Exhibit 4.11
PLEDGE AND SECURITY AGREEMENT
-----------------------------
PLEDGE AND SECURITY AGREEMENT, dated as of August 5, 1998 (as amended,
modified or supplemented from time to time, this "Agreement"), made by each of
the undersigned pledgors (each a "Pledgor", and together with any entity that
becomes a party hereto pursuant to Section 22 hereof, the "Pledgors"), in favor
of BANKERS TRUST COMPANY, as Collateral Agent, for the benefit of the Secured
Creditors (as defined below) (in such capacity, the "Pledgee"). Except as
otherwise defined herein, terms used herein and defined in the Credit Agreement
(as defined below) shall be used herein as therein defined.
WITNESSETH:
-----------
WHEREAS, Host Marriott Corporation ("Host Marriott"), Host Marriott
Hospitality, Inc. ("Hospitality"), HMH Properties, Inc. ("HMH"), Host Marriott,
L.P. (the "Operating Partnership"), HMC Capital Resources Corp. ("CRC"), various
lenders from time to time party thereto (the "Banks"), Xxxxx Fargo Bank,
National Association, The Bank of Nova Scotia and Credit Lyonnais New York
Branch, as Co-Arrangers (in such capacity, the "Co-Arrangers"), and Bankers
Trust Company, as Arranger and Administrative Agent (in such capacity and
together with any successor thereto, the "Administration Agent" and, together
with the Pledgee, the Co-Arrangers and the Banks and their respective successors
and assigns, and together with any other lenders from time to time party to the
Credit Agreement hereinafter referred to, the "Bank Creditors"), have entered
into an Amended and Restated Credit Agreement, dated as of June 19, 1997 and
amended and restated as of August 5, 1998, providing for the making of Loans to
the Borrower as contemplated therein (as used herein, the term "Credit
Agreement" means the Amended and Restated Credit Agreement described above in
this paragraph, as the same may be amended, modified, extended, renewed,
replaced, restated, supplemented or refinanced from time to time, and including
any agreement extending the maturity of, or refinancing or restructuring
(including, but not limited to, the inclusion of additional borrowers or
guarantors thereunder or any increase in the amount borrowed) all or any portion
of, the indebtedness under such agreement or any successor agreement, whether or
not with the same agent, trustee, representative, lenders or holders- provided
that, with respect to any agreement providing for the refinancing or replacement
of indebtedness under the Credit Agreement, such agreement shall only be treated
as, or as part of, the Credit Agreement hereunder if (i) either (A) all
obligations under the Credit Agreement being refinanced or replaced shall be
paid in full at the time of such refinancing or replacement, and all commitments
pursuant to the refinanced or replaced Credit Agreement shall have terminated in
accordance with their terms or (B) the Required Banks shall have consented in
writing to the refinancing or replacement indebtedness being treated as
indebtedness pursuant to the Credit Agreement, and (ii) a notice to the effect
that the refinancing or replacement indebtedness shall be treated as issued
under the Credit Agreement shall be delivered by the Borrower to the Pledgee);
WHEREAS, the Borrower may from time to time be party to (or guaranty the
obligations of one or more of its Subsidiaries under) one or more Interest Rate
Protection Agreements and/or Other Hedging Agreements with a Bank Creditor or an
affiliate of a Bank Creditor (each such Bank Creditor or affiliate, even if the
respective Bank Creditor subsequently ceases to be a Bank under the Credit
Agreement for any reason, together with such Bank Creditor's or affiliate's
successors and assigns, collectively, the "Other Creditors");
WHEREAS, pursuant to the Parents Guaranty and the Subsidiaries Guaranty,
the Parent Guarantors and the Subsidiary Guarantors, respectively, have jointly
and severally guaranteed to the Bank Creditors and the Other Creditors the
payment when due of all obligations and liabilities of the
Borrower under or with respect to (x) the Credit Documents (as used herein, the
term "Credit Documents" shall have the meaning provided in the Credit Agreement
and shall include any documentation executed and delivered in connection with
any replacement or refinancing Credit Agreement) and (y) each Interest Rate
Protection Agreement and Other Hedging Agreement with one or more of the Other
Creditors;
WHEREAS, after giving effect to the conclusion of the Existing HMH Notes
Tender Offers/Consent Solicitations, there remain outstanding on the date hereof
certain of HMH's (i) 91/2% Senior Secured Notes due 2005, (ii) 8 7/8% Senior
Notes due 2007 and (iii) 9% Senior Notes due 2007 (collectively, the "HMH
Notes") (with the holders from time to time of such HMH Notes being herein
called the "HMH Noteholders") which were issued pursuant to each of the
respective indentures entered into by HMH, the subsidiary guarantors named
therein and Marine Midland Bank, as trustee in connection with the HMH Notes
(collectively, the "HMH Note Indentures");
WHEREAS, with respect to those HMH Notes that remain outstanding on the
date hereof, various of the Pledgors continue to guaranty the payment when due
of all of the obligations and liabilities of HMH under or with respect to such
HMH Notes and the Note Indentures (with any such guarantees, together with the
HMH Notes and the Note Indentures being herein collectively called "HMH Note
Documents");
WHEREAS, pursuant to the HMH Note Documents, the capital stock or other
equity interests of certain of the Borrower's current and future Subsidiaries
(the "Currently Pledged Securities") have been pledged to equally and ratably
secure the obligations of the Borrower and certain Subsidiaries thereof under
the Senior Notes;
WHEREAS, it is contemplated that the Currently Pledged Securities will also
be pledged to secure the Credit Document Obligations, the Other Obligations, the
Senior Note Obligations, the Additional Debt Obligations and all other amounts
comprising "Obligations" (as each such term is hereinafter defined) on an equal
and ratable basis with the HMH Note Obligations (as hereinafter defined), as
contemplated hereby, and that in connection therewith (i) the fights and
responsibilities with respect to the Currently Pledged Securities pursuant to
the Note Indentures of the parties thereto shall be amended and restated as set
forth in this Agreement and (ii) the Pledgee, as collateral agent hereunder,
shall act as the "Collateral Agent" for the benefit of the Noteholders and the
other Secured Creditors;
WHEREAS, on or prior to the date hereof, will have issued $1,700,000,000 in
aggregate principal amount of (i) the $500,000,000 7 7/8% Series A Senior Notes
due 2005 of and (ii) the $1,200,000,000 7 7/8% Series B Senior Notes due 2008 of
HMH (collectively, the "Senior Notes") (with the holders from time to time of
such Senior Notes being herein called the "Senior Noteholders") pursuant to the
Indenture, dated as of August 5, 1998, among the guarantors and subsidiary
guarantors named therein and Marine Midland Bank, as trustee, in connection with
the Senior Notes (the "Senior Note Indenture");
WHEREAS, various of the Pledgors have issued, or in the future may enter
into, guarantees of the payment when due of all of the obligations and
liabilities of HMH under or with respect to the Senior Notes and the Senior Note
Indenture (with any such guarantees, together with the Senior Notes and Senior
Note Indenture being herein collectively called "Senior Note Documents");
WHEREAS, the Borrower may in the future incur Additional Debt (as
hereinafter defined) as provided in Sections 9.04(xi) and (xii) of the Credit
Agreement and Section 4.7 of the Senior
2
Note Indenture that may be (in accordance with the terms thereof and to the
extent permitted pursuant to the Credit Agreement and the Senior Note Indenture)
(x) guaranteed by various of the Pledgors and (y) to the extent that such
Additional Debt constitutes senior obligations of the Borrower which rank pari
passu in right of payment with the Credit Document Obligations (as defined
below) and the Senior Note Obligations (as defined below), secured hereunder on
an equal and ratable basis with all of the Obligations as hereinafter provided
(with any holders of such Additional Debt from time to time being herein
collectively called "Additional Debtholders" and with all documentation
evidencing any such Additional Debt and any guarantees thereof being herein
called "Additional Debt Documents"). For purposes hereof, the term "Additional
Debt" shall mean Indebtedness incurred pursuant to Sections 9.04(xi) and/or
9.04(xii) of the Credit Agreement and Section 4.7 of the Senior Note Indenture
in the aggregate principal amount of up to $2,200,000,000, so long as such
Indebtedness is not otherwise secured;
WHEREAS, it is a condition precedent to the extensions of credit under the
Credit Agreement and the Senior Note Indenture that each Pledgor shall have
executed and delivered to the Pledgee this Agreement;
WHEREAS, each Pledgor desires to execute this Agreement to satisfy the
conditions described in the immediately preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each Pledgor,
the receipt and sufficiency of which are hereby acknowledged, each Pledgor
hereby makes the following representations and warranties to the Pledgee and
hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. (a) Subject to the provisions of the
following clause (b) of this Section 1, this Agreement is made by each Pledgor
in favor of the Pledgee for the benefit of the Bank Creditors, the Other
Creditors, the Other Noteholders, the Senior Noteholders, the Additional
Debtholders and any trustee, agent or other similar representative of any such
creditors or holders (collectively, together with the Pledgee, the "Secured
Creditors"), to secure on an equal and ratable basis:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of such Pledgor (as
obligor or guarantor, as the case may be) to the Bank Creditors, whether
now existing or hereafter incurred under, arising out of or in connection
with the Credit Agreement and all other Credit Documents to which it is at
any time a party (including, without limitation, all such obligations and
liabilities of such Pledgor under the Credit Agreement (if a party thereto)
and under any guaranty by it of the obligations under the Credit Agreement)
and the due performance and compliance by such Pledgor with the terms of
each such Credit Document (all such obligations and liabilities under this
clause (i) being herein collectively called the "Credit Document
Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of such Pledgor (as
obligor or guarantor, as the case may be) to the Other
3
Creditors, whether now existing or hereafter incurred under, arising out of
or in connection with any Interest Rate Protection Agreement or Other
Hedging Agreement (including, without limitation, all such obligations and
liabilities of such Pledgor under any guaranty by it of the obligations
under any Interest Rate Protection Agreement or Other Hedging Agreement)
and the due performance and compliance by such Pledgor with the terms of
each such Interest Rate Protection Agreement and Other Hedging Agreement
(all such obligations and liabilities under this clause (ii) being herein
collectively called the "Other Obligations");
(iii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of such Pledgor (as
obligor or guarantor, as the case may be) to the Noteholders, whether now
existing or hereafter incurred under, arising out of or in connection with
the HMH Notes and the other HMH Note Documents to which such Pledgor is at
any time a party (including, without limitation, all such obligations and
liabilities of such Pledgor under any guaranty with respect thereto) and
the due performance and compliance by such Pledgor with all of the terms,
conditions and agreements on its part contained in each such HMH Note
Document (all such obligations and liabilities under this clause (iii)
being herein collectively called the "HMH Note Obligations");
(iv) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of such Pledgor (as
obligor or guarantor, as the case may be) to the Senior Noteholders,
whether now existing or hereafter incurred under, arising out of or in
connection with the Senior Note Documents to which such Pledgor is at any
time a party (including, without limitation, all such obligations and
liabilities of such Pledgor under the Senior Note Indenture or any guaranty
by it of the obligations under the Senior Note Indenture) and the due
performance and compliance by such Pledgor with all of the terms,
conditions and agreements on its part contained in each such Senior Note
Document (all such obligations and liabilities under this clause (iv) being
herein collectively called the "Senior Note Obligations");
(v) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of such Pledgor (as
obligor or guarantor, as the case may be) to the Additional Debtholders,
whether now existing or hereafter incurred under, arising out of or in
connection with the Additional Debt and the other Additional Debt Documents
to which such Pledgor is at any time a party (including, without
limitation, all such obligations and liabilities of such Pledgor under any
guaranty with respect thereto) and the due performance and compliance by
such Pledgor with all of the terms, conditions and agreements on its part
contained in each such Additional Debt Document (all such obligations and
liabilities under this clause (v) being herein collectively called the
"Additional Debt Obligations");
4
(vi) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) or preserve its security interest
in the Collateral;
(vii) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities referred to in
clauses (i) through (vi) above, after an Event of Default (such term, as
used in this Agreement, shall mean (a) any "Event of Default" at any time
under, and as defined in, any of the Credit Agreement, the HMH Note
Documents and the Senior Note Documents and, if the Additional Debt
Obligations are secured hereunder at such time, the Additional Debt
Documents, and (b) any payment default (after the expiration of any
applicable grace period) on any of the Obligations secured hereunder at
such time) shall have occurred and be continuing, the reasonable expenses
of retaking, holding, preparing for sale or lease, selling or otherwise
disposing or realizing on the Collateral, or of any exercise by the Pledgee
of its rights hereunder, together with reasonable attorneys' fees and court
costs; and
(viii) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of this
Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (viii) of this Section 1, subject to the provisions of following clause
(b), being herein collectively called the "Obligations," it being acknowledged
and agreed that the "Obligations" shall include extensions of credit of the type
described above, whether outstanding on the date of this Agreement or extended
from time to time after the date of this Agreement.
(b) Notwithstanding anything to the contrary contained above in this
Section I or elsewhere in this Agreement, obligations and liabilities which
would otherwise constitute Additional Debt Obligations as defined in clause (v)
of Section l(a) of this Agreement shall not constitute Obligations for purposes
of (or be secured pursuant to) this Agreement unless the Borrower shall have
delivered to the Pledgee a written "Notice of Pledge Agreement Entitlement'
(each, a "Notice of Pledge Agreement Entitlement") with respect thereto at least
5 days (or such shorter number of days as may be reasonably acceptable to the
Pledgee) prior to the date of the incurrence of the respective Indebtedness, as
follows:
Such written notice from the Borrower (i) shall state that it is a "Notice
of Pledge Agreement Entitlement", (ii) shall be delivered to the Pledgee,
(iii) shall describe the new Additional Debt Obligations (and shall
describe the Pledgors obligated, as obligors or guarantors, with respect
thereto) to be secured hereby, (iv) shall state that it is delivered
pursuant to Section l(b) of this Pledge and Security Agreement, (v) shall
reference the aggregate principal amount of such new Indebtedness and the
aggregate principal amount of all other Indebtedness constituting
Additional Debt Obligations hereunder, and (vi) shall state that the new
Indebtedness and the incurrence thereof does not violate, and may be
incurred and secured hereunder in accordance with, the applicable
provisions of Sections 9.01 and 9.04 of the Credit Agreement and, to the
extent still in effect, Section 4.7 of the Senior Note Indenture.
2. DEFINITION OF STOCK, LIMITED LIABILITY COMPANY INTERESTS, PARTNERSHIP
INTERESTS, SECURITIES, ETC. (a) As used herein: (i) the term "Stock" shall mean
5
(x) with respect to corporations incorporated under the laws of the United
States or any State or territory thereof (each a "Domestic Corporation'), all of
the issued and outstanding shares of capital stock of any Domestic Corporation
at any time owned by any Pledgor and (y) with respect to corporations that are
not Domestic Corporations (each a "Foreign Corporation"), all of the issued and
outstanding shares of capital stock of any Foreign Corporation at any time owned
by any Pledgor, provided that, (A) except as provided in the last sentence of
this Section 2(a) and except for Foreign Subsidiaries that are Look-Through
Subsidiaries, such Pledgor shall not be required to pledge hereunder more than
65% of the total combined voting power of all classes of capital stock entitled
to vote for the directors of such Foreign Corporation (herein called "Voting
Stock") owned by such Pledgor of any Foreign Corporation and (B) the Pledgor
shall be required to pledge hereunder 100% of the issued and outstanding shares
of all capital stock which is not Voting Stock (herein called "Non-Voting
Stock") at any time owned by the Pledgor of any Foreign Corporation; (ii) the
term "Limited Liability Company Interest" shall mean the entire limited
liability company interests or membership interests at any time owned by each
Pledgor in any limited liability company (each such limited liability company, a
"Pledged Limited Liability Company"); (iii) the term "Partnership Interest"
shall mean the entire partnership interests (whether general and/or limited
partnership interests) at any time owned by each Pledgor in any partnership
(whether a general or limited partnership) (each such partnership, a "Pledged
Partnership"); and (iv) the term "Securities" shall mean all of the Stock,
Limited Liability Company Interests and Partnership Interests. Notwithstanding
anything to the contrary contained in this Agreement, (x) Host Marriott shall
not be required to pledge the capital stock of Hospitality hereunder until March
31, 1999, although no such pledge shall be required in the event that the REIT
Conversion has occurred on or before such date, and (y) from and after the.
consummation of the REIT Transaction and the issuance of the IRS Ruling, only
Securities of Persons that are Look-Through Subsidiaries shall be "Securities"
subject to the terms of this Agreement.
Each Pledgor represents and warrants that on the date hereof (i) the Stock
held by such Pledgor consists of the number and type of shares of the stock of
the corporations as described in Annex A hereto; (ii) such Stock constitutes
that percentage of the issued and outstanding capital stock of the issuing
corporation as is set forth in Annex A hereto; (iii) the Limited Liability
Interests held by such Pledgor consist of the number and type of interest of the
issuing Pledged Limited Liability Company as described in Annex B hereto; (iv)
such Limited Liability Company Interests constitute that percentage of the
issued and outstanding equity interests of the respective issuing Pledged
Limited Liability Company as is set forth in Annex B hereto; and (v) the
Partnership Interests held by such Pledgor constitute that percentage of the
entire Partnership Interest of the respective Pledged Partnership as is set
forth in Annex C hereto for such Pledgor. In the circumstances and to the extent
provided in Section 8.17 of the Credit Agreement, the limitation set forth in
part (A) of the proviso to clause (i)(y) of this Section 2(a) and in Section 3.2
hereof shall no longer be applicable and such Pledgor shall duly pledge and
deliver to the Pledgee such of the Securities not theretofore required to be
pledged hereunder.
(b) All Stock at any time pledged or required to be pledged hereunder is
hereinafter called the "Pledged Stock," all Limited Liability Company Interests
at any time pledged or required to be pledged hereunder are hereinafter called
the "Pledged Limited Liability Company Interests," all Partnership Interests at
any time pledged or required to be pledged hereunder are hereinafter called the
"Pledged Partnership Interests," all of the Pledged Stock, Pledged Limited
Liability Interests and Pledged Partnership Interests together are hereinafter
called the "Pledged Securities," which together with (i) all proceeds thereof,
including any securities and moneys received and at the time held by the Pledgee
hereunder, (ii) the entries on the books of any securities intermediary
pertaining to the Pledged Stock, Pledged Limited Liability Company Interests and
Pledged Partnership Interests, (iii) all dividends, cash, warrants, rights,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Stock,
6
Pledged Limited Liability Company Interests and Pledged Partnership Interests
and (iv) all rights under Section 3. 1 (a)(iv) and (v) are hereinafter called
the "Collateral".
(c) Notwithstanding anything to the contrary contained in this Agreement,
no Pledgor shall be required to pledge hereunder the Securities of a Person that
is not a Wholly-Owned Subsidiary if such pledge would violate the provisions of
any Indebtedness of such Person or any other material contract binding upon such
Person.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. (a) To secure all Obligations of such Pledgor and for the
purposes set forth in Section I hereof, each Pledgor hereby: (i) grants to the
Pledgee a first priority security interest in all of the Collateral owned by
such Pledgor- (ii) pledges and deposits as security with the Pledgee the
certificate Securities owned by such Pledgor on the date hereof, and delivers to
the Pledgee all certificates or instruments therefor, if any, accompanied by
undated stock powers duly executed in blank by such Pledgor in the case of
Stock, or such other instruments of transfer as are reasonably acceptable to the
Pledgee; (iii) assigns, transfers, hypothecates, mortgages, charges and sets
over to the Pledgee all of such Pledgor's right, title and interest in and to
such Securities (and in and to all certificates or instruments evidencing such
Securities), to be held by the Pledgee, upon the terms and conditions set forth
in this Agreement; (iv) transfers and assigns to the Pledgee all of such
Pledgor's Limited Liability Company Interests (and delivers any certificates or
instruments evidencing such limited liability company or membership interests,
duly endorsed in blank) and all of such Pledgor's right, title and interest in
each limited liability company to which such interests relate, whether now
existing or hereafter acquired, including, without limitation:
(A) all the capital thereof and its interest in all profits, losses,
Limited Liability Company Assets (as defined below) and other distributions
to which such Pledgor shall at any time be entitled in respect of such
Limited Liability Company Interests;
(B) all other payments due or to become due to such Pledgor in
respect of Limited Liability Company Interests, whether under any limited
liability company agreement or otherwise, whether as contractual
obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority,
options, security interests, liens and remedies, if any, under any limited
liability company agreement or operating agreement, or at law or otherwise
in respect of such Limited Liability Company Interests (except any rights
as managing member of a limited liability company which is not a Wholly-
Owned Subsidiary, to the extent the applicable limited liability company
agreement or operating agreement prohibits a pledge of such rights);
(D) all present and future claims, if any, of such Pledgor against
any Pledged Limited Liability Company for moneys loaned or advanced, for
services rendered or otherwise;
(E) subject to Section 5 hereof, all of such Pledgor's rights under
any limited liability company agreement or operating agreement or at law to
exercise and enforce every right, power, remedy, authority, option and
privilege of such Pledgor relating to any Limited Liability Company
Interest (except any rights as managing member of a limited
7
liability company which is not a Wholly-Owned Subsidiary, to the extent the
applicable limited liability company agreement or operating agreement
prohibits a pledge of such rights), including any power to terminate,
cancel or modify any limited liability company agreement or operating
agreement, to execute any instruments and to take any and all other action
on behalf of and in the name of such Pledgor in respect of such Limited
Liability Company Interest and any Pledged Limited Liability Company, to
make determinations, to exercise any election (including, but not limited
to, election of remedies) or option or to give or receive any notice,
consent, amendment, waiver of approval, together with full power and
authority to demand, receive, enforce, collect or receipt for any of the
foregoing or for any Limited Liability Company Assets, to enforce or
execute any checks, or other instruments or orders, to file any claims and
to take any action in connection with any of the foregoing;
(F) all other property hereafter delivered in substitution for or in
addition to any of the foregoing, all certificates and instruments
representing or evidencing such other property and all cash, securities,
interest, dividends, rights and other property at any time and from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing; and
(G) to the extent not otherwise included, all proceeds of any or all
of the foregoing;
and (v) transfers and assigns to the Pledgee such Pledgor's Partnership
Interests (and delivers any certificates or instruments evidencing such
partnership interests, duly endorsed in blank) and all of such Pledgor's right,
title and interest in each Pledged Partnership including, without limitation:
(A) all of the capital thereof and its interest in all profits,
losses, Partnership Assets (as defined below) and other distributions to
which such Pledgor shall at any time be entitled in respect of any such
Partnership Interests;
(B) all other payments due or to become due to such Pledgor in
respect of any such Partnership Interests, whether under any partnership
agreement or otherwise, whether as contractual obligations, damages,
insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority,
options, security interests, liens and remedies, if any, under any
partnership or other agreement or at law or otherwise in respect of any
such Partnership Interests (except any rights as general partner of a
limited partnership which is not a Wholly-Owned Subsidiary, to the extent
the applicable partnership agreement prohibits a pledge of such rights);
(D) all present and future claims, if any, of such Pledgor against
any Pledged Partnership for moneys loaned or advanced, for services
rendered or otherwise;
(E) subject to Section 5 hereof, all of such Pledgor's rights under
any partnership agreement or at law to exercise and enforce every right,
power, remedy, authority, option and privilege of such Pledgor relating to
any Partnership Interest (except any rights as general partner of a limited
partnership which is not a Wholly-Owned Subsidiary, to the extent the
applicable partnership agreement prohibits a pledge of such rights),
including any power, if any, to terminate, cancel or modify any general or
limited partnership agreement, to execute any instruments and to take any
and all other action on behalf of and in the name of such
8
Pledgor in respect of such Partnership Interest and any Pledged
Partnership, to make determinations, to exercise any election (including,
but not limited to, election of remedies) or option or to give or receive
any notice, consent, amendment, waiver or approval, together with full
power and authority to demand, receive, enforce collect or receipt for any
of the foregoing or for any Partnership Assets, to enforce or execute any
checks, or other instruments or orders, to file any claims and to take any
action in connection with any of the foregoing;
(F) all other property hereafter delivered in substitution for or in
addition to any of the foregoing, all certificates and instruments
representing or evidencing such other property and all cash, securities,
interest, dividends, rights and other property at any time and from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all thereof, and
(G) to the extent not otherwise included, all proceeds of any or all
of the foregoing.
(a) As used herein, the term "Limited Liability Company Assets" shall
mean all assets, whether tangible or intangible and whether real, personal or
mixed (including, without limitation, all limited liability company capital and
interests in other limited liability companies), at any time owned by any
Pledged Limited Liability Company.
(b) As used herein, the term "Partnership Assets" shall mean all assets,
whether tangible or intangible and whether real, personal or mixed (including,
without limitation, all partnership capital and interests in other
partnerships), at any time owned by any Pledged Partnership.
(c) As used herein, the term "Partnership Assets" shall mean all assets,
whether tangible or intangible and whether real, personal or mixed (including,
without limitation, all partnership capital and interests in other
partnerships), at any time owned by any Pledged Partnership.
3.2. Subsequently Acquired Securities. Subject to Section 2(c) hereof if
--------------------------------
any Pledgor shall acquire (by purchase, stock dividend or otherwise) any
additional Securities at any time or from time to time after the date hereof,
such Securities shall automatically (and without any further action being
required to be taken) be subject to the pledge and security interests created
pursuant to Section 3.1(a) hereof and, furthermore, such Pledgor will forthwith
deliver and deposit such Securities (or any certificates or instruments
representing such Securities) as security with the Pledgee and deliver to the
Pledgee all certificates therefor or instruments thereof, if any, accompanied by
undated stock powers duly executed in blank in the case of certificated Stock,
Limited Liability Company Interests or Partnership Interests or such other
instruments of transfer as are reasonably acceptable to the Pledgee, and will
promptly thereafter deliver to the Pledgee a certificate executed by any
Authorized Officer of such Pledgor describing such Securities and certifying
that the same have been duly pledged with the Pledgee hereunder. Subject to the
last sentence of Section 2(a) hereof, any pledge of Voting Stock of any Foreign
Corporation shall be subject to the provisions of part (A) of the proviso to
clause (i)(y) of Section 2(a) hereof.
3.3. Uncertificated Securities. If any Securities (whether now owned or
--------------------------
hereafter acquired) are uncertificated securities, the respective Pledgor shall
promptly notify the Pledgee thereof, and shall promptly take all actions
required to perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 8-106 and 9-115 of the New York UCC, if
applicable). Each Pledgor further agrees to take such actions as the Pledgee
deems reasonably necessary or desirable to effect the foregoing and to permit
the Pledgee to exercise any of its rights and remedies hereunder, and agrees to
provide an opinion of counsel reasonably satisfactory to the Pledgee with
respect to any such pledge of uncertificated Securities promptly upon request of
the Pledgee.
9
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall have the
right to appoint one or more sub-agents for the purpose of retaining physical
possession of any Pledged Securities that are represented by certificates, which
may be held (in the discretion of the Pledgee) in the name of such Pledgor,
endorsed or assigned in blank or in favor of the Pledgee or any nominee or
nominees of the Pledgee or a sub-agent appointed by the Pledgee. The Pledgee
agrees to promptly notify the relevant Pledgor after the appointment of any
sub-agent; provided, however, that the failure to give such notice shall not
affect the validity of such appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until an Event of
Default shall have occurred and be continuing, each Pledgor shall be entitled to
(i) exercise any and all voting and other consensual rights pertaining to the
Pledged Stock and to give all consents, waivers or ratifications in respect
thereof and (ii) exercise any and all voting, consent, administration,
management and other rights and remedies under (x) any limited liability company
agreement or operating agreement or otherwise with respect to the Pledged
Limited Liability Interests of such Pledgor and (y) any partnership agreement or
otherwise with respect to the Pledged Partnership Interests of such Pledgor, in
each case together with all other rights assigned pursuant to Sections 3.
1(a)(iv)(E) and 3. 1 (a)(v)(E) hereof; provided, that no vote shall be cast or
any consent, waiver or ratification given or any other action taken which would
violate or be inconsistent with any of the terms of this Agreement or any other
Secured Debt Agreement (as hereinafter defined), or which would have the effect
of impairing the rights, priorities or remedies of the Pledgee or any other
Secured Creditor under this Agreement or any other Secured Debt Agreement. All
such rights of such Pledgor to vote and to give consents, waivers and
ratification's shall cease in case an Event of Default shall occur and be
continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default shall have
occurred and be continuing and subject to the terms of the Secured Debt
Agreements, all cash dividends and other cash distributions payable in respect
of the Pledged Securities shall be paid to the respective Pledgor; provided,
that all cash dividends and other cash distributions payable in respect of any
Pledged Security which represent in whole or in part an extraordinary,
liquidating or other distribution in return of capital shall be paid to the
Pledgee and retained by it as part of the Collateral (except as otherwise
permitted to be retained or distributed by such Pledgor pursuant to the
respective Secured Debt Agreements). The Pledgee shall also be entitled to
receive directly (with all necessary endorsements), and to retain as part of the
Collateral:
(i) all other or additional stock or other securities or property
(other than cash) paid or distributed by way of dividend or otherwise in
respect of the Pledged Stock, Pledged Limited Liability Company Interests
and Pledged Partnership Interests;
(ii) all other or additional stock or other securities or property
(including cash) paid or distributed in respect of the Pledged Stock,
Pledged Limited Liability Company Interests or Pledged Partnership
Interests by way of stock-split, spin-off, split-up, reclassification,
combination of shares or similar rearrangement or in connection with 6
reduction of capital, capital surplus or paid-in surplus; and
(iii) except as provided in the Secured Debt Agreements, all other or
additional stock or other securities or property (including cash) which may
be paid in respect of the Collateral by reason of any consolidation,
merger, exchange of stock, conveyance of assets, partial or total
liquidation or similar corporate reorganization.
10
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive proceeds of the Collateral in any form in accordance
with Section 3 of this Agreement. All dividends, distributions or other payments
which are received by the Pledgor contrary to the provisions of this Section 6
and Section 7 below shall be received in trust for the benefit of the Pledgee,
shall be segregated from other property or funds of the Pledgor and shall be
forthwith paid over to the Pledgee as Collateral in the same form as so received
(with any necessary endorsement).
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of Default shall
have occurred and be continuing, the Pledgee shall be entitled to exercise all
of its rights, powers and remedies (whether vested in it by this Agreement, by
any other Credit Document, by any HMH Note Document, by any Senior Note Document
or, to the extent then in effect and secured hereby, any Interest Rate
Protection Agreement or Other Hedging Agreement or any Additional Debt Document
(with all of the Documents listed above being herein collectively called the
"Secured Debt Agreements") or by law) for the protection and enforcement of its
rights in respect of the Collateral, and the Pledgee shall be entitled to
exercise all the rights and remedies of a secured party under the UCC and also
shall be entitled, without limitation, to exercise the following rights, which
each Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral
otherwise payable to such Pledgor under Section 6 hereof,
(ii) to transfer all or any part of the Pledged Securities into the
Pledgee's name or the name of its nominee or nominees;
(iii) to vote all or any part of the Pledged Stock, Pledged Limited
Liability Company Interests or Pledged Partnership Interests (whether or
not transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise act
with respect thereto as though it were the outright owner thereof, and
(iv) at any time or from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of credit
risk, and for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; provided, that at. least 10 Business
Days' notice of the time and place of any such sale shall be given to such
Pledgor. Each Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any,
of marshaling the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the
Pledgee on behalf of the Secured Creditors may bid for and purchase all or
any part of the Collateral so sold free from any such right or equity of
redemption. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Pledgor, and
each Pledgor hereby waives (to the extent permitted by law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted. The Pledgee may adjourn any public or private sale from time to
time
11
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Each Pledgor hereby waives any claims against the Pledgee
arising by reason of the fact that the price at which any Collateral may
have been sold at such a private sale was less than the price which might
have been obtained at a public sale, even if the Pledgee accepts the first
offer received and does not offer such Collateral to more than one offeree.
If the proceeds of any sale or other disposition of the Collateral are
insufficient to pay all the Obligations, the Pledgors shall be liable for
the deficiency and the fees of any attorneys employed by the Pledgee to
collect such deficiency. Neither the Pledgee nor any other Secured Creditor
shall be liable for failure to collect or realize upon any or all of the
Collateral or for any delay in so doing nor shall any of them be under any
obligation to take any action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the Pledgee
provided for in this Agreement or in any other Secured Debt Agreement or now or
here after existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee or any other Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or in any other Secured Debt Agreement or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. The Secured Creditors agree that
this Agreement may be enforced only by the Pledgee acting upon the instructions
of the Required Secured Creditors (as defined in Annex G hereto) and that no
other Secured Creditor shall have any right individually to seek to enforce or
to enforce this Agreement or to realize upon the security to be granted hereby,
it being understood and agreed that such rights and remedies may be exercised by
the Pledgee for the benefit of the Secured Creditors upon the terms of this
Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee upon
any sale or other disposition of the Collateral of each Pledgor, together with
all other moneys received by the Pledgee hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing to the Pledgee of
the type provided in clauses (vi), (vii) and (viii) of the definition of
Obligations in Section I hereof,
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Primary Obligations (as hereinafter defined) shall be paid to the Secured
Creditors as provided in Section 9(e) hereof, with each Secured Creditor
receiving an amount equal to its outstanding Primary Obligations of such
Pledgor or, if the proceeds are insufficient to pay in full all such
Primary Obligations, its Pro Rata Share (as hereinafter defined) of the
amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations (as hereinafter defined) shall be paid to
the Secured Creditors as provided in Section 9(e) hereof, with each Secured
Creditor receiving an amount equal to its outstanding
12
Secondary Obligations of such Pledgor or, if the proceeds are insufficient
to pay in full all such Secondary Obligations, its Pro Rata Share of the
amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, and
following the termination of this Agreement pursuant to Section 18 hereof,
to the relevant Pledgor or to whomever may be lawfully entitled to receive
such surplus.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary Obligations or Secondary Obligations,
as the case may be, (y) "Primary Obligation" shall mean (i) in the case of the
Credit Document Obligations, all Obligations arising out of or in connection
with (including, without limitation, as obligor or guarantor, as the case may
be) the principal of, and interest on, all Loans, all unreimbursed drawings or
payments in respect of any letters of credit (together with all interest accrued
thereon), and the aggregate stated amounts of all letters of credit issued under
the Credit Agreement, and all regularly accruing fees, (ii) in the case of the
HMH Note Obligations, all Obligations secured hereby arising out of or in
connection with (including, without limitation, as obligor or guarantor, as the
case may be) the principal of, and interest on, the HMH Notes, and all regularly
accruing fees, (iii) in the case of the Senior Note Obligations, all Obligations
secured hereby arising out of or in connection with (including, without
limitation, as obligor or guarantor, as the case may be) the principal of, and
interest on, the Senior Notes, and all regularly accruing fees, (iv) in the case
of the Additional Debt Obligations, all Obligations secured hereby arising out
of or in connection with (including, without limitation, as obligor or
guarantor, as the case may be) the principal of, and interest on, the Additional
Debt, and all regularly accruing fees, and (v) in the case of the Other
Obligations, all Obligations arising out of or in connection with (including,
without limitation, as a direct obligor or a guarantor, as the case may be)
Interest Rate Protection Agreements or Other Hedging Agreements secured hereby
(other than indemnities, fees (including, without limitation, attorneys' fees)
and similar obligations and liabilities), and (z) "Secondary Obligations" shall
mean all Obligations of such Pledgor secured hereby other than Primary
Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be deemed to be applied (for purposes of making determinations
under this Section 9 only) (i) first, to the Primary Obligations and (ii)
second, to the Secondary Obligations.
(d) If the Bank Creditors are to receive a distribution in
accordance with the procedures set forth above in this Section 9 on account of
undrawn amounts with respect to letters of credit issued under the Credit
Agreement, such amounts shall be paid to the Administrative Agent under the
Credit Agreement and held by it, for the equal and ratable benefit of the Bank
Creditors as such. If any amounts are held as cash security pursuant to the
immediately preceding sentence, then upon the termination of all outstanding
letters of credit, and after the application of all such cash security to the
repayment of all Obligations owing to the Bank Creditors after giving effect to
the termination of all such letters of credit, if there remains any excess cash,
such excess cash shall be returned by the Administrative Agent to the Pledgee
for distribution in accordance with Section 9(a) hereof.
13
(e) Except as set forth in Section 9(d) hereof, all payments
required to be made hereunder shall be made (i) if to the Bank Creditors, to the
Administrative Agent under the Credit Agreement for the account of the Bank
Creditors, and (ii) if to any other Secured Creditors (other than the Pledgee),
to the trustee, paying agent or other similar representative (each a
"Representative") for such Secured Creditors or, in the absence of such a
Representative, directly to the other Secured Creditors.
(f) For purposes of applying payments received in accordance with
this Section 9, the Pledgee shall be entitled to rely upon (i) the
Administrative Agent under the Credit Agreement and (ii) the Representative for
any other Secured Creditors or, in the absence of such a Representative, upon
the respective Secured Creditors for a determination (which the Administrative
Agent, each Representative for any other Secured Creditors and the Secured
Creditors agree (or shall agree) to provide upon request of the Pledgee) of the
outstanding Primary Obligations and Secondary Obligations owed to the Secured
Creditors. Unless it has actual knowledge (including by way of written notice
from a Representative for any Secured Creditor or directly from a Secured
Creditor) to the contrary, the Pledgee, in acting hereunder, shall be entitled
to assume that no Interest Rate Protection Agreements or Other Hedging
Agreements are in existence.
(g) It is understood and agreed that each Pledgor shall remain
liable to the extent of any deficiency between the amount of the proceeds of the
Collateral pledged by it hereunder and the aggregate amount of the Obligations
of such Pledgor.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or non-application thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to indemnify
and hold harmless the Pledgee in such capacity, each Representative of a Secured
Creditor in its capacity as such and each other Secured Creditor that is an
indemnitor under Section 6 of Annex G hereto from and against any and all
claims, demands, losses, judgments and liabilities of whatsoever kind or nature,
and (ii) to reimburse the Pledgee in such capacity, each Representative of a
Secured Creditor in its capacity as such and each other Secured Creditor that is
an indemnitor under Section 6 of Annex G hereto for all reasonable costs and
expenses, including reasonable attorneys' fees, in each case to the extent
growing out of or resulting from the exercise by the Pledgee of any right or
remedy granted to it hereunder except, with respect to clauses (i) and (ii)
above, to the extent arising from the Pledgee's or such other Secured Creditor's
gross negligence or willful misconduct. In no event shall the Pledgee be liable,
in the absence of gross negligence or willful misconduct on its part, for any
matter or thing in connection with this Agreement other than to account for
moneys actually received by it in accordance with the terms hereof If and to the
extent that the obligations of the Pledgors under this Section 11 are
unenforceable for any reason, each Pledgor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
12. FURTHER ASSURANCES; POWER OF ATTORNEY. (a) Each Pledgor agrees that it
will join with the Pledgee in executing and, at such Pledgor's own expense, file
and refile under the applicable UCC or such other law such financing statements,
continuation statements and other documents in such offices as the Pledgee may
reasonably deem necessary or appropriate and wherever
14
required or permitted by law in order to perfect and preserve the Pledgee's
security interest in the Collateral and hereby authorizes the Pledgee to file
financing statements and amendments thereto relative to all or any part of the
Collateral without the signature of such Pledgor where permitted by law, and
agrees to do such further acts and things and to execute and deliver to the
Pledgee such additional conveyances, assignments, agreements and instruments as
the Pledgee may reasonably deem necessary or advisable to carry into effect the
purposes of this Agreement or to further assure and confirm unto the Pledgee its
rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, to act from time to time after the
occurrence and during the continuance of an Event of Default in the Pledgee's
reasonable discretion to take any action and to execute any instrument which the
Pledgee may deem necessary or advisable to accomplish the purposes of this
Section 12.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this
Agreement all items of the Collateral at any time received under this Agreement.
It is expressly understood and agreed that the obligations of the Pledgee as
holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Pledgee shall act hereunder on the
terms and conditions set forth herein and in Annex G hereto, the terms of which
shall be deemed incorporated herein by reference as fully as if same were set
forth herein in their entirety.
14. TRANSFER BY PLEDGORS. No Pledgor will sell or otherwise dispose of,
grant any option with respect to, or mortgage, pledge or otherwise encumber any
of the Collateral or any interest therein (except in accordance with the terms
of this Agreement and as permitted by the terms of the Secured Debt Agreements).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGORS. (a) Each Pledgor
represents, warrants and covenants that:
(i) it is the legal, record and beneficial owner of, and has good
title to, all Pledged Securities purported to be owned by such Pledgor
(including as shown on Annexes A, B and C hereof, subject to no Lien,
except the Liens created by this Agreement;
(ii) it has full power, authority and legal right to pledge all the
Pledged Securities;
(iii) this Agreement has been duly authorized, executed and delivered
by such Pledgor and constitutes the legal, valid and binding obligation of
such Pledgor enforceable in accordance with its terms, except to the extent
that the enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by equitable principles (regardless of
whether enforcement is sought in equity or at law);
(iv) no consent of any other party (including, without limitation, any
stockholder or creditor of such Pledgor or any of its Subsidiaries and any
other partners or members of such Pledgor's partnerships or limited
liability companies) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to,
15
or registration, filing (except any filings required under the UCC, which
filings have been made (or will be made within 5 days after the date hereof
or declaration with, any governmental authority is required to be obtained
by such Pledgor in connection with the execution, delivery or performance
of this Agreement, or in connection with the exercise of its rights and
remedies pursuant to this Agreement, in each case except those which have
been obtained or made or as may be required by laws affecting the offer and
sale of securities generally in connection with the exercise by the Pledgee
of certain of its remedies hereunder;
(v) the execution, delivery and performance of this Agreement by
such Pledgor does not violate any provision of any applicable law or
regulation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, or of the
certificate of incorporation or by-laws (or analogous organizational
documents) of such Pledgor or of any securities issued by such Pledgor or
any of its Subsidiaries, or of any mortgage, indenture, lease, deed of
trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument to which such Pledgor or any of its Subsidiaries is
a party or which purports to be binding upon such Pledgor or any of its
Subsidiaries or upon any of their respective assets and will not result in
the creation or imposition (or the obligation to create or impose) of any
lien or encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement;
(vi) all the shares of Stock have been duly and validly issued, are
fully paid and nonassessable and subject to no options to purchase or
similar rights;
(vii) the pledge, assignment and delivery (which delivery has been
made) to the Pledgee of the Pledged Stock creates a valid and perfected
first priority security interest in such Stock, subject to no prior lien or
encumbrance or to any agreement purporting to grant to any third party
(except the Secured Creditors) a lien or encumbrance on the property or
assets of such Pledgor which would include the Securities;
(viii) each Pledged Partnership Interest and each Pledged Limited
Liability Company Interest has been validly acquired and is fully paid for
(to the extent applicable) and is duly and validly pledged hereunder;
(ix) each partnership agreement and each limited liability company
or operating agreement is the legal, valid and binding obligation of the
applicable Pledgor, enforceable in accordance with its terms;
(x) no Pledgor is in default in the payment of any portion of any
mandatory capital contribution, if any, required to be made under any
general or limited partnership agreement or any limited liability company
or operating agreement to which such Pledgor is a party, and no Pledgor is
in violation of any other material provisions of any partnership agreement
or any limited liability company or operating agreement to which such
Pledgor is a party, or is otherwise in default or violation thereunder in
any material respect;
16
(xi) the pledge and assignment of the Pledged Partnership Interests
and/or Pledged Limited Liability Company Interests pursuant to this
Agreement, together with the relevant filings or recordings under the UCC
(or other steps described in any applicable version of the UCC) (which
filings, recordings or other steps have been made (or will be made) within
5 days after the date hereof), create a valid perfected and continuing
first priority security interest in such Partnership Interests and/or
Limited Liability Company Interests and the proceeds thereof, subject to no
prior lien or encumbrance or to any agreement purporting to grant to any
third party (except the Secured Creditors) a lien or encumbrance on the
property or assets of such Pledgee or which would include the Securities;
(xii) there are no currently effective financing statements under the
UCC covering property which is now or hereafter may be included in the
Collateral and such Pledgor will not, without the prior written consent of
the Pledgee, execute and, until the Termination Date (as hereinafter
defined), there will not ever be on file in any public office any
enforceable financing statement or statements covering any or all of the
Collateral, except financing statements filed or to be filed in favor of
the Pledgee as secured party;
(xiii) each Pledgor shall give the Pledgee prompt notice of any
written claim it receives relating to the Collateral- and
(xiv) each Pledgor shall deliver to the Pledgee a copy of each other
demand, notice or document received by it which may adversely affect the
Pledgee's interest in the Collateral promptly upon, but in any event within
10 days after, such Pledgor's receipt thereof.
Each Pledgor covenants and agrees that it will defend the Pledgee's right,
title and security interest in and to the Collateral and the proceeds thereof
against the claims and demands of all persons whomsoever; and such Pledgor
covenants and agrees that it will have like title to and right to pledge any
other property at any time hereafter pledged to the Pledgee as Collateral
hereunder and will likewise defend the right thereto and security interest
therein of the Pledgee and the other Secured Creditors.
(b) Each Pledgor hereby further represents, warrants and covenants
that as of the date hereof, the chief executive office of such Pledgor is
located at the address indicated on Annex F hereto for such Pledgor. Such
Pledgor will not move its chief executive office except to such new location as
such Pledgor may establish in accordance with the last sentence of this Section
15(b). No Pledgor shall establish new locations for such offices until (i) it
shall have given to the Pledgee prior written notice of its intention to do so,
clearly describing such new location and providing such other information in
connection therewith as the Pledgee may reasonably request, (ii) it shall have
delivered to the Pledgee a written supplement to Annex F hereto in the form of
Exhibit A-1 hereto as provided in clause (c) below showing the new location of
its chief executive office and (iii) with respect to such new location, it shall
have taken all action, reasonably satisfactory to the Pledgee, to maintain all
security interest of the Pledgee in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
(c) Without in any way limiting Section 3.2 hereof, at any time and
from time to time that any Pledgor (x) determines that the information with
respect to it contained on Annex
17
A, B, C and/or F, as the case may be, is inaccurate or (y) acquires any
additional Securities which have not already been pledged hereunder and
reflected on Annexes A through C, as appropriate, such Pledgor shall deliver a
supplement to this Agreement, substantially in the form of Exhibit A- I hereto
(each a "Pledge and Security Agreement Supplement") adding (or, in the case of
any Securities released pursuant to Section 18 hereof, deleting) such Securities
to (from) Annexes A through C hereto, as appropriate. The execution and delivery
of any such supplement shall not require the consent of any Pledgor hereunder.
It is understood and agreed that the pledge and security interests granted
hereunder shall apply to all Collateral as provided in Section 3.1 hereof
regardless of the failure of any Pledgor to deliver, or any inaccurate
information stated in, the Pledge and Security Agreement Supplement as otherwise
provided above.
(d) Each Pledgor hereby covenants and agrees that with respect to
all Partnership Interests or Limited Liability Company Interests, in each case
required to be pledged by it hereunder, such Pledgor will deliver to the
respective Pledged Partnerships or Pledged Limited Liability Companies, as the
case may be (with copies to the Pledgee) a notice (appropriately completed) in
the form of Annex D attached hereto (with such changes thereto as may be
acceptable to the Pledgee) and by this reference made a part hereof (each such
notice a "Partnership/LLC Notice") and such Pledgor will use its reasonable best
efforts to cause to be delivered to the Pledgee an acknowledgment in the form
set forth as Annex E attached hereto (with such changes thereto as may be
acceptable to the Pledgee) (each such acknowledgment, a "Pledge
Acknowledgment"), duly executed by the relevant Pledged Partnership and/or
Pledged Limited Liability Company, as the case may be, in each case within
forty-five days following the date of any pledge of any Pledged Partnership
Interests or Pledged Limited Liability Company Interests hereunder.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each Pledgor
under this Agreement shall be absolute and unconditional and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (i) any renewal, extension, amendment
or modification of or addition or supplement to or deletion from any Secured
Debt Agreement or any other instrument or agreement referred to therein, or any
assignment or transfer of any thereof, (ii) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such agreement
or instrument or this Agreement; (iii) any furnishing of any additional security
to the Pledgee or its assignee or any acceptance thereof or any release of any
security by the Pledgee or its assignee; (iv) any limitation on any party's
liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof, (v) any limitation on any other Pledgor's
liability or obligations under this Agreement or under any other Secured Debt
Agreement or any invalidity or unenforceability, in whole or in part, of this
Agreement or any other Secured Debt Agreement or any term thereof, or (vi) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to such Pledgor or any Subsidiary
of such Pledgor, or any action taken with respect to this Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not
such Pledgor shall have notice or knowledge of any of the foregoing.
17. REGISTRATION, ETC. If at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Pledged Securities pursuant to
Section 7 hereof, such Pledged Securities or the part thereof to be sold shall
not, for any reason whatsoever, be effectively registered under the Securities
Act, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or part thereof by private sale in such manner and
under such circumstances as the Pledgee may deem necessary or advisable in order
that such sale may legally be effected without
18
such registration; provided, that at least 10 Business Days' notice of the time
and place of any such sale shall be given to such Pledgor. Without limiting the
generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion: (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under such Securities Act- (ii)
may approach and negotiate with a single possible purchaser to effect such sale;
and (iii) may restrict such sale to a purchaser who will represent and agree
that such purchaser is purchasing for its own account, for investment, and not
with a view to the distribution or sale of such Pledged Securities or part
thereof In the event of any such sale, the Pledgee shall incur no responsibility
or liability for selling all or any part of the Pledged Securities at a price
which the Pledgee, in its sole and absolute discretion, may in good xxxxx xxxx
reasonable under. the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.
18. TERMINATION, RELEASE. (a) After the Termination Date (as defined
below), this Agreement shall terminate (provided that all indemnities set forth
herein including, without limitation, in Section 11 hereof shall survive any
such termination) and the Pledgee, at the request and expense of the respective
Pledgor, will promptly execute and deliver to such Pledgor a proper instrument
or instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Pledgee and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement. As used in this Agreement,
"Termination Date" shall mean the earlier of (i) the date upon which the Total
Commitment and all Interest Rate Protection Agreements and Other Hedging
Agreements have been terminated, no Note under the Credit Agreement is
outstanding and all other Credit Document Obligations (excluding normal
continuing indemnity obligations which survive in accordance with their terms,
so long as no amounts are then due and payable in respect thereof) have been
indefeasibly paid in full (provided the terms of the other Secured Debt
Agreements do not otherwise prohibit the termination hereof), and (ii) the date
upon which the Credit Documents are amended to release all Collateral subject to
this Agreement.
(b) In the event that any part of the Collateral is sold (other than
to any Credit Party) in connection with a sale permitted by the Secured Debt
Agreements, is distributed in connection with the SLC Spinoff or is otherwise
released at the direction of the Required Secured Creditors), the Pledgee, at
the request and expense of such Pledgor will promptly execute and deliver to
such Pledgor a proper instrument or instruments acknowledging such release, and
will duly assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) such of the Collateral as is then being
(or has been) so sold, distributed or released and as may be in possession of
the Pledgee and has not theretofore been released pursuant to this Agreement.
Any proceeds of Collateral sold as contemplated by the immediately preceding
sentence shall be applied in accordance with, and to the extent required by, the
requirements of the applicable Secured Debt Agreements.
(c) Provided that (i) the REIT Transaction has been consummated
substantially in accordance with the applicable provisions of the Credit
Agreement and (ii) the IRS Ruling has been issued, that portion of the
Collateral consisting of ownership interests (and related Collateral) in
entities that are not Look-Through Subsidiaries shall (at the request and
expense of the Borrower) be released from the liens and security interests
created hereby (and the Pledgee will promptly execute and deliver to such
Pledgor a proper instrument or instruments acknowledging such releases and will
duly assign, transfer and deliver to the related Pledgors (without recourse and
without any
19
representation or warranty) such portion of the Collateral at the expense of the
Borrower and the related Pledgors).
(d) At any time that a Pledgor desires that Collateral be released
as provided in the foregoing Section 18(a), (b) or (c), it shall deliver to the
Pledgee a certificate signed by an Authorized Officer of such Pledgor stating
that the release of the respective Collateral is permitted pursuant to Section
18(a), (b) or (c), and the Pledgee shall be entitled (but not required) to
conclusively rely thereon.
19. NOTICES, ETC. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been given or made when delivered to the party to
which such notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as follows:
(a) if to any Pledgor, at:
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel,
Asset Management, Dept. 923
Facsimile No.: (000) 000-0000
(b) if to the Pledgee, at:
Bankers Trust Company
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(c) if to any Bank Creditor (other than the Pledgee), (x) to the
Administrative Agent, at the address of the Administrative Agent specified in
the Credit Agreement or (y) at such address as such Bank Creditor shall have
specified in the Credit Agreement;
(d) if to any other Secured Creditor, (x) to the Representative for
such Secured Creditor or (y) if there is no such Representative, at such address
as such Secured Creditor shall have specified in writing to each Pledgor and the
Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this Agreement
may be changed, waived, modified or varied in any manner whatsoever unless in
writing duly signed by each Pledgor directly affected thereby (it being
understood that additional Pledgors may be added as parties hereto from time to
time in accordance with Section 22 hereof and Pledgors may be released as
parties hereto in accordance with Sections 18 and 21 and that no consent of any
other Pledgor or of the Secured Creditors shall be required in connection
therewith) and the Pledgee (with the written consent of (x) the Required Banks
(or all the Banks if required by Section 13.12 of the Credit Agreement) at all
20
times prior to the time at which all Credit Document Obligations have been paid
in full and all commitments pursuant to the Credit Agreement have terminated
(with such date being herein called the "Credit Document Obligations Termination
Date") and (y) thereafter, the holders of at least a majority of the outstanding
Other Obligations- provided, that (with respect to preceding clauses (x) and
(y)) the Borrower certifies that any such change, waiver, modification or
variance is otherwise permitted by the terms of the respective Secured Debt
Agreements or, if not so permitted, that the requisite consents therefor have
been obtained (it being understood that the terms of the Additional Debt
Documents as same relate to amending or modifying this Agreement shall be
substantially as set forth in the Senior Note Indenture). Notwithstanding
anything to the contrary contained above, it is understood and agreed that the
Required Banks may agree to modifications to this Agreement for the purpose,
among other things, of securing additional extensions of credit (including,
without limitation, pursuant to the Credit Agreement or any refinancing or
extension thereof), with such changes not being subject to the proviso to the
immediately preceding sentence. Furthermore, the proviso to the second preceding
sentence shall not apply to any release of Collateral effected in accordance
with the requirements of Section 18 of this Agreement, or any other release of
Collateral or termination of this Agreement so long as the Borrower certifies
that such actions will not violate the terms of any Secured Debt Agreement then
in effect.
21. RELEASE OF GUARANTORS. In the event any Pledgor party to any Guaranty
is released from such Guaranty, such Pledgor (so long as such Pledgor is not the
Borrower) shall be released from this Agreement and this Agreement shall, as to
such Pledgor only, have no further force or effect.
22. ADDITIONAL PLEDGORS. Pursuant to Section 8.18 of the Credit Agreement,
certain Subsidiaries of Holdings may after the date hereof be required to enter
into this Agreement as a Pledgor. Upon execution and delivery, after the date
hereof, by the Pledgee and such Subsidiary of an instrument in the form of
Exhibit A-2, such Subsidiary shall become a Pledgor hereunder with the same
force and effect as if originally named as a Pledgor hereunder. Each Subsidiary
which is required to become a party to this Agreement shall so execute and
deliver a copy of Exhibit A-2 to the Pledgee and, at such time, shall execute a
Pledge and Security Agreement Supplement in the form of Exhibit A- I to this
Agreement with respect to all Collateral of such Pledgor required to be pledged
hereunder, which Supplement shall be completed in accordance with Exhibit A-1.
The execution and delivery of any such instrument shall not require the consent
of any other Pledgor hereunder. Upon the execution and delivery by the Pledgee
and such Subsidiary of an instrument in the form of Exhibit A-2 as provided
above, it is understood and agreed that the pledge and security interests
hereunder shall apply to all Collateral of such additional Pledgor as provided
in Section 3.1 hereof regardless of any failure of any additional Pledgor to
deliver, or any inaccurate information stated in, the Pledge and Security
Agreement Supplement.
23. RECOURSE. This Agreement is made with full recourse to the Pledgors
and pursuant to and upon all representations, warranties, covenants and
agreements on the part of the Pledgors contained herein and otherwise in writing
in connection herewith.
24. PLEDGEE NOT BOUND. (a) Nothing herein shall be construed to make the
Pledgee or any other Secured Creditor liable as a member of any limited
liability company or a partner of any partnership and the Pledgee or any other
Secured Creditor by virtue of this Agreement or otherwise (except as referred to
in the following sentence) shall not have any of the duties, obligations or
liabilities of a member of any limited liability company or partner of any
partnership. The parties hereto expressly agree that, unless the Pledgee shall
become the absolute owner of the respective Pledged Limited Liability Company
Interest or Pledged Partnership Interest pursuant hereto, this Agreement shall
not be
21
construed as creating a partnership or joint venture among the Pledgee, any
other Secured Creditor and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph (a) of this
Section 24, the Pledgee, by accepting this Agreement, did not intend to become a
member of any limited liability company or partner of any partnership or
otherwise be deemed to be a co-venturer with respect to any Pledgor or any
limited liability company or partnership either before or after an Event of
Default shall have occurred. The Pledgee shall have only those powers set forth
herein and shall assume none of the duties, obligations or liabilities of a
member of any limited liability company or partnership or any Pledgor.
(c) The Pledgee shall not be obligated to perform or discharge any
obligation of any Pledgor as a result of the collateral assignment hereby
effected.
(d) The acceptance by the Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Pledgee to appear in or defend any action or proceeding
relating to the Collateral to which it is not a party, or to take any action
hereunder or thereunder, or to expend any money or incur any expenses or perform
or discharge any obligation, duty or liability under the Collateral.
25. CONTINUING PLEDGORS. The rights and obligations of each Pledgor (other
than the respective released Pledgor in the case of following clause (y))
hereunder shall remain in full force and effect notwithstanding (x) the addition
of any new Pledgor as a party to this Agreement as contemplated by Section 22
hereof or otherwise and/or (y) the release of any Pledgor under this Agreement
as contemplated by Section 21 hereof or otherwise.
26. NO FRAUDULENT CONVEYANCE. Each Pledgor hereby confirms that it is its
intention that this Agreement not constitute a fraudulent transfer or conveyance
for purposes of any bankruptcy, insolvency or similar law, the Uniform
Fraudulent Conveyance Act or any similar Federal, state or foreign law. To
effectuate the foregoing intention, each Pledgor hereby irrevocably agrees that
its obligations and liabilities hereunder shall be limited to the maximum amount
as will after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Pledgor that are relevant under such laws, result
in the obligations and liabilities of such Pledgor hereunder in respect of such
maximum amount not constituting a fraudulent transfer or conveyance.
27. MISCELLANEOUS. This Agreement shall be binding upon the successors and
assigns of each Pledgor and shall inure to the benefit of and be enforceable by
the Pledgee and its successors and assigns; provided that no Pledgor may assign
any of its rights or obligations hereunder without the prior written consent of
the Pledgee (with the consent of the Required Banks and, if required by Section
13.12 of the Credit Agreement, all Banks). THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK
(WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS). The headings in this
Agreement are for purposes of reference only and shall not limit or define the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which shall constitute one
instrument.
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly
executed and delivered by its duly authorized officer on the date first above
written-
22
HOST MARRIOTT CORPORATION
By
-------------------------------------
Name:
Title:
HOST MARRIOTT HOSPITALITY, INC.
By
-------------------------------------
Name:
Title:
HMH PROPERTIES, INC.
By
-------------------------------------
Name:
Title:
HOST MARRIOTT, L.P.
By: HMC Real Estate Corporation, its general
partner
By
-------------------------------------
Name:
Title:
HMC CAPITAL RESOURCES CORP.
By
-------------------------------------
Name:
Title:
HMH RIVERS, INC.
By
-------------------------------------
Name:
Title:
23
MARRIOTT SBM TWO CORPORATION
By
-------------------------------------
Name:
Title:
MARRIOTT PLP CORPORATION
By
-------------------------------------
Name:
Title:
HMC RETIREMENT PROPERTIES, INC.
By
-------------------------------------
Name:
Title:
HMH PENTAGON CORPORATION
By
-------------------------------------
Name:
Title:
HMC SFO, INC.
By
-------------------------------------
Name:
Title:
HMH MARINA, INC.
By
-------------------------------------
Name:
Title:
24
HOST AIRPORT HOTELS, INC.
By
-------------------------------------
Name:
Title:
HOST OF HOUSTON 1979
By Host Airport Hotels, Inc., a general partner
By
-------------------------------------
Name:
Title:
HOST OF HOUSTON, LTD.
By Host Airport Hotels, Inc., its general partner
By
-------------------------------------
Name:
Title:
HOST OF BOSTON, LTD.
By Host Airport Hotels, Inc., its general partner
By
-------------------------------------
Name:
Title:
MARRIOTT FINANCIAL SERVICES, INC.
By
-------------------------------------
Name:
Title:
25
MARRIOTT SBM ONE CORPORATION
By
-------------------------------------
Name:
Title:
YBG ASSOCIATES LLC
By
-------------------------------------
Name:
Title:
PRM CORPORATION
By
-------------------------------------
Name:
Title:
MARRIOTT PARK RIDGE CORPORATION
By
-------------------------------------
Name:
Title:
ACCEPTED AND AGREED TO:
BANKERS TRUST COMPANY,
as Collateral Agent and Pledgee
By
-------------------------------------
Name:
Title:
26
