PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT ("Agreement") is made as of this
31st day of August, 1998, by and between INTEGRA HOTELS, INC., a Delaware
corporation (the "Company"), and BANK ONE, N.A., a national banking association,
as trustee (hereinafter, in such capacity, the "Trustee") for the holders of the
Company's 10% Collateralized Subordinated Debentures due July 31, 2005 (the
"Securities"), pursuant to an Indenture dated as of August 31, 1998, between the
Company and the Trustee (as amended or supplemented and in effect from time to
time, the "Indenture").
W I T N E S S E T H :
WHEREAS, the Company is the direct legal and beneficial owner of the
shares of the common stock of Xxxxx Suite Hotels, Inc. ("BSH") described on
Annex A hereto (the "Stock"); and
WHEREAS, the Company now desires to issue its 10% Collateralized
Subordinated Debentures ("Debentures") pursuant to that certain Indenture
("Indenture") between the Company and the Trustee, as Trustee ("Trustee") dated
as of August 31, 1998 and desires to grant to the Trustee a first and prior
pledge and security interest in the Stock to secure the Debentures pursuant to
this Agreement; and
WHEREAS, pursuant to the Indenture, upon the occurrence of certain
events, the Company may be required to grant certain additional pledges and
security interests in favor of the Trustee; and
WHEREAS the Company wishes to grant (and provide for such additional
grant of) pledges and security interests in favor of the Trustee, as herein
provided; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Trustee is also entering into that certain Intercreditor
Agreement dated as of August 31, 1998 with BONY and the Original Trustee
regarding their respective rights and interests in the Stock;
NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
Section 1. Pledge of Stock, Etc.
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(a) The Company hereby pledges, assigns, grants to the Trustee or its
agent a security interest in the number of shares of Stock to be held by the
Trustee hereunder and under the Indenture, all for the benefit of the holders
from time to time of the Securities, subject to the terms and conditions
hereinafter set forth. The certificates for such shares, accompanied by stock
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powers or other appropriate instruments of assignment thereof duly executed in
blank by the Company, have been delivered to the Trustee.
(b) In case the Company shall acquire any additional shares of a class
of capital stock of any corporation (i) all or a portion of the shares of such
class of which have been pledged pursuant to Section 1(a) above and (ii) which
is a wholly-owned subsidiary of the Company, or the successor of any such
corporation, or any securities which are exercisable or exchangeable for or
convertible into shares of such capital stock of such corporation, by purchase
or otherwise, then the Company shall forthwith pledge such number of shares or
other securities to the Trustee under this Agreement and deliver such number of
shares or other securities to the Trustee or its agent in connection therewith
as represents the same proportion to the number of shares or securities being
acquired as the number of shares (including shares which securities are
exercisable or exchangeable for or convertible into) of such class previously
pledged hereunder bears to the number of shares (including shares which
securities are exercisable or exchangeable for or convertible into) of such
class owned by the Company immediately prior to such acquisition by the Company.
The Company agrees that the Trustee may from time to time attach as Annex A
hereto an updated list of the shares of capital stock or securities at the time
pledged with the Trustee hereunder.
(c) The Company also hereby pledges, assigns, grants a security
interest in, and delivers to the Trustee the Cash Collateral Account and all of
the Cash Collateral, as such terms are hereinafter defined.
Section 2. Definitions. All capitalized terms used herein without
definition have the respective meanings assigned to such terms in the Indenture.
Terms used herein and not defined in the Indenture or otherwise defined herein
that are defined in the Uniform Commercial Code as in effect in the State of New
York have such defined meanings herein, unless the context otherwise indicates
or requires, and the following terms have the following meanings:
"Cash Collateral" has the meaning ascribed to such term in Section 4
hereof.
"Cash Collateral Account" has the meaning ascribed to such term in
Section 4 hereof.
"Collateral" means the property at any time pledged to the Trustee
hereunder (whether described herein or not) and all income therefrom, increases
therein and proceeds thereof, including without limitation the Stock and the
Cash Collateral.
"Obligations" has the meaning ascribed to such term in Section 3 hereof.
"Release Amounts has the meaning ascribed to such term in Section 10
hereof.
"Stock" means the number of shares of stock set forth and described in
Annex A attached hereto and any additional securities pledged with the Trustee
hereunder pursuant to Section i(b) above.
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Section 3. Security for Obligations. This Agreement and the security
interest in and pledge of the Collateral hereunder are made with and granted to
the Trustee, as security for the payment, when due, whether at stated maturity,
upon call for redemption, upon acceleration or otherwise, of the principal of,
and premium, if any, and interest on, the Securities and all other obligations
of the Company to the Holders of the Securities under the Indenture
(hereinafter, the "Obligations").
Section 4. Liquidation, Recapitalization, Etc.
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(a) Any sums or other property paid or distributed upon or with respect
to any of the Stock, whether by dividend or redemption or upon the liquidation
or dissolution of the issuer thereof or otherwise, shall, except to the extent
provided in Section 6, be paid over and delivered to the Trustee or its agent to
be held by or for the benefit of the Trustee as security for the payment and
performance in full of all of the Obligations. In case, pursuant to the
recapitalization or reclassification of the capital of the issuer thereof or
pursuant to the reorganization thereof, any distribution of capital shall be
made on or in respect of any of the Stock or any property shall be distributed
upon or with respect to any of the Stock, the property so distributed shall be
delivered to the Trustee or its agent, to be held by or for the benefit of the
Trustee as security for the Obligations. Except to the extent provided in
Section 6, all sums of money and property paid or distributed in respect of the
Stock, whether as a dividend or upon such a liquidation, dissolution,
recapitalization or reclassification or otherwise, that are received by the
Company shall, until paid or delivered to the Trustee or its agent, be held in
trust for the Trustee, for the benefit of the Holders from time to time of the
Securities, as security for the payment and performance in full of all of the
Obligations.
(b) All sums of money that are delivered to the Trustee or its agent
pursuant to this Section 4 shall be deposited into an interest bearing account
maintained by, and under the sole dominion and control of, the Trustee (the
"Cash Collateral Account"). Interest earned on the Cash Collateral Account shall
be deposited in the Cash Collateral Account. The Cash Collateral Account, all
sums from time to time standing to the credit of the Cash Collateral Account,
any cash or cash equivalents (including Investment Grade Securities) deposited
with the Trustee in accordance with Section 1207 of the Indenture, and any and
all proceeds of any thereof are hereinafter referred to as the "Cash
Collateral."
(c) Unless the conditions set forth in Section 1207 of the Indenture
are complied with, the Company shall have no right to withdraw sums from the
Cash Collateral Account or to receive any of the Cash Collateral.
Section 5. Warranty of Title. The Company hereby represents and
warrants that: (a) except as otherwise disclosed on Schedule 5(a) hereto, the
Company has good and marketable title to the Stock described on Annex A , free
and clear of all pledges, liens, security interests, charges, options,
restrictions or other encumbrances except for this Agreement and (b) the
information set forth in Annex A hereto relating to the Stock is true and
correct.
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Section 6. Dividends Voting, Etc., Prior to Maturity. So long as no
Event of Default shall have occurred and be continuing, the Company shall be
entitled to receive all cash dividends paid in respect of the Stock, to vote the
Stock and to give consents, waivers and ratifications in respect of the Stock.
All such rights of the Company to vote and give consents, waivers and
ratifications with respect to the Stock shall, at the Trustee's option, as
evidenced by the Trustee's notifying the Company of such election, cease if an
Event of Default shall have occurred and be continuing.
Section 7. Remedies.
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(a) If an Event of Default shall have occurred and be continuing, the
Trustee shall thereafter have the following rights and remedies (the extent
permitted by applicable law) in addition to the rights and remedies of a secured
party under the Uniform Commercial Code as in effect in the State of New York or
such other jurisdiction as may mandatorily be applicable thereto, all such
rights and remedies being cumulative, not exclusive, and enforceable
alternatively, successively or concurrently, at such time or times as the
Trustee deems expedient:
(i) if the Trustee so elects and gives notice of such
election to the Company, the Trustee may vote any or all shares of the
Stock (whether or not the same shall have been transferred into its
name or the name of its nominee or nominees) and, if such Stock (the
"Subsidiary Stock") consists of less than all of the common stock of a
wholly-owned Subsidiary of the Company, all of the other shares of
common stock of such Subsidiary (the "Other Shares") for any lawful
purpose, including, without limitation, if the Trustee so elects, for
the liquidation of the assets of the issuer thereof, and give all
consents, waivers and ratifications in respect of the Stock and
otherwise act with respect thereto as though it were the outright owner
thereof, and the Company hereby irrevocably appoints and constitutes
the Trustee as its lawful attorney-in-fact and proxy with full power of
substitution to vote, and to give all consents, waivers and
ratifications in respect of, the Other Shares following the occurrence
and during the continuance of an Event of Default, and such proxy shall
be irrevocable and coupled with an interest and shall expire upon the
termination of this Agreement pursuant to Section 15 hereof or the
earlier release of the Subsidiary Stock from the Lien created under
this Agreement;
(ii) the Trustee may demand, xxx for, collect or make
any compromise or settlement the Trustee deems suitable in respect of
any Collateral;
(iii) the Trustee may sell, resell, assign and
deliver, or otherwise dispose of any or all of the Collateral, for cash
or credit or both and upon such terms, at such places, at such times
and to such Persons as the Trustee deems expedient, all without demand
for performance by the Company or any notice or advertisement
whatsoever except as expressly provided herein or as may otherwise be
required by law;
(iv) the Trustee may cause all or any part of the
Stock held by it to be transferred into its name or the name of its
nominee or nominees; and
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(v) the Trustee may set off against the Obligations
any and all sums deposited with it or held by it, including without
limitation, any sums standing to-the credit of the Cash Collateral
Account.
(b) In the event of any disposition of the Collateral as provided in
clause (iii) of Section 7(a), the Trustee shall give to the Company at least ten
Business Days, prior written notice of the time and place of any public sale of
the Collateral or of the time after which any private sale or any other intended
disposition is to be made. The Company hereby acknowledges that ten Business
Days, prior written notice of such sale or sales shall be reasonable notice. The
Trustee may buy any part or all of the Collateral at any public sale and if any
part or all of the Collateral is of a type customarily sold in a recognized
market or is of the type which is the subject of widely distributed standard
price quotations, the Trustee may buy at private sale and may make payments
thereof by any means.
(c) If the Trustee shall determine to exercise its right to sell any or
all of the Stock pursuant to this Section 7, and if in the opinion of counsel
for the Trustee it is necessary, or if in the reasonable opinion of the Trustee
it is advisable, to have the Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), the Company agrees to use commercially reasonable efforts to
cause the issuer or issuers of the Stock contemplated to be sold to execute and
deliver, and cause the directors and officers of such issuer or issuers to
execute and deliver, all at the Company's expense, all such instruments and
documents, and to do or cause to be done all such other acts and things as may
be necessary or, in the reasonable opinion of the Trustee, advisable to register
such Stock under the provisions of the Securities Act and to cause the
registration statement relating thereto to become effective and to remain
effective for a period of 3 months from the date such registration statement
became effective, and to make all amendments thereto or to the related
prospectus or both that, in the reasonable opinion of the Trustee, are necessary
or advisable, all in conformity with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange Commission applicable
thereto. The Company agrees to use commercially reasonable efforts to cause such
issuer or issuers to comply with the provisions of the securities or "Blue Sky"
laws of any jurisdiction which the Trustee shall designate and to cause such
issuer or issuers to make available to its security-holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act. If the Trustee
elects to sell Stock in a private sale, the Company agrees to use commercially
reasonable efforts to cause the issuer or issuers of the Stock contemplated to
be sold to execute and deliver, and cause the directors and officers of such
issuer or issuers to execute and deliver, all at the Company's expense, all such
instruments and documents, and to do or cause to be done all such other acts and
things as may be necessary or, in the reasonable opinion of the Trustee,
advisable to exempt such Stock from registration under the provisions of the
Securities Act, and to make all amendments to such instruments and documents
which, in the opinion of the Trustee, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto.
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(d) The Trustee agrees that any sale of Stock shall be made in a
commercially reasonable manner.
(e) The Company further agrees to do or cause to be done all such other
acts and things as may be reasonably necessary to make any sales of any portion
or all of the Stock pursuant to this Section 7 valid and binding and in
compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at the Company's expense.
(f) If the Trustee exercises its right, set forth in Section 1006 of
the Indenture, to cause the Company to sell Other Shares, the provisions of this
Section 7 shall be applicable to such sale, except as provided in such Section
1006 with respect to the proceeds of such sale.
Section 8. Company's Obligations Not Affected. The obligations
of the Company hereunder shall remain in full force and effect without regard
to, and shall not be impaired by (a) any exercise or nonexercise, or any waiver,
by the Trustee or any holder of Securities of any right, remedy, power or
privilege under or in respect of any of the Obligations or any security thereof
(including under this Agreement); (b) any amendment to or modification of the
Indenture, the Securities or any of the Obligations; or (c) the taking of
additional security for, or any other assurances of payment of, any of the
Obligations or the release, discharge or termination of any security or other
assurances of payment or performance for any of the Obligations.
Section 9. Other Liens. The Company shall not pledge, grant or suffer
to exist any Lien in, or otherwise encumber or restrict, any of the Collateral
or any interest therein, except for the pledge thereof and Lien therein provided
for in this Agreement or any Lien existing on the date hereof; provided,
however, that the Company may xxxxx x Xxxx on all or any portion of the
Collateral if the conditions specified in Section 1109 of the Original Indenture
and Section 1109 of the Indenture have been satisfied. In connection with the
grant or creation of a Lien by the Company in all or any portion of the
Collateral to the extent permitted under this Section, the Company may require
the Trustee, following receipt by the Trustee of at least five Business Days'
prior written notice from the Company, to deliver the Collateral which is to be
subject to such Lien to the holder of Indebtedness to be secured by such Lien at
such time and place as the Company shall specify in such notice, provided that
such Collateral remains subject to the Lien created under this Pledge Agreement,
and such holder of Indebtedness agrees in writing to act as the Trustee's agent
for such purpose. The Trustee's rights in the Collateral are also subject to the
terms and conditions of the Intercreditor Agreement.
Section 10. Release of Collateral. Provided that no Event of Default
has occurred and is continuing, the Trustee, upon receipt of at least five
Business Days written notice from the Company delivered in connection with a
proposed sale of all or any portion of the Collateral, shall take all action
necessary to release such portion of the Collateral as is proposed to be sold
from the Lien created under this Agreement and deliver such Collateral to the
Company free and clear of such Lien at the time and place specified by the
Company in such notice, against receipt by the
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Trustee or the Paying Agent of (i) an amount at least equal to the lesser of (A)
the Net Value on the Exchange Closing (or such later date as the asset was added
to the Security Pool) of the Collateral which is to be released, (B) the Net
Proceeds received by the company from the sale of such Collateral, or (C) the
Net Proceeds remaining after the satisfaction of all prior and senior Liens to
which such asset is subject (such lesser amount, the "Released Amount"), which
amount shall be applied by the Trustee or Paying Agent to the simultaneous
redemption of Securities at 100% of the principal amount thereof, plus accrued
interest thereon to the Redemption Date, (ii) the consideration received from
the sale of any Collateral released pursuant to this Section (less a portion of
such consideration, the Fair Value of which is equal to the sum of the items
described in clauses (A), (B) and (C) of the definition of Net Proceeds set
forth in the indenture), or cash or cash equivalents (including Investment Grade
Securities) in an amount at least equal to the Release Amount, which shall be
deposited by the Trustee into the Cash Collateral Account and be Collateral
subject to the Lien granted and created under this Agreement, or (iii) evidence
reasonably satisfactory to the Trustee that Securities are substantially
simultaneously being repurchased by the Company in the open market or in private
transactions for an aggregate consideration, at least equal to the Release
Amount. The Trustee agrees to deliver such documents or instruments as the
Company may reasonably request in connection with the release of any Lien or
delivery of any Collateral as contemplated by this Section. In the case of
clause (i) above, it shall be a condition of the release of such Collateral from
such Lien that the Company shall have taken all action necessary to cause the
Redemption Date to occur simultaneously with such release. The Trustee shall
take all steps reasonably required to release any part of the Collateral from
the Lien under this Agreement in connection with the sale of such asset by the
Company if the proceeds thereof are used to satisfy prior and senior Liens in
accordance with the terms of the Original Pledge Agreement and the Original
Indenture and if all remaining proceeds, if any, are used or delivered as
required by this Section 10.
Section 11. Further Assurances. The Company will do all such acts, and
will furnish to the Trustee all such financing statements, certificates, legal
opinions and other documents and will obtain all such governmental consents and
corporate approvals and will do or cause to be done all such other things as the
Trustee may reasonably request from time to time in order to give full effect to
this Agreement and to secure the rights of the Trustee hereunder, all without
any cost or expense to the Trustee. If the Trustee so elects, a photocopy of
this Agreement may at any time and from time to time be filed by the Trustee as
a financing statement in any recording office in any jurisdiction.
Section 12. Trustee's Exoneration. Under no circumstances shall the
Trustee be deemed to assume any responsibility for or obligation or duty to the
Company with respect to any part or all of the Collateral of any nature or kind
or any matter or proceedings arising out of or relating thereto, other than (a)
to exercise reasonable care in the physical custody of the Collateral and (b)
after an Event of Default shall have occurred and be continuing to act in a
commercially reasonable manner. The Trustee shall not be required to take any
action of any kind to collect, preserve or protect its or the Company's rights
in the Collateral. The Trustee's prior recourse to any part or all of the
Collateral shall not constitute a condition of any demand, suit or proceeding
for payment or collection of any of the Obligations.
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Section 13. No Waiver, Etc. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the Trustee, with the consent of the Required Holders
if such consent is required pursuant to the Indenture, and the Company. No act,
failure or delay by the Trustee shall constitute a waiver of its rights and
remedies hereunder or otherwise. No single or partial waiver by the Trustee of
any default or right or remedy that it may have shall operate as a waiver of any
other default, right or remedy or of the same default, right or remedy on a
future occasion. The Company hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any of the Obligations or
the Collateral, and any and all other notices and demands whatsoever (except as
expressly provided herein or in the indenture).
Section 14. Notice, Etc. All notices, requests and other communications
hereunder shall be made in the manner set forth in Section 105 of the Indenture.
Section 15. Termination. Upon final payment and performance in full of
the Obligations, this Agreement shall terminate and the Trustee shall, at the
Company's request and expense, return to the Company all Collateral in the
possession or control of the Trustee together with any moneys and other property
at the time held by the Trustee hereunder.
Section 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of New York.
Section 17. Miscellaneous. The headings of each section of this
Agreement are for convenience only and shall not define or limit the provisions
thereof. This Agreement and all rights and obligations hereunder shall be
binding upon the Company and its respective successors and assigns, and shall
inure to the benefit of the Trustee and the holder from time to time of the
Securities and their respective successors and assigns. If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall be in no way affected thereby, and this Agreement
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein.
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IN WITNESS WHEREOF, intending to be legally bound, the Company and the
Trustee have caused this Agreement to be executed as of the date first above
written.
INTEGRA HOTELS, INC.
By: /s/ Xxxxxx X. Xxxxx
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Title: Vice President
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BANK ONE, N.A.
as Trustee
By: /s/ Xxxxx X. Xxxx
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Title: Authorized Signature
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Annex A to Pledge Agreement
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Number of Number of Par or
Number of Issued and Shares Liquidation
Class of Certificate Authorized Outstanding Being Value per
Issuer Shares Number(s) Shares Shares Pledged Share
------ ------ --------- ---------- ----------- ---------- -----------
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Xxxxx Suite Hotels, Inc. Common 7 10,000 8,000 8,000 $1.00
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Schedule 5(a)
Other Liens
None
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