Exhibit 4.09
INDEMNITY, SUBROGATION and CONTRIBUTION AGREEMENT dated
as of April 28, 1998 among CHOICE HOTELS INTERNATIONAL,
INC., a Delaware corporation (the "Borrower"), each
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Subsidiary of the Borrower listed on Schedule I hereto (the
"Guarantors") and THE CHASE MANHATTAN BANK, a New York
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banking corporation ("Chase"), as collateral agent (in such
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capacity, the "Collateral Agent") for the Secured Parties
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(as defined in the Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of October 15,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the lenders from time to time party
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thereto (the "Lenders") and Chase, as administrative agent (in such capacity,
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the "Agent") for the Lenders and as Collateral Agent and (b) the Guarantee
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Agreement dated as of October 15, 1997, between the Guarantors and the
Collateral Agent (the "Guarantee Agreement"). Capitalized terms used herein and
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not defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Guarantors have guaranteed such Loans and the other
Guaranteed Obligations (as defined in the Guarantee Agreement) of the Borrower
under the Credit Agreement pursuant to the Guarantee Agreement. The obligations
of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
are conditioned on, among other things, the execution and delivery by the
Borrower and the Guarantors of an agreement in the form hereof.
Accordingly, the Borrower, each Guarantor and the Collateral Agent
agree as follows:
SECTION 1. INDEMNITY AND SUBROGATION. In addition to all such rights
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of indemnity and subrogation as the Guarantors may have under applicable law
(but subject to Section 3), the Borrower agrees that in the event a payment
shall be made by any Guarantor under the Guarantee Agreement, the Borrower shall
indemnify such Guarantor for the full amount of such payment and such Guarantor
shall be subrogated to the rights of the person to whom such payment shall have
been made to the extent of such payment.
SECTION 2. CONTRIBUTION AND SUBROGATION. Each Guarantor (a
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"Contributing Guarantor") agrees (subject to Section 3) that, in the event a
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payment shall be made by any other Guarantor under the Guarantee Agreement to
satisfy a claim of any Secured Party and such other Guarantor (the "Claiming
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Guarantor") shall not have been fully indemnified by the Borrower as provided in
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Section 1, the Contributing Guarantor shall indemnify the Claiming Guarantor in
an amount equal to the amount of such payment in each case multiplied by a
fraction of which the
numerator shall be the net worth of the Contributing Guarantor on the date
hereof and the denominator shall be the aggregate net worth of all the
Guarantors on the date hereof (or, in the case of any Guarantor becoming a party
hereto pursuant to Section 12, the date of the Supplement hereto executed and
delivered by such Guarantor). Any Contributing Guarantor making any payment to a
Claiming Guarantor pursuant to this Section 2 shall be subrogated to the rights
of such Claiming Guarantor under Section 1 to the extent of such payment.
SECTION 3. SUBORDINATION. Notwithstanding any provision of this
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Agreement to the contrary, all rights of the Guarantors under Sections 1 and 2
and all other rights of indemnity, contribution or subrogation under applicable
law or otherwise shall be fully subordinated to the indefeasible payment in full
in cash of the Guaranteed Obligations. No failure on the part of the Borrower or
any Guarantor to make the payments required by Sections 1 and 2 (or any other
payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of any Guarantor with respect to its obligations
hereunder, and each Guarantor shall remain liable for the full amount of the
obligations of such Guarantor hereunder.
SECTION 4. TERMINATION. This Agreement shall survive and be in full
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force and effect so long as any Guaranteed Obligation is outstanding and has not
been indefeasibly paid in full in cash, and so long as the L/C Exposure has not
been reduced to zero or any of the Commitments under the Credit Agreement have
not been terminated, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Guaranteed
Obligation is rescinded or must otherwise be restored by any Secured Party or
any Guarantor upon the bankruptcy or reorganization of the Borrower, any
Guarantor or otherwise.
SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
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CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. NO WAIVER; AMENDMENT. (a) No failure on the part of the
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Collateral Agent or any Guarantor to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy by the
Collateral Agent or any Guarantor preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. None of
the Collateral Agent and the Guarantors shall be deemed to have waived any
rights hereunder unless such waiver shall be in writing and signed by such
parties.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Borrower, the Guarantors and the Collateral Agent, with the prior written
consent of the Required Lenders (except as otherwise provided in the Credit
Agreement).
SECTION 7. NOTICES. All communications and notices hereunder shall be
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in writing and given as provided in the Guarantee Agreement and addressed as
specified therein.
SECTION 8. BINDING AGREEMENT; ASSIGNMENTS. Whenever in this Agreement
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any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the parties that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns. Neither the Borrower nor any Guarantor may assign or transfer any of
its rights or obligations hereunder (and any such attempted assignment or
transfer shall be void) without the prior written consent of the Required
Lenders. Notwithstanding the foregoing, at the time any Guarantor is released
from its obligations under the Guarantee Agreement in accordance with such
Guarantee Agreement and the Credit Agreement, such Guarantor will cease to have
any rights or obligations under this Agreement.
SECTION 9. SURVIVAL OF AGREEMENT; SEVERABILITY. (a) All covenants and
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agreements made by the Borrower and each Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with this
Agreement or the other Loan Documents shall be considered to have been relied
upon by the Collateral Agent, the other Secured Parties and each Guarantor and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loans or any
other fee or amount payable under the Credit Agreement or this Agreement or
under any of the other Loan Documents is outstanding and unpaid or the L/C
Exposure does not equal zero and as long as the Commitments have not been
terminated.
(b) In case any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, no
party hereto shall be required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable, but the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 10. COUNTERPARTS. This Agreement may be executed in
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counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall be effective with
respect to any Guarantor when a counterpart bearing the signature of such
Guarantor shall have been delivered to the Collateral Agent. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.
SECTION 11. RULES OF INTERPRETATION. The rules of interpretation
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specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 12. ADDITIONAL GUARANTORS. Pursuant to Section 5.09 of the
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Credit Agreement, each Subsidiary (other than a Foreign Subsidiary) of the
Borrower that was not in existence or not such a Subsidiary on the date of the
Credit Agreement is required to enter into the Guarantee Agreement as a
Guarantor upon becoming such a Subsidiary. Upon execution and
delivery, after the date hereof, by the Collateral Agent and such a Subsidiary
of an instrument in the form of Annex 1 hereto, such Subsidiary shall become a
Guarantor hereunder with the same force and effect as if originally named as a
Guarantor hereunder. The execution and delivery of any instrument adding an
additional Guarantor as a party to this Agreement shall not require the consent
of any Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Guarantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first appearing
above.
CHOICE HOTELS INTERNATIONAL, INC.,
by /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President, Treasurer
QUALITY HOTELS EUROPE, INC.
by /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President, Treasurer
QUALITY HOTELS EUROPE PARTNERSHIP
by: QUALITY HOTELS EUROPE, INC.,
as partner
by /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President, Treasurer
by: CHOICE HOTELS INTERNATIONAL, INC.,
as partner
by /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President, Treasurer
THE CHASE MANHATTAN BANK, as Collateral Agent,
by /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Vice President
SCHEDULE I
to the Indemnity Subrogation
and Contribution Agreement
Guarantors
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Name Address
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Quality Hotels Europe, Inc. 00000 Xxxxxxxx Xxxx
Xxxxxx Xxxxxxx, XX 00000
QH Europe Partnership 00000 Xxxxxxxx Xxxx
Xxxxxx Xxxxxxx, XX 00000
ANNEX I
to the Indemnity Subrogation
and Contribution Agreement
SUPPLEMENT NO. dated as of , to the Indemnity,
Subrogation and Contribution Agreement dated as of April 28,
1998 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Indemnity, Subrogation and
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Contribution Agreement"), among CHOICE HOTELS INTERNATIONAL,
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INC., a Delaware corporation (the "Borrower"), each
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Subsidiary of the Borrower listed on Schedule I thereto (the
"Guarantors"), and THE CHASE MANHATTAN BANK, a New York
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banking corporation ("Chase"), as collateral agent (the
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"Collateral Agent") for the Secured Parties (as defined in
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the Credit Agreement referred to below).
A. Reference is made to (a) the Credit Agreement dated as of October
15, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the lenders from time to time party
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thereto (the "Lenders") and Chase, as administrative agent (in such capacity,
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the "Agent") for the Lenders and as Collateral Agent, and (b) the Guarantee
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Agreement dated as of October 15, 1997, between the Guarantors and the
Collateral Agent (the "Guarantee Agreement").
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B. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Indemnity, Subrogation and
Contribution Agreement and the Credit Agreement.
C. The Borrower and the Guarantors have entered into the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
Loans and the Issuing Bank to issue Letters of Credit. Pursuant to Section 5.09
of the Credit Agreement, each Subsidiary (other than a Foreign Subsidiary) of
the Borrower that was not in existence or not such a Subsidiary on the date of
the Credit Agreement is required to enter into the Guarantee Agreement as a
Guarantor upon becoming a Subsidiary. Section 12 of the Indemnity, Subrogation
and Contribution Agreement provides that additional Subsidiaries of the Borrower
may become Guarantors under the Indemnity, Subrogation and Contribution
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary of the Borrower (the "New Guarantor") is
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executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Guarantor under the Indemnity, Subrogation and
Contribution Agreement in order to induce the Lenders to make additional Loans
and the Issuing Bank to issue additional Letters of Credit and as consideration
for Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 12 of the Indemnity,
Subrogation and Contribution Agreement, the New Guarantor by its signature below
becomes a Guarantor under the Indemnity, Subrogation and Contribution Agreement
with the same force and effect as if originally named therein as a Guarantor and
the New Guarantor hereby agrees to all the terms and provisions of the
Indemnity, Subrogation and Contribution Agreement applicable to it as a
Guarantor thereunder. Each reference to a "Guarantor" in the Indemnity,
Subrogation and Contribution Agreement shall be deemed to include the New
Guarantor. The Indemnity, Subrogation and Contribution Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Indemnity, Subrogation and Contribution Agreement shall not in
any way be affected or impaired. The parties hereto shall endeavor in good-
faith negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in
writing and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have
duly executed this Supplement to the Indemnity, Subrogation and Contribution
Agreement as of the day and year first above written.
[Name Of New Guarantor],
by
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Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as Collateral Agent,
by
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Name:
Title:
SCHEDULE I
to Supplement No.___ to the Indemnity
Subrogation and Contribution Agreement
Guarantors
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Name Address
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