EXHIBIT 10.2
PREPARED BY AND WHEN
RECORDED RETURN TO:
▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
MORTGAGE AND DEED OF TRUST
(WITH SECURITY AGREEMENT AND FINANCING STATEMENT)
BY
HEP PIPELINE, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY,
AS GRANTOR
TO
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
AS TRUSTEE
FOR THE BENEFIT OF
▇▇▇▇▇ CORPORATION,
A DELAWARE CORPORATION
AS BENEFICIARY
DATED AS OF JULY 8, 2005
THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A TRANSMITTING UTILITY.
THIS INSTRUMENT COVERS GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL
PROPERTY DESCRIBED HEREIN AND IS TO BE FILED FOR RECORD IN THE RECORDS WHERE
MORTGAGES ON REAL ESTATE ARE RECORDED. ADDITIONALLY, THIS INSTRUMENT SHOULD BE
APPROPRIATELY INDEXED, NOT ONLY AS A MORTGAGE, BUT ALSO AS A FINANCING STATEMENT
COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED
HEREIN. THE MAILING ADDRESSES OF THE GRANTOR (DEBTOR) AND BENEFICIARY
(BENEFICIARY) ARE SET FORTH IN THIS INSTRUMENT.
MORTGAGE AND DEED OF TRUST
(WITH SECURITY AGREEMENT AND FINANCING STATEMENT)
THIS MORTGAGE AND DEED OF TRUST (WITH SECURITY AGREEMENT AND FINANCING
STATEMENT) (hereinafter referred to as this "DEED OF TRUST"), is entered into as
of the 8th day of July, 2005, by HEP Pipeline, L.L.C., a Delaware limited
liability company (hereinafter referred to as "GRANTOR"), a subsidiary of ▇▇▇▇▇
Energy Partners, L.P., a Delaware limited partnership ("HEP"), whose address for
notice hereunder is at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: General Counsel, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, to ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Trustee (hereinafter referred to in such capacity as "TRUSTEE"),
whose address is c/o Scheuer, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-9570, for the benefit of the herein
below defined Beneficiary.
WITNESSETH:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used herein, the following terms shall have the following
meanings:
(a) AFFILIATE: With respect to a specified Person, any other Person
controlling, controlled by or under common control with that first Person.
As used in this definition, the term "control" includes (i) with respect
to any Person having voting shares or the equivalent and elected
directors, managers or Persons performing similar functions, the ownership
of or power to vote, directly or indirectly, shares or the equivalent
representing more than 50% of the power to vote in the election of
directors, managers or Persons performing similar functions, (ii)
ownership of more than 50% of the equity or equivalent interest in any
Person and (iii) the ability to direct the business and affairs of any
Person by acting as a general partner, manager or otherwise.
(b) BENEFICIARY: ▇▇▇▇▇ Corporation, a Delaware corporation whose address
for notice hereunder is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: General Counsel.
(c) CONTRACTS: The Pipeline Contracts.
(d) DEED OF TRUST: Shall have the meaning set forth in the introductory
paragraph hereof.
(e) EASEMENTS: The Pipeline Easements.
(f) EVENT OF DEFAULT: Any happening or occurrence described in Article 7
of this Deed of Trust.
(g) FIXTURES: All materials, supplies, equipment, apparatus and other
items now or hereafter acquired by Grantor and now or hereafter attached
to, installed in or used in
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connection with (temporarily or permanently) the Real Property or the
Pipelines, together with all accessions, replacements, betterments and
substitutions for any of the foregoing and the proceeds thereof.
(h) GOVERNMENTAL ENTITY: Any court, governmental department, commission,
council, board, bureau, agency or other judicial, administrative,
regulatory, legislative or other instrumentality of the United States of
America or any foreign country, or any state, county, municipality or
local governmental body or political subdivision or any such other foreign
country.
(i) GRANTOR: The above defined Grantor, whether one or more, and any and
all subsequent owners of the Mortgaged Property or any part thereof.
(j) IMPOSITIONS: All real estate and personal property taxes; water, gas,
sewer, electricity and other utility rates and charges; charges for any
easement, license or agreement maintained for the benefit of the Mortgaged
Property; and all other taxes, charges and assessments and any interest,
costs or penalties with respect thereto, general and special, ordinary and
extraordinary, foreseen and unforeseen, of any kind and nature whatsoever
which at any time prior to or after the execution hereof may be assessed,
levied or imposed upon the Mortgaged Property or the ownership, use,
occupancy or enjoyment thereof.
(k) IMPROVEMENTS: The Pipeline Improvements.
(l) LEASES: Any and all leases, subleases, licenses, concessions or other
agreements (written or verbal, now or hereafter in effect) which grant a
possessory interest in and to, or the right to use, the Mortgaged
Property, and all other agreements, such as utility contracts, maintenance
agreements and service contracts, which in any way relate to the use,
occupancy, operation, maintenance, enjoyment or ownership of the Mortgaged
Property, save and except any and all leases, subleases or other
agreements pursuant to which Grantor is granted a possessory interest in
the Real Property.
(m) LEGAL REQUIREMENTS: Shall mean any and all laws, statutes, codes,
rules, regulations, ordinances, judgments, orders, writs, decrees,
requirements or determinations of any Governmental Entity, and (ii) to the
extent not covered by clause (i) immediately above, any and all
requirements of permits, licenses, certificates, authorizations,
concessions, franchises or other approvals granted by any Governmental
Entity.
(n) MORTGAGED PROPERTY: The Pipeline Assets, together with:
(i) all rights, privileges, tenements, hereditaments, rights-of-way,
easements, appendages and appurtenances in anywise appertaining
thereto, and all right, title and interest of Grantor in and to any
streets, ways, alleys, strips or gores of land adjoining the Real
Property or any part thereof; and
(ii) all betterments, additions, alterations, appurtenances,
substitutions, replacements and revisions thereof and thereto and
all reversions and remainders therein; and
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(iii) all other property and rights of Grantor of every kind and
character to the extent specifically relating to and used or to be
used solely in connection with the foregoing property, and all
proceeds and products of any of the foregoing.
As used in this Deed of Trust, the term "MORTGAGED PROPERTY" shall be
expressly defined as meaning all or, where the context permits or
requires, any portion of the above, and all or, where the context permits
or requires, any interest therein. Notwithstanding anything to the
contrary herein, in no event shall the term "MORTGAGED PROPERTY" include
any Product owned by third parties that may be shipped through or stored
at or in any of the Mortgaged Property.
(o) OBLIGATIONS: Shall have the meaning given such term in Section 2.1.
(p) PERMITTED ENCUMBRANCES: Shall mean any of the following matters:
(i) any (A) inchoate liens, security interests or similar charges
constituting or securing the payment of expenses which were incurred
incidental to the ownership and operation of the Pipelines
(collectively, the "OPERATIONS") or the operation, storage,
transportation, shipment, handling, repair, construction,
improvement or maintenance of the Mortgaged Property, and (B)
materialman's, mechanics', repairman's, employees', contractors',
operators', warehousemen's, barge or ship owner's and carriers'
liens or other similar liens, security interests or charges for
liquidated amounts arising in the ordinary course of business
incidental to the conduct of the Operations or the ownership and
operation of the Mortgaged Property, securing amounts the payment of
which is not delinquent and that will be paid in the ordinary course
of business or, if delinquent, that are being contested in good
faith with any action or proceeding to foreclose or attach any of
the Mortgaged Property on account thereof properly stayed; (ii) any
liens or security interests for Taxes not yet delinquent or, if
delinquent, that are being contested in good faith in the ordinary
course of business with any action or proceeding to foreclose or
attach any of the Mortgaged Property on account thereof properly
stayed; (iii) any liens or security interests reserved in leases,
rights of way or other real property interests for rental or for
compliance with the terms of such leases, rights of way or other
real property interests, provided payment of the debt secured is not
delinquent or, if delinquent, is being contested in good faith in
the ordinary course of business with any action or proceeding to
foreclose or attach any of the Mortgaged Property on account thereof
properly stayed; (iv) all prior reservations of minerals in and
under or that may be produced from any of the lands constituting
part of the Mortgaged Property or on which any part of the Mortgaged
Property is located; (v) all liens (other than liens for borrowed
money), security interests, charges, easements, restrictive
covenants, encumbrances, contracts, instruments, obligations,
discrepancies, conflicts, shortages in area or boundary lines,
encroachments or protrusions, or overlapping of improvements,
defects, irregularities and other matters affecting or encumbering
title to the Mortgaged Property which individually or in the
aggregate are not such as to unreasonably or materially interfere
with or prevent any material operations conducted on the Mortgaged
Property; (vi) rights reserved
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to or vested in any Governmental Entity to control or regulate any
of the Mortgaged Property or the Operations and all Legal
Requirements of such authorities, including any building or zoning
ordinances and all environmental laws; (vii) any contract, easement,
instrument, lien, security instrument, permit, amendment, extension
or other matter entered into by a party in accordance with the terms
of the Purchase Agreement (as defined in the Pipelines Agreement) or
in compliance with the approvals or directives of the other party
made pursuant to such Purchase Agreement; (viii) all Post-Closing
Consents (as defined in the Purchase Agreement); (ix) defects in the
early chain of the title consisting of the mere failure to recite
marital status in a document or omissions of successions of heirship
proceedings, unless such failure or omission results in another
Person's superior claim of title to the Pipeline Easements or
relevant portion thereof; (x) any assertion of a defect based on a
lack of a survey with respect to the Pipelines; (xi) any title
defect affecting (or the termination or expiration of) any easement,
right of way, leasehold interest or fee interest affecting property
over which the Pipelines pass which has been replaced prior to the
date of this Deed of Trust by an easement, right of way, leasehold
interest or fee interest covering substantially the same land or the
portion thereof used by Beneficiary or its Affiliates; and (xii) all
Senior Liens.
(q) PERMITS: The Pipeline Permits.
(r) PERSON: An individual, a corporation, a partnership, a limited
liability company, an association, a trust, or any other entity or
organization, including, without limitation, any Governmental Entity.
(s) PERSONALTY: The Pipeline Equipment, and all other personal property
(other than the Fixtures) and intangible assets of any kind or character
as defined in and subject to the provisions of the Uniform Commercial Code
Article 9 - Secured Transactions, as the same is codified and in effect in
New Mexico, which are now or hereafter located or to be located upon,
within or about the Real Property, or which are or may be used in or
related to the planning, development, financing or operation of the
Mortgaged Property, together with all accessories, replacements and
substitutions thereto or therefor and the proceeds thereof.
(t) PIPELINE ASSETS: All of the following assets, properties and rights,
whether real, personal or mixed, which are owned or held for use by
Grantor solely in connection with the ownership or operation of those
certain pipelines described on Exhibit B (the "PIPELINES"):
(i) All parcels of fee simple real property now or hereafter owned
by Grantor on which any part of the Pipelines are located including,
without limitation, the property held in fee by Grantor described on
Exhibit A, if any (collectively, the "PIPELINE FEE LAND");
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(ii) All leases of real property now or hereafter entered into or
acquired by Grantor on which all or a part of the Pipelines are
located, including, without limitation, the leases described on
Exhibit A, if any (the "PIPELINE LEASES");
(iii) All easements, rights-of-way, property use agreements, line
rights and real property licenses (including right-of-way permits
from railroads and road crossing permits or other right-of-way
permits from Governmental Entities) required to operate the
Pipelines now or hereafter entered into or acquired by Grantor,
including, without limitation, the easements, rights-of-way,
property use agreements, line rights and real property licenses
described on Exhibit A (the "PIPELINE EASEMENTS");
(iv) All structures, fixtures and appurtenances (A) located on the
Pipeline Fee Land, (B) located on the land subject to the Pipeline
Leases, or (C) located within the Pipeline Easements, and now or
hereafter owned by Grantor, including, without limitation, any
buildings, pipelines and pumping facilities described on Exhibit A
(collectively, the "PIPELINE IMPROVEMENTS");
(v) To the extent same do not constitute Pipeline Improvements, any
and all fittings, cathodic protection ground beds, rectifiers, other
cathodic or electric protection devices, machinery, engines, pipes,
pipelines, valves, valve boxes, connections, gates, scraper trap
extenders, telecommunication facilities and equipment (including
microwave and other transmission towers), lines, wires, computer
hardware, fixed or mobile machinery and equipment, vehicle refueling
tanks, pumps, heating and non-pipeline pumping stations, fittings,
tools, furniture and metering equipment now owned or hereafter
acquired by Grantor (the "PIPELINE EQUIPMENT");
(vi) The contracts, agreements, leases and other legally binding
rights and obligations of Grantor described on Exhibit A, if any,
but excluding those contracts and agreements constituting Pipeline
Leases and Pipeline Easements (the "PIPELINE CONTRACTS");
(vii) Intellectual property rights and related computer software;
(viii) All permits, licenses, certificates, authorizations,
registrations, orders, waivers, variances and approvals now or
hereafter granted by any Governmental Entity to Grantor or its
predecessors in interest pertaining solely to the ownership or
operation of the Pipelines, including, without limitation, those
permits, licenses, certificates, authorizations, registrations,
orders, waivers, variances and approvals described on Exhibit A, in
each case to the extent the same are assignable (the "PIPELINE
PERMITS"); and
(ix) All records and documents now or hereafter acquired by Grantor
relating solely to the ownership, condition or operation of the
Pipeline Assets (the "PIPELINE RECORDS").
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(u) PIPELINE CONTRACTS: Shall have the meaning set forth in subsection
(vi) of the definition of Pipeline Assets.
(v) PIPELINE EASEMENTS: Shall have the meaning set forth in subsection
(iii) of the definition of Pipeline Assets.
(w) PIPELINE EQUIPMENT: Shall have the meaning set forth in subsection (v)
of the definition of Pipeline Assets.
(x) PIPELINE FEE LAND: Shall have the meaning set forth in subsection (i)
of the definition of Pipeline Assets.
(y) PIPELINE IMPROVEMENTS: Shall have the meaning set forth in subsection
(iv) of the definition of Pipeline Assets.
(z) PIPELINE LEASES: Shall have the meaning set forth in subsection (ii)
of the definition of Pipeline Assets.
(aa) PIPELINE PERMITS: Shall have the meaning set forth in subsection
(viii) of the definition of Pipeline Assets.
(bb) PIPELINE REAL PROPERTY: Collectively, the Pipeline Fee Land, the
Pipeline Leases, the Pipeline Improvements and the Pipeline Easements.
(cc) PIPELINE RECORDS: Shall have the meaning set forth in subsection (ix)
of the definition of Pipeline Assets.
(dd) PIPELINES: Shall have the meaning set forth in the first paragraph of
the definition of Pipeline Assets.
(ee) PIPELINES AGREEMENT: That certain Pipelines Agreement dated as of
July __, 2005 by and among Beneficiary, HEP, Navajo Refining Company,
L.P., a Delaware limited partnership, ▇▇▇▇▇ Energy Partners-Operating,
L.P., a Delaware limited partnership, Grantor, HEP Logistics Holdings,
L.P., a Delaware limited partnership, ▇▇▇▇▇ Logistic Services, L.L.C., a
Delaware limited liability company, and HEP Logistics GP, L.L.C., a
Delaware limited liability company, together with any amendments,
restatements or modifications from time to time made thereto.
(ff) PRODUCT: Crude oil, gas oil, diesel, kerosene, casinghead, naphtha,
normal butane and isobutane transported through the Pipelines.
(gg) PURCHASE AGREEMENT: That certain Purchase and Sale Agreement dated as
of July 6, 2005 by and among Beneficiary, Navajo Pipeline Co., L.P., a
Delaware limited partnership, Navajo Refining Company, L.P., a Delaware
limited partnership, HEP, ▇▇▇▇▇ Energy Partners - Operating, L.P., a
Delaware limited partnership, and Grantor.
(hh) REAL PROPERTY: The Pipeline Real Property.
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(ii) SECURITY DOCUMENTS: This Deed of Trust and any and all other
documents now or hereafter executed by Grantor or any other Person to
evidence or secure the performance of the Obligations.
(jj) SENIOR BANK LIENS: Collectively, (i) each lien and security interest
in all or any portion of the Mortgaged Property heretofor or hereafter
granted by Grantor or its Affiliates under the Senior Credit Agreement,
and (ii) each lien and security interest in all or any portion of the
Mortgaged Property hereafter granted by any Person who acquires an
interest in all or any portion of the Mortgaged Property securing senior
debt of such Person.
(kk) SENIOR CREDIT AGREEMENT: That certain Credit Agreement dated as of
July 7, 2004 (as extended, amended, supplemented, restated, replaced or
refinanced in whole or in part, from time to time) among ▇▇▇▇▇ Energy
Partners - Operating, L.P., a Delaware limited partnership, the banks
party thereto from time to time, and Union Bank of California, N.A., in
its capacity as administrative agent (or any assignee of or successor to
such administrative agent).
(ll) SENIOR LIEN: Collectively, the Senior Bank Liens and each other lien
and security interest as to which the lien and security interest granted
pursuant to this Deed of Trust has been subordinated thereto pursuant to
the terms of a Subordination, Non-Disturbance and Attornment Agreement in
substantially the form of Attachment 1 hereto executed by the Beneficiary
and the holder of such lien and security interest and recorded in the
Official Public Records of Real Property of ▇▇▇▇ and Lea Counties, New
Mexico and (at the election of such holder) any or all of the other
counties in New Mexico in which any of the Mortgaged Property is located.
(mm) TAXES: Any and all federal, state, local, foreign and other net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, leases, service, service use, withholding,
payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees, or
assessments.
ARTICLE 2
GRANT
2.1 GRANT. To secure and enforce the prompt performance and compliance by HEP
of all obligations set forth for HEP in Section 2(c), Section 7, and
Section 10(c) of the Pipelines Agreement, plus all claims (as such term is
defined in the Bankruptcy Code) of or damages owed to the Beneficiary
against HEP and/or the Mortgaged Property resulting from any rejection of
the Pipelines Agreement by HEP in any bankruptcy or insolvency proceeding
involving HEP, and any reasonable costs and expenses (including, but not
limited to, attorneys' and experts' fees and court costs) incurred by
Beneficiary in enforcing and exercising its rights hereunder
(collectively, the "OBLIGATIONS"), Grantor has GRANTED, BARGAINED, SOLD
and CONVEYED, and by these presents does ▇▇▇▇▇, BARGAIN, SELL and CONVEY,
unto Trustee the Mortgaged Property,
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subject, however, to the Permitted Encumbrances, TO HAVE AND TO HOLD the
Mortgaged Property unto Trustee, forever, and Grantor does hereby bind
itself, its successors and assigns to WARRANT AND FOREVER DEFEND the title
to the Mortgaged Property unto Trustee against every Person whomsoever
lawfully claiming or to claim the same or any part thereof other than
against any holder of any Senior Lien; provided, however, that this grant
shall terminate upon the full performance and discharge of all of the
Obligations and in accordance with the other terms set forth herein.
2.2 MAXIMUM SECURED INDEBTEDNESS. THE OUTSTANDING INDEBTEDNESS SECURED BY
PROPERTY LOCATED IN NEW MEXICO SHALL NOT AT ANY ONE TIME EXCEED THE
AGGREGATE MAXIMUM AMOUNT OF $100,000,000, WHICH SHALL CONSTITUTE THE
MAXIMUM AMOUNT AT ANY TIME SECURED HEREBY.
ARTICLE 3
WARRANTIES AND REPRESENTATIONS
Grantor hereby unconditionally warrants and represents to Beneficiary as
follows:
3.1 ORGANIZATION AND POWER. Grantor (a) is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and has complied with all conditions prerequisite to
its doing business in the State of New Mexico and (b) has all requisite
power and all governmental certificates of authority, licenses, permits,
qualifications and documentation to own, lease and operate its properties
and to carry on its business as now being, and as proposed to be,
conducted.
3.2 VALIDITY OF SECURITY DOCUMENTS. The execution, delivery and performance by
Grantor of the Security Documents (a) are within Grantor's powers and have
been duly authorized by Grantor's Manager or other necessary parties, and
all other requisite action for such authorization has been taken; (b) have
received all (if any) requisite prior governmental approval in order to be
legally binding and enforceable in accordance with the terms thereof; and
(c) will not violate, be in conflict with, result in a breach of or
constitute (with due notice or lapse of time, or both) a default under,
any Legal Requirement or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of Grantor's
property or assets, except as contemplated by the provisions of the
Security Documents. The Security Documents constitute the legal, valid and
binding obligations of Grantor and others obligated under the terms of the
Security Documents, in accordance with their respective terms.
3.3 LIEN OF THIS INSTRUMENT. Subject to the Senior Liens, this Deed of Trust
constitutes a valid and subsisting deed of trust lien on the Real Property
and the Fixtures and a valid, subsisting security interest in and to, and
a valid assignment of, the Personalty and Leases, all in accordance with
the terms hereof.
3.4 LITIGATION. There are no actions, suits or proceedings pending, or to the
knowledge of Grantor threatened, against or affecting the Grantor as a
result of or in connection with
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Grantor's entering into this Deed of Trust, or involving the validity or
enforceability of this Deed of Trust or the priority of the liens and
security interests created by the Security Documents, and no event has
occurred (including specifically Grantor's execution of the Security
Documents) which will violate, be in conflict with, result in the breach
of, or constitute (with due notice or lapse of time, or both) a default
under, any Legal Requirement or result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon any of
Grantor's property other than the liens and security interests created by
the Security Documents.
ARTICLE 4
AFFIRMATIVE COVENANTS OF GRANTOR
Grantor hereby unconditionally covenants and agrees with Beneficiary that,
except for the Permitted Encumbrances, Grantor will protect the lien and
security interest status of this Deed of Trust and except for the Permitted
Encumbrances, will not, without the prior written consent of Beneficiary, place,
or permit to be placed, or otherwise mortgage, hypothecate or encumber the
Mortgaged Property with, any other lien or security interest of any nature
whatsoever (statutory, constitutional or contractual) regardless of whether same
is allegedly or expressly inferior to the lien and security interest created by
this Deed of Trust, and, if any such lien or security interest is asserted
against the Mortgaged Property, Grantor will promptly, at its own cost and
expense, (a) pay the underlying claim in full or take such other action so as to
cause same to be released and (b) within five days from the date such lien or
security interest is so asserted, give Beneficiary notice of such lien or
security interest. Such notice shall specify who is asserting such lien or
security interest and shall detail the origin and nature of the underlying claim
giving rise to such asserted lien or security interest.
ARTICLE 5
NEGATIVE COVENANTS OF GRANTOR
Grantor hereby covenants and agrees with Beneficiary that, until the full
performance and discharge of all of the Obligations, Grantor will not, without
the prior written consent of Beneficiary, create, place or permit to be created
or placed, or through any act or failure to act, acquiesce in the placing of, or
allow to remain, any mortgage, pledge, lien (statutory, constitutional or
contractual), security interest, encumbrance or charge on, or conditional sale
or other title retention agreement, regardless of whether same are expressly
subordinate to the liens of the Security Documents, with respect to, the
Mortgaged Property, other than the Permitted Encumbrances.
ARTICLE 6
AFFIRMATIVE COVENANTS OF BENEFICIARY
By its acceptance hereof, Beneficiary recognizes that (a) Grantor is
obligated or may hereafter become obligated to any of the Credit Parties (as
defined in the SNDA [defined below]) in connection with the Senior Credit
Agreement, and (b) Grantor and any future owner of the
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Mortgaged Property may incur additional indebtedness or become otherwise
obligated to one or more banks, insurance companies, investment banks or other
financial institutions regularly engaged in commercial lending and/or bonds,
debentures, notes and similar instruments evidencing obligations that may be
secured by liens or security interests on some or all of Grantor's property,
including the Mortgaged Property (the holder of such liens or security interests
being a "SECURED LENDER"). To the extent that any such Secured Lender notifies
Beneficiary of Secured Lender's desire to subordinate the lien and security
interest held by Beneficiary pursuant to this Deed of Trust, Beneficiary, by its
acceptance hereof, will agree to effect such subordination by promptly
executing, in one or more counterparts, a Subordination, Non-Disturbance and
Attornment Agreement in substantially the form of Attachment 1 hereto (the
"SNDA"). The subordination of this Deed of Trust shall (i) not be effective
unless and until the SNDA has been executed by the Secured Lender, and (ii) be
subject to compliance by the Secured Lender with its obligations under Section 3
and Section 4 of the SNDA. Any Secured Lender who is a party to an SNDA and who
is in compliance with its obligations under Section 3 and Section 4 of such SNDA
is hereinafter referred to as a "LIENHOLDER."
ARTICLE 7
EVENTS OF DEFAULT
The term "EVENT OF DEFAULT", as used in the Security Documents, shall mean
the occurrence or happening, at any time and from time to time, of any one or
more of the following.
7.1 BREACH OF DEED OF TRUST. (a) Grantor shall (i) fail to perform or observe,
in any material respect, any covenant, condition or agreement of this Deed
of Trust to be performed or observed by Grantor, or (ii) breach any
warranty or representation made by Grantor in this Deed of Trust, and such
failure or breach shall continue unremedied for a period of thirty (30)
days after receipt of written notice thereof to the Grantor from the
Beneficiary; provided, however, that in the event such failure or breach
cannot be reasonably cured within such thirty (30) day period and Grantor
has diligently proceeded (and continues to proceed) to cure such breach,
Grantor shall have an additional sixty (60) days to cure such failure or
breach, or (b) HEP shall fail to perform all of the Obligations in full
and on or before the dates same are to be performed (after giving effect
to any applicable grace and cure periods).
7.2 VOLUNTARY BANKRUPTCY. Grantor shall (a) voluntarily be adjudicated a
bankrupt or insolvent, (b) procure, permit or suffer the voluntary or
involuntary appointment of a receiver, trustee or liquidator for itself or
for all or any substantial portion of its property, (c) file any petition
seeking a discharge, rearrangement, or reorganization of its debts
pursuant to the bankruptcy laws or any other debtor relief laws of the
United States or any state or any other competent jurisdiction, or (d)
make a general assignment for the benefit of its creditors.
7.3 INVOLUNTARY BANKRUPTCY. If (a) a petition is filed against Grantor seeking
to rearrange, reorganize or extinguish its debts under the provisions of
any bankruptcy or other debtor relief law of the United States or any
state or other competent jurisdiction, and such petition is not dismissed
or withdrawn within sixty (60) days after its filing, or (b) a court
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of competent jurisdiction enters an order, judgment or decree appointing,
without the consent of Grantor a receiver or trustee for it, or for all or
any part of its property, and such order, judgment, or decree is not
dismissed, withdrawn or reversed within sixty (60) days after the date of
entry of such order, judgment or decree.
7.4 REJECTION OF PIPELINES AGREEMENT. A rejection, by or on behalf of Grantor
or HEP, of the Pipelines Agreement in bankruptcy.
ARTICLE 8
REMEDIES
8.1 REMEDIES. Subject, in each case, to the rights of any Lienholder arising
under or pursuant to the Senior Liens, and the terms and provisions of the
SNDA, and provided no material default by the ▇▇▇▇▇ Entities (as defined
in the Pipelines Agreement) has occurred and is continuing, if an Event of
Default shall occur and be continuing, Beneficiary may, at Beneficiary's
election and by or through Trustee or otherwise, exercise any or all of
the following rights, remedies and recourses:
(a) ENTRY UPON MORTGAGED PROPERTY. Enter upon the Mortgaged Property and
take exclusive possession thereof and of all books, records and accounts
relating thereto. If Grantor remains in possession of all or any part of
the Mortgaged Property after an Event of Default and without Beneficiary's
prior written consent thereto, Beneficiary may invoke any and all legal
remedies to dispossess Grantor, including specifically one or more actions
for forcible entry and detainer, trespass to try title and writ of
restitution. Nothing contained in the foregoing sentence shall, however,
be construed to impose any greater obligation or any prerequisites to
acquiring possession of the Mortgaged Property after an Event of Default
than would have existed in the absence of such sentence.
(b) OPERATION OF MORTGAGED PROPERTY. Hold, lease, manage, operate or
otherwise use or permit the use of the Mortgaged Property, either itself
or by other Persons, firms or entities, in such manner, for such time and
upon such other terms as Beneficiary may deem to be prudent and reasonable
under the circumstances (making such repairs, alterations, additions and
improvements thereto and taking any and all other action with reference
thereto, from time to time, as Beneficiary shall deem necessary or
desirable), and apply all amounts collected by Trustee or Beneficiary in
connection therewith in accordance with the provisions of Section 8.8.
(c) TRUSTEE OR RECEIVER. Prior to, upon or at any time after, commencement
of any legal proceedings hereunder, make application to a court of
competent jurisdiction as a matter of strict right and without notice to
Grantor or regard to the adequacy of the Mortgaged Property for the
satisfaction of the Obligations for appointment of a receiver of the
Mortgaged Property, and Grantor does hereby irrevocably consent to such
appointment. Any such receiver shall have all the usual powers and duties
of receivers in similar cases, including the full power to rent, maintain
and otherwise operate the Mortgaged Property upon such terms as may be
approved by the court.
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(d) OTHER. Exercise any and all other rights, remedies and recourses
granted under this Deed of Trust.
8.2 REMEDIES CUMULATIVE, CONCURRENT AND NONEXCLUSIVE. Beneficiary shall have
all rights, remedies and recourses granted in the Pipelines Agreement and,
subject to the rights of any Lienholder arising under or pursuant to the
Senior Liens, and the terms and provisions of the SNDA, the Deed of Trust
and same (a) shall be cumulative and concurrent; (b) may be pursued
separately, successively or concurrently against Grantor or others
obligated under this Deed of Trust, or against the Mortgaged Property, or
against any one or more of them, at the sole discretion of Beneficiary;
(c) may be exercised as often as occasion therefor shall arise, it being
agreed by Grantor that the exercise or failure to exercise any of same
shall in no event be construed as a waiver or release thereof or of any
other right, remedy or recourse; and (d) are intended to be, and shall be,
nonexclusive.
8.3 OBLIGATIONS. Neither Grantor, HEP nor any other Person hereafter obligated
for performance or fulfillment of all or any of the Obligations shall be
relieved of such obligation by reason of (a) the failure of Trustee to
comply with any request of Grantor or any other Person to enforce any
provisions of this Deed of Trust; (b) the release, regardless of
consideration, of the Mortgaged Property or the addition of any other
property to the Mortgaged Property; (c) any agreement or stipulation
between any subsequent owner of the Mortgaged Property and Beneficiary
extending, renewing, rearranging or in any other way modifying the terms
of the Security Documents without first having obtained the consent of,
given notice to or paid any consideration to Grantor or such other Person,
and in such event Grantor and all such other Persons shall continue to be
liable to make payment according to the terms of any such extension or
modification agreement unless expressly released and discharged in writing
by Beneficiary; or (d) by any other act or occurrence save and except the
complete fulfillment of all of the Obligations.
8.4 RELEASE OF AND RESORT TO COLLATERAL. Beneficiary may release, regardless
of consideration, any part of the Mortgaged Property without, as to the
remainder, in any way impairing, affecting, subordinating or releasing the
lien or security interest created in or evidenced by this Deed of Trust or
their stature as a lien and security interest in and to the Mortgaged
Property.
8.5 WAIVER OF REDEMPTION, NOTICE AND MARSHALLING OF ASSETS. To the fullest
extent permitted by law, Grantor hereby irrevocably and unconditionally
waives and releases (a) all benefits that might accrue to Grantor by
virtue of any present or future law exempting the Mortgaged Property from
attachment, levy or sale on execution or providing for any appraisement,
valuation, stay of execution, exemption from civil process, redemption or
extension of time for payment; (b) all notices of any Event of Default or
of Trustee's election to exercise or his actual exercise of any right,
remedy or recourse provided for under this Deed of Trust; and (c) any
right to a marshalling of assets or a sale in inverse order of alienation.
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8.6 LIMITATION ON NEW MEXICO REDEMPTION. Pursuant to NMSA 1978, Section
39-5-19 (1965), the redemption period after foreclosure sale for any
Mortgaged Property situated in or otherwise subject to the laws of the
State of New Mexico shall be limited to one (1) month.
8.7 DISCONTINUANCE OF PROCEEDINGS. In case Beneficiary shall have proceeded to
invoke any right, remedy or recourse permitted under this Deed of Trust
and shall thereafter elect to discontinue or abandon same for any reason,
Beneficiary shall have the unqualified right so to do and, in such an
event, Grantor and Beneficiary shall be restored to their former positions
with respect to the Obligations, the Security Documents, the Mortgaged
Property and otherwise, and the rights, remedies, recourses and powers of
Beneficiary shall continue as if same had never been invoked.
8.8 APPLICATION OF PROCEEDS. Subject, in each case, to the rights of any
Lienholder arising under or pursuant to the Senior Liens, and the terms
and provisions of the SNDA (including, without limitation, the right to
receive payments otherwise due to HEP under the terms of the Pipelines
Agreement), the proceeds and other amounts generated by the holding,
operating or other use of, the Mortgaged Property shall be applied by
Trustee or Beneficiary (or the receiver, if one is appointed) to the
extent that funds are so available therefrom in the following orders of
priority:
(a) first, to the payment of the costs and expenses of taking possession
of the Mortgaged Property and of holding, using, leasing, repairing and
improving the same, including without limitation (i) trustees' and
receivers' fees, (ii) court costs, (iii) attorneys' and accountants' fees,
and (iv) the payment of any and all Impositions, liens, security interests
or other rights, titles or interests equal or superior to the lien and
security interest of this Deed of Trust (except those to which the
Mortgaged Property has been sold subject to and without in any way
implying Beneficiary's prior consent to the creation thereof);
(b) second, to the payment of all amounts which may be due to Beneficiary
with respect to the Obligations;
(c) third, to the extent permitted by law, funds are available therefor
out of the proceeds generated by the holding, operating or other use of
the Mortgaged Property and known by Beneficiary, to the payment of any
indebtedness or obligation secured by a subordinate deed of trust on or
security interest in the Mortgaged Property; and
(d) fourth, to Grantor.
8.9 INDEMNITY. IN CONNECTION WITH ANY ACTION TAKEN BY TRUSTEE AND/OR
BENEFICIARY PURSUANT TO THIS DEED OF TRUST, TRUSTEE AND/OR BENEFICIARY AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, MEMBERS,
EMPLOYEES, AGENTS, REPRESENTATIVES, ATTORNEYS, ACCOUNTANTS AND EXPERTS
(COLLECTIVELY THE "INDEMNIFIED PARTIES") SHALL NOT BE LIABLE FOR ANY LOSS
SUSTAINED BY GRANTOR RESULTING FROM (i) AN
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ASSERTION THAT TRUSTEE, BENEFICIARY OR INDEMNIFIED PARTY HAS RECEIVED
FUNDS FROM THE OPERATIONS OF THE MORTGAGED PROPERTY CLAIMED BY THIRD
PERSONS OR (ii) ANY ACT OR OMISSION OF TRUSTEE, BENEFICIARY OR INDEMNIFIED
PARTY IN ADMINISTERING, MANAGING, OPERATING OR CONTROLLING THE MORTGAGED
PROPERTY, INCLUDING IN EITHER CASE SUCH LOSS WHICH MAY RESULT FROM THE
ORDINARY NEGLIGENCE OF TRUSTEE, BENEFICIARY OR AN INDEMNIFIED PARTY OR
WHICH MAY RESULT FROM STRICT LIABILITY, WHETHER UNDER APPLICABLE LAW OR
OTHERWISE, UNLESS SUCH LOSS IS CAUSED BY THE GROSS NEGLIGENCE, WILLFUL
MISCONDUCT OR BAD FAITH OF TRUSTEE, BENEFICIARY OR ANY INDEMNIFIED PARTY
NOR SHALL TRUSTEE, BENEFICIARY AND/OR ANY INDEMNIFIED PARTY BE OBLIGATED
TO PERFORM OR DISCHARGE ANY OBLIGATION, DUTY OR LIABILITY OF GRANTOR.
GRANTOR SHALL AND DOES HEREBY AGREE TO INDEMNIFY TRUSTEE, BENEFICIARY AND
EACH OF THEIR RESPECTIVE INDEMNIFIED PARTIES FOR, AND TO HOLD THEM
HARMLESS FROM, ANY AND ALL LOSSES WHICH MAY OR MIGHT BE INCURRED BY
TRUSTEE, BENEFICIARY OR INDEMNIFIED PARTY BY REASON OF THIS DEED OF TRUST
OR THE EXERCISE OF RIGHTS OR REMEDIES HEREUNDER, INCLUDING SUCH LOSSES
WHICH MAY RESULT FROM THE ORDINARY NEGLIGENCE OF TRUSTEE, BENEFICIARY OR
AN INDEMNIFIED PARTY OR WHICH MAY RESULT FROM STRICT LIABILITY, WHETHER
UNDER APPLICABLE LAW OR OTHERWISE, UNLESS SUCH LOSS IS CAUSED BY THE GROSS
NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH OF TRUSTEE, BENEFICIARY OR
INDEMNIFIED PARTY. SHOULD TRUSTEE, BENEFICIARY AND/OR ANY INDEMNIFIED
PARTY MAKE ANY EXPENDITURE ON ACCOUNT OF ANY SUCH LOSSES, THE AMOUNT
THEREOF, INCLUDING, WITHOUT LIMITATION, COSTS, EXPENSES AND REASONABLE
ATTORNEYS' FEES, SHALL BE A DEMAND OBLIGATION (WHICH OBLIGATION GRANTOR
HEREBY EXPRESSLY PROMISES TO PAY) OWING BY GRANTOR TO TRUSTEE AND/OR
BENEFICIARY AND SHALL BEAR INTEREST FROM THE DATE EXPENDED UNTIL PAID AT
THE HIGHEST RATE ALLOWED BY LAW, SHALL BE A PART OF THE OBLIGATIONS AND
SHALL BE SECURED BY THIS DEED OF TRUST. THE LIABILITIES OF GRANTOR AS SET
FORTH IN THIS SECTION 8.9 SHALL SURVIVE THE TERMINATION OF THIS DEED OF
TRUST.
8.10 LIMITATIONS ON INDEMNIFICATIONS.
(a) To the extent, if at all, but only to the extent, that NMSA 1978,
Section 56-7-1 (1971), as amended from time to time, is applicable to this
Deed of Trust or any indemnification agreements herein, any agreement to
indemnify any indemnitee given in this Deed of Trust, regardless of
whether such agreement to indemnify makes reference to this or any other
limitation provision, will not extend to liability, claims, damages,
losses or expenses, including attorneys' fees, arising out of (i) the
preparation or approval
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of maps, drawings, opinions, reports, surveys, change orders, designs or
specifications by such indemnitee, or the agents or employees of such
indemnitee, or (ii) the giving of or the failure to give directions or
instructions by such indemnitee, or the agents or employees of such
indemnitee, where such giving or failure to give directions or
instructions is the primary cause of bodily injury to persons or damage to
property.
(b) To the extent, if at all, but only to the extent, that NMSA 1978,
Section 56-7-2 (1999), as amended from time to time, is applicable to this
Deed of Trust or any indemnification agreements herein, or agreement to
indemnify any indemnitee given in this Deed of Trust, regardless of
whether such undertaking or agreement to indemnify makes reference to this
or any other limitation provision, this Deed of Trust does not purport to
indemnify such indemnitee against loss or liability for damages arising
from: (i) the sole or concurrent negligence of such indemnitee or the
agents or employees of such indemnitee; (ii) the sole or concurrent
negligence of an independent contractor who is directly responsible to
such indemnitee; or (iii) an accident that occurs in operations carried on
at the direction or under the supervision of such indemnitee, an employee
or representative of such indemnitee or in accordance with methods and
means specified by such indemnitee or the employees or representatives of
such indemnitee.
ARTICLE 9
SECURITY AGREEMENT
9.1 SECURITY INTEREST. This Deed of Trust shall be construed as a deed of
trust on real property and it shall (subject to the Senior Liens) also
constitute and serve as a "Security Agreement" on personal property within
the meaning of, and shall constitute a security interest under, the
Uniform Commercial Code (as the same is codified and in effect in New
Mexico) with respect to the Personalty, Fixtures and Leases. To this end,
Grantor has GRANTED, BARGAINED, CONVEYED, ASSIGNED, TRANSFERRED, AND SET
OVER, and by these presents does GRANT, BARGAIN, CONVEY, ASSIGN, TRANSFER
AND SET OVER, unto Trustee and unto Beneficiary, a security interest in
all of Grantor's right, title and interest in, to and under the
Personalty, Fixtures and Leases to secure the full and timely performance
and discharge of the Obligations, subject only to the Permitted
Encumbrances.
9.2 FINANCING STATEMENTS. Grantor hereby authorizes Beneficiary to file such
"Financing Statements," and Grantor hereby agrees to execute and deliver
such further assurances as Beneficiary may, from time to time, consider
reasonably necessary to create, perfect and preserve Beneficiary's
security interest herein granted and Beneficiary may cause such statements
and assurances to be recorded and filed, at such times and places as may
be required or permitted by law to so create, perfect and preserve such
security interest.
9.3 UNIFORM COMMERCIAL CODE REMEDIES. Subject, in each case, to the rights of
any Lienholder under or pursuant to the Senior Liens, and the terms and
provisions of the SNDA and this Deed of Trust, Beneficiary and/or Trustee
shall have all the rights, remedies and recourses (other than auction and
sale rights) with respect to the Personalty, Fixtures and Leases afforded
to it by the aforesaid Uniform Commercial Code (as the
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same is codified and in effect in New Mexico) in addition to, and not in
limitation of, the other rights, remedies and recourses afforded by this
Deed of Trust.
9.4 NO OBLIGATION OF TRUSTEE OR BENEFICIARY. The assignment and security
interest herein granted shall not be deemed or construed to constitute
Trustee or Beneficiary as a trustee in possession of the Mortgaged
Property, to obligate Trustee or Beneficiary to lease the Mortgaged
Property or attempt to do same, or to take any action, incur any expense
or perform or discharge any obligation, duty or liability whatsoever.
9.5 FIXTURE FILING. This Deed of Trust shall constitute a "fixture filing" for
all purposes of Article 9 of the Uniform Commercial Code, as codified and
in effect in New Mexico. All or part of the Mortgaged Property are or are
to become fixtures; information concerning the security interest herein
granted may be obtained at the addresses set forth on the first page
hereof. The address of the Secured Party (Beneficiary) is the address set
forth in Section 1.1(a) and the address of the Debtor (Grantor) is the
address set forth in the opening recital of this Deed of Trust.
9.6 SATISFACTION AND RELEASE. If (a) all Obligations secured hereby shall be
paid, performed and satisfied in full, the Mortgaged Property (or any
portion thereof, in which case the provisions of clauses (i) through (iv)
below shall be applicable only to such portion) shall be sold, consigned,
conveyed or transferred in accordance with the provisions of the Pipelines
Agreement, (c) the Pipelines Agreement shall be terminated, cancelled or
otherwise expire, and the Obligations of HEP set forth in Section 2(c) of
the Pipelines Agreement shall no longer be applicable, and/or (d) at any
time Grantor's or HEP's (in the event Grantor does not have a stand-alone
credit rating) senior unsecured debt has an Investment Grade Rating (as
hereinafter defined) from both ▇▇▇▇▇'▇ Investors Service, Inc. ("▇▇▇▇▇'▇")
and Standard & Poor's Ratings Group ("S&P") (or any successor to the
rating business of either thereof), then this Deed of Trust shall be null
and void, (ii) the liens and security interests created by this Deed of
Trust shall be released as promptly as practicable, (iii) the Mortgaged
Property shall revert to Grantor (or the transferee in the case of clause
(b) above) free and clear of the liens and security interests created by
this Deed of Trust, and Beneficiary and Trustee (as applicable) shall
execute and deliver, or cause to be executed and delivered, instruments of
satisfaction and release that are reasonably requested by Grantor.
Otherwise, this Deed of Trust shall remain and continue in full force and
effect. As used in this Section 9.6, the term "Investment Grade Rating"
shall mean a rating equal to or higher than Baa3 (or the equivalent) by
▇▇▇▇▇'▇, or BBB- (or the equivalent) by S&P.
ARTICLE 10
CONCERNING THE TRUSTEE
10.1 NO REQUIRED ACTION. Trustee shall not be required to take any action
toward the execution and enforcement of the trust hereby created or to
institute, appear in or defend any action, suit or other proceeding in
connection therewith where in his opinion such action will be likely to
involve him in expense or liability, unless requested so to do by a
written instrument signed by Beneficiary and, if Trustee so requests,
unless Trustee is
16
tendered security and indemnity satisfactory to him against any and all
costs, expense and liabilities arising therefrom. Trustee shall not be
responsible for the execution, acknowledgment or validity of the Security
Documents, or for the proper authorization thereof, or for the sufficiency
of the lien and security interest purported to be created hereby, and
makes no representation in respect thereof or in respect of the rights,
remedies and recourses of Beneficiary.
10.2 CERTAIN RIGHTS. With the approval of Beneficiary, Trustee shall have the
right to take any and all of the following actions: (a) to select, employ
and advise with counsel (who may be, but need not be, counsel for
Beneficiary) upon any matters arising hereunder, including the
preparation, execution and interpretation of the Security Documents, and
shall be fully protected in relying as to legal matters on the advice of
counsel; (b) to execute any of the trusts and powers hereof and to perform
any duty hereunder either directly or through his agents or attorneys; (c)
to select and employ, in and about the execution of his duties hereunder,
suitable accountants, engineers and other experts, agents and
attorneys-in-fact, either corporate or individual, not regularly in the
employ of Trustee, and Trustee shall not be answerable for any act,
default or misconduct of any such accountant, engineer or other expert,
agent or attorney-in-fact, if selected with reasonable care, or for any
error of judgment or act done by Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee's gross negligence or bad faith; and (d) to take any and all other
lawful action as Beneficiary may instruct Trustee to take to protect or
enforce Beneficiary's rights hereunder. Trustee shall not be personally
liable in case of entry by him, or anyone entering by virtue of the powers
herein granted him, upon the Mortgaged Property for debts contracted or
liability or damages incurred in the management or operation of the
Mortgaged Property. Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any action
taken or proposed to be taken by him hereunder, believed by him in good
faith to be genuine. Trustee shall be entitled to reimbursement for
expenses incurred by him in the performance of his duties hereunder and to
reasonable compensation for such of his services hereunder as shall be
rendered. Grantor will, from time to time, pay the compensation due to
Trustee hereunder and reimburse Trustee for, and save him harmless
against, any and all liability and expenses which may be incurred by him
in the performance of his duties.
10.3 RETENTION OF MONEYS. All moneys received by Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by law) and Trustee shall be
under no liability for interest on any moneys received by him hereunder.
10.4 SUCCESSOR TRUSTEES. Trustee may resign by the giving of notice of such
resignation in writing to Beneficiary. If Trustee shall die, resign or
become disqualified from acting in the execution of this trust, or shall
fail or refuse to execute the same when requested by Beneficiary so to do,
or if, for any reason, Beneficiary shall prefer to appoint a substitute
trustee to act instead of the aforenamed Trustee, Beneficiary shall have
full power to appoint a substitute trustee and, if preferred, several
substitute trustees in succession who shall succeed to all the estates,
properties, rights, powers and duties of the aforenamed
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Trustee. Such appointment may be executed by any authorized agent of
Beneficiary, and if such Beneficiary be a corporation and such appointment
be executed in its behalf by any officer of such corporation, such
appointment shall be conclusively presumed to be executed with authority
and shall be valid and sufficient without proof of any action by the Board
of Directors or any superior officer of the corporation. Grantor hereby
ratifies and confirms any and all acts which the aforenamed Trustee, or
his successor or successors in this trust, shall do lawfully by virtue
hereof.
10.5 PERFECTION OF APPOINTMENT. Should any deed, conveyance or instrument of
any nature be required from Grantor by any successor Trustee to more fully
and certainly vest in and confirm to such new Trustee such estates,
rights, powers and duties, then, upon request by such Trustee, any and all
such deeds, conveyances and instruments shall be made, executed,
acknowledged and delivered and shall be caused to be recorded and/or filed
by Grantor.
10.6 SUCCESSION INSTRUMENTS. Any new Trustee appointed pursuant to any of the
provisions hereof shall, without any further act, deed or conveyance,
become vested with all the estates, properties, rights, powers and trusts
of its or his predecessor in the rights hereunder with like effect as if
originally named as Trustee herein; but nevertheless, upon the written
request of Beneficiary or of the successor Trustee, the Trustee ceasing to
act shall execute and deliver an instrument transferring to such successor
Trustee, upon the trusts herein expressed, all the estates, properties,
rights, powers and trusts of the Trustee so ceasing to act, and shall duly
assign, transfer and deliver any of the property and moneys held by such
Trustee to the successor Trustee so appointed in its or his place.
10.7 NO REPRESENTATION BY TRUSTEE. By accepting or approving anything required
to be observed, performed or fulfilled or to be given to Trustee or
Beneficiary pursuant to the Security Documents, including but not limited
to, any officer's certificate, balance sheet, statement of profit and loss
or other financial statement, survey, appraisal or insurance policy,
neither Trustee nor Beneficiary shall be deemed to have warranted,
consented to, or affirmed the sufficiency, legality, effectiveness or
legal effect of the same, or of any term, provision or condition thereof,
and such acceptance or approval thereof shall not be or constitute any
warranty, consent or affirmation with respect thereto by Trustee or
Beneficiary.
ARTICLE 11
MISCELLANEOUS
11.1 PERFORMANCE AT GRANTOR'S EXPENSE. The cost and expense of performing or
complying with any and all of the Obligations shall be borne solely by
Grantor and/or HEP to the extent provided in the Pipelines Agreement.
11.2 SURVIVAL OF OBLIGATIONS. Each and all of the Obligations shall survive the
execution and delivery of the Security Documents and shall continue in
full force and effect until the Obligations have been performed and
discharged in full.
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11.3 FURTHER ASSURANCES. Grantor, upon the request of Trustee or Beneficiary,
will execute, acknowledge, deliver and record and/or file such further
instruments and do such further acts as may be necessary, desirable or
proper to carry out more effectively the purpose of the Security Documents
and to subject to the liens and security interests thereof any property
intended by the terms thereof to be covered thereby, including
specifically but without limitation, any renewals, additions,
substitutions, replacements, betterments or appurtenances to the then
Mortgaged Property.
11.4 RECORDING AND FILING. Grantor will cause the Security Documents and all
amendments and supplements thereto and substitutions therefor to be
recorded, filed, re-recorded and refiled in such manner and in such places
as Trustee or Beneficiary shall reasonably request, and will pay all such
recording, filing, re-recording and refiling taxes, fees and other
charges.
11.5 NOTICES. All notices or other communications required or permitted to be
given pursuant to this Deed of Trust shall be in writing and shall be
considered as properly given if mailed by first-class United States mail,
postage prepaid, registered or certified with return receipt requested, or
by delivering same in person to the intended addressee or by prepaid
telegram. Notice so mailed shall be effective two days following its
deposit. Notice given in any other manner shall be effective only if and
when received by the addressee. For purposes of notice, the addresses of
Beneficiary and Grantor shall be as set forth in Section 1.1(a) and the
opening recital hereinabove, respectively; provided, however, that either
party shall have the right to change its address for notice hereunder to
any other location within the continental United States by the giving of
thirty (30) days' notice to the other party in the manner set forth
hereinabove.
11.6 NO WAIVER. Any failure by Trustee or Beneficiary to insist, or any
election by Trustee or Beneficiary not to insist, upon strict performance
by Grantor of any of the terms, provisions or conditions of the Security
Documents shall not be deemed to be a waiver of same or of any other
terms, provision or condition thereof and Trustee or Beneficiary shall
have the right at any time or times thereafter to insist upon strict
performance by Grantor of any and all of such terms, provisions and
conditions.
11.7 BENEFICIARY'S RIGHT TO PERFORM THE OBLIGATIONS. If Grantor shall fail,
refuse or neglect to make any payment or perform any act required by the
Security Documents (after giving effect to any applicable notice and cure
period), then at any time thereafter, and without further notice to or
demand upon Grantor and without waiving or releasing any other right,
remedy or recourse Beneficiary may have because of same, Beneficiary may
(but shall not be obligated to) make such payment or perform such act for
the account of and at the expense of Grantor, and shall have the right to
enter upon or in the Real Property for such purpose and to take all such
action thereon and with respect to the Mortgaged Property as it may deem
necessary or appropriate but in any case subject to the rights of any
Lienholder arising under or pursuant to the Senior Liens and the terms and
provisions of the SNDA. If Beneficiary shall elect to pay any Imposition
or other sums due with reference to the Mortgaged Property, Beneficiary
may do so in reliance on any bill, statement or assessment procured from
the appropriate Governmental Entity or other issuer thereof without
inquiring into the accuracy or validity thereof. Similarly, in
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making any payments to protect the security intended to be created by the
Security Documents, Beneficiary shall not be bound to inquire into the
validity of any apparent or threatened adverse title, lien, encumbrance,
claim or charge before making an advance for the purpose of preventing or
removing the same. Grantor shall indemnify Beneficiary for all losses,
expenses, damage, claims and causes of action, including reasonable
attorneys' fees, incurred or accruing by reason of any acts performed by
Beneficiary pursuant to the provisions of this Section 11.7 or by reason
of any other provision in the Security Documents. All sums paid by
Beneficiary pursuant to this Section 11.7 and all other sums expended by
Beneficiary to which it shall be entitled to be indemnified, together with
interest thereon at the maximum rate allowed by law from the date of such
payment or expenditure, shall be secured by the Security Documents and
shall be paid by Grantor to Beneficiary upon demand.
11.8 COVENANTS RUNNING WITH THE LAND. All Obligations contained in the Security
Documents are intended by the parties to be, and shall be construed as,
covenants running with the Mortgaged Property.
11.9 SUCCESSORS AND ASSIGNS. All of the terms of the Security Documents shall
apply to, be binding upon and inure to the benefit of the parties thereto,
their successors and assigns, and all other Persons claiming by, through
or under them.
11.10 SEVERABILITY. The Security Documents are intended to be performed in
accordance with, and only to the extent permitted by, all applicable Legal
Requirements. If any provision of any of the Security Documents or the
application thereof to any Person or circumstance shall, for any reason
and to any extent, be invalid or unenforceable neither the remainder of
the instrument in which such provision is contained nor the application of
such provision to other Persons or circumstances nor the other instruments
referred to hereinabove shall be affected thereby, but rather shall be
enforced to the greatest extent permitted by law.
11.11 ENTIRE AGREEMENT AND MODIFICATION. The Security Documents contain the
entire agreements between the parties relating to the subject matter
hereof and thereof and all prior agreements relative thereto which are not
contained herein or therein are terminated. Notwithstanding anything
herein to the contrary, Grantor and, by its acceptance hereof, Beneficiary
hereby acknowledge and agree that in the event that any of the terms or
provisions of this Deed of Trust conflict with any terms or provisions of
the Pipelines Agreement, the terms or provisions of the Pipelines
Agreement shall govern and control for all purposes. The Security
Documents may not be amended, revised, waived, discharged, released or
terminated orally but only by a written instrument or instruments (a)
executed by the party against which enforcement of the amendment,
revision, waiver, discharge, release or termination is asserted, and (b)
consented to by the Lienholders to the extent any such amendment,
revision, waiver, discharge, release or termination would be materially
adverse to the rights of any such Lienholder. Any alleged amendment,
revision, waiver, discharge, release or termination which is not so
documented shall not be effective as to any party.
20
11.12 COUNTERPARTS. This Deed of Trust may be executed in any number of
counterparts, each of which shall be an original but all of which together
shall constitute but one instrument.
11.13 APPLICABLE LAW. The Security Documents shall be governed by and construed
according to the laws of the State of New Mexico (excluding any conflicts
of law, rule or principle that might refer such matters to the laws of
another jurisdiction).
11.14 NO PARTNERSHIP. Nothing contained in the Security Documents is intended
to, or shall be construed as, creating to any extent and in any manner
whatsoever, any partnership, joint venture, or association between
Grantor, Trustee and Beneficiary, or in any way make Beneficiary or
Trustee coprincipals with Grantor with reference to the Mortgaged
Property, and any inferences to the contrary are hereby expressly negated.
11.15 HEADINGS. The Article, Section and Subsection entitlements hereof are
inserted for convenience of reference only and shall in no way alter,
modify or define, or be used in construing, the text of such Articles,
Sections or Subsections.
11.16 WAIVER OF STAY, MORATORIUM, AND SIMILAR RIGHTS. Grantor agrees, to the
full extent that it may lawfully do so, that it will not at any time
insist upon or plead or in any way take advantage of any appraisement,
valuation, stay, marshalling of assets, extension, redemption or
moratorium law now or hereafter in force and effect so as to prevent or
hinder the enforcement of the provisions of this Deed of Trust or the
indebtedness secured hereby, or any agreement between Grantor and
Beneficiary or any rights or remedies Beneficiary may have thereunder,
hereunder or by law.
11.17 TRANSFER OF MORTGAGED PROPERTY. No sale, lease, exchange, assignment,
conveyance or other transfer (each, a "TRANSFER") of the Mortgaged
Property will extinguish the lien or security interest created by this
Deed of Trust, except to the extent provided in Section 9.6 of this Deed
of Trust or in the Pipelines Agreement. As a condition to any Transfer,
Beneficiary may (a) require the express assumption of the Obligations by
the transferee (with or without the release of Grantor from liability in
respect thereof), and (b) require the execution of an assumption
agreement, modification agreements, supplemental security documents and
financing statements satisfactory in form and substance to Beneficiary.
11.18 ESTOPPEL CERTIFICATES. Grantor and Beneficiary agree to execute and
deliver from time to time, upon the request of the other party, a
certificate regarding the status of the Pipelines Agreement, consisting of
statements, if true (or if not, specifying why not), (a) that the
Pipelines Agreement is in full force and effect, (b) the date through
which payments have been paid, (c) the date of the commencement of the
term of the Pipelines Agreement, (d) the nature of any amendments or
modifications of the Pipelines Agreement, (e) to such party's actual
knowledge without investigation, no default, or state of facts which with
the passage of time or notice (or both) would constitute a default, exists
under the Pipelines Agreement, (f) to such party's actual knowledge
without investigation, no setoffs, recoupments, estoppels, claims or
counterclaims exist against the other party under the Pipelines Agreement,
and (g) such other factual matters as may be reasonably requested.
21
11.19 FINAL AGREEMENT. ▇▇▇▇▇▇▇ acknowledges receipt of a copy of this instrument
at the time of execution hereof. Grantor acknowledges that, except as
incorporated in writing in this Deed of Trust, there are not, and were
not, and no persons are or were authorized to make any representations,
understandings, stipulations, agreements or promises, oral or written,
with respect to the matters addressed in this Deed of Trust. THE WRITTEN
AGREEMENTS HEREIN REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
11.20 OTHER NEW MEXICO PROVISIONS.
(a) In addition to the requirements for giving notice set forth elsewhere
in this instrument, all notices shall be sent by regular, first-class
United States mail, postage prepaid.
(b) Notwithstanding anything to the contrary contained in this instrument,
the appointment of a receiver for the Mortgaged Property shall be in
accordance with the New Mexico Receivership Act, Section 44-8-1, et seq.,
NMSA 1978.
(c) To the extent this instrument constitutes a deed of trust, it is
subject to the New Mexico Deed of Trust Act, Section 48-10-1, et seq.,
NMSA 1978.
(d) To the extent this instrument constitutes a mortgage, the grant of the
mortgage is made with mortgage covenants and upon the statutory mortgage
condition, for the breach of which, except as otherwise provided herein,
this instrument is subject to foreclosure as provided by law.
(e) For Security Agreement and Fixture Filing purposes, (1) the Debtor's
name is HEP Pipeline, L.L.C., whose address is shown on the first page of
this instrument; (2) the Secured Party's name is ▇▇▇▇▇ Corporation, whose
address is shown on the first page of this instrument; (3) this instrument
covers materials, supplies, equipment, apparatus and other items that are,
or are to become, fixtures; and (4) the real property to which such
fixtures are related is attached to this instrument as Exhibit A.
[SIGNATURE PAGE TO FOLLOW]
22
WITNESS THE EXECUTION HEREOF as of the date first above written.
GRANTOR:
HEP PIPELINE, L.L.C., a Delaware limited liability
company
By: ▇▇▇▇▇ Energy Partners - Operating, L.P., a
Delaware limited partnership, its sole member
By: HEP Logistics GP, L.L.C., a Delaware
limited liability company, its general partner
By: ▇▇▇▇▇ Energy Partners, L.P., a Delaware
limited partnership, its sole member
By: HEP Logistics Holdings, L.P., a
Delaware limited partnership, its
general partner
By: ▇▇▇▇▇ Logistic Services, L.L.C.,
a Delaware limited liability
company, its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President and
Chief Financial Officer
EMPLOYER IDENTIFICATION NUMBER OF GRANTOR: ▇▇-▇▇▇▇▇▇▇
ORGANIZATIONAL NUMBER OF GRANTOR: 381427
[Signature Page]
THE STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on July 8, 2005, by ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Vice President and Chief Financial Officer of ▇▇▇▇▇ Logistic
Services, L.L.C., a Delaware limited liability company, general partner of HEP
Logistics Holdings, L.P., a Delaware limited partnership, general partner of
▇▇▇▇▇ Energy Partners, L.P., a Delaware limited partnership, sole member of HEP
Logistics GP, L.L.C., a Delaware limited liability company, general partner of
▇▇▇▇▇ Energy Partners - Operating, L.P., a Delaware limited partnership, sole
member of HEP Pipeline, L.L.C., a Delaware limited liability company.
/s/ Notary Public
----------------------------------
Notary Public, State of Texas
My Commission Expires: 1/25/06
-----------------
[Acknowledgement Page]
EXHIBIT A
A-1
EXHIBIT B
DESCRIPTION OF PIPELINES
Approximately 65 miles of 8" feedstock pipeline and 10" feedstock pipeline, each
of which begins at the inlet flange of the delivery manifold motor operated
valves at the Lovington Refinery, near Lovington, New Mexico and ends at the
outlet flange of the turbine meter at the Artesia Refinery in Artesia, New
Mexico, along with any and all connection facilities, including the
Enterprise/MAPL connection, field booster pump stations, spare parts, pipes,
valves, motors and miscellaneous equipment directly associated with the 8" inch
and 10" feedstock pipelines.
B-1
ATTACHMENT 1
FORM OF SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
After recording, return to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
This Subordination, Non-Disturbance and Attornment Agreement (this
"AGREEMENT") is executed as of July __, 2005, among Union Bank of California,
N.A., in its capacity as administrative agent (or any assignee of or successor
to such administrative agent) under the Credit Agreement (as defined below) and
on behalf of the Credit Parties (as defined below) ("ADMINISTRATIVE AGENT"), and
▇▇▇▇▇ Corporation, a Delaware corporation ("▇▇▇▇▇").
RECITALS:
A. Holly Energy Partners - Operating, L.P., a Delaware limited partnership
("OPERATING"), the financial institutions party thereto from time to time
(individually, a "FINANCIAL INSTITUTION" and collectively, the "FINANCIAL
INSTITUTIONS"), the Financial Institutions issuing letters of credit thereunder
from time to time, if any (individually, an "ISSUING BANK" and collectively, the
"ISSUING BANKS"), the Financial Institutions or any affiliate thereof that have
entered into hedging arrangements with Operating or any subsidiary thereof from
time to time (individually, a "SWAP COUNTERPARTY" and collectively, the "SWAP
COUNTERPARTIES" and, together with Administrative Agent, the Financial
Institutions and the Issuing Banks, being collectively referred to herein as the
"CREDIT PARTIES") are parties to that certain Credit Agreement dated as of July
7, 2004 (as heretofore and hereafter renewed, extended, amended, supplemented,
replaced, modified and/or restated from time to time, the "CREDIT AGREEMENT").
B. The Financial Institutions are the present owners and holders of
certain promissory notes dated July 7, 2004, executed by Operating and payable
to the order of each such Financial Institution (as heretofore and hereafter
renewed, extended, amended, supplemented, replaced, modified, and/or restated
from time to time and together with any additional notes issued under or
pursuant to the Credit Agreement, the "NOTES"). Administrative Agent, for the
ratable benefit of the Credit Parties, is the beneficiary of that certain (i)
Mortgage, Deed of Trust, Security Agreement, Assignment of Rents and Leases,
Fixture Filing and Financing Statement dated as of July __, 2005 (as heretofore
and hereafter renewed, extended, amended, supplemented, replaced, modified,
and/or restated from time to time, the "SENIOR MORTGAGE"), and the secured party
under certain other security agreements and documents
Attachment 1-1
entered into in connection with the Credit Agreement (as heretofore and
hereafter renewed, extended, amended, supplemented, replaced, modified, and/or
restated from time to time, the "SECURITY INSTRUMENTS" and, together with the
Credit Agreement, the Notes, the Senior Mortgage and any other documents,
instruments and agreements executed and/or delivered in connection with the
Credit Agreement, collectively, the "SENIOR LOAN DOCUMENTS").
C. Pursuant to the Senior Loan Documents and to secure the Notes and the
other Secured Obligations (as defined in the Senior Mortgage), HEP Pipeline,
L.L.C., a Delaware limited liability company ("HEP PIPELINE") and a subsidiary
of ▇▇▇▇▇ Energy Partners, L.P., a Delaware limited partnership ("HEP") granted a
security interest and mortgage lien to or for the benefit of Administrative
Agent, covering the right, title and interest of HEP Pipeline in certain
property described in Exhibit A attached hereto (the "PROPERTY").
▇. ▇▇▇▇▇ is the current owner of certain rights and interests under and
pursuant to the provisions of that certain Pipelines Agreement dated as of July
__, 2005 by and among ▇▇▇▇▇, HEP, Navajo Refining Company, L.P., a Delaware
limited partnership, Operating, HEP Pipeline, HEP Logistics Holdings, L.P., a
Delaware limited partnership, ▇▇▇▇▇ Logistic Services, L.L.C., a Delaware
limited liability company, and HEP Logistics GP, L.L.C., a Delaware limited
liability company (together with any amendments, restatements or modifications
from time to time made thereto, the "PIPELINES AGREEMENT").
▇. ▇▇▇▇▇ is the current beneficiary of certain liens and security
interests in a portion of the Property (the "SUBORDINATED LIENS") under and
pursuant to the provisions of that certain Mortgage and Deed of Trust (with
Security Agreement and Financing Statement) (the "▇▇▇▇▇ MORTGAGE") dated as of
July __, 2005 executed by HEP Pipeline to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee, for the
benefit of ▇▇▇▇▇, securing the Obligations (as defined in the ▇▇▇▇▇ Mortgage and
referred to herein as the "HEP OBLIGATIONS"), such ▇▇▇▇▇ Mortgage being recorded
(or to be recorded) in various counties in the State of New Mexico.
F. Holly has agreed to subordinate its Subordinated Lien under the ▇▇▇▇▇
Mortgage (but not, pursuant to this Agreement, any of its rights and interests
under the Pipelines Agreement) to (i) the Senior Mortgage and the other Senior
Loan Documents, and (ii) any other mortgage, deed of trust or security
instrument granted by a Purchaser (as defined below) or any subsequent purchaser
of any portion of the Mortgaged Property (as heretofore and hereafter renewed,
extended, amended, supplemented, replaced, modified, and/or restated from time
to time, a "FUTURE SENIOR MORTGAGE") that secures debt and obligations of, and
other extensions of credit to, such Purchaser or purchaser (together with the
Secured Obligations (as defined in the Senior Mortgage), referred to herein as
the "SENIOR SECURED OBLIGATIONS") and Administrative Agent has agreed that it
and any such Purchaser at foreclosure of the Senior Mortgage shall recognize and
not disturb or extinguish the ▇▇▇▇▇ Mortgage, all on the terms and conditions
hereinafter set forth.
Attachment 1-2
AGREEMENTS:
NOW, THEREFORE, in consideration of Ten Dollars ($10) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Administrative Agent and ▇▇▇▇▇ hereby covenants and agrees as
follows:
1. SUBORDINATION OF ▇▇▇▇▇ MORTGAGE.
(a) Subject to the provisions of Section 3 and Section 4 hereof, the
Subordinated Liens of ▇▇▇▇▇ under the ▇▇▇▇▇ Mortgage and all of the terms,
covenants and provisions of the ▇▇▇▇▇ Mortgage, and all rights, remedies and
options of ▇▇▇▇▇ thereunder, are and shall at all times continue to be subject,
subordinate and inferior in all respects to the Senior Loan Documents and any
Future Senior Mortgage and to the liens and security interests thereof and to
all amendments, modifications, and replacements thereof, with the same force and
effect as if the Senior Loan Documents, or if applicable, the Future Senior
Mortgage, had been executed, delivered and recorded prior to the execution,
delivery and recordation of the ▇▇▇▇▇ Mortgage. This Agreement is not intended,
and shall not be construed, to (i) subordinate the rights and interests of ▇▇▇▇▇
under the Pipelines Agreement (including ▇▇▇▇▇'s right to quiet enjoyment under
the Pipelines Agreement or any claims, remedies or damages that may be due or
available to, or become due or available to, ▇▇▇▇▇ under the Pipelines
Agreement), or subordinate the ▇▇▇▇▇ Mortgage to any mortgage, deed of trust,
assignment, security agreement, financing statement or other security document,
other than, with respect to clause (ii), the Senior Loan Documents and the
Future Senior Mortgage. Nothing in this Agreement shall impair, as between HEP
or Operating, on the one hand, and ▇▇▇▇▇, on the other hand, the obligations of
HEP and Operating, which are absolute and unconditional, to perform the HEP
Obligations in accordance with their terms.
(b) Notwithstanding anything herein or in the ▇▇▇▇▇ Mortgage to the
contrary, ▇▇▇▇▇ hereby acknowledges and agrees, and HEP Pipeline by its consent
to this Agreement acknowledges and agrees, that (i) in the event that any of the
terms or provisions of this Agreement conflict with any terms or provisions of
the ▇▇▇▇▇ Mortgage, the terms or provisions of this Agreement shall govern and
control for all purposes; and (ii) without the written prior consent of the
Administrative Agent or the beneficiary of any Future Senior Mortgage (together
with the Credit Parties, the "SENIOR BENEFICIARIES"), neither ▇▇▇▇▇ nor HEP
Pipeline (nor any future owner of the Mortgaged Property) will amend, revise,
supplement, replace, restate, or otherwise modify the ▇▇▇▇▇ Mortgage if such
amendment, revision, supplement, replacement, restatement or other modification
would be materially adverse to the rights of any Senior Beneficiary.
2. RELATIVE RIGHTS AND PRIORITIES. Subject to the provisions of Section 1,
Section 3 and Section 4 hereof:
(a) Until the Senior Secured Obligations have been indefeasibly paid
in full, all commitments to extend credit under the Credit Agreement (or if
applicable, any agreement governing obligations secured by a Future Senior
Mortgage) have terminated, and all letters of credit issued thereunder have been
terminated and returned (the "SENIOR OBLIGATIONS PAYMENT
Attachment 1-3
DATE"), ▇▇▇▇▇ will not (i) commence any foreclosure (whether a judicial
foreclosure or non-judicial foreclosure) of the ▇▇▇▇▇ Mortgage, (ii) accept a
deed or assignment in lieu of foreclosure, (iii) otherwise exercise any of its
rights or remedies under the ▇▇▇▇▇ Mortgage, or (iv) take any Enforcement
Action.
(b) ▇▇▇▇▇ agrees that, until the Senior Obligations Payment Date has
occurred:
(i) it will not take or cause to be taken any action, the
purpose or effect of which is to make any Subordinated Lien pari passu with or
senior to, or to give ▇▇▇▇▇ any preference or priority relative to, the liens
and security interests with respect to the Senior Secured Obligations;
(ii) it will not oppose, object to, interfere with, hinder or
delay, in any manner, whether by judicial proceedings (including without
limitation the filing of an Insolvency Proceeding (as herein defined)) or
otherwise, any foreclosure, sale, lease, exchange, transfer or other disposition
of the Mortgaged Property (as defined in the ▇▇▇▇▇ Mortgage and with the same
meaning herein as therein defined) by any of the Senior Beneficiaries or any
other Enforcement Action taken by or on behalf of any of the Senior
Beneficiaries;
(iii) it has no right to (x) direct any of the Senior
Beneficiaries to exercise any right, remedy or power with respect to the
Mortgaged Property or pursuant to the Senior Loan Documents or any Future Senior
Mortgage or (y) consent or object to the exercise by any of the Senior
Beneficiaries of any right, remedy or power with respect to the Mortgaged
Property or pursuant to the Senior Loan Documents or any Future Senior Mortgage
or to the timing or manner in which any such right is exercised or not exercised
(or, to the extent they may have any such right described in this clause (iii),
whether as a junior lien creditor or otherwise, they hereby irrevocably waive
such right);
(iv) it will not institute any suit or other proceeding or
assert in any suit, Insolvency Proceeding or other proceeding any claim against
any of the Senior Beneficiaries seeking damages from or other relief by way of
specific performance, instructions or otherwise, with respect to, and none of
the Senior Beneficiaries shall be liable for any action taken or omitted to be
taken by any of the Senior Beneficiaries with respect to the Mortgaged Property
or pursuant to the Senior Loan Documents or any Future Senior Mortgage; and
(v) the Senior Beneficiaries shall have the prior right to
collect and receive any and all proceeds which may be paid or distributed in
respect of the Mortgaged Property in any Insolvency Proceeding or otherwise
arising from any sale or other disposition of the Mortgaged Property.
(c) Until the Senior Obligations Payment Date has occurred, ▇▇▇▇▇
agrees that it shall not, in, or in connection with, any Insolvency Proceeding,
file any pleadings or motions, take any position at any hearing or proceeding of
any nature, or otherwise take any action whatsoever, in each case, that is
inconsistent with the terms or spirit of, or intent of the parties
Attachment 1-4
with respect to, this Agreement, including, without limitation, with respect to
the determination of any liens or claims held by any of the Senior Beneficiaries
(including the validity and enforceability thereof) or the value of any claims
of such parties under the United States Bankruptcy Code or otherwise; provided
that ▇▇▇▇▇ may file a proof of claim in an Insolvency Proceeding, subject to the
limitations contained in this Agreement and only if consistent with the terms
and the limitations imposed hereby; provided further, that if no proof of claim
is filed in any Insolvency Proceeding with respect to the HEP Obligations by the
10th day prior to the bar date for such proof of claim, the Senior Beneficiaries
may (but shall have no duty or obligation to), after notice to ▇▇▇▇▇, file such
proof of claim, provided that the foregoing shall not confer to any Senior
Beneficiary the right to vote on behalf of ▇▇▇▇▇ in any insolvency proceeding.
(d) Until the Senior Obligations Payment Date has occurred, whether
or not an Insolvency Proceeding has been commenced by or against the owner of
the Mortgaged Property, any of the Senior Beneficiaries shall have the exclusive
right to take and continue any Enforcement Action with respect to the Mortgaged
Property, without any consultation with or consent of ▇▇▇▇▇. Upon the occurrence
and during the continuance of a default or an event of default under the Senior
Loan Documents or any Future Senior Mortgage, any of the Senior Beneficiaries
may take and continue any Enforcement Action with respect to the Senior Secured
Obligations and the Mortgaged Property in such order and manner as they may
determine in their sole discretion.
(e) To the extent required, ▇▇▇▇▇ hereby consents to the liens and
security interests created by the Senior Mortgage and any Future Senior
Mortgage, and ▇▇▇▇▇ shall not object to or contest, or support any other person
or entity in contesting or objecting to, in any proceeding (including without
limitation, any Insolvency Proceeding), the validity, extent, perfection,
priority or enforceability of any lien or security interest in the Mortgaged
Property granted in favor of any of the Senior Beneficiaries. Notwithstanding
any failure by any of the Senior Beneficiaries or ▇▇▇▇▇ or their respective
representatives to perfect their liens in the Mortgaged Property or any
avoidance, invalidation or subordination by any third party or court of
competent jurisdiction of the liens in the Mortgaged Property granted in favor
of any of the Senior Beneficiaries or ▇▇▇▇▇, the priority and rights as between
any of the Senior Beneficiaries and ▇▇▇▇▇ and its representatives with respect
to the Mortgaged Property shall be as set forth herein.
As used in this Section 2, the following terms shall have the following
meanings:
"ENFORCEMENT ACTION" means any demand for payment or acceleration thereof,
the bringing of any lawsuit or other proceeding, the exercise of any rights and
remedies, directly or indirectly, with respect to any Mortgaged Property, any
enforcement or foreclosure of any lien or security interest, any sale in lieu of
foreclosure, the taking of possession, exercise of any offset, repossession,
garnishment, sequestration or execution, any collection of any Mortgaged
Property, any notice to account debtors on any Mortgaged Property or the
commencement or prosecution of enforcement of any of the rights and remedies
under the Senior Loan Documents or applicable law, including without limitation
the exercise of any rights of set-off or recoupment, and the exercise of any
rights or remedies of a secured creditor under the uniform commercial code of
any applicable jurisdiction, under the United States Bankruptcy Code, as amended
from time to
Attachment 1-5
time or otherwise; provided, that, neither the exercise or enforcement by ▇▇▇▇▇
of its rights under the Pipelines Agreement, nor the filing of a proof of claim
in an Insolvency Proceeding, shall constitute an Enforcement Action.
"INSOLVENCY PROCEEDING" means any proceeding in respect of bankruptcy,
insolvency, winding up, receivership, dissolution or assignment for the benefit
of creditors, in each of the foregoing events whether under the United States
Bankruptcy Code, as amended from time to time or any similar federal, state or
foreign bankruptcy, insolvency, reorganization, receivership or similar law.
3. RECOGNITION AND NON-DISTURBANCE OF ▇▇▇▇▇ MORTGAGE. If Administrative
Agent, any other Credit Party or any other person (Administrative Agent, any
other Credit Party or such other person being herein called a "PURCHASER") shall
become the owner of any part of the Property by reason of the foreclosure
(whether a judicial foreclosure or non-judicial foreclosure) of the Senior
Mortgage or the acceptance of a deed or assignment in lieu of foreclosure or
otherwise (any of such being herein called a "FORECLOSURE EVENT"), then for so
long as the Pipelines Agreement is in effect, the Purchaser shall (i) recognize
the ▇▇▇▇▇ Mortgage, and the ▇▇▇▇▇ Mortgage shall not be terminated or affected
thereby, but shall continue in full force and effect upon all of the terms,
covenants and conditions set forth in the ▇▇▇▇▇ Mortgage, and (ii) be bound by
and subject to all of the terms, provisions, covenants and conditions of the
▇▇▇▇▇ Mortgage; provided, that, the ▇▇▇▇▇ Mortgage shall be subordinated to any
Future Senior Mortgage, regardless of whether such Future Senior Mortgage is a
direct replacement of an existing Senior Mortgage or Security Instrument, and
any such Future Senior Mortgage shall be considered a "Senior Mortgage" for
purposes of this Agreement and the ▇▇▇▇▇ Mortgage. Administrative Agent shall
not claim, or seek adjudication, that the ▇▇▇▇▇ Mortgage has been terminated or
otherwise adversely affected by any Foreclosure Event.
4. PIPELINES AGREEMENT. Administrative Agent recognizes and confirms that
the Pipelines Agreement, and the rights and interests of ▇▇▇▇▇ thereunder, shall
in no way be restricted, limited or otherwise affected by this Agreement, the
▇▇▇▇▇ Mortgage, the Senior Mortgage, any Future Senior Mortgage, the Security
Instruments or any liens or security interests thereof; provided, however, that,
▇▇▇▇▇ agrees that nothing in the Pipelines Agreement shall (a) prevent any
Purchaser or subsequent purchaser from owning or operating the Mortgaged
Property, so long as such Purchaser or subsequent purchaser shall have assumed,
and be in compliance with, HEP's obligations under the Pipelines Agreement and
shall have executed an "SNDA" as defined in, and in accordance with, Article 6
of the ▇▇▇▇▇ Mortgage, or (b) be deemed to invalidate or require the release of
any Senior Beneficiary's liens in the Mortgaged Property in connection with the
exercise by ▇▇▇▇▇ of a purchase option under the Pipelines Agreement or
otherwise. ▇▇▇▇▇ shall not amend, modify or supplement the Pipelines Agreement
without the prior written consent of the Majority Banks (as defined in the
Credit Agreement); provided, that, such amendments, modifications or supplements
may be made without the consent of the Majority Banks if such amendments,
modifications or supplements (i) individually or in the aggregate, are not
materially adverse to the rights of the Administrative Agent or the Financial
Institutions, and (ii) individually or in the aggregate, do not materially
decrease the economic benefit that Operating would have otherwise received
pursuant to such agreement. Administrative Agent, both for itself and for any
Purchaser, further agrees that upon any
Attachment 1-6
Foreclosure Event, the Pipelines Agreement shall not be terminated or affected
thereby, nor shall ▇▇▇▇▇'s right to ship or store petroleum products through the
pipelines or in the terminals, respectively, constituting a portion of the
Property in accordance with the provisions of the Pipelines Agreement (or any
other rights of ▇▇▇▇▇ under the Pipelines Agreement) be affected or disturbed
because of the Foreclosure Event, but rather the Pipelines Agreement shall
continue in full force and effect as direct obligations between the Purchaser
and ▇▇▇▇▇, upon all of the terms, covenants and conditions set forth in the
Pipelines Agreement. Neither Administrative Agent nor any Purchaser shall claim,
or seek adjudication, that the Pipelines Agreement has been terminated or
otherwise adversely affected by any Foreclosure Event. Notwithstanding the
foregoing, in the event that the Pipelines Agreement is rejected in bankruptcy
or is otherwise terminated, the Purchaser shall, promptly upon request by ▇▇▇▇▇,
enter into a Pipelines Agreement with ▇▇▇▇▇ on substantially the same terms (and
with tariffs and minimum volumes commensurate with those then applicable under
the Pipelines Agreement) and conditions as the rejected or terminated Pipelines
Agreement, but having a term commencing on the date on which Purchaser acquired
title to any portion of the Property. The immediately preceding sentence shall
be deemed to be a covenant running with the land and shall be binding on any
person or entity that acquires title to all or party of the Property by, through
or under the Senior Mortgage.
5. ATTORNMENT WITH RESPECT TO THE PIPELINES AGREEMENT. Upon the occurrence
of any Foreclosure Event, ▇▇▇▇▇ shall attorn to the Purchaser, the Purchaser
shall accept such attornment, and the Purchaser and ▇▇▇▇▇ shall be bound to each
other under all of the terms, provisions, covenants and conditions of the
Pipelines Agreement; provided, that, except for ▇▇▇▇▇'s express rights and
remedies under the Pipelines Agreement, in no event shall the Purchaser be
liable for any act, omission, default, misrepresentation, or breach of warranty
of HEP or HEP Pipeline (or any owner of the Mortgaged Property prior to such
Purchaser) or obligations accruing prior to Purchaser's actual ownership of the
Property. The provisions of this Agreement regarding attornment by ▇▇▇▇▇ shall
be self-operative and effective without the necessity of execution of any new
document on the part of any party hereto or the respective heirs, legal
representatives, successors or assigns of any such party. ▇▇▇▇▇ agrees, however,
to execute and deliver upon the request of Purchaser, any instrument or
certificate which in the reasonable judgment of Purchaser may be necessary or
appropriate to evidence such attornment.
6. ESTOPPEL CERTIFICATE. ▇▇▇▇▇ agrees to execute and deliver from time to
time, upon the request of any of the Senior Beneficiaries, a certificate
regarding the status of the Pipelines Agreement, consisting of statements, if
true (or if not, specifying why not), (a) that the Pipelines Agreement is in
full force and effect, (b) the date through which payments have been paid, (c)
the date of the commencement of the term of the Pipelines Agreement, (d) the
nature of any amendments or modifications of the Pipelines Agreement, (e) to
▇▇▇▇▇'s actual knowledge without investigation, no default, or state of facts
which with the passage of time or notice (or both) would constitute a default,
exists under the Pipelines Agreement, (f) to ▇▇▇▇▇'s actual knowledge without
investigation, no setoffs, recoupments, estoppels, claims or counterclaims exist
against HEP under the Pipelines Agreement, and (g) such other factual matters as
may be reasonably requested.
7. [INTENTIONALLY OMITTED].
Attachment 1-7
8. RELIANCE ON NOTICES. HEP Pipeline agrees that ▇▇▇▇▇ may rely upon any
and all notices from Administrative Agent or any Purchaser, even if such
conflict with notices from HEP Pipeline.
9. NOTICES. All notices, consents and other communications pursuant to the
provisions of this Agreement shall be in writing and shall be sent by (a)
registered or certified mail, postage prepaid, return receipt requested, (b)
nationally recognized overnight delivery service, or (c) telecopier, addressed
as follows:
If to Administrative Agent: Union Bank of California, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇: ▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notice sent by registered or certified mail, postage prepaid, return
receipt requested, shall be deemed given and received on the third Business Day
(hereinafter defined) after being deposited in the United States mail, notice
sent by nationally recognized overnight delivery service shall be deemed given
in conformity with this paragraph and received on the first Business Day after
being deposited with such delivery service, and notice given by telecopier shall
be deemed given and received upon actual receipt if received during the
recipient's normal business hours or at the beginning of the recipient's next
Business Day after receipt if not received during the recipient's normal
business hours. Each party may designate a change of address by notice to the
other party. "BUSINESS DAY" means a day upon which commercial banks are not
authorized or required by law to close in Dallas, Texas.
10. BINDING EFFECT. This Agreement shall be binding upon Administrative
Agent, ▇▇▇▇▇ and any Purchaser and inure to the benefit of the Senior
Beneficiaries and ▇▇▇▇▇ and their respective successors and assigns. HEP
Pipeline has assigned to Administrative Agent its rights hereunder, and ▇▇▇ has
assigned to Administrative Agent its rights under the Pipelines Agreement by way
of a collateral assignment. The parties agree that any person that shall become
the owner of any of the rights of HEP Pipeline hereunder, or any of the rights
of HEP under the Pipelines Agreement by reason of foreclosure (whether a
judicial foreclosure or non-judicial foreclosure and including, without
limitation, Administrative Agent) or the acceptance of a deed or assignment in
lieu of foreclosure or otherwise shall (i) have the same rights as HEP Pipeline
hereunder, and HEP under the Pipelines Agreement, including, without limitation,
under this Section 10, and (ii) be bound by and subject to all of the terms,
provisions, covenants and conditions of this Agreement.
Attachment 1-8
11. GENERAL DEFINITIONS. The term "ADMINISTRATIVE AGENT" as used herein
shall include the successors and assigns of Administrative Agent. The term "HEP"
as used herein shall include the successors and assigns of HEP under the
Pipelines Agreement, but shall not mean or include Administrative Agent. The
term "Property" as used herein shall mean the Property, the improvements now or
hereafter located thereon and the estates therein encumbered by the Senior
Mortgage. The term "▇▇▇▇▇" as used herein shall include the successors and
assigns of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and under the Pipelines Agreement including, without
limitation, any ▇▇▇▇▇ Successor.
12. MODIFICATIONS. This Agreement may not be modified in any manner or
terminated except by an instrument in writing executed by the parties hereto.
13. GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State in which the Property is located.
14. DUPLICATE ORIGINALS; COUNTERPARTS. This Agreement may be executed in
any number of duplicate originals and each duplicate original shall be deemed to
be an original. This Agreement may be executed in several counterparts, each of
which counterparts shall be deemed an original instrument and all of such
together shall constitute a single Agreement.
15. FURTHER ASSURANCES. Without unreasonable delay and to the extent
requested by HEP, subject to Section 4 hereof and Article 6 of the ▇▇▇▇▇
Mortgage, ▇▇▇▇▇ will enter into new Subordination, Non-Disturbance and
Attornment Agreements, if necessary or advisable, to facilitate the extension,
amendment, supplement, restatement, replacement or refinancing of the
indebtedness under the Credit Agreement.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
Attachment 1-9
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
ADMINISTRATIVE AGENT: UNION BANK OF CALIFORNIA, N.A., as
Administrative Agent
By:_____________________________________
▇▇▇▇ ▇▇▇▇▇▇, Vice President
▇▇▇▇▇: ▇▇▇▇▇ CORPORATION
By:____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
and Chief Financial Officer
Attachment 1-10
HEP PIPELINE'S CONSENT
The undersigned hereby consents to the foregoing Subordination, Non-Disturbance
and Attornment Agreement and, without limitation, agrees to the provisions of
Section 8 thereof.
GRANTOR:
HEP PIPELINE, L.L.C., a Delaware limited liability
company
By: ▇▇▇▇▇ Energy Partners - Operating, L.P., a Delaware
limited partnership, its sole member
By: HEP Logistics GP, L.L.C., a Delaware limited
liability company, its general partner
By: ▇▇▇▇▇ Energy Partners, L.P., a Delaware
limited partnership, its sole member
By: HEP Logistics Holdings, L.P., a
Delaware limited partnership, its
general partner
By: ▇▇▇▇▇ Logistic Services, L.L.C.,
a Delaware limited liability
company, its general partner
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President and
Chief Financial Officer
Attachment 1-11
THE STATE OF TEXAS
COUNTY OF DALLAS
THIS INSTRUMENT was acknowledged before me on July ___, 2005 by ▇▇▇▇
▇▇▇▇▇▇, Vice President of Union Bank of California, N.A., a national banking
association, as Administrative Agent, on behalf of such banking association.
______________________________________________
Notary Public in and for the State of Texas
____________________________ _______________________________________________
My Commission Expires Printed Name of Notary
THE STATE OF TEXAS
COUNTY OF DALLAS
THIS INSTRUMENT was acknowledged before me on July ___, 2005 by ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Vice President and Chief Financial Officer of ▇▇▇▇▇ Corporation, a
Delaware corporation, on behalf of such corporation.
____________________________________________
Notary Public in and for the State of Texas
_____________________________ ____________________________________________
My Commission Expires Printed Name of Notary
Attachment 1-12
THE STATE OF TEXAS
COUNTY OF DALLAS
THIS INSTRUMENT was acknowledged before me on July ___, 2005 by ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Vice President and Chief Financial Officer of ▇▇▇▇▇ Logistic
Services, L.L.C., a Delaware limited liability company, general partner of HEP
Logistics Holdings, L.P., a Delaware limited partnership, general partner of
▇▇▇▇▇ Energy Partners, L.P., a Delaware limited partnership, sole member of HEP
Logistics GP, L.L.C., a Delaware limited liability company, general partner of
▇▇▇▇▇ Energy Partners - Operating, L.P., a Delaware limited partnership, sole
member of HEP Pipeline, L.L.C., a Delaware limited liability company, on behalf
of such limited liability company.
____________________________________________
Notary Public in and for the State of Texas
__________________________ ____________________________________________
My Commission Expires Printed Name of Notary
Attachment 1-13
EXHIBIT A
PROPERTY
Attachment 1-14