment or other court order as permitted by
applicable law.
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7.14. No Third Party Beneficiaries. Nothing in this Pledge Agreement shall confer any
rights or remedies upon any Person other than Secured Party, Buyer and Pledgor and their respective
successors and permitted assigns.
7.15. Specific Performance. Each of Pledgor and Secured Party acknowledge and agree that
either party may be damaged irreparably in the event any of the provisions of this Pledge Agreement
are not performed in accordance with their specific terms or otherwise are breached. Accordingly,
each of Pledgor and Secured Party hereto agree that each party shall be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Pledge Agreement and to enforce
specifically this Pledge Agreement and the terms and provisions hereof in any action instituted in
any State or Federal court located in New Castle County, Delaware, in addition to any other remedy
to which they may be entitled, at law or in equity.
7.16. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT,
ACTION OR PROCEEDING ARISING HEREUNDER.
7.17. Counterparts. This Pledge Agreement may be executed in multiple counterparts by the
different signatories hereto in separate counterparts, each of which when executed shall be deemed
to be an original but all of which taken together shall constitute one and the same agreement.
Delivery of an executed signature page of this Pledge Agreement by facsimile transmission or
electronic image scan transmission (e.g., .PDF) shall be effective as delivery of a manually
executed counterpart hereof.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, Pledgor and Secured Party have executed this Pledge and Security Agreement
as of the date first above written.
| PLEDGOR: XXXXX LOGISTICS LIMITED LLC, a Delaware limited partnership By: Xxxxx Logistics Services, L.L.C., its sole member |
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| By: | /S/ XXXXX X. XXXX | |||
| Xxxxx X. Xxxx | ||||
| Senior Vice President and Chief Financial Officer |
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| SECURED PARTY: SUNOCO PARTNERS MARKETING & TERMINALS L.P. By: Sunoco Logistics Partners Operations GP LLC, its General Partner |
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| By: | /S/ XXXXXXX X. XXXXXXXX | |||
| Xxxxxxx X. Xxxxxxxx | ||||
| President and Chief Operating Officer |
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(Signature Page to Pledge and Security Agreement)
