EXHIBIT 10.2
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT dated as of July 13, 2004 (this "Pledge Agreement")
is by and among HEP OPERATING COMPANY, L.P., a Delaware limited partnership
("Borrower"), each other party and each subsidiary of the Borrower signatory
hereto (together with the Borrower, the "Pledgors" and individually, each a
"Pledgor") and UNION BANK OF CALIFORNIA, N.A., a national association, as
Administrative Agent (the "Secured Party") for the ratable benefit of itself,
the Banks (as defined below), the Issuing Banks (as defined below), and the Swap
Counterparties (as defined below) (together with the Administrative Agent, the
Issuing Banks, the Banks, individually a "Beneficiary", and collectively, the
"Beneficiaries").
RECITALS
A. This Pledge Agreement is entered into in connection with that certain
Credit Agreement dated as of July 7, 2004 (as it has been or may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among the Borrower, the banks party thereto from time to time (the "Banks", and
individually, each a "Bank"), the Banks issuing letters of credit thereunder
from time to time (the "Issuing Banks", and individually, each an "Issuing
Bank") and Secured Party as Administrative Agent for such Banks and Issuing
Banks.
B. Each Pledgor (other than Borrower) is a Subsidiary of the Borrower and
will derive substantial direct and indirect benefit from (i) the transactions
contemplated by the Credit Agreement and the other Credit Documents (as defined
in the Credit Agreement) and (ii) the Interest Rate Contracts (as defined in the
Credit Agreement) entered into by the Borrower or any of its other Subsidiaries
with a Bank or an Affiliate of a Bank (each such counterparty, a "Swap
Counterparty").
C. It is a requirement under the Credit Agreement that the Pledgors shall
secure the due payment and performance of all Obligations (as defined in the
Credit Agreement) by entering into this Pledge Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged and
confessed, each Pledgor hereby agrees with the Secured Party for the benefit of
the Beneficiaries as follows:
Section 1. Definitions. All capitalized terms not otherwise defined in
this Pledge Agreement that are defined in the Credit Agreement shall have the
meanings assigned to such terms by the Credit Agreement. Any terms used in this
Pledge Agreement that are defined in the Uniform Commercial Code as adopted in
the State of Texas ("UCC") shall have the meanings assigned to those terms by
the UCC as the UCC may be amended from time to time, whether specified elsewhere
in this Pledge Agreement or not. All meanings to defined terms, unless otherwise
indicated, are to be equally applicable to both the singular and plural forms of
the terms defined. Article, Section, Schedule, and Exhibit references are to
Articles and Sections of, and Schedules and Exhibits to, this Pledge Agreement,
unless otherwise specified. All references to instruments, documents, contracts,
and agreements are references to such instruments, documents, contracts, and
agreements as the same may be amended, supplemented,
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and otherwise modified from time to time, unless otherwise specified. The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Pledge Agreement shall refer to this Pledge Agreement as a whole and not to any
particular provision of this Pledge Agreement. As used herein, the term
"including" means "including, without limitation". Paragraph headings have been
inserted in this Pledge Agreement as a matter of convenience for reference only
and it is agreed that such paragraph headings are not a part of this Pledge
Agreement and shall not be used in the interpretation of any provision of this
Pledge Agreement.
Section 2. Pledge.
2.01. Grant of Pledge.
(a) Each Pledgor hereby pledges to the Secured Party, and grants to
the Secured Party, for the benefit of the Beneficiaries, a continuing
security interest in, the Pledged Collateral, as defined in Section 2.02
below. This Pledge Agreement shall secure all Obligations now or hereafter
existing, including any extensions, modifications, substitutions,
amendments, and renewals thereof, whether for principal, interest, fees,
expenses, indemnifications or otherwise. All such obligations shall be
referred to in this Pledge Agreement as the "Secured Obligations".
(b) Notwithstanding anything contained herein to the contrary, it is
the intention of each Pledgor, the Secured Party and the other
Beneficiaries that the amount of the Secured Obligations secured by each
Pledgor's interests in any of its Property shall not exceed the maximum
amount permitted by fraudulent conveyance, fraudulent transfer and other
similar law, rule or regulation of any Governmental Authority applicable
to such Pledgor. Accordingly, notwithstanding anything to the contrary
contained in this Pledge Agreement or any other agreement or instrument
executed in connection with the payment of any of the Secured Obligations,
the amount of the Secured Obligations secured by each Pledgor's interests
in any of its Property pursuant to this Pledge Agreement shall be limited
to an aggregate amount equal to the largest amount that would not render
such Pledgor's obligations hereunder or the liens and security interest
granted to the Secured Party hereunder subject to avoidance under Section
548 of the United States Bankruptcy Code or any comparable provision of
any other applicable law.
2.02. Pledged Collateral. "Pledged Collateral" shall mean all of each
Pledgor's right, title, and interest in the following, whether now owned or
hereafter acquired:
(a) (i) all of the membership interests listed in the attached
Schedule 2.02(a) issued to such Pledgor (the "Membership Interests"), (ii)
all such additional membership interests of any issuer of such interests
hereafter acquired by such Pledgor, (iii) the certificates representing
the Membership Interests, if any, and all such additional membership
interests, and (iv) all rights to money or Property which such Pledgor now
has or hereafter acquires in respect of the Membership Interests,
including, without limitation, (A) any proceeds from a sale by or on
behalf of such Pledgor of any of the Membership Interests, and (B) any
distributions, dividends, cash, instruments and other property from
time-to-time received or otherwise distributed in respect of the
Membership Interests, whether regular, special or made in connection with
the partial or
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total liquidation of the issuer and whether attributable to profits, the
return of any contribution or investment or otherwise attributable to the
Membership Interests or the ownership thereof, (collectively, the
"Membership Interests Distributions");
(b) (i) all of the general and limited partnership interests listed
in the attached Schedule 2.02(b) issued to such Pledgor (the "Partnership
Interests"), (ii) all such additional limited or general partnership
interests of any issuer of such interests hereafter acquired by such
Pledgor and (iii) all rights to money or Property which such Pledgor now
has or hereafter acquires in respect of the Partnership Interests,
including, without limitation, (A) any proceeds from a sale by or on
behalf of such Pledgor of any of the Partnership Interests, and (B) any
distributions, dividends, cash, instruments and other property from
time-to-time received or otherwise distributed in respect of the
Partnership Interests, whether regular, special or made in connection with
the partial or total liquidation of the issuer and whether attributable to
profits, the return of any contribution or investment or otherwise
attributable to the Partnership Interests or the ownership thereof,
(collectively, the "Partnership Interests Distributions");
(c) (i) all of the shares of stock listed in the attached Schedule
2.02(c) issued to such Pledgor (the "Pledged Shares"), (ii) all such
additional shares of stock of any issuer of such shares of stock hereafter
issued to such Pledgor, (iii) the certificates representing the Pledged
Shares and all such additional shares, and (iv) all rights to money or
Property which such Pledgor now has or hereafter acquires in respect of
the Pledged Shares, including, without limitation, (A) any proceeds from a
sale by or on behalf of such Pledgor of any of the Pledged Shares, and (B)
any distributions, dividends, cash, instruments and other property from
time-to-time received or otherwise distributed in respect of the Pledged
Shares, whether regular, special or made in connection with the partial or
total liquidation of the issuer and whether attributable to profits, the
return of any contribution or investment or otherwise attributable to the
Pledged Shares or the ownership thereof, (collectively, the "Pledged
Shares Distributions"; together with the Membership Interests
Distributions and the Partnership Interest Distributions, the
"Distributions"); and
(d) all proceeds from the Pledged Collateral described in paragraphs
(a), (b) and (c) of this Section 2.02.
Notwithstanding the foregoing, as provided in 7.04(c) of this Pledge Agreement,
"Pledge Collateral" shall not include any cash distributions or dividends which
have been made by the Borrower to its Equity Interest holders in compliance with
the Credit Agreement.
2.03. Delivery of Pledged Collateral. All certificates or instruments, if
any, representing the Pledged Collateral shall be delivered to the Secured Party
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to the Secured Party. After the occurrence and
during the continuance of an Event of Default, the Secured Party shall have the
right, upon prior written notice to the applicable Pledgor, to transfer to or to
register in the name of the Secured Party or any of its nominees any of the
Pledged Collateral, subject to the rights specified in Section 2.04. In
addition, after the occurrence and during the
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continuance of an Event of Default, the Secured Party shall have the right at
any time to exchange the certificates or instruments representing the Pledged
Collateral for certificates or instruments of smaller or larger denominations.
2.04. Rights Retained by Pledgor. Notwithstanding the pledge in Section
2.01, so long as no Event of Default shall have occurred and remain uncured or
unwaived:
(a) and, if an Event of Default shall have occurred and remain
uncured or unwaived, until such time thereafter as such voting and other
consensual rights have been terminated pursuant to Section 5 hereof, each
Pledgor shall be entitled to exercise any voting and other consensual
rights pertaining to its Pledged Collateral for any purpose not
inconsistent with the terms of this Pledge Agreement or the Credit
Agreement; provided, however, that no Pledgor shall exercise nor shall it
refrain from exercising any such right if such action would have a
materially adverse effect on the value of the Pledged Collateral;
(b) except as otherwise provided in the Credit Agreement, each
Pledgor shall be entitled to receive and retain any dividends and other
Distributions paid on or in respect of the Pledged Collateral and the
proceeds of any sale of the Pledged Collateral; and
(c) at and after such time as voting and other consensual rights
have been terminated pursuant to Section 5 hereof, each Pledgor shall
execute and deliver (or cause to be executed and delivered) to the Secured
Party all proxies and other instruments as the Secured Party may
reasonably request to (i) enable the Secured Party to exercise the voting
and other rights which such Pledgor is entitled to exercise pursuant to
paragraph (a) of this Section 2.04, and (ii) receive any Distributions and
proceeds of sale of the Pledged Collateral which such Pledgor is
authorized to receive and retain pursuant to paragraph (b) of this Section
2.04.
Section 3. Pledgor's Representations and Warranties. Each Pledgor
represents and warrants to the Secured Party and the other Beneficiaries as
follows:
(a) The Pledged Collateral applicable to such Pledgor listed on the
attached Schedules 2.02(a), 2.02(b) and 2.02(c) have been duly authorized
and validly issued to such Pledgor and are fully paid and nonassessable
(as applicable in light of the entity type of each individual issuer).
(b) Such Pledgor is the legal and beneficial owner of the Pledged
Collateral free and clear of any Lien or option, except for (i) the
security interest created by this Pledge Agreement and (ii) other
Permitted Liens.
(c) No authorization, authentication, approval, or other action by,
and no notice to or filing with, any Governmental Authority or regulatory
body is required either (a) for the pledge by such Pledgor of the Pledged
Collateral pursuant to this Pledge Agreement or for the execution,
delivery, or performance of this Pledge Agreement by such Pledgor or (b)
for the exercise by the Secured Party or any Beneficiary of the voting or
other rights provided for in this Pledge Agreement or the remedies in
respect of the
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Pledged Collateral pursuant to this Pledge Agreement (except as may be
required in connection with such disposition by laws affecting the
offering and sale of securities generally).
(d) Such Pledgor has the full right, power and authority to deliver,
pledge, assign and transfer the Pledged Collateral to the Secured Party.
(e) The Membership Interests listed on the attached Schedule 2.02(a)
constitute the percentage of the issued and outstanding membership
interests of the respective issuer thereof set forth on Schedule 2.02(a)
and all of the Equity Interest in such issuer in which the Pledgor has any
ownership interest.
(f) The Partnership Interests listed on the attached Schedule
2.02(b) constitute the percentage of the issued and outstanding general
and limited partnership interests of the respective issuer thereof set
forth on Schedule 2.02(b) and all of the Equity Interest in such issuer in
which the Pledgor has any ownership interest.
(g) The Pledged Shares list on the attached Schedule 2.02(c)
constitute the percentage of the issued and outstanding shares of capital
stock of the respective issuer thereof set forth on Schedule 2.02(c) and
and all of the Equity Interest in such issuer in which the Pledgor has any
ownership interest.
(h) Schedule 3 sets forth its sole jurisdiction of formation, type
of organization, federal tax identification number, the organizational
number, and all names used by it during the last five years prior to the
date of this Pledge Agreement.
Section 4. Pledgor's Covenants. During the term of this Pledge Agreement
and until all of the Secured Obligations (including all Letter of Credit
Obligations) have been fully and finally paid and discharged in full, the
Commitments under the Credit Agreement have been terminated or expired, all
Letters of Credit have terminated or expired, and all obligations of the Issuing
Banks and the Banks in respect of Letters of Credit have been terminated, each
Pledgor covenants and agrees with the Secured Party that:
4.01. Protect Collateral; Further Assurances. Each Pledgor will warrant
and defend the rights and security interest herein granted unto the Secured
Party in and to the Pledged Collateral (and all right, title, and interest
represented by the Pledged Collateral) against the claims and demands of all
Persons whomsoever. Each Pledgor agrees that, at the expense of such Pledgor,
such Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be reasonably necessary and
that the Secured Party or any Beneficiary may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Secured Party or any Beneficiary to exercise and enforce
its rights and remedies hereunder with respect to any Pledged Collateral. Each
Pledgor hereby authorizes the Secured Party to file any financing statements,
amendments or continuations without the signature of such Pledgor to the extent
permitted by applicable law in order to perfect or maintain the perfection of
any security interest granted under this Pledge Agreement, including financing
statements containing an "all assets" or "all personal property" collateral
description.
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4.02. Transfer, Other Liens, and Additional Shares. Each Pledgor agrees
that it will not (a) except as otherwise permitted by the Credit Agreement, sell
or otherwise dispose of, or grant any option with respect to, any of the Pledged
Collateral or (b) create or permit to exist any Lien upon or with respect to any
of the Pledged Collateral, except for Permitted Liens. Each Pledgor agrees that
it will (a) cause each issuer of the Pledged Collateral that is a Subsidiary of
such Pledgor not to issue any other Equity Interests in addition to or in
substitution for the Pledged Collateral issued by such issuer, except (i) with
respect to a Subsidiary other than the Restricted Subsidiary, to such Pledgor or
any other Pledgor, and (ii) with respect to the Restricted Subsidiary, to such
Pledgor and to the other Equity Interest owners of such issuer existing on the
date hereof; provided that, any such issuance of Equity Interests shall not
result in such Pledgor owning a smaller percentage of all issued and outstanding
Equity Interests of such issuer than that percentage that the Pledgor owned on
the date hereof, and (b) pledge hereunder, promptly upon its acquisition
(directly or indirectly) thereof, any additional Equity Interests of an issuer
of the Pledged Collateral. No Pledgor shall approve any material amendment or
modification of any of the Pledged Collateral without the Secured Party's prior
written consent.
4.03. Jurisdiction of Formation; Name Change. Each Pledgor shall give the
Secured Party at least 30 days' prior written notice before it (i) in the case
of a Pledgor that is not a "registered organization" (as defined in Section
9-102 of the UCC) changes the location of its principal place of business and
chief executive office, or (ii) uses a trade name other than its current name
used on the date hereof. Other than as permitted by Section 6.09 of the Credit
Agreement, no Pledgor shall amend, supplement, modify or restate its articles or
certificate of incorporation, bylaws, limited liability company agreements, or
other equivalent organizational documents, nor amend its name or change its
jurisdiction of incorporation, organization or formation without the prior
written consent of the Secured Party.
Section 5. Remedies upon Default. If any Event of Default shall have
occurred and be continuing:
5.01. UCC Remedies. To the extent permitted by law, the Secured Party may
exercise in respect of the Pledged Collateral, in addition to other rights and
remedies provided for in this Pledge Agreement or otherwise available to it, all
the rights and remedies of a secured party under the UCC (whether or not the UCC
applies to the affected Pledged Collateral).
5.02. Dividends and Other Rights.
(a) All rights of the Pledgors to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to Section 2.04(a) may be exercised by the Secured Party if the
Secured Party so elects and gives written notice of such election to the
affected Pledgor and all rights of the Pledgors to receive any
Distributions on or in respect of the Pledged Collateral and the proceeds
of sale of the Pledged Collateral which it would otherwise be authorized
to receive and retain pursuant to Section 2.04(b) shall cease.
(b) All Distributions on or in respect of the Pledged Collateral and
the proceeds of sale of the Pledged Collateral which are received by any
Pledgor shall be received in trust for the benefit of the Secured Party,
shall be segregated from other funds
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of such Pledgor, and shall be promptly paid over to the Secured Party as
Pledged Collateral in the same form as so received (with any necessary
indorsement).
5.03. Sale of Pledged Collateral. The Secured Party may sell all or part
of the Pledged Collateral at public or private sale, at any of the Secured
Party's offices or elsewhere, for cash, on credit, or for future delivery, and
upon such other terms as may be commercially reasonable in accordance with
applicable laws. Each Pledgor agrees that to the extent permitted by law such
sales may be made without notice. If notice is required by law, each Pledgor
hereby deems 10 days' advance notice of the time and place of any public sale or
the time after which any private sale is to be made reasonable notification,
recognizing that if the Pledged Collateral threatens to decline speedily in
value or is of a type customarily sold on a recognized market shorter notice may
be reasonable. The Secured Party shall not be obligated to make any sale of the
Pledged Collateral regardless of notice of sale having been given. The Secured
Party may adjourn any public or private sale from time-to-time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Each Pledgor shall
fully cooperate with Secured Party in selling or realizing upon all or any part
of the Pledged Collateral. In addition, each Pledgor shall fully comply with the
securities laws of the United States, the State of Texas, and other states and
take such actions as may be reasonably necessary to permit Secured Party to sell
or otherwise dispose of any securities representing the Pledged Collateral in
compliance with such laws.
5.04. Exempt Sale. If, in the opinion of the Secured Party, there is any
question that a public or semipublic sale or distribution of any Pledged
Collateral will violate any state or federal securities law, the Secured Party
in its reasonable discretion (a) may offer and sell securities privately to
purchasers who will agree to take them for investment purposes and not with a
view to distribution and who will agree to imposition of restrictive legends on
the certificates representing the security, or (b) may sell such securities in
an intrastate offering under Section 3(a)(11) of the Securities Act of 1933, as
amended, and no sale so made in good faith by the Secured Party shall be deemed
to be not "commercially reasonable" solely because so made. Each Pledgor shall
cooperate fully with the Secured Party in all reasonable respects in selling or
realizing upon all or any part of the Pledged Collateral.
5.05. Application of Collateral. The proceeds of any sale, or other
realization (other than that received from a sale or other realization permitted
by the Credit Agreement) upon all or any part of the Pledged Collateral pledged
by the Pledgors shall be applied by the Secured Party as set forth in Section
7.06 of the Credit Agreement.
5.06. Cumulative Remedies. Each right, power and remedy herein
specifically granted to the Secured Party or otherwise available to it shall be
cumulative, and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity, or
otherwise, and each such right, power and remedy, whether specifically granted
herein or otherwise existing, may be exercised at any time and from time-to-time
as often and in such order as may be deemed expedient by the Secured Party in
its sole discretion. No failure on the part of the Secured Party to exercise,
and no delay in exercising, and no course of dealing with respect to, any such
right, power or remedy, shall operate as a waiver thereof, nor shall any single
or partial exercise of any such rights, power or remedy preclude any other or
further exercise thereof or the exercise of any other right.
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Section 6. Secured Party as Attorney-in-Fact for Pledgor.
6.01. Secured Party Appointed Attorney-in-Fact. Each Pledgor hereby
irrevocably appoints the Secured Party as such Pledgor's attorney-in-fact, with
full authority after the occurrence and during the continuance of an Event of
Default to act for such Pledgor and in the name of such Pledgor, and, in the
Secured Party's discretion, to take any action and to execute any instrument
which the Secured Party may deem reasonably necessary or advisable to accomplish
the purposes of this Pledge Agreement, including, without limitation, to
receive, indorse, and collect all instruments made payable to such Pledgor
representing any dividend, or the proceeds of the sale of the Pledged
Collateral, or other distribution in respect of the Pledged Collateral and to
give full discharge for the same. Secured Party shall exercise its rights under
this Section 6.01 only after the occurrence and during the continuance of an
Event of Default. EACH PLEDGOR HEREBY ACKNOWLEDGES, CONSENTS AND AGREES THAT THE
POWER OF ATTORNEY GRANTED PURSUANT TO THIS SECTION 6.01 IS IRREVOCABLE AND
COUPLED WITH AN INTEREST.
6.02. Secured Party May Perform. The Secured Party may from time-to-time,
at its option but at the Pledgors' expense, perform any act which any Pledgor
expressly agrees hereunder to perform and which such Pledgor shall fail to
perform after being requested in writing to so perform (it being understood that
no such request need be given after the occurrence and during the continuance of
any Event of Default and after notice thereof by the Secured Party to the
affected Pledgor) and the Secured Party may from time-to-time take any other
action which the Secured Party reasonably deems necessary for the maintenance,
preservation or protection of any of the Pledged Collateral or of its security
interest therein. The Secured Party shall provide notice to the affected Pledgor
of any action taken hereunder; provided however, the failure to provide such
notice shall not be construed as a waiver of any rights of the Secured Party
provided under this Pledge Agreement or under applicable law.
6.03. Secured Party Has No Duty. The powers conferred on the Secured Party
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty on it to exercise any such powers. Except for reasonable
care of any Pledged Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall have no duty as to
any Pledged Collateral or responsibility for taking any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Pledged Collateral.
6.04. Reasonable Care. The Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which the Secured Party accords its own property, it being understood
that the Secured Party shall have no responsibility for (a) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
tenders, or other matters relative to any Pledged Collateral, whether or not the
Secured Party has or is deemed to have knowledge of such matters, or (b) taking
any necessary steps to preserve rights against any parties with respect to any
Pledged Collateral.
Section 7. Miscellaneous.
7.01. Expenses. The Pledgors will upon demand pay to the Secured Party for
its benefit and the benefit of the other Beneficiaries the amount of any
reasonable out-of-pocket expenses,
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including the reasonable fees and disbursements of its counsel and of any
experts, which the Secured Party and the other Beneficiaries may incur in
connection with (a) the custody, preservation, use, or operation of, or the
sale, collection, or other realization of, any of the Pledged Collateral, (b)
the exercise or enforcement of any of the rights of the Secured Party or any
Bank or any other Beneficiary hereunder, and (c) the failure by any Pledgor to
perform or observe any of the provisions hereof.
7.02. Amendments, Etc. No amendment or waiver of any provision of this
Pledge Agreement nor consent to any departure by any Pledgor herefrom shall be
effective unless made in writing and authenticated by the affected Pledgor and
the Secured Party and, as required by the Credit Agreement, either all of the
Banks or the Majority Banks, and such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
7.03. Addresses for Notices. All notices and other communications provided
for hereunder shall be in the manner and to the addresses set forth in the
Credit Agreement or on the signature page hereof.
7.04. Continuing Security Interest; Transfer of Interest.
(a) This Pledge Agreement shall create a continuing security
interest in the Pledged Collateral and, unless expressly released by the
Secured Party, shall (a) other than as provided in Section 7.04(c) below,
remain in full force and effect until the indefeasible payment in full in
cash of the Secured Obligations (including all Letter of Credit
Obligations), the termination or expiration of all Letters of Credit and
the termination of all obligations of the Issuing Banks and the Banks in
respect of Letters of Credit, and the termination or expiration of the
Commitments, (b) be binding upon each Pledgor and its successors,
transferees and assigns, and (c) inure, together with the rights and
remedies of the Secured Party hereunder, to the benefit of and be binding
upon, the Secured Party, the Issuing Banks, and the Banks and their
respective successors, transferees, and assigns, and to the benefit of and
be binding upon, the Swap Counterparties, and each of their respective
successors, transferees, and assigns to the extent such successors,
transferees, and assigns of a Swap Counterparty is a Bank or an Affiliate
of a Bank. Without limiting the generality of the foregoing clause, when
any Bank assigns or otherwise transfers any interest held by it under the
Credit Agreement or other Credit Document to any other Person pursuant to
the terms of the Credit Agreement or such other Credit Document, that
other Person shall thereupon become vested with all the benefits held by
such Bank under this Pledge Agreement.
(b) Upon the indefeasible payment in full in cash of the Secured
Obligations (including all Letter of Credit Obligations), the termination
or expiration of all Letters of Credit and the termination of all
obligations of the Issuing Banks and the Banks in respect of Letters of
Credit, and the termination or expiration of the Commitments, the security
interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to the applicable Pledgor to the extent such
Pledged Collateral shall not have been sold or otherwise applied pursuant
to the terms hereof. Upon any such termination, the Secured Party will
promptly, at the Pledgors' expense, deliver all Pledged Collateral to the
applicable Pledgor, execute and deliver to the applicable Pledgor such
documents
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as such Pledgor shall reasonably request and take any other actions
reasonably requested to evidence or effect such termination.
(c) If a cash distribution or dividend is made by the Borrower to
its Equity Interest holders in compliance with the Credit Agreement, then
upon delivery of such cash to the Equity Interest holders (i) the security
interest granted to the Secured Party herein on such cash shall terminate
and (ii) such cash shall no longer constitute Pledged Collateral for
purposes of this Agreement.
7.05. Waivers. Each Pledgor hereby waives:
(a) promptness, diligence, notice of acceptance, and any other
notice with respect to any of the Secured Obligations and this Pledge
Agreement;
(b) any requirement that the Secured Party or any Beneficiary
protect, secure, perfect, or insure any Lien or any Property subject
thereto or exhaust any right or take any action against any Pledgor, any
Guarantor, or any other Person or any collateral; and
(c) any duty on the part of the Secured Party to disclose to any
Pledgor any matter, fact, or thing relating to the business, operation, or
condition of any Pledgor, any other Guarantor, or any other Person and
their respective assets now known or hereafter known by such Person.
7.06. Severability. Wherever possible each provision of this Pledge
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Pledge Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Pledge Agreement.
7.07. Choice of Law. This Pledge Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas, except
to the extent that the validity or perfection of the security interests
hereunder, or remedies hereunder, in respect of any particular Pledged
Collateral are governed by the laws of a jurisdiction other than the State of
Texas.
7.08. Counterparts. The parties may execute this Pledge Agreement in any
number of duplicate originals, each of which constitutes an original, and all of
which, collectively, constitute only one agreement. The parties may execute this
Pledge Agreement in counterparts, each of which constitutes an original, and all
of which, collectively, constitute only one agreement. Delivery of an executed
counterpart signature page by facsimile is as effective as executing and
delivering this Pledge Agreement in the presence of the other parties to this
Pledge Agreement. In proving this Pledge Agreement, a party must produce or
account only for the executed counterpart of the party to be charged.
7.09. Headings. Paragraph headings have been inserted in this Pledge
Agreement as a matter of convenience for reference only and it is agreed that
such paragraph headings are not a part of this Pledge Agreement and shall not be
used in the interpretation of any provision of this Pledge Agreement.
10
7.10. Reinstatement. If, at any time after payment in full of all Secured
Obligations and termination of the Secured Party's security interest, any
payments on the Secured Obligations previously made must be disgorged by the
Secured Party for any reason whatsoever, including, without limitation, the
insolvency, bankruptcy or reorganization of any Pledgor or any other Person,
this Pledge Agreement and the Secured Party's security interests herein shall be
reinstated as to all disgorged payments as though such payments had not been
made, and each Pledgor shall sign and deliver to the Secured Party all
documents, and shall do such other acts and things, as may be necessary to
reinstate and perfect the Secured Party's security interest. EACH PLEDGOR SHALL
DEFEND AND INDEMNIFY EACH BENEFICIARY FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS,
LIABILITY, COST OR EXPENSE UNDER THIS SECTION 7.10 (INCLUDING REASONABLE
ATTORNEYS' FEES AND EXPENSES) IN THE DEFENSE OF ANY SUCH ACTION OR SUIT
INCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE ARISING AS A
RESULT OF THE INDEMNIFIED BENEFICIARY'S OWN NEGLIGENCE BUT EXCLUDING SUCH CLAIM,
DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE THAT IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
FROM SUCH INDEMNIFIED BENEFICIARY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
7.11. Conflicts. In the event of any explicit or implicit conflict between
any provisions of this Pledge Agreement and any provision of the Credit
Agreement, the terms of the Credit Agreement shall be controlling.
7.12. Additional Pledgors. Pursuant to Section 5.10 of the Credit
Agreement, each Subsidiary (other than a Restricted Subsidiary) of the Borrower
that was not in existence on the date of the Credit Agreement is required to
enter into this Pledge Agreement as a Pledgor upon becoming a Subsidiary of the
Borrower. Upon execution and delivery after the date hereof by the Secured Party
and such Subsidiary of an instrument in the form of Annex 1, such Subsidiary
shall become a Pledgor hereunder with the same force and effect as if originally
named as a Pledgor herein. The execution and delivery of any instrument adding
an additional Pledgor as a party to this Pledge Agreement shall not require the
consent of any other Pledgor hereunder. The rights and obligations of each
Pledgor hereunder shall remain in full force and effect notwithstanding the
addition of any new Pledgor as a party to this Pledge Agreement.
7.13. Entire Agreement. THIS PLEDGE AGREEMENT AND THE OTHER CREDIT
DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
[SIGNATURE PAGES FOLLOW]
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The parties hereto have caused this Pledge Agreement to be duly executed
as of the date first above written.
PLEDGORS: HEP OPERATING COMPANY, L.P., a Delaware
limited partnership
By: HEP Logistics GP, L.L.C., a Delaware limited
liability company, its General Partner
By: Xxxxx Energy Partners, L.P., a Delaware
limited partnership, its Managing Member
By: HEP Logistics Holdings, L.P., a Delaware
limited partnership, its General Partner
By: Xxxxx Logistic Services, L.L.C., a Delaware
limited liability company, its General Partner
By: /s/ M. Xxxxx Xxxxxxxxx
----------------------------------------------
M. Xxxxx Xxxxxxxxx
Vice President - Treasury and
Investor Relations
HEP PIPELINE, L.L.C., a Delaware limited liability company
HEP REFINING, L.L.C., a Delaware limited liability company
Each by: HEP Operating Company, L.P., a Delaware
limited partnership and its Sole Member
By: HEP Logistics GP, L.L.C., a Delaware limited
liability company, its General Partner
By: Xxxxx Energy Partners, L.P., a Delaware
limited partnership, its Managing Member
By: HEP Logistics Holdings, L.P., a Delaware
limited partnership, its General Partner
By: Xxxxx Logistic Services, L.L.C., a Delaware
limited liability company, its General Partner
By: /s/ M. Xxxxx Xxxxxxxxx
------------------------------------------
M. Xxxxx Xxxxxxxxx
Vice President - Treasury and
Investor Relations
[Signature pages continue.]
Signature page to Pledge Agreement
SECURED PARTY: UNION BANK OF CALIFORNIA, N.A., as Secured
Party for the ratable benefit of the Beneficiaries
By: /s/ Xxxx Xxxxxx
-----------------------------------------
Xxxx Xxxxxx, Vice President
Signature page to Pledge Agreement
