CONFORMED COPY
AMENDED AND RESTATED COMPETITIVE ADVANCE AND
MULTI-CURRENCY REVOLVING CREDIT FACILITY AGREEMENT
dated as of November 30, 1994, as amended and
restated as of September 6, 1996, among MANOR CARE,
INC., a Delaware corporation (the "Company"), MANOR
HEALTHCARE CORP., a Delaware Subsidiary (as herein
defined), CHOICE HOTELS INTERNATIONAL, INC., a
Delaware Subsidiary, QUALITY HOTELS EUROPE, INC., a
Delaware Subsidiary, QUALITY HOTELS EUROPE (JENA)
GMBH, a German Subsidiary, and the other BORROWING
SUBSIDIARIES (as herein defined), the lenders listed
in Schedule 2.01 (the "Lenders"), NATIONSBANK, N.A.,
as co- agent, and THE CHASE MANHATTAN BANK, a New
York banking corporation, as agent for the Lenders
(in such capacity, the "Agent").
The Borrowers, the Lenders and the Agent are parties to a Credit
Agreement dated as of November 30, 1994, as amended as of June 23, 1995, and in
effect prior to the effectiveness of this Agreement (the "Original Credit
Agreement"). The Borrowers have requested that the Lenders and the Agent agree
to amend and restate the Original Credit Agreement in order to provide for (a)
certain modifications of the provisions contained therein to become effective
upon the Distribution (such term and each other capitalized term used but not
otherwise defined herein having the meaning assigned to it in Article I), (b)
the replacement of the Commitments under the Original Credit Agreement with
Commitments hereunder providing for Loans to the Borrowers at any time and from
time to time prior to the Maturity Date, in an aggregate principal amount at any
time outstanding not in excess of $250,000,000. The proceeds of the borrowings
hereunder shall be used for general corporate purposes of the Borrowers and
their Subsidiaries, including working capital, capital expenditures,
acquisitions and equity investments. The Lenders and the Agent are willing to
amend and restate the Original Credit Agreement on the terms and subject to the
conditions hereinafter set forth. Accordingly, the Original Credit Agreement is
hereby amended and restated, effective as of the Amendment Effective Date, as
set forth herein.
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ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan denominated in dollars bearing interest
at a rate determined by reference to the Alternate Base Rate in accordance with
the provisions of Article II.
"ABR Standby Loan" shall mean any Standby Loan denominated in dollars
bearing interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"Adjusted CD Rate" shall mean, with respect to any CD Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to the sum of (a) a rate per annum equal to the
product of (i) the Fixed CD Rate in effect for such Interest Period and (ii)
Statutory Reserves, plus (b) the Assessment Rate. For purposes hereof, the term
"Fixed CD Rate" shall mean the arithmetic average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the prevailing rates per annum bid at or
about 10:00 a.m., New York City time, to the Agent on the first Business Day of
the Interest Period applicable to such CD Borrowing by three New York City
negotiable certificate of deposit dealers of recognized national standing
selected by the Agent for the purchase at face value of negotiable certificates
of deposit of major United States money center banks in a principal amount
approximately equal to the Reference Bank's portion of such CD Borrowing and
with a maturity comparable to such Interest Period.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit B.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified. Following the Distribution, the Spin-Off Subsidiaries shall not be
deemed to be Affiliates of the
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Company or the Subsidiaries merely by virtue of such companies' having common
shareholders or directors as a result of the Distribution.
"Agent and Administrative Fees" shall have the meaning assigned to
such term in Section 2.06(b).
"Aggregate Principal Amount Outstanding" shall mean, at any time, the
sum of (i) the aggregate principal amount at such time of all outstanding Loans
denominated in dollars and (ii) the aggregate Equivalent Dollar Amount at such
time of the principal amounts of all outstanding Eurocurrency Loans.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Agent as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective on the date such change is publicly announced as effective.
"Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from the New York City negotiable certificate of
deposit dealers of recognized national standing selected by it. "Federal Funds
Effective Rate" shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
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arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Agent from three Federal funds
brokers of recognized national standing selected by it. If for any reason the
Agent shall have determined that it is unable to ascertain the Base CD Rate or
the Federal Funds Effective Rate or both for any reason, including the inability
or failure of the Agent to obtain sufficient quotations in accordance with the
terms thereof, the Alternate Base Rate shall be determined without regard to
clauses (b) or (c) of the first sentence of this definition, as appropriate,
until the circumstances giving rise to such inability no longer exist. Any
change in the Alternate Base Rate due to a change in the Prime Rate, the Three
Month Secondary CD Rate or the Federal Funds Effective Rate shall be effective
on the effective date of such change in the Prime Rate, the Three Month
Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"Alternative Currency" shall mean Sterling, French Francs, Deutsche
Marks and any other freely available currency (other than ECUs) that is freely
transferable and freely convertible into dollars and in which dealings in
deposits are carried on in the London interbank market, which shall be requested
by the Borrowers and approved by the Lenders.
"Amendment Effective Date" shall mean the date on which this Agreement
becomes effective in accordance with Section 4.02.
"Applicable Margin" shall mean as to any Standby Loan, the applicable
number of basis points per annum set forth below based upon the Applicable
Rating Category, as follows:
Applicable Rating Adjusted
Category LIBO Margin CD Margin
-------- ----------- ---------
Category 1 17.00 29.50
Category 2 18.50 31.00
Category 3 20.00 32.50
Category 4 27.50 40.00
Category 5 36.25 48.75
Category 6 50.00 62.50
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Any change in the Applicable Margin shall be effective as of the date on which
the Applicable Rating Category changes.
"Applicable Rating Category" at any time shall be determined as set
forth below based upon the Company's senior unsecured long-term debt ratings by
S&P and Moody's (or, if S&P or Moody's does not establish a rating for the
Company's senior unsecured long-term debt, the rating (implied or otherwise)
established by such agency for the Company's general senior long-term debt).
S&P/Moody's Ratings Applicable Rating Category
A-/A3 or higher Category 1
BBB+/Baa1 Category 2
BBB/Baa2 Category 3
BBB-/Baa3 Category 4
BB+/Ba1 Category 5
BB/Ba2 or lower Category 6
For purposes of the foregoing, (i) if no rating (implied or otherwise) for the
Company's general senior long-term debt shall be available from either rating
agency, such rating agency shall be deemed to have established a rating of
BB/Ba2 or lower, (ii) if the ratings established or deemed to have been
established by Moody's and S&P shall fall within different Categories, the
Applicable Rating Category shall be based upon the lower of (A) the higher of
the two ratings and (B) the rating two Categories above the lower of the two
ratings, (iii) if any rating established or deemed to have been established by
Moody's or S&P shall be changed (other than as a result of a change in the
rating system of either Moody's or S&P), such change shall be effective as of
the date on which such change is first announced by the rating agency making
such change, and (iv) if there shall be no outstanding general senior long-term
debt of the Company and no rating (implied or otherwise) for such debt, the
Company and the Agent shall enter into negotiations to determine the Applicable
Rating Category subject to Section 10.08, and pending agreement on another
Applicable Rating Category the Applicable Rating Category most recently in
effect shall be deemed to continue in effect. Each such change shall take effect
on the effective date of such change and shall end on the date immediately
preceding the effective date of the next such change. If the rating system of
either Moody's or S&P shall change prior to the Maturity Date, the Company and
the Lenders shall negotiate in good faith to amend the references to specific
ratings in
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this definition to reflect such changed rating system, and pending agreement on
another Applicable Rating Category the Applicable Rating Category most recently
in effect shall be deemed to continue in effect.
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) identified by the Agent (or, if
need be, reasonably estimated by the Agent) as the then current net annual
assessment rate that will be employed in determining amounts payable by the
Agent to the Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time deposits made in
dollars at the Agent's domestic offices.
"Asset Sale" shall mean, with respect to the Company or any
Subsidiary, any sale, transfer or other disposition of any assets or other
properties (including individual business assets, patents, trademarks and other
intangibles) of the Company or such Subsidiary, including the sale, transfer or
disposition of any capital stock of or any merger or consolidation involving any
Subsidiary (other than the Pharmacy Subsidiary) and any issuance or sale by any
Subsidiary (other than the Pharmacy Subsidiary) of shares of its capital stock,
other than (i) sales of inventory and used equipment in the ordinary course of
business of the person (whether the Company or a Subsidiary) owning and selling
such inventory or used equipment; (ii) sales, transfers and other dispositions
of any tangible assets by the Company or any Subsidiary if the Company or such
Subsidiary enters into an agreement to replace such assets with a comparable
asset as soon as practicable (and in no event later than three months) after the
disposition and, pending such replacement, diligently pursues the replacement
thereof, and the fair market value of the replacement asset is substantially
equivalent to or exceeds that of the asset so disposed of; (iii) sales,
transfers and other dispositions of any assets to the Company or any Subsidiary;
(iv) sales, transfers and other dispositions of any assets by the Pharmacy
Subsidiary; (v) Sale and Lease- Back Transactions; (vi) sales of hotel
properties acquired by the Company for investment purposes and listed on
Schedule 6.06; (vii) sales by the Company or Subsidiaries of assets acquired
from persons other than the Company or other Subsidiaries, which sales occur not
more than 12 months after the respective dates on which such assets were
acquired and (viii) the Distribution.
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"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Agent, in the form
of Exhibit C.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" shall mean the Company or any Borrowing Subsidiary.
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders (or, in the case of a Competitive Borrowing, by the Lender or Lenders
whose Competitive Bids have been accepted pursuant to Section 2.03) on a single
date and as to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by any Borrower in accordance
with the terms of Section 2.04.
"Borrowing Subsidiary" shall mean Manor Healthcare, Choice Hotels
International, Quality Hotels, Quality Hotels Europe (Jena) GmbH and any
Subsidiary (other than the Pharmacy Subsidiary) which shall have executed and
delivered to the Agent and each Lender a Borrowing Subsidiary Agreement;
provided that, following the Distribution, "Borrowing Subsidiary" shall mean
Manor Healthcare.
"Borrowing Subsidiary Agreement" shall mean an agreement, in the form
of Exhibit D-1, duly executed by the Company and a Subsidiary and approved by
the Agent and the Required Lenders.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that (i) when used in
connection with a Eurodollar Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in dollar deposits in the
London interbank market and (ii) when used in connection with a Eurocurrency
Loan, "Business Day" shall also exclude any day on which commercial banks are
not open for foreign exchange business in London or, if such reference relates
to the date on which any amount is to be paid or made available in an
Alternative
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Currency, in the principal financial center in the country of such Alternative
Currency.
"Capital Lease Obligations" of any person shall mean the obligations
of such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
applied on a consistent basis and, for the purposes of this Agreement, the
amount of such obligations at any time shall be the capitalized amount thereof
at such time determined in accordance with GAAP applied on a consistent basis.
"CD Borrowing" shall mean a Borrowing comprised of CD Loans.
"CD Loan" shall mean any Loan bearing interest at a rate determined by
reference to the Adjusted CD Rate in accordance with the provisions of Article
II.
"CD Standby Borrowing" shall mean a Borrowing composed of CD Standby
Loans.
"CD Standby Loan" shall mean any Standby Loan bearing interest at a
rate determined by reference to the Adjusted CD Rate in accordance with the
provisions of Article II.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities and Exchange
Commission as in effect on the date hereof) other than Stewart Bainum and his
family shall own directly or indirectly, beneficially or of record, shares
representing more than 15% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Company, except that such a
person or group may own directly or indirectly, beneficially or of record,
shares representing not more than 20% of the aggregate voting power represented
by the issued and outstanding capital stock of the Company if such person or
group reports and continues to report such ownership on Schedule 13G (filed
pursuant to Rule 13d-1(b), Rule 13d- 1(c), or, in the case of amendments, Rule
13d-2(b), of the Securities and Exchange Commission as in effect on the date
hereof); (b) a majority of the seats (other than vacant seats) on the board of
directors of the Company shall at any
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time have been occupied by persons who were neither (i) nominated by the
management of the Company or by the Nominating Committee of the Company's board
of directors in connection with an annual meeting of the stockholders of the
Company, nor (ii) appointed by directors so nominated; or (c) any person or
group other than Stewart Bainum and his family shall otherwise directly or
indirectly Control the Company. Notwithstanding the foregoing, if a trust or
foundation or other entity established by Stewart Bainum or his family holds
shares representing in excess of 15% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Company and
Stewart Bainum or his family Controls such trust or foundation or such other
entity and the vote of such shares held by such trust or foundation or such
other entity and Stewart Bainum and his family remain in Control of the Company,
there shall be no Change in Control for purposes of this Agreement; provided,
however, that any transfer of such shares by Stewart Bainum, such trust or such
foundation or such other entity shall stand on its own merits for purposes of
this Agreement.
"Choice Hotels" shall mean Choice Hotels Holdings, Inc., a Subsidiary.
"Choice Hotels International" shall mean Choice Hotels International,
Inc., a Delaware corporation.
"Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
"Commitment" shall mean, with respect to each Lender, the commitment
of such Lender hereunder as set forth in Schedule 2.01, as such Lender's
Commitment may be permanently terminated or reduced from time to time pursuant
to Section 2.11. The Commitments shall automatically and permanently terminate
on the Maturity Date.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a notification made
by the Company pursuant to Section 2.03(d) in the form of Exhibit A-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid made by a
Lender pursuant to Section 2.03(b), (i) in the case of a Eurodollar Competitive
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Loan, the Competitive Margin, and (ii) in the case of a Fixed Rate Loan, the
fixed rate of interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant to
Section 2.03 in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
whose Competitive Bids for such Borrowing have been accepted by the Company
under the bidding procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan from a Lender to the Company
pursuant to the bidding procedure described in Section 2.03. Each Competitive
Loan shall be a Eurodollar Competitive Loan or a Fixed Rate Loan.
"Competitive Margin" shall mean, as to any Eurodollar Competitive
Loan, the margin (expressed as a percentage rate per annum in the form of a
decimal to no more than four decimal places) to be added to or subtracted from
the LIBO Rate in order to determine the interest rate applicable to such Loan,
as specified in the Competitive Bid relating to such Loan.
"Consolidated Debt Ratio" shall mean, as of any date of determination,
the ratio of (a) Consolidated Funded Indebtedness as of such date to (b) the sum
of (i) Consolidated Funded Indebtedness as of such date and (ii) Consolidated
Net Worth as of such date.
"Consolidated EBITDA" shall mean, for any period, without duplication,
the sum for such period of (a) Consolidated Net Income, (b) depreciation and
amortization expense, (c) Consolidated Interest Expense and (d) provisions for
income tax expense, all as determined in accordance with GAAP consistently
applied.
"Consolidated Funded Indebtedness" shall mean, as at any date of
determination, all obligations accounted for as indebtedness on a consolidated
balance sheet of the Company in accordance with GAAP consistently applied,
whether such obligations are classified as long-term or short-term.
"Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio of (a) Consolidated EBITDA for
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such period to (b) Consolidated Interest Expense for such
period.
"Consolidated Interest Expense" shall mean, for any period, gross
total expenses of the Company and its consolidated Subsidiaries accounted for as
interest expense (including capitalized interest determined in accordance with
GAAP consistently applied) for such period, including (i) the portion of rental
payments under Capital Lease Obligations deemed to represent interest in
accordance with GAAP consistently applied, (ii) the amortization of debt
discounts, (iii) the amortization of all fees (including fees with respect to
interest rate protection agreements) payable in connection with the incurrence
of Indebtedness to the extent included in interest expense, all as determined on
a consolidated basis in accordance with GAAP consistently applied. For purposes
of the foregoing, gross interest expense shall be determined after giving effect
to any net payments made or received with respect to interest rate protection
agreements entered in to as a hedge against interest rate exposure.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss) of the Company and its consolidated Subsidiaries for such period, as
determined on a consolidated basis in accordance with GAAP consistently applied.
"Consolidated Net Worth" shall mean, as at any date of determination,
the consolidated stockholders' equity of the Company and its consolidated
Subsidiaries, as determined on a consolidated basis in accordance with GAAP
consistently applied.
"Consolidated Total Assets" shall mean, as at any date of
determination, the total assets of the Company and its consolidated Subsidiaries
at such time, as determined on a consolidated basis in accordance with GAAP
consistently applied.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto; provided, however, the existence of a management contract by the
Company or one of its Affiliates to manage another entity shall not be deemed to
be Control.
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"Default" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
"Denomination Date" shall mean, in relation to any Eurocurrency
Borrowing, the date that is three Business Days before the date of such
Borrowing.
"Deutsche Marks" shall mean the lawful money of the Federal Republic
of Germany.
"Distribution" shall mean the distribution by the Company to its
shareholders of all the capital stock of Choice Hotels in the manner, on the
terms and with the results set forth in the Form 10.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Equivalent Dollar Amount" shall mean, with respect to an amount of
any Alternative Currency on any date, the amount of dollars that may be
purchased with such amount of such Alternative Currency at the Spot Exchange
Rate on such date.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is a member of a group of which the Company is a member and
which is treated as a single employer under Section 414 of the Code.
"Eurocurrency Borrowing" shall mean a Borrowing comprised of
Eurocurrency Loans.
"Eurocurrency Loan" shall mean any Loan denominated in an Alternative
Currency and bearing interest at a rate determined by reference to the LIBO Rate
in accordance with the provisions of Article II.
"Eurocurrency Sublimit" shall mean $75,000,000.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
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"Eurodollar Competitive Loan" shall mean any Competitive Loan
denominated in dollars and bearing interest at a rate determined by reference to
the LIBO Rate in accordance with the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan or
Eurodollar Standby Loan.
"Eurodollar Standby Borrowing" shall mean a Borrowing comprised of
Eurodollar Standby Loans.
"Eurodollar Standby Loan" shall mean any Standby Loan denominated in
dollars and bearing interest at a rate determined by reference to the LIBO Rate
in accordance with the provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Facility Fee" shall have the meaning assigned to such term in Section
2.06(a).
"Fees" shall mean the Facility Fee and the Agent and Administrative
Fees.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such
corporation.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of Fixed Rate
Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing interest at
a fixed percentage rate per annum (expressed in the form of a decimal to no more
than four decimal places) specified by the Lender making such Loan in its
Competitive Bid.
"Form 10" shall mean the registration statement on Form 10 of Choice
Hotels, substantially in the form filed with the Securities and Exchange
Commission on July 11, 1996.
"French Francs" shall mean the lawful money of the Republic of France.
"GAAP" shall mean generally accepted accounting principles.
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"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that the term Guarantee
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business.
"IHH" shall mean In Home Health, Inc., a Minnesota corporation.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property or assets purchased by such person, (e) all obligations of such person
issued or assumed as the deferred purchase price of property or services, (f)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (g) all Guarantees by such person
of Indebtedness of others, (h) all Capital Lease Obligations of such person, (i)
all obligations of such person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging arrangements and (j) all obligations of such person as an account
party in respect of letters of
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credit (other than (x) documentary letters of credit (including commercial and
trade letters of credit) issued to secure payment obligations in respect of
goods and services in the ordinary course of business and (y) letters of credit
and surety bonds with respect to obligations of such person that are fully
accounted for as liabilities in the financial records of such person) and
bankers' acceptances. The Indebtedness of any person shall include the
Indebtedness of any partnership in which such person is a general partner.
"Interest Payment Date" shall mean, with respect to any Loan, the last
day of the Interest Period applicable thereto and, in the case of a Eurocurrency
Loan or Eurodollar Loan with an Interest Period of more than three months'
duration or a Fixed Rate Loan or a CD Loan with an Interest Period of more than
90 days' duration, each day that would have been an Interest Payment Date for
such Loan had successive Interest Periods of three months' duration or 90 days'
duration, as the case may be, been applicable to such Loan and, in addition, the
date of any refinancing or conversion of such Loan with or to a Loan of a
different Type.
"Interest Period" shall mean (a) as to any Eurocurrency Borrowing or
Eurodollar Borrowing, the period commencing on the date of such Borrowing and
ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6
months thereafter, as the applicable Borrower may elect, (b) as to any CD
Borrowing, a period of 30, 60, 90 or 180 days' duration, as the Company may
elect, commencing on the date of such Borrowing, (c) as to any ABR Borrowing,
the period commencing on the date of such Borrowing and ending on the date 90
days thereafter or, if earlier, on the Maturity Date or the date of prepayment
of such Borrowing and (d) as to any Fixed Rate Borrowing, the period commencing
on the date of such Borrowing and ending on the date specified in the
Competitive Bids in which the offer to make the Fixed Rate Loans comprising such
Borrowing were extended, which shall not be earlier than seven days after the
date of such Borrowing or later than 360 days after the date of such Borrowing;
provided, however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of Eurocurrency Loans and Eurodollar Loans
only, such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period
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shall end on the next preceding Business Day. Interest shall accrue from and
including the first day of an Interest Period to but excluding the last day of
such Interest Period.
"Interest Rate Determination Date" shall mean, with respect to a
Eurocurrency Borrowing or Eurodollar Borrowing, the date which is two Business
Days prior to the commencement of any Interest Period for such Borrowing.
"LIBO Rate" shall mean, (a) with respect to any Eurocurrency Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the rate at which deposits in the
currency in which such Loan is denominated approximately equal in principal
amount to the Reference Bank's portion of such Eurocurrency Borrowing and for a
maturity comparable to such Interest Period are offered to the principal London
office of the Agent, in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, on the relevant Interest Rate
Determination Date, and (b) with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the rate at which dollar deposits approximately
equal in principal amount to (i) in the case of a Standby Borrowing, the
Reference Bank's portion of such Standby Borrowing and (ii) in the case of a
Competitive Borrowing, a principal amount that would have been the Reference
Bank's portion of such Competitive Borrowing had such Competitive Borrowing been
a Standby Borrowing, and for a maturity comparable to such Interest Period are
offered to the principal London office of the Agent, in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
on the applicable Interest Rate Determination Date.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party (excluding rights of first refusal) with respect to such securities.
"Loan" shall mean a Competitive Loan or a Standby Loan, whether made
as a Eurocurrency Loan, a Eurodollar
17
Loan, a CD Loan, an ABR Loan or a Fixed Rate Loan, as permitted hereby.
"Loan Documents" shall mean this Agreement and any Borrowing
Subsidiary Agreement.
"Margin Stock" shall have the meaning given such term under Regulation
U.
"Manor HealthCare" shall mean Manor HealthCare Corp., a wholly owned
Subsidiary.
"Material Adverse Effect" shall mean a materially adverse effect on
the business, assets, property or condition, financial or otherwise, of the
Company and the Subsidiaries taken as a whole.
"Maturity Date" shall mean the fifth anniversary of the date hereof.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Obligations" shall mean (a) the Borrowers' obligations in respect of
the due and punctual payment of principal of and interest on the Loans when and
as due whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (b) all Fees, expenses, indemnities, reimbursements and
other obligations, monetary or otherwise, of the Borrowers under this Agreement
or any other Loan Document and (c) all obligations, monetary or otherwise, of
each Subsidiary under each Loan Document to which it is a party.
"Original Credit Agreement" shall have the meaning ascribed thereto in
the preamble to this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
18
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America);
(b) investments in commercial paper having credit
ratings of at least A-2 from S&P and P-2 from Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits issued or guaranteed by or placed with,
and money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United
States of America or any State thereof which has a combined capital and
surplus and undivided profits of not less than $200,000,000;
(d) investments in the ordinary course of business in
customary repurchase agreements with respect to freely marketable,
short-term securities of the type customarily subject to repurchase
agreements; and
(e) other readily marketable debt and equity securities traded
on national securities exchanges or on other nationally recognized
markets, including over-the-counter markets.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
"Pharmacy Subsidiary" shall mean Vitalink Pharmacy Services, Inc.,
formerly known as TotalCare Pharmacy Services, Inc., a subsidiary of Manor
HealthCare, and its subsidiaries.
"Pharmacy Subsidiary Agreements" shall mean the following agreements:
(a) the Administrative Services Agreement dated as
of June 1, 1991, as amended, between the Pharmacy
Subsidiary and the Company;
19
(b) the Tax Agreement dated as of June 1, 1991,
between the Pharmacy Subsidiary and the Company;
(c) the Intercompany Debt and Credit Agreement
dated as of June 1, 1991, between the Pharmacy
Subsidiary and the Company;
(d) the Sublease Agreement dated as of June 1,
1991, between the Pharmacy Subsidiary and Manor
HealthCare;
(e) the Lease Agreement dated as of June 1, 1991,
between the Pharmacy Subsidiary and Manor HealthCare;
(f) the Master Agreement for Pharmacy Services dated as of
June 1, 1991, between the Pharmacy Subsidiary and Manor HealthCare;
(g) the Master Pharmacy Consulting Agreement dated as of June
1, 1991, between the Pharmacy Subsidiary and Manor HealthCare;
(h) the Pharmacy Services Consultant Agreement dated as of
June 1, 1991, between the Pharmacy Subsidiary and Manor HealthCare;
(i) the Master Agreement for Infusion Therapy
Products and Services dated as of June 1, 1991, between
TotalCare Billing Services, Inc. and Manor HealthCare;
and
(j) the Registration Rights Agreement dated as of
June 1, 1991, between the Pharmacy Subsidiary and Manor
HealthCare.
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code which
is maintained for employees of the Company or any ERISA Affiliate.
"Proceeds" shall mean, with respect to any Asset Sale, (a) the gross
amount of consideration or other amounts payable to or receivable by the Company
or a Subsidiary in respect of such Asset Sale, less (b) the amount, if any, of
all estimated taxes payable with respect to such Asset Sale whether or not
payable during the taxable year in which such Asset Sale shall have occurred,
and less (c) reasonable and customary fees, commissions, costs and other
expenses (other
20
than those payable to the Company or a Subsidiary or Affiliate of the Company)
which are incurred in connection with such Asset Sale and are payable by the
seller or the transferor of the assets or property to which such Asset Sale
relates, but only to the extent not already deducted in arriving at the amount
referred to in clause (a) above. For purposes of determining Proceeds, the value
of all noncash consideration payable or receivable by the Company or any
Subsidiary, as the case may be, shall be the fair market value of such noncash
consideration as determined in good faith by the Company and the Company shall
provide to the Agent a certificate of a Financial Officer with respect to the
fair market value of such consideration, in form and substance reasonably
satisfactory to the Agent.
"Quality Hotels" shall mean Quality Hotels Europe, Inc., a Subsidiary.
"Reference Bank" shall mean the Agent or, in the case where the
Agent's Commitment is not the largest of the Lenders' Commitments, the Lender
possessing the largest Commitment.
"Register" shall have the meaning given such term in Section 10.04(d).
"Regulation D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Reportable Event" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate which is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the
Code).
21
"Required Lenders" shall mean, at any time, Lenders having Commitments
representing at least a majority of the Total Commitment or, if the Commitments
have been terminated, Lenders holding Loans representing at least a majority of
the aggregate principal amount of the Loans then outstanding.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Sale and Lease-Back Transaction" shall mean any arrangement, directly
or indirectly, with any person whereby such person shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred.
"Significant Subsidiary" shall mean at any time (a) Choice Hotels
International, (b) Manor HealthCare, (c) any Subsidiary of the Company with
revenues during the fiscal year of the Company most recently ended greater than
or equal to 5% of the total revenues of the Company and its Subsidiaries during
such year, computed and consolidated in accordance with GAAP consistently
applied ("Consolidated Revenues"), (d) any Subsidiary of the Company with assets
as of the last day of the Company's most recently ended fiscal year greater than
or equal to 5% of the total assets of the Company and its Subsidiaries at such
date, computed and consolidated in accordance with GAAP consistently applied
("Consolidated Assets"), (e) any Subsidiary with stockholder's equity as of the
last day of the Company's most recently ended fiscal year greater than or equal
to 5% of the stockholder's equity of the Company and the Subsidiaries at such
date, computed and consolidated in accordance with GAAP consistently applied
("Net Stockholders' Equity"), (f) any Subsidiary designated in writing by the
Company as a Significant Subsidiary, (g) any Subsidiary created or acquired by
the Company after the date hereof that falls within or that comes to meet one of
clauses (a) through (f) or (h) any Subsidiary in existence on the date hereof
which comes to meet one of clauses (a) through (f) after the date hereof;
provided, however, that
22
if at any time (x) the aggregate revenues of all Subsidiaries that are
Significant Subsidiaries during any fiscal year of the Company shall not equal
or exceed 90% of Consolidated Revenues for such fiscal year, (y) the aggregate
assets of all Subsidiaries that are Significant Subsidiaries as of the last day
of any fiscal year of the Company shall not equal or exceed 90% of Consolidated
Assets at such date, or (z) the aggregate stockholders' equity of all
Subsidiaries that are Significant Subsidiaries as of the last day of any fiscal
year of the Company shall not equal or exceed 90% of Net Stockholders' Equity at
such date, then the term Significant Subsidiary shall be deemed to include such
Subsidiaries (as determined pursuant to the next following sentence) of the
Company as may be required so that none of clauses (x), (y) and (z) above shall
continue to be true; provided further that, upon consummation of the
Distribution, none of the Spin-Off Subsidiaries shall be deemed to be
Significant Subsidiaries. For purposes of the proviso to the next preceding
sentence, the Subsidiaries which shall be deemed to be Significant Subsidiaries
shall be determined based on the percentage that the assets of each such
Subsidiary are of Consolidated Assets, with the Subsidiary with the highest such
percentage being selected first, and each other Subsidiary required to satisfy
the requirements set forth in such proviso being selected in descending order of
such percentage.
"S&P" shall mean Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
"Spin-Off Subsidiaries" shall mean the entities set forth on Schedule
1.01.
"Spot Exchange Rate" shall mean, on any day, with respect to any
Alternative Currency, the spot rate at which dollars are offered on such day by
The Chase Manhattan Bank in London for such Alternative Currency at
approximately 11:00 A.M. (London time).
"Standby Borrowing" shall mean a borrowing consisting of simultaneous
Standby Loans from each of the Lenders.
"Standby Borrowing Request" shall mean a request made pursuant to
Section 2.04 in the form of Exhibit A-5.
"Standby Loans" shall mean the revolving loans made by the Lenders to
the Borrowers pursuant to
23
Section 2.04. Each Standby Loan shall be a Eurocurrency Loan, a Eurodollar
Standby Loan, a CD Loan or an ABR Loan.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which the Agent is
subject for new negotiable nonpersonal time deposits in dollars of over $100,000
with maturities approximately equal to the applicable Interest Period. Statutory
Reserves shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"Sterling" or "(pound)" shall mean the lawful money of the United
Kingdom.
"Subordinated Indebtedness" shall mean Indebtedness of the Company
that is subordinated in right of payment to any of the Obligations.
"subsidiary" shall mean, with respect to any person (herein referred
to as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) which is, at the time any
determination is made, otherwise Controlled by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of the Company; provided,
however, that during the period prior to the date that IHH becomes a wholly
owned subsidiary of the Company, IHH shall be deemed not to be a "Subsidiary"
for purposes of this Agreement; provided further, however, that notwithstanding
the foregoing, at any time that IHH is considered a consolidated subsidiary of
the Company for financial accounting purposes, IHH shall be considered a
Subsidiary for determining compliance with the covenants in Sections 5.04, 6.11,
6.12 and 6.13.
24
"Total Commitment" shall mean at any time the aggregate amount of the
Lenders' Commitments, as in effect at such time.
"Transactions" shall have the meaning assigned to such term in Section
3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined and the currency in which such Loan or the Loans
comprising such Borrowing are denominated. For purposes hereof, "Rate" shall
include the LIBO Rate, the Adjusted CD Rate, the Alternate Base Rate and the
Fixed Rate, and "currency" shall include Dollars, French Francs, Deutsche Marks,
Sterling and any other Alternative Currency permitted hereunder.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP consistently applied, as in effect from
time to time; provided, however, that, for purposes of determining compliance
with any covenant set forth in Article VI, such terms shall be construed in
accordance with GAAP as in effect on the date of this Agreement applied on a
basis consistent with the application used in preparing the Company's audited
financial statements referred to in Section 3.05.
25
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Standby Loans to the Company or Manor
Healthcare and to make Eurocurrency Loans to the Borrowers, at any time and from
time to time on and after the date hereof and until the earlier of the Maturity
Date and the termination of the Commitment of such Lender, in an aggregate
principal amount at any time outstanding which does not exceed (or the
Equivalent Dollar Amount of which does not exceed) such Lender's Commitment
minus the amount by which the Competitive Loans outstanding at such time shall
be deemed to have used such Commitment pursuant to Section 2.16, subject,
however, to the conditions that (a) at no time shall any Loan be made if,
immediately after giving effect thereto and to the application of the proceeds
thereof, the Aggregate Principal Amount Outstanding would exceed the Total
Commitment, (b) at no time shall any Loan be made if, immediately after giving
effect thereto and to the application of the proceeds thereof, the aggregate
Equivalent Dollar Amount of all outstanding Eurocurrency Loans would exceed the
Eurocurrency Sublimit and (c) at all times the outstanding aggregate principal
amount of all Standby Loans made by each Lender shall equal the product of (i)
the percentage which its Commitment represents of the Total Commitment times
(ii) the outstanding aggregate principal amount of all Standby Loans made
pursuant to Section 2.04. Each Lender's Commitment is set forth opposite its
respective name in Schedule 2.01. Such Commitments may be terminated or reduced
from time to time pursuant to Section 2.11. Within the foregoing limits, the
Borrowers may borrow, pay or prepay and reborrow hereunder, on and after the
Amendment Effective Date and prior to the Maturity Date, subject to the terms,
conditions and limitations set forth herein.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their Commitments; provided, however, that the failure of any Lender to make any
Standby Loan shall not in itself relieve any other Lender of its obligation to
lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). Each Competitive Loan shall be made in accordance
with the
26
procedures set forth in Section 2.03. The Standby Loans or Competitive Loans
comprising any Borrowing shall be (i) in the case of Competitive Loans, in an
aggregate principal amount which is an integral multiple of $1,000,000 and not
less than $5,000,000 and (ii) in the case of Standby Loans, in an aggregate
principal amount which is an integral multiple of $1,000,000 and not less than
$5,000,000 (or an aggregate principal amount equal to the remaining balance of
the available Commitments); provided, however, that if the Equivalent Dollar
Amount of any Eurocurrency Loan at the end of the Interest Period applicable
thereto does not exceed by more than 5%, and is not less than 95% of, the
Equivalent Dollar Amount of such Loan on the relevant Denomination Date, then
the applicable Borrower may (notwithstanding clauses (i) and (ii) above)
refinance such Loan with a new Loan denominated in the same Alternative Currency
and with the same principal amount (in such Alternative Currency) at the end of
such Interest Period, notwithstanding that the Equivalent Dollar Amount of the
new Loan is not an integral multiple of $1,000,000. For purposes of this
Section, any Eurocurrency Borrowing shall be deemed to be in an amount equal to
the Equivalent Dollar Amount of such Eurocurrency Borrowing determined as of its
Denomination Date.
(b) Each Standby Borrowing shall be comprised entirely of Eurocurrency
Loans, Eurodollar Standby Loans, CD Loans or ABR Loans and each Competitive
Borrowing shall be comprised entirely of Eurodollar Competitive Loans or Fixed
Rate Loans as the Company may request pursuant to Section 2.03 or 2.04, as
applicable. Each Lender may at its option make any Eurocurrency Loan or
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided, however, that (i) any exercise of such
option shall not affect the obligation of the applicable Borrower to repay such
Loan in accordance with the terms of this Agreement and (ii) in exercising such
option, the Lender shall use its reasonable efforts to minimize any increased
costs to the applicable Borrower resulting therefrom (which obligation of the
Lender shall not require it to take, or refrain from taking, actions that it
determines would result in increased costs for which it will not be compensated
hereunder or that it determines would be otherwise disadvantageous to it and in
the event of such request for costs for which compensation is provided under
this Agreement, the provisions of Section 2.13(c) shall apply). Borrowings of
more than one Type may be outstanding at the same time; provided, however, that
the Borrowers shall not be entitled to request any Borrowing
27
which, if made, would result in (A) an aggregate of more than fifteen separate
Standby Loans of any Lender being outstanding hereunder at any one time, (B)
there being Loans outstanding in an aggregate of more than six currencies, (C)
there being at any time more than five Borrowers with Eurocurrency Loans
outstanding or (D) there being more than 30 Eurocurrency Borrowings having an
Interest Period of one month during any twelve-month period. For purposes of the
foregoing, Loans having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Loans.
(c) Subject to Section 2.05, each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to such account as the Agent may designate, not
later than 12:00 noon, New York City time, or, in the case of funds in an
Alternative Currency, 12:00 noon, London time, and the Agent shall by 3:00 p.m.,
New York City time, or, in the case of funds in an Alternative Currency, 3:00
p.m., London time, credit the amounts so received to an account designated by
the applicable Borrower with the Agent or, if a Borrowing shall not occur on
such date because any condition precedent herein specified shall not have been
met, return the amounts so received to the respective Lenders. Competitive Loans
shall be made by the Lender or Lenders whose Competitive Bids therefor are
accepted pursuant to Section 2.03 in the amounts so accepted and Standby Loans
shall be made by the Lenders pro rata in accordance with Section 2.16. Unless
the Agent shall have received notice from a Lender prior to (or, in the case of
an ABR Borrowing, on) the date of any Borrowing that such Lender shall not make
available to the Agent such Lender's portion of such Borrowing, the Agent may
assume that such Lender has made such portion available to the Agent on the date
of such Borrowing in accordance with this Section 2.02(c) and the Agent may, in
reliance upon such assumption, make available to the applicable Borrower on such
date a corresponding amount. If the Agent shall have so made funds available
then, to the extent that such Lender shall not have made such portion available
to the Agent, such Lender and the applicable Borrower severally agree to repay
to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the applicable Borrower until the date such amount is repaid to the Agent at (i)
in the case of the applicable Borrower, the interest rate applicable at the time
to the Loans comprising such
28
Borrowing and (ii) in the case of such Lender, a rate determined by the Agent to
represent its cost of overnight or short-term funds in the relevant currency
(which determination shall be conclusive absent manifest error). If such Lender
shall repay to the Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
(d) Notwithstanding any other provision of this Agreement, the
Borrowers shall not be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
SECTION 2.03. Competitive Bid Procedure. (a) In order to request
Competitive Bids, the Company shall hand deliver, telex or telecopy to the Agent
a duly completed Competitive Bid Request in the form of Exhibit A-1, to be
received by the Agent (i) in the case of a Eurodollar Competitive Borrowing, not
later than 10:00 a.m., New York City time, four Business Days before a proposed
Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later
than 10:00 a.m., New York City time, one Business Day before a proposed
Competitive Borrowing. No Eurocurrency Loan, CD Loan or ABR Loan shall be
requested in, or made pursuant to, a Competitive Bid Request. A Competitive Bid
Request that does not conform substantially to the format of Exhibit A-1 may be
rejected in the Agent's sole discretion, and the Agent shall promptly notify the
Company of such rejection by telex or telecopier. Such request shall in each
case refer to this Agreement and specify (x) whether the Borrowing then being
requested is to be a Eurodollar Borrowing or a Fixed Rate Borrowing, (y) the
date of such Borrowing (which shall be a Business Day) and the aggregate
principal amount thereof which shall be in a minimum principal amount of
$5,000,000 and in an integral multiple of $1,000,000, and (z) the Interest
Period with respect thereto (which may not end after the Maturity Date).
Promptly after its receipt of a Competitive Bid Request that is not rejected as
aforesaid, the Agent shall invite by telex or telecopier (in the form of Exhibit
A-2) the Lenders to bid, on the terms and conditions of this Agreement, to make
Competitive Loans pursuant to such Competitive Bid Request.
(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to the Company responsive to a Competitive Bid Request. Each
Competitive Bid by a Lender must be received by the Agent via telex or
telecopier, in
29
the form of Exhibit A-3, (i) in the case of a Eurodollar Competitive Borrowing,
not later than 9:30 a.m., New York City time, three Business Days before a
proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing,
not later than 9:30 a.m., New York City time, on the day of a proposed
Competitive Borrowing. Multiple bids shall be accepted by the Agent. Competitive
Bids that do not conform substantially to the format of Exhibit A-3 may be
rejected by the Agent after conferring with, and upon the instruction of, the
Company, and the Agent shall notify the Lender making such nonconforming bid of
such rejection as soon as practicable. Each Competitive Bid shall refer to this
Agreement and specify (x) the principal amount (which shall be in a minimum
principal amount of $5,000,000 and in an integral multiple of $1,000,000 and
which may equal the entire principal amount of the Competitive Borrowing
requested by the Company) of the Competitive Loan or Loans that the Lender is
willing to make to the Company, (y) the Competitive Bid Rate or Rates at which
the Lender is prepared to make the Competitive Loan or Loans and (z) the
Interest Period and the last day thereof. If any Lender shall elect not to make
a Competitive Bid, such Lender shall so notify the Agent via telex or telecopier
(I) in the case of Eurodollar Competitive Loans, not later than 9:30 a.m., New
York City time, three Business Days before a proposed Competitive Borrowing and
(II) in the case of Fixed Rate Loans, not later than 9:30 a.m., New York City
time, on the day of a proposed Competitive Borrowing; provided, however, that
failure by any Lender to give such notice shall not cause such Lender to be
obligated to make any Competitive Loan as part of such Competitive Borrowing. A
Competitive Bid submitted by a Lender pursuant to this Section 2.03(b) shall be
irrevocable.
(c) The Agent shall promptly notify the Company by telex or telecopier
of all the Competitive Bids made, the Competitive Bid Rate and the principal
amount of each Competitive Loan in respect of which a Competitive Bid was made
and the identity of the Lender that made each bid. The Agent shall send a copy
of all Competitive Bids to the Company for its records as soon as practicable
after completion of the bidding process set forth in this Section.
(d) The Company may in its sole and absolute discretion, subject only
to the provisions of this Section 2.03(d), accept or reject any Competitive Bid
referred to in Section 2.03(c). The Company shall notify the Agent by telephone,
confirmed by telex or telecopier in
30
the form of a Competitive Bid Accept/Reject Letter substantially in the form set
forth in Exhibit A-4, whether and to what extent it has decided to accept or
reject any of or all the bids referred to in Section 2.03(c), (y) in the case of
a Eurodollar Competitive Borrowing, not later than 10:30 a.m., New York City
time, three Business Days before a proposed Competitive Borrowing and (z) in the
case of a Fixed Rate Borrowing, not later than 10:30 a.m., New York City time,
on the day of a proposed Competitive Borrowing; provided, however, that (i) the
failure by the Company to give such notice shall be deemed to be a rejection of
all the bids referred to in Section 2.03(c), (ii) the Company shall not accept a
bid made at a particular Competitive Bid Rate if the Company has decided to
reject a bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of
the Competitive Bids accepted by the Company shall not exceed the principal
amount specified in the Competitive Bid Request, (iv) if the Company shall
accept a bid or bids made at a particular Competitive Bid Rate but the amount of
such bid or bids shall cause the total amount of bids to be accepted by the
Company to exceed the amount specified in the Competitive Bid Request, then the
Company shall accept a portion of such bid or bids in an amount equal to the
amount specified in the Competitive Bid Request less the amount of all other
Competitive Bids accepted with respect to such Competitive Bid Request, which
acceptance, in the case of multiple bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such bid at such Competitive
Bid Rate, and (v) except pursuant to clause (iv) above, no bid shall be accepted
for a Competitive Loan unless such Competitive Loan is in a minimum principal
amount of $5,000,000 and an integral multiple of $1,000,000; provided further,
however, that if a Competitive Loan must be in an amount less than $5,000,000
because of the provisions of clause (iv) above, such Competitive Loan may be for
a minimum of $1,000,000 or any integral multiple thereof, and in calculating the
pro rata allocation of acceptances of portions of multiple bids at a particular
Competitive Bid Rate pursuant to clause (iv) above the amounts shall be rounded
to integral multiples of $1,000,000 in a manner which shall be in the discretion
of the Company. A notice given by the Company pursuant to this Section 2.03(d)
shall be irrevocable.
(e) The Agent shall promptly notify each bidding Lender whether or not
its Competitive Bid has been accepted (and if so, in what amount and at what
Competitive Bid Rate) by telex or telecopier sent by the Agent, and each
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successful bidder shall thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect of which its bid has
been accepted.
(f) A Competitive Bid Request shall not be made within three Business
Days after the date of any previous Competitive Bid Request.
(g) If the Agent shall elect to submit a Competitive Bid in its
capacity as a Lender, it shall submit such bid directly to the Company one
quarter of an hour earlier than the latest time at which the other Lenders are
required to submit their bids to the Agent pursuant to Section 2.03(b).
(h) All Notices required by this Section shall be given in accordance
with Section 10.01.
SECTION 2.04. Standby Borrowing Procedure. In order to request a
Standby Borrowing, a Borrower shall hand deliver, telex or telecopy to the Agent
a duly completed Standby Borrowing Request in the form of Exhibit A-5 (a) in the
case of a Eurocurrency Borrowing, not later than 10:30 a.m., London time, three
Business Days before a proposed borrowing, (b) in the case of a Eurodollar
Borrowing, not later than 10:30 a.m., New York City time, three Business Days
before a proposed borrowing, (c) in the case of a CD Borrowing, not later than
10:30 a.m., New York City time, one Business Day before a proposed borrowing and
(d) in the case of an ABR Borrowing, not later than 10:30 a.m., New York City
time, on the day of a proposed borrowing. No Fixed Rate Loan shall be requested
or made pursuant to a Borrowing Request. Such notice shall be irrevocable and
shall in each case specify (i) whether the Borrowing then being requested is to
be a Eurocurrency Borrowing, a Eurodollar Borrowing, a CD Borrowing or an ABR
Borrowing; (ii) the date of such Borrowing (which shall be a Business Day) and
the amount thereof, which, in the case of a Eurocurrency Borrowing, shall be
expressed in the Equivalent Dollar Amount; (iii) if such Borrowing is to be a
Eurocurrency Borrowing, the Alternative Currency in which such Borrowing is to
be denominated and the number and location of the account to which funds are to
be disbursed; and (iv) if such Borrowing is to be a Eurocurrency Borrowing,
Eurodollar Borrowing or CD Borrowing, the Interest Period with respect thereto.
If no election as to the Type of Borrowing is specified in any such notice, then
32
the requested Borrowing shall be an ABR Borrowing. If no Interest Period with
respect to any Eurocurrency Borrowing, Eurodollar Borrowing or CD Borrowing is
specified in any such notice, then the applicable Borrower shall be deemed to
have selected an Interest Period of one month's duration, in the case of a
Eurocurrency Borrowing or a Eurodollar Borrowing, or 30 days' duration, in the
case of a CD Borrowing. If the applicable Borrower shall not have given notice
in accordance with this Section of its election to refinance a Borrowing prior
to the end of the Interest Period in effect for such Borrowing, then the
applicable Borrower shall (unless such Borrowing is repaid at the end of such
Interest Period) be deemed to have given notice of an election to refinance such
Borrowing with an ABR Borrowing. The Agent shall promptly advise the Lenders of
any notice given pursuant to this Section and of each Lender's portion of the
requested Borrowing.
SECTION 2.05. Refinancings. A Borrower may refinance all or any part
of any Borrowing with a Borrowing of the same or a different Type made pursuant
to Section 2.03 or Section 2.04, subject to the conditions and limitations set
forth herein and elsewhere in this Agreement, including refinancings of
Competitive Borrowings with Standby Borrowings and Standby Borrowings with
Competitive Borrowings. Any Borrowing or part thereof so refinanced with a
Borrowing denominated in the same currency shall be deemed to be repaid in
accordance with Section 2.07 with the proceeds of a new Borrowing hereunder and
the proceeds of the new Borrowing, to the extent they do not exceed the
principal amount of the Borrowing being refinanced, shall not be paid by the
Lenders to the Agent or by the Agent to the applicable Borrower pursuant to
Section 2.02(c); provided, however, that (i) if the principal amount extended by
a Lender in a refinancing is greater than the principal amount extended by such
Lender in the Borrowing being refinanced, then such Lender shall pay such
difference to the Agent for distribution to the Lenders described in (ii) below,
(ii) if the principal amount extended by a Lender in the Borrowing being
refinanced is greater than the principal amount being extended by such Lender in
the refinancing, the Agent shall return the difference to such Lender out of
amounts received pursuant to (i) above, and (iii) to the extent any Lender fails
to pay the Agent amounts due from it pursuant to (i) above, any Loan or portion
thereof being refinanced shall not be deemed repaid in accordance with Section
2.07 and shall be payable by the applicable Borrower.
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SECTION 2.06. Fees. (a) The Borrowers agree, jointly and severally, to
pay to each Lender, through the Agent, on each March 31, June 30, September 30
and December 31, on the date on which the Commitment of such Lender shall be
terminated as provided herein and on the Maturity Date, a facility fee (a
"Facility Fee"), based on the table below, on the amount of the Commitment of
such Lender, whether used or unused, during the preceding quarter (or shorter
period commencing with the date hereof or ending with the Maturity Date or any
date on which the Commitment of such Lender shall be terminated). The Facility
Fee shall be based on the Applicable Rating Category, as follows:
Facility Fee (basis
Applicable Rating Category points per annum)
-------------------------- -----------------
Category 1 8.00
Category 2 9.00
Category 3 10.00
Category 4 12.50
Category 5 18.75
Category 6 25.00
Any change in the Facility Fees shall be effective as of the date on which the
Applicable Rating Category changes. The Facility Fees shall be computed on the
basis of the actual number of days elapsed in a year of 360 days. The Facility
Fee due to each Lender shall commence to accrue on the date hereof and shall
cease to accrue on the earlier of (i) the termination of the Commitment of such
Lender and (ii) the Maturity Date.
(b) The Company shall pay to the Agent, for its own account, agent and
administrative fees (the "Agent and Administrative Fees") at the times and in
the amounts agreed upon in the letter agreement dated August 20, 1996, between
the Company and the Agent.
(c) All Fees shall be paid on the dates due, in immediately available
funds, to the Agent for distribution, if and as appropriate, among the Lenders.
Once paid, none of the Fees shall be refundable under any circumstances unless
such Fees were paid in error.
SECTION 2.07. Evidence of Indebtedness; Repayment of Loans. (a) The
Borrower hereby unconditionally promises to pay to the Agent for the account of
each Lender the then unpaid principal amount of each Loan on the Maturity Date.
34
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of each Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from each Borrower to each Lender hereunder and
(iii) the amount of any sum received by the Agent hereunder for the account of
the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Agent to maintain such accounts or any error therein shall not in
any manner affect the obligation of each Borrower to properly repay the Loans in
accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, each Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Agent.
SECTION 2.08. Interest on Loans. (a) Subject to the provisions of
Section 2.09, the Loans comprising each Eurocurrency Borrowing and Eurodollar
Borrowing shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days) at a rate per annum equal to (i) in the
case of each Eurocurrency Loan or Eurodollar Standby Loan, the LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Margin, and
(ii) in the case of each Eurodollar Competitive Loan, the LIBO Rate for the
Interest Period in effect for such Borrowing plus the Competitive Margin offered
by the Lender making such Loan and accepted by the Company pursuant to Section
2.03. Interest on each Eurocurrency Borrowing and Eurodollar Borrowing shall be
payable on each applicable Interest Payment Date. The LIBO Rate for each
Interest Period shall be determined by the Agent in accordance with
35
the definition of LIBO Rate herein. The Agent shall promptly advise the
applicable Borrower and each Lender, as appropriate, of such determination.
(b) Subject to the provisions of Section 2.09, the Loans comprising
each CD Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted CD Rate for the Interest Period in effect for such Borrowing plus the
Applicable Margin. Interest on each CD Borrowing shall be payable on each
applicable Interest Payment Date. The Adjusted CD Rate for each Interest Period
shall be determined by the Agent in accordance with the definition of Adjusted
CD Rate herein. The Agent shall promptly advise the Company and each Lender of
such determination.
(c) Subject to the provisions of Section 2.09, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of (i) 365 or 366 days, as the case may be,
during any period in which the Alternate Base Rate is based on the Prime Rate,
and (ii) 360 days, during any period in which the Alternate Base Rate is based
on the Base CD Rate or the Federal Funds Effective Rate) at a rate per annum
equal to the Alternate Base Rate. Interest on each ABR Borrowing shall be
payable on each applicable Interest Payment Date. The Alternate Base Rate shall
be determined by the Agent in accordance with the definition of Alternate Base
Rate herein.
(d) Subject to the provisions of Section 2.09, each Fixed Rate Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the fixed rate of
interest offered by the Lender making such Loan and accepted by the Company
pursuant to Section 2.03. Interest on each Fixed Rate Loan shall be payable on
the Interest Payment Dates applicable to such Loan except as otherwise provided
in this Agreement.
SECTION 2.09. Default Interest. If any Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, whether by scheduled maturity, notice of prepayment, acceleration
or otherwise, such Borrower shall on demand from time to time from the Agent pay
interest, to the extent permitted by law, on such defaulted amount up to (but
not
36
including) the date of actual payment (after as well as before judgment) at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 360 days) equal to the Alternate Base Rate plus 2%.
SECTION 2.10. Alternate Rate of Interest. (a) In the event, and on
each occasion, that on the day two Business Days prior to the commencement of
any Interest Period for a Eurocurrency Borrowing or a Eurodollar Borrowing the
Agent shall have determined (i) that deposits in the principal amounts of the
Loans comprising such Borrowing and in the currency in which such Loan is to be
denominated are not generally available in the relevant market, or that the
rates at which such deposits are being offered will not adequately and fairly
reflect the cost to any Lender of making or maintaining its Eurocurrency Loan or
Eurodollar Loan, as applicable, during such Interest Period, or that reasonable
means do not exist for ascertaining the LIBO Rate, or (ii) in the case of a
Eurocurrency Borrowing, that there shall have occurred any change in national or
international financial, political or economic conditions (including the
imposition of or any change in exchange controls) or currency exchange rates
which would make it impracticable to make Loans denominated in the applicable
Alternative Currency, the Agent shall, as promptly as practicable, give written,
telex or telecopy notice of such determination to the Borrowers and the Lenders.
In the event of any such determination, until the Agent shall have advised the
Borrowers and the Lenders that the circumstances giving rise to such notice no
longer exist, (A) any request by the Company for a Eurodollar Competitive
Borrowing pursuant to Section 2.03 shall be of no force and effect and shall be
denied by the Agent, (B) any request by the Company for a Eurodollar Standby
Borrowing pursuant to Section 2.04 shall be deemed to be a request for an ABR
Borrowing and (C) any request by a Borrower for a Eurocurrency Borrowing
pursuant to Section 2.04 shall be deemed to be a request by the Company for an
ABR Borrowing.
(b) In the event, and on each occasion, that on or before the day on
which the Adjusted CD Rate for a CD Borrowing is to be determined the Agent
shall have determined that such Adjusted CD Rate cannot be determined for any
reason, including the inability of the Agent to obtain sufficient bids in
accordance with the terms of the definition of Fixed CD Rate, or the Agent shall
determine that the Adjusted CD Rate for such CD Borrowing will not adequately
and fairly reflect the cost to any Lender of
37
making or maintaining its CD Loan during such Interest Period, the Agent shall,
in a timely manner, give written or telex notice of such determination to the
Company and the Lenders. In the event of any such determination, any request by
the Company for a CD Borrowing pursuant to Section 2.04 shall, until the Agent
shall have advised the Company and the Lenders that the circumstances giving
rise to such notice no longer exist, be deemed to be a request for an ABR
Borrowing.
SECTION 2.11. Termination and Reduction of Commitments. (a) The
Commitments shall be automatically terminated on the Maturity Date.
(b) Upon at least five Business Days' prior irrevocable written or
telex notice to the Agent, the Company may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Total
Commitment; provided, however, that (i) each partial reduction of the Total
Commitment shall be in an integral multiple of $1,000,000 and in a minimum
principal amount of $10,000,000 and (ii) no such termination or reduction shall
be made which would reduce the Total Commitment to an amount less than the
aggregate outstanding principal amount of the Competitive Loans. If, following
any partial reduction of the Total Commitment, the Total Commitment (as so
reduced) shall be less than the Eurocurrency Sublimit, the Eurocurrency Sublimit
shall be automatically reduced so as to equal the Total Commitment.
(c) In the event that the aggregate Proceeds from all Asset Sales
after the date of this Agreement shall exceed 30% of Consolidated Total Assets
as of the end of the preceding fiscal year, then at the time of each Asset Sale
(including the Asset Sale that results in the aggregate Proceeds from Asset
Sales exceeding 30% of Consolidated Total Assets as of the end of the preceding
fiscal year) the Commitments shall be automatically and permanently reduced by
an amount equal to 50% of the Proceeds of such Asset Sale in excess of 30% of
Consolidated Total Assets as of the end of the preceding fiscal year aggregate
amount. If any reduction of the Commitments required by this paragraph would
result in the Total Commitment being less than the aggregate principal amount of
the outstanding Competitive Loans, such reduction shall be deferred for the
minimum period necessary to avoid such result.
38
(d) Each reduction in the Total Commitment hereunder shall be made
ratably among the Lenders in accordance with their respective Commitments. The
Borrowers shall pay to the Agent for the accounts of the Lenders, on the date of
each termination or reduction, the Facility Fees on the amount of the
Commitments so terminated or reduced accrued through the date of such
termination or reduction.
SECTION 2.12. Prepayment. (a) The Borrowers shall have the right at
any time and from time to time to prepay any Standby Borrowing, in whole or in
part, upon giving written or telex notice (or telephone notice promptly
confirmed by written or telex notice) to the Agent before 10:00 a.m., New York
City time (or, in the case of any Eurocurrency Borrowing, 10:00 a.m., London
time), three Business Days prior to prepayment; provided, however, that each
partial prepayment shall be in an amount which is (or the Equivalent Dollar
Amount of which is) an integral multiple of $1,000,000 and not less than
$5,000,000. The Company shall not have the right to prepay any Competitive
Borrowing.
(b) On the date of any termination or reduction of the Commitments
pursuant to Section 2.11, the Borrowers shall pay or prepay so much of the
Standby Borrowings as shall be necessary in order that the Aggregate Principal
Amount Outstanding shall not exceed the Total Commitment after giving effect to
such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable and shall commit the applicable Borrower to prepay such Borrowing
(or portion thereof) by the amount stated therein on the date stated therein.
All prepayments under this Section shall be subject to Section 2.15 but
otherwise without premium or penalty. All prepayments under this Section shall
be accompanied by accrued interest on the principal amount being prepaid to the
date of payment.
SECTION 2.13. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender of the
principal of or
39
interest on any Eurocurrency Loan, Eurodollar Loan, CD Loan or Fixed Rate Loan
made by such Lender or any Fees or other amounts payable hereunder (other than
changes in respect of taxes imposed on the overall net income of such Lender by
any jurisdiction or any political subdivision thereof) or shall impose, modify
or deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of or credit extended by such Lender
(except any such reserve requirement which is already reflected in the
definition of the applicable Rate), or shall impose on such Lender or the London
interbank market any other condition affecting this Agreement or any
Eurocurrency Loan, Eurodollar Loan, CD Loan or Fixed Rate Loan made by such
Lender, and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurocurrency Loan, Eurodollar Loan, CD
Loan or Fixed Rate Loan or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or
otherwise) by an amount deemed by such Lender to be material, then the
applicable Borrower shall pay to such Lender upon demand such additional amount
or amounts as will compensate such Lender for such additional costs incurred or
reduction suffered. Notwithstanding the foregoing, no Lender shall be entitled
to request compensation under this paragraph with respect to any Competitive
Loan if it should have been aware of the change giving rise to such request at
the time of submission of the Competitive Bid pursuant to which such Competitive
Loan shall have been made.
(b) If any Lender shall have determined that the applicability of any
law, rule, regulation or guideline adopted pursuant to or arising out of the
July 1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards", or the adoption after the date hereof of any other law, rule,
regulation or guideline regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any Governmental Authority charged with the interpretation or administration
thereof, or compliance by any Lender (or any lending office of such Lender) or
any Lender's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such Governmental
Authority, has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the
40
Loans made by such Lender pursuant hereto to a level below that which such
Lender or such Lender's holding company could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's policies
and the policies of such Lender's holding company with respect to capital
adequacy) by an amount deemed by such Lender to be material, then from time to
time the Borrowers shall, jointly and severally, pay to such Lender such
additional amount or amounts as will compensate such Lender or such Lender's
holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth such amount or amounts as
shall be necessary to compensate such Lender as specified in paragraph (a) or
(b) above, as the case may be, shall be delivered to the applicable Borrower.
The Borrowers shall pay each Lender the amount shown as due on any such
certificate delivered by it within 10 days after the receipt of the same. In the
event any Lender delivers such a certificate, the Company may, at its sole
expense and effort, require such Lender to transfer and assign, without recourse
(in accordance with Section 10.04) all its interests, rights and obligations
under this Agreement to an assignee which shall assume such assigned obligations
(which assignee may be another Lender, if a Lender accepts such assignment);
provided, however, that (i) such assignment shall not conflict with any law,
rule or regulation or order of any Governmental Authority, (ii) the Company
shall have received a written consent of the Agent in the case of an assignee
that is not a Lender, which consent shall not unreasonably be withheld, and
(iii) the Company or such assignee shall have paid to the assigning Lender in
immediately available funds the principal of and interest accrued to the date of
such payment on the Loans made by it hereunder and all other amounts owed to it
hereunder.
(d) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Lender's right to demand compensation with respect to such period or any
other period.
(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section shall survive
the payment in full of the principal of and interest on all Loans made
hereunder.
41
SECTION 2.14. Change in Legality. (a) Notwithstanding any other
provision herein, if any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurocurrency Loan or Eurodollar Loan or to give effect
to its obligations as contemplated hereby with respect to any Eurocurrency Loan
or Eurodollar Loan, then, by written notice to the Company and to the Agent,
such Lender may:
(i) declare that Eurocurrency Loans or Eurodollar Loans, as
the case may be, shall not thereafter be made by such Lender hereunder,
whereupon such Lender shall not submit a Competitive Bid in response to
a request for Eurodollar Competitive Loans and any request by any
Borrower for a Eurocurrency Loan or Eurodollar Standby Borrowing, as
the case may be, shall, as to such Lender only, be deemed a request for
an ABR Loan to the Company unless such declaration shall be
subsequently withdrawn; and
(ii) require that all outstanding Eurocurrency Loans or
Eurodollar Loans, as the case may be, made by it be converted to ABR
Loans, in which event all such Eurocurrency Loans or Eurodollar Loans,
as the case may be, shall be automatically converted to ABR Loans as of
the effective date of such notice as provided in paragraph (b) below
(such conversion to be made, in the case of a Eurocurrency Loan, into
dollars at the applicable Spot Exchange Rate).
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurocurrency Loans or Eurodollar Loans, as the case may be, that would
have been made by such Lender or the converted Eurocurrency Loans or Eurodollar
Loans of such Lender shall instead be applied to repay the ABR Loans made by
such Lender in lieu of, or resulting from the conversion of, such Eurocurrency
Loans or Eurodollar Loans.
(b) For purposes of this Section, a notice to the Company by any
Lender shall be effective as to each Eurocurrency Loan or Eurodollar Loan, as
the case may be, if lawful, on the last day of the Interest Period then
applicable to such Eurocurrency Loan or Eurodollar Loan; in
42
all other cases such notice shall be effective on the date
of receipt by the Company.
SECTION 2.15. Indemnity. The Borrowers shall, jointly and severally,
indemnify each Lender against any loss or expense which such Lender may sustain
or incur as a consequence of (a) any failure by any Borrower to fulfill on the
date of any borrowing hereunder the applicable conditions set forth in Article
IV, (b) any failure by any Borrower to borrow or to refinance any Loan hereunder
after irrevocable notice of such borrowing or refinancing has been given
pursuant to Section 2.03 or 2.04, (c) any payment, prepayment, assignment
pursuant to Section 2.13(c), conversion of a Eurocurrency Loan or Eurodollar
Loan pursuant to Section 2.14(a) or conversion of a Eurocurrency Loan,
Eurodollar Loan, CD Loan or Fixed Rate Loan required by any other provision of
this Agreement or otherwise made or deemed made on a date other than the last
day of the Interest Period applicable thereto, (d) any default in payment or
prepayment of the principal amount of any Loan or any part thereof or interest
accrued thereon, as and when due and payable at the due date thereof (whether by
scheduled maturity, acceleration, irrevocable notice of prepayment or otherwise)
or (e) the occurrence of any Event of Default, including, in each such case, any
loss or reasonable expense sustained or incurred or to be sustained or incurred
in liquidating or employing deposits from third parties acquired to effect or
maintain such Loan or any part thereof as a Eurocurrency Loan, Eurodollar Loan,
CD Loan or Fixed Rate Loan. Such loss or reasonable expense shall include an
amount equal to the excess, if any, as reasonably determined by such Lender, of
(i) its cost of obtaining the funds for the Loan being paid, prepaid, assigned,
converted or not borrowed (based on the LIBO Rate or Adjusted CD Rate or, in the
case of a Fixed Rate Loan, the fixed rate of interest applicable thereto) for
the period from the date of such payment, prepayment, assignment, conversion or
failure to borrow to the last day of the Interest Period for such Loan (or, in
the case of a failure to borrow, the Interest Period for such Loan which would
have commenced on the date of such failure) over (ii) the amount of interest (as
reasonably determined by such Lender) that would be realized by such Lender in
reemploying the funds so paid, prepaid, assigned, converted or not borrowed for
such period or Interest Period, as the case may be. A certificate of any Lender
setting forth any amount or amounts which such Lender is entitled to receive
pursuant to this Section and
43
evidencing a loss suffered by such Lender of such amount or amounts shall be
delivered to the Company.
SECTION 2.16. Pro Rata Treatment. Except as required under Section
2.14, each Standby Borrowing, each payment or prepayment of principal of any
Standby Borrowing, each payment of interest on the Standby Loans, each payment
of the Facility Fees, each reduction of the Commitments and each refinancing of
any Borrowing with a Standby Borrowing of any Type, shall be allocated pro rata
among the Lenders in accordance with their respective Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Standby Loans). Each payment
of principal of any Competitive Borrowing shall be allocated pro rata among the
Lenders participating in such Borrowing in accordance with the respective
principal amounts of their outstanding Competitive Loans comprising such
Borrowing. Each payment of interest on any Competitive Borrowing shall be
allocated pro rata among the Lenders participating in such Borrowing in
accordance with the respective amounts of accrued and unpaid interest on their
outstanding Competitive Loans comprising such Borrowing. For purposes of
determining the available Commitments of the Lenders at any time, each
outstanding Competitive Borrowing shall be deemed to have utilized the
Commitments of the Lenders (including those Lenders which shall not have made
Loans as part of such Competitive Borrowing) pro rata in accordance with such
respective Commitments. Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, the Agent may, in its discretion,
round each Lender's percentage of such Borrowing to the next higher or lower
whole dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
any Borrower or the Company (in its capacity as guarantor pursuant to Article
IX), or pursuant to a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of, such
secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means (other than
an assignment pursuant to Section 2.13(c) or 10.04), obtain payment (voluntary
or involuntary) in respect of any Standby Loan as a result of which the unpaid
principal portion of its Standby Loans shall be proportionately less than the
unpaid principal
portion of the Standby Loans of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
Standby Loans of such other Lender, so that the aggregate unpaid principal
amount of the Standby Loans and participations in the Standby Loans held by each
Lender shall be in the same proportion to the aggregate unpaid principal amount
of all Standby Loans then outstanding as the principal amount of its Standby
Loans prior to such exercise of banker's lien, setoff or counterclaim or other
event was to the principal amount of all Standby Loans outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; provided,
however, that, if any such purchase or purchases or adjustments shall be made
pursuant to this Section and the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be rescinded to the
extent of such recovery and the purchase price or prices or adjustment restored
without interest. Each Borrower expressly consents to the foregoing arrangements
and agrees that any Lender holding a participation in a Standby Loan deemed to
have been so purchased may exercise any and all rights of banker's lien, setoff
or counterclaim with respect to any and all moneys owing by such Borrower to
such Lender by reason thereof as fully as if such Lender had made a Standby Loan
directly to such Borrower in the amount of such participation.
SECTION 2.18. Payments. (a) Each Borrower shall make each payment of
principal of and interest on the Loans and any other amounts hereunder and under
any other Loan Document to such account of the Agent as the Agent shall have
specified, not later than 10:30 a.m., local time, at the place of payment, on
the date when due, in the currency in which such Loan was made and in federal
funds or such other immediately available funds as may then be customary for the
settlement of international transactions in the relevant currency at such place.
Each Borrower shall make each payment of Fees not later than 12:00 noon, New
York time, on the date when due in dollars in immediately available funds to the
Agent at its address referred to in Section 10.01.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business
45
Day, such payment may (except as otherwise provided in the definition of
"Interest Period") be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of interest
or Fees, if applicable.
SECTION 2.19. Taxes. (a) Any and all payments by any Borrower
hereunder shall be made, in accordance with Section 2.18, free and clear of and
without deduction for any and all present or future taxes, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding
taxes imposed on the Agent's or any Lender's (or any transferee's or assignee's,
including a participation holder's (any such entity a "Transferee")) net income
and franchise taxes imposed on the Agent or any Lender (or Transferee) by any
jurisdiction or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder to the Lenders
(or any Transferee) or the Agent, (i) the sum payable shall be increased by the
amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) such Lender
(or Transferee) or the Agent (as the case may be) shall receive an amount equal
to the sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions and (iii) such Borrower shall pay the full
amount deducted to the relevant taxing authority or other Governmental Authority
in accordance with applicable law.
(b) In addition, the Borrowers shall, jointly and severally, pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Document (hereinafter referred to as "Other
Taxes").
(c) The Borrowers shall, jointly and severally, indemnify each Lender
(or Transferee) and the Agent for the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid by such Lender (or Transferee) or the Agent, as
the case may be, and any liability (including penalties, interest and reasonable
out-of-pocket expenses) arising therefrom or with respect thereto, whether or
not
46
such Taxes or Other Taxes were correctly or legally asserted by the relevant
taxing authority or other Governmental Authority. Such indemnification shall be
made within 30 days after the date any Lender (or Transferee) or the Agent, as
the case may be, makes written demand therefor, which demand may be made after
such Lender (or Transferee) or the Agent, in its sole discretion (reasonably
exercised) and at the sole expense of the applicable Borrower, determines to
challenge or contest such assertion of Taxes or Other Taxes. After the
applicable Borrower makes full payment to the Lender (or Transferee) or the
Agent with respect to such indemnification for Taxes or Other Taxes asserted, if
such Lender (or Transferee) or the Agent believes in its sole discretion that
reasonable grounds exist to challenge or contest the Taxes or Other Taxes
imposed, then such Lender (or Transferee) or the Agent, as the case may be,
shall so contest or challenge in good faith the Taxes or Other Taxes asserted,
which contest or challenge shall be at the sole expense of such Borrower. If a
Lender (or Transferee) or the Agent shall become aware that it is entitled to
receive a refund in respect of Taxes or Other Taxes, it shall promptly notify
the applicable Borrower of the availability of such refund and shall, within 30
days after receipt of a request by such Borrower, apply for such refund at the
Company's reasonable out-of-pocket expense. If any Lender (or Transferee) or the
Agent receives a refund in respect of any Taxes or Other Taxes for which such
Lender (or Transferee) or the Agent has received payment from any Borrower
hereunder it shall promptly notify such Borrower of such refund and shall
promptly upon receipt repay such refund to such Borrower, net of all
out-of-pocket expenses of such Lender and without interest; provided, however,
that such Borrower, upon the request of such Lender (or Transferee) or the
Agent, agrees to return such refund (plus penalties, interest or other charges)
to such Lender (or Transferee) or the Agent in the event such Lender (or
Transferee) or the Agent is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by any Borrower in respect of any payment to any Lender (or
Transferee) or the Agent, such Borrower will furnish to the Agent, at its
address referred to in Section 10.01, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section shall survive
the
47
payment in full of the principal of and interest on all
Loans made hereunder.
(f) On or before the date it becomes a party to this Agreement and
from time to time thereafter as renewals are due and upon any change in status
rendering any certificate or documents previously delivered pursuant to this
Section 2.19(f) invalid or inaccurate, each Lender (or Transferee) that is
organized outside the United States or Germany shall (but (x) in the case of a
Transferee or (y) in the case of a Lender with respect to any renewal or change
in status, only if legally able to do so) upon written request of a Borrower,
deliver to such Borrower such certificates, documents or other evidence, as
specified by such Borrower and, as the case may be, required by (A) in the case
of a Borrower organized in the United States and a non-United States Lender, the
Code or Treasury Regulations issued pursuant thereto, including Internal Revenue
Service Form 1001 or Form 4224 and any other certificate or statement of
exemption required by Treasury Regulation Section 1.1441-1(a) or Section
1.1441-6(c) or any subsequent version thereof, or (B) in the case of a Borrower
in Germany and a non-German Lender, such forms that may be required under the
laws, regulations, official interpretations or treaties (the "Controlling Tax
Laws") enacted by, made or entered into with Germany, in each case properly
completed and duly executed by such Lender (or Transferee) establishing that
such payment is, as the case may be, (i) not subject to withholding under the
Code because such payment is effectively connected with the conduct by such
Lender (or Transferee) of a trade or business in the United States, (ii) totally
exempt from United States tax under a provision of an applicable tax treaty or
(iii) exempt from German withholding tax under the Controlling Tax Laws of
Germany. Unless the Borrowers and the Agent have received forms or other
documents satisfactory to them indicating that payments hereunder are not
subject to United States or German withholding tax, as the case may be, or are
subject to such tax at a rate reduced by an applicable tax treaty, the Borrowers
or the Agent shall withhold taxes from such payments at the applicable statutory
rate in the case of payments to or for any Lender (or Transferee) or assignee
organized under the laws of a jurisdiction outside the United States or Germany,
as the case may be.
(g) A Borrower shall not be required to pay any additional amounts to
any Lender (or Transferee) in respect of United States withholding tax or German
withholding tax
48
pursuant to Section 2.19(a) if the obligation to pay such additional amounts
would not have arisen but for a failure by such Lender (or Transferee) to comply
with the provisions of Section 2.19(f) unless such failure results from (i) a
change in applicable law, regulation or official interpretation thereof or (ii)
an amendment, modification or revocation of any applicable tax treaty or a
change in official position regarding the application or interpretation thereof,
in each case after the Amendment Effective Date (and, in the case of a
Transferee, after the date of assignment or transfer); provided, however, that
the Borrowers shall be required to pay those amounts to any Lender (or
Transferee) that it was required to pay hereunder prior to the failure of such
Lender (or Transferee) to comply with the provisions of Section 2.19(f).
(h) Any Lender (or Transferee) claiming any additional amounts payable
pursuant to this Section shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document in a timely manner
requested by the Company or to change the jurisdiction of its applicable lending
office if the making of such a filing or change would avoid the need for or
reduce the amount of any such additional amounts which may thereafter accrue and
would not, in the sole and reasonable determination of such Lender, be otherwise
disadvantageous to such Lender (or Transferee).
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each of the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Company and the
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has all requisite power
and authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business in
every jurisdiction where such qualification is required, except where the
failure so to qualify would not result in a Material Adverse Effect, and (d) in
the case of each of the Borrowers (including by the Company in its capacity as
guarantor pursuant to Article IX), has the power and authority to execute,
deliver and perform its obligations under each of the Loan Documents and each
other agreement or instrument
49
contemplated thereby to which it is or will be a party and, in the case of each
of the Borrowers, to borrow hereunder. Each Borrowing Subsidiary, at the time it
becomes a Borrowing Subsidiary and at all times thereafter, will have the power
and authority to execute and deliver the Borrowing Subsidiary Agreement
delivered by it and to perform its obligations thereunder and under the other
Loan Documents and each other agreement or instrument contemplated thereby to
which it is or will be a party and to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance
by each of the Borrowers (including by the Company in its capacity as guarantor
pursuant to Article IX) of each of the Loan Documents to which it is a party and
the borrowings hereunder by each of the Borrowers (collectively, the
"Transactions") (a) have been (or, in the case of any Loan Documents delivered
by any Borrowing Subsidiary, will be at the time they are delivered) duly
authorized by all requisite action, including, if required, stockholder action
on the part of each of the Borrowers (including on the part of the Company in
its capacity as guarantor pursuant to Article IX) or the applicable Borrowing
Subsidiary, as the case may be, and (b) will not (i) violate (A) any provision
of law, statute, rule or regulation, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of the Company or any
Subsidiary, (B) any order of any Governmental Authority or (C) any provision of
any indenture, agreement or other instrument to which the Company or any
Subsidiary is a party or by which any of them or any of their property is or may
be bound, (ii) be in conflict with, result in a breach of or constitute (alone
or with notice or lapse of time or both) a default under any such indenture,
agreement or other instrument or (iii) result in the creation or imposition of
any Lien upon or with respect to any property or assets now owned or hereafter
acquired by the Company or any Subsidiary.
SECTION 3.03. Enforceability. This Agreement has been duly executed
and delivered by each of the Borrowers (including by the Company in its capacity
as guarantor pursuant to Article IX) and constitutes, and each other Loan
Document when executed and delivered by each of the Borrowers (including by the
Company in its capacity as guarantor pursuant to Article IX) will constitute, a
legal, valid and binding obligation of each Borrower (including of the Company
in its capacity as guarantor pursuant to Article IX) enforceable against each
Borrower including against the
50
Company (in its capacity as guarantor pursuant to Article IX) in accordance with
its terms.
SECTION 3.04. Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except
such as have been made or obtained and are in full force and effect.
SECTION 3.05. Financial Statements. The Company has heretofore
furnished to the Lenders the consolidated balance sheets and statements of
income and cash flow of the Company, Manor HealthCare and Choice Hotels
International as of and for the fiscal year ended May 31, 1995, audited by and
accompanied by the opinion of Arthur Andersen & Co., independent public
accountants, in the case of the Company, and certified by its chief financial
officer, in the case of each of Manor HealthCare and Choice Hotels
International. Such financial statements and monthly summaries of pretax income
or loss present fairly the financial condition and results of operations of the
Company and its consolidated subsidiaries as of such dates and for such periods.
Such balance sheets and the notes thereto disclose all material liabilities,
direct or contingent, of the Company and its consolidated subsidiaries as of the
dates thereof. Such financial statements and monthly summaries of pretax income
or loss were prepared in accordance with GAAP applied on a consistent basis.
SECTION 3.06. No Material Adverse Change. As of the date hereof, there
has been no material adverse change in the business, assets, property or
condition, financial or otherwise, of the Company and the Subsidiaries, taken as
a whole, since May 31, 1995 (it being understood that changes in general
economic conditions shall not be deemed to constitute such a material adverse
change).
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each
of the Company and the Subsidiaries has good and marketable title to, or valid
leasehold interests in, all its material properties and assets, except for minor
defects in title that do not interfere with its ability to conduct its business
as currently conducted or to utilize such properties and assets for their
intended purposes. All such material properties and assets are free and clear of
Liens, other than Liens expressly permitted by Section 6.02.
51
(b) Each of the Company and the Subsidiaries has complied with all
material obligations under all material leases to which it is a party and all
such leases are in full force and effect. Each of the Company and the
Subsidiaries enjoys peaceful and undisturbed possession under all such material
leases.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the date
hereof a list of all Subsidiaries of the Company and the percentage ownership
interest of the Company therein.
SECTION 3.09. Litigation; Compliance with Laws. (a) There are not any
actions, suits or proceedings at law or in equity or by or before any
Governmental Authority now pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any business,
property or rights of any such person (i) which involve any Loan Document or the
Transactions (excluding any such actions, suits or proceedings threatened by the
Lenders or the Agent) or (ii) as to which there is a reasonable probability of
an adverse determination and which, if such probable adverse determination
occurred, could, individually or in the aggregate, reasonably be anticipated to
result in a Material Adverse Effect.
(b) To the best knowledge of the Company, neither the Company nor any
of the Subsidiaries is in violation of any law, rule or regulation, or in
default with respect to any judgment, writ, injunction or decree of any
Governmental Authority, where such violation or default could reasonably be
anticipated to result in a Material Adverse Effect.
SECTION 3.10. Agreements. (a) Neither the Company nor any of the
Subsidiaries is a party to any agree- ment or instrument or subject to any
corporate or other restriction that has resulted or could reasonably be
anticipated to result in a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is in default in
any manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, where such default could reasonably be anticipated to result in a
Material Adverse Effect.
52
SECTION 3.11. Federal Reserve Regulations. (a) Neither the Company nor
any of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, (i) to
purchase or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including Regulation G, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act. Neither the Company nor any Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrowers will use the proceeds of
the Loans only for the purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of the Company and the Subsidiaries
has filed or caused to be filed all Federal, state, local and foreign tax
returns required to have been filed by it and has paid or caused to be paid all
taxes shown to be due and payable on such returns or on any assessments received
by it, except taxes that are being contested in good faith by appropriate
proceedings and for which the Company or such Subsidiary shall have set aside on
its books adequate reserves.
SECTION 3.15. No Material Misstatements. No information, report,
financial statement, exhibit or schedule furnished by or on behalf of any
Borrower to the Agent or any Lender in connection with the negotiation of any
Loan Document or included therein or delivered pursuant thereto contained,
contains or will contain any material misstatement of fact or omitted, omits or
will omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were, are or will be made,
not misleading.
53
SECTION 3.16. Employee Benefit Plans. Each of the Company and its
ERISA Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the regulations and published interpretations there-
under. No Reportable Event has occurred as to which the Company or any ERISA
Affiliate was required to file a report with the PBGC, and the present value of
all benefit liabilities under each Plan (based on those assumptions used to fund
such Plan) did not, as of the last annual valuation date applicable thereto,
exceed by more than $5,000,000 the value of the assets of such Plan. Neither the
Company nor any ERISA Affiliate has incurred any Withdrawal Liability which
remains unpaid and that could result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization or has been terminated within the
meaning of Title IV of ERISA, and to the best knowledge of the Company no
Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated, where such reorganization or termination has resulted or could
reasonably be expected to result, through increases in the contributions
required to be made to such Plan or otherwise, in a Material Adverse Effect.
SECTION 3.17. Environmental Matters. The Company and each Subsidiary
has complied in all material respects with all Federal, state, local and other
statutes, ordinances, orders, judgments, rulings and regulations relating to
environmental pollution or to environmental regulation or control or to employee
health or safety. Neither the Company nor any Subsidiary has received notice of
any failure so to comply. The Company's and the Subsid- iaries' facilities do
not manage any hazardous wastes, hazardous substances, hazardous materials,
toxic substances, toxic pollutants or substances similarly denominated, as those
terms or similar terms are used in the Resource Conservation and Recovery Act,
the Comprehensive Environmental Response Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Toxic Substance Control Act, the
Clean Air Act, the Clean Water Act or any other applicable law, in material
violation of any such law or any regulations promulgated pursuant thereto.
SECTION 3.18. Solvency. As of the date of and after giving effect to
the Distribution:
(a) The fair salable value of the assets of each
Borrower and each Significant Subsidiary will exceed
54
the amount that will be required to be paid on or in respect of the
existing debts and other liabilities of such Borrower or Significant
Subsidiary as such debts and liabilities become absolute and mature.
(b) The assets of each Borrower and each Significant
Subsidiary will not constitute unreasonably small capital for such
Borrower or Significant Subsidiary to carry out its businesses as now
conducted and as proposed to be conducted including the capital needs
of such Borrower or Significant Subsidiary, taking into account the
particular capital requirements of the business conducted by such
Borrower or Significant Subsidiary and projected capital requirements
and capital availability thereof.
(c) None of the Borrowers or Significant Subsidiaries intends
to incur debts or liabilities beyond its ability to pay such debts and
liabilities as they mature, taking into account the timing and amounts
of cash to be received by it, and of amounts to be payable on or in
respect of its debts and liabilities. The cash flow of each Borrower
and each Significant Subsidiary, after taking into account all
anticipated uses of the cash of such Borrower or such Significant
Subsidiary, will at all times be sufficient to pay all such amounts on
or in respect of debt and liabilities of such Borrower or such
Significant Subsidiary when such amounts are required to be paid.
ARTICLE IV. CONDITIONS OF LENDING
The effectiveness of this Agreement and the obligations of the Lenders
to make Loans hereunder are subject to the satisfaction of the following
conditions:
SECTION 4.01. All Borrowings. On the date of each Borrowing, including
each Borrowing in which Loans are refinanced with new Loans as contemplated by
Section 2.05:
(a) The Agent shall have received a notice of such Borrowing
as required by Section 2.03 or Section 2.04, as applicable.
(b) The representations and warranties set forth
in Article III hereof (except (i) in the case of a
refinancing of a Standby Borrowing with a new Standby
55
Borrowing that does not increase the aggregate principal amount of the
Loans of any Lender outstanding, the representation set forth in
Section 3.09(a), and (ii) in the case of a refinancing of a Competitive
Borrowing with a Standby Borrowing that does not increase the aggregate
principal amount of the Loans outstanding, the representation set forth
in Section 3.09(a), provided that the exception contained in this
clause (ii) shall be applicable only if, on the date of the applicable
Competitive Borrowing, the Borrower satisfied all conditions for the
making of a new Standby Borrowing that did not refinance an existing
Standby Borrowing) shall be true and correct in all material respects
on and as of the date of such Borrowing with the same effect as though
made on and as of such date, except to the extent such representations
and warranties expressly relate to an earlier date.
(c) Each Borrower shall be in compliance with all the terms
and provisions set forth herein and in each other Loan Document on its
part to be observed or performed, and at the time of and immediately
after such Borrowing no Event of Default or Default shall have occurred
and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Company on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. First Borrowing. On the Amendment Effective Date:
(a) All legal matters incident to this Agreement and the
borrowings hereunder shall be satisfactory to the Lenders and their
counsel and to Cravath, Swaine & Moore, counsel for the Agent.
(b) The Agent shall have received (i) a copy of all amendments
to the certificate or articles of incorporation (or analogous
documents) of each of the Borrowers, since December 1, 1994, certified
as of a recent date by the Secretary of State (or other appropriate
Governmental Authority) of the state (or country) of its organization
or such other evidence as is reasonably satisfactory to the Agent; (ii)
a certif-
56
icate as to the good standing (or other analogous certification to the
extent available) of each of the Borrowers as of a recent date, from
the appropriate Secretary of State (or other appropriate Governmental
Authority) or such other evidence as is reasonably satisfactory to the
Agent; (iii) a certificate of the Secretary or Assistant Secretary of
each of the Borrowers dated the Amendment Effective Date and certifying
(A) that attached thereto is a true and complete copy of the by-laws
(or such other analogous documents to the extent available) of such
Borrower as in effect on the Amendment Effective Date and at all times
since a date prior to the date of the resolutions described in clause
(B) below, (B) that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of such Borrower
authorizing the execution, delivery and performance of the Loan
Documents and the borrowings hereunder, and that such resolutions have
not been modified, rescinded or amended and are in full force and
effect, (C) that the certificate or articles of incorporation (or
analogous documents) of such Borrower have not been amended since the
date of the last amendment thereto shown on the certificate of good
standing (or other analogous certification or such other evidence
reasonably satisfactory to the Agent) furnished pursuant to clause (i)
or (ii) above, and (D) as to the incumbency and specimen signature of
each officer executing any Loan Document or any other document
delivered in connection herewith on behalf of such Borrower; (iv) a
certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (iii) above; and (v) such other documents as
the Lenders or their counsel or Cravath, Swaine & Moore, counsel for
the Agent, may reasonably request.
(c) The Agent shall have received a certificate of each of the
Borrowers, dated the Amendment Effective Date and signed, in the case
of the Company, by a Financial Officer of the Company, and, in the case
of each Borrower other than the Company, a Responsible Officer of such
Borrower, confirming compliance with the conditions precedent set forth
in paragraphs (b) and (c) of Section 4.01.
57
(d) The Agent shall have received all Fees and other amounts
due and payable on or prior to the Amendment Effective Date.
(e) The amendment agreement dated as of the date hereof among
the Borrowers, the Agent and the lenders named therein, shall have been
executed and delivered to the Agent.
SECTION 4.03. First Borrowing by Each Borrowing Subsidiary. The
obligations of the Lenders to make Loans to each Borrowing Subsidiary hereunder
on the first date on which Loans are made to such Borrowing Subsidiary are
subject to the following additional conditions precedent:
(a) The Agent shall have received a favorable written opinion
of James H. Rempe, Esq., General Counsel for the Company or other
counsel satisfactory to the Lenders, dated the date of such Loans,
addressed to the Lenders and satisfactory to Cravath, Swaine & Moore,
counsel for the Agent, to the effect set forth in Exhibit D-2.
(b) All legal matters incident to this Agreement and the
borrowings hereunder shall be satisfactory to Cravath, Swaine & Moore,
counsel for the Agent.
(c) The Agent shall have received (i) a copy of the
certificate or articles of incorporation (or analogous documents),
including all amendments thereto, of such Borrowing Subsidiary,
certified as of a recent date by the Secretary of State (or other
appropriate Governmental Authority) of the state (or country) of its
organization or such other evidence as is reasonably satisfactory to
the Agent; (ii) a certificate of good standing (or other analogous
certification to the extent available) of such Borrowing Subsidiary as
of a recent date, from such Secretary of State (or other appropriate
Governmental Authority) or such other evidence as is reasonably
satisfactory to the Agent; (iii) a certificate of the Secretary or an
Assistant Secretary of such Borrowing Subsidiary dated the date on
which such Loans are to be made and certifying (A) that attached
thereto is a true and complete copy of the by-laws (or such other
analogous documents to the extent available) of such Borrowing
Subsidiary as in effect on the date of such certificate and at all
times since a date prior to the
58
date of the resolution of such Borrowing Subsidiary described in item
(B) below, (B) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of such Borrowing
Subsidiary authorizing the execution, delivery and performance of the
Borrowing Subsidiary Agreement delivered by such Borrowing Subsidiary
and the borrowings hereunder by such Borrowing Subsidiary, and that
such resolutions have not been modified, rescinded or amended and are
in full force and effect, (C) that the certificate or articles of
incorporation (or other analogous documents) of such Borrowing
Subsidiary have not been amended since the date of the last amendment
thereto shown on the certificate of good standing (or other analogous
certification or such other evidence reasonably satisfactory to the
Agent) furnished pursuant to clause (i) or (ii) above, and (D) as to
the incumbency and specimen signature of each officer of such Borrowing
Subsidiary executing the Borrowing Subsidiary Agreement delivered by
such Borrowing Subsidiary or any other document delivered in connection
herewith or therewith; (iv) a certificate of another officer of such
Borrowing Subsidiary as to the incumbency and signature of the
Secretary or such Assistant Secretary of such Borrowing Subsidiary
executing the certificate pursuant to (iii) above; and (v) such other
documents as the Lenders or Cravath, Swaine & Moore, counsel for the
Agent, may reasonably request.
(d) Each Lender shall have received a copy of the
Borrowing Subsidiary Agreement executed by such
Borrowing Subsidiary.
(e) The Lenders shall have received a certificate of such
Borrowing Subsidiary, dated such date and signed by a Responsible
Officer of such Borrowing Subsidiary, confirming compliance with the
conditions precedent set forth in paragraphs (b) and (c) of Section
4.01.
(f) The Agent shall have received all Fees and other amounts
due and payable on or prior to such date.
Upon the satisfaction of the conditions precedent set forth in this
Section, such Borrowing Subsidiary shall become a Borrower hereunder with the
same force and effect as if originally named as a Borrower hereunder. The rights
59
and obligations of each Borrower hereunder shall remain in full force and effect
notwithstanding the addition of any new Borrower as a party to this Agreement.
ARTICLE V. AFFIRMATIVE COVENANTS
The Company covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on any
Loan, any Fees or any other expenses or amounts payable under any Loan Document
shall be unpaid, unless the Required Lenders shall otherwise consent in writing,
the Company shall, and shall cause each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated (except
for the Distribution); comply in all material respects with all applicable laws,
rules, regulations and orders of any Governmental Authority, whether now in
effect or hereafter enacted; and at all times maintain and preserve all property
material to the conduct of such business and keep such property in good repair,
working order and condition and from time to time make, or cause to be made, all
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times.
SECTION 5.02. Insurance. Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; maintain such
other insurance, to such extent and against such risks, including fire and other
risks insured against by extended coverage, as is customary with companies in
the same or similar businesses, including public liability insurance against
claims for personal injury or death or property damage occurring upon,
60
in, about or in connection with the use of any properties owned, occupied or
controlled by it; and maintain such other insurance as may be required by law.
SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful and
valid claims for labor, materials and supplies or otherwise which, if unpaid,
might give rise to a Lien upon such properties or any part thereof; provided,
however, that such payment and discharge shall not be required with respect to
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the Company or such Subsidiary shall have set aside on its books adequate
reserves with respect thereto.
SECTION 5.04. Financial Statements, Reports, etc. In the case of the
Company, furnish to the Agent and each Lender:
(a) within 100 days after the end of each fiscal year, its
audited consolidated balance sheets and related statements of income
and cash flow, showing the financial condition of the Company and its
consolidated subsidiaries as of the close of such fiscal year and the
results of its operations and the operations of such subsidiaries
during such year, all audited by Arthur Andersen & Co. or other
independent public accountants of recognized national standing
acceptable to the Required Lenders and accompanied by an opinion of
such accountants (which shall not be qualified in any material respect)
to the effect that such consolidated financial statements fairly
present the financial condition and results of operations of the
Company on a consolidated basis in accordance with GAAP consistently
applied;
(b) within 50 days after the end of each of the first three
fiscal quarters of each fiscal year, its unaudited consolidated balance
sheets and related statements of income and cash flow, showing the
financial condition of the Company and its consolidated subsidiaries as
of the close of such fiscal quarter and
61
the results of its operations and the operations of such subsidiaries
during such fiscal quarter and the then elapsed portion of the fiscal
year, all certified by one of its Financial Officers as fairly
presenting the financial condition and results of operations of the
Company on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements
under clause (a) or (b) above, a certificate of the accounting firm or
Financial Officer opining on or certifying such statements (which
certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal
interpretations) (i) certifying that no Event of Default or Default has
occurred or, if such an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto and (ii) setting
forth computations in reasonable detail satisfactory to the Agent
demonstrating compliance with the covenants contained in Sections 6.06,
6.11, 6.12 and 6.13;
(d) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by it with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of or all the functions of
said Commission, or with any national securities exchange, or
distributed to its shareholders, as the case may be; and
(e) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
the Company or any Subsidiary, or compliance with the terms of any Loan
Document, as the Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the Agent and
each Lender prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) proposed to be taken
with respect thereto;
62
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Company or any Affiliate thereof as
to which there is a reasonable probability of an adverse determination
and which, if such probable adverse determination occurred, could
reasonably be anticipated to result in a Material Adverse Effect; and
(c) any development that has resulted in, or could reasonably
be anticipated to result in, a Material Adverse Effect.
SECTION 5.06. ERISA. (a) Comply in all material respects with the
applicable provisions of ERISA and (b) furnish to the Agent and each Lender (i)
as soon as possible, and in any event within 30 days after any Responsible
Officer of the Company or any ERISA Affiliate either knows or has reason to know
that any Reportable Event has occurred that alone or together with any other
Reportable Event could reasonably be expected to result in liability of the
Company or any ERISA Affiliate to the PBGC in an aggregate amount exceeding
$5,000,000, a statement of a Financial Officer setting forth details as to such
Reportable Event and the action proposed to be taken with respect thereto,
together with a copy of the notice, if any, of such Reportable Event given to
the PBGC, (ii) promptly after receipt thereof, a copy of any notice the Company
or any ERISA Affiliate may receive from the PBGC relating to the intention of
the PBGC to terminate any Plan or Plans (other than a Plan maintained by an
ERISA Affiliate which is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code) or to appoint a trustee to
administer any Plan or Plans, (iii) within 10 days after the due date for filing
with the PBGC pursuant to Section 412(n) of the Code of a notice of failure to
make a required installment or other payment with respect to a Plan, a statement
of a Financial Officer setting forth details as to such failure and the action
proposed to be taken with respect thereto, together with a copy of such notice
given to the PBGC and (iv) promptly and in any event within 30 days after
receipt thereof by the Company or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by the Company or any ERISA
Affiliate concerning (A) the imposition of Withdrawal Liability in excess of
$500,000 or (B) a determination that a Multiemployer Plan is, or is expected
63
to be, terminated or in reorganization, in each case within
the meaning of Title IV of ERISA.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Maintain all financial records in accordance with GAAP consistently
applied and upon reasonable notice by any Lender permit any representatives
designated by such Lender, subject to Section 10.17 of this Agreement, to visit
and inspect the financial records and the properties of the Company or any
Subsidiary at reasonable times and as often as requested and to make extracts
from and copies of such financial records, and permit any representatives
designated by any Lender to discuss the affairs, finances and condition of the
Company or any Subsidiary with the officers thereof and independent accountants
therefor.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans only for
the purposes set forth in the preamble to this Agreement.
SECTION 5.09. Ownership. Subject to Section 6.05, maintain Manor
HealthCare as a wholly owned Subsidiary. Prior to the date of the Distribution,
maintain Quality Hotels as a wholly owned Subsidiary, except that shares
representing up to 10% of the shares of any class of the capital stock of
Quality Hotels (but not representing more than 10% of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of Quality
Hotels) may be sold to certain members of management, and maintain Choice Hotels
International as a Subsidiary in which the Company owns shares representing not
less than 88.9% of the aggregate ordinary voting power represented by the issued
and outstanding capital stock of Choice Hotels International. Prior to the date
of the Distribution, continue to own, directly or indirectly, the operations of
Choice Hotels International substantially as they exist on the date hereof.
SECTION 5.10. Spin-Off Transactions. (a) The Borrowers will not permit
the Distribution, and the transactions related thereto, to differ materially
from the description thereof in the Form 10 in any manner that would materially
adversely affect the rights or interests of the Lenders or the creditworthiness
of the Borrowers.
(b) The Borrowers will make such prepayments as are necessary so that,
immediately prior to the
64
Distribution, no Loans made to such Borrowers (other than the Company or Manor
Healthcare), nor other amounts due in connection therewith, remain outstanding.
ARTICLE VI. NEGATIVE COVENANTS
The Company covenants and agrees with each Lender and the Agent that,
so long as this Agreement shall remain in effect or the principal of or interest
on any Loan, any Fees or any other expenses or amounts payable under any Loan
Document shall be unpaid, unless the Required Lenders shall otherwise consent in
writing, the Company shall not, and shall not cause or permit any of the
Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except (without duplication):
(a) Indebtedness existing on the date hereof and set forth in
Schedule 6.01(a) and any extensions, renewals or replacements of
existing mortgages and Capital Lease Obligations; provided, however,
that (i) the principal amount of any such extension, renewal or
replacement shall not exceed the principal amount of the mortgage or
Capital Lease Obligation so extended, renewed or replaced, (ii) the
mortgage or Capital Lease Obligation so extended, renewed or replaced
shall not be secured by any property or asset that was not already
pledged to secure the existing mortgage or Capital Lease Obligation,
and (iii) such extension, renewal or replacement is not on terms
materially more restrictive to the Company or its Subsidiaries or
materially less favorable to the Lenders than the mortgage or Capital
Lease Obligation so extended, renewed or replaced;
(b) Indebtedness represented by the Loan Documents; provided,
however, that Indebtedness consisting of commercial paper of the
Company may also be incurred pursuant to this clause (b) to the extent
the sum of such Indebtedness and the aggregate principal amount of
Loans then outstanding do not exceed the Total Commitment at such time
(subject to Section 6.01(m) to the extent in excess of $250,000,000).
65
(c) Indebtedness incurred upon the acquisition of any property
or asset secured by Liens on such property or asset in accordance with
Section 6.02(b); provided, however, that the amount of such
Indebtedness shall not exceed the purchase price of any such property
or asset;
(d) Indebtedness secured by Liens permitted under
Section 6.02(i), 6.02(j) or 6.02(m);
(e) Indebtedness of Subsidiaries existing at the
time they are acquired by the Company and not incurred
in contemplation of such acquisition;
(f) other Indebtedness of Subsidiaries not
prohibited by Section 6.09;
(g) at any time prior to the Distribution, Indebtedness of (i)
the Company to any wholly owned Subsidiary, Choice Hotels International
or Quality Hotels; (ii) any wholly owned Subsidiary, Choice Hotels
International or Quality Hotels to the Company; (iii) any Subsidiary
(other than the Pharmacy Subsidiary), Choice Hotels International or
Quality Hotels to any wholly owned Subsidiary (or to Choice Hotels
International or Quality Hotels); and (iv) the Pharmacy Subsidiary to
the Company and Manor HealthCare, as applicable, incurred pursuant to
or in connection with the Pharmacy Subsidiary Agreements in an
aggregate principal amount not to exceed $60,000,000 outstanding at any
time, or the Company and Manor HealthCare, as applicable, to the
Pharmacy Subsidiary (for the purposes of this clause (g), "wholly owned
Subsidiary" includes any wholly owned subsidiary of Choice Hotels
International and/or Quality Hotels, any Subsidiary that would
otherwise constitute a wholly owned Subsidiary but for directors'
qualifying shares or similar matters, and any Subsidiary the only
direct shareholders, members or participants in which are wholly owned
Subsidiaries, Choice Hotels International or Quality Hotels);
(h) at any time following the Distribution, Indebtedness of
(i) the Company to any wholly owned Subsidiary; (ii) any wholly owned
Subsidiary to the Company; (iii) any Subsidiary (other than the
Pharmacy Subsidiary) to any wholly owned Subsidiary; and (iv) the
Pharmacy Subsidiary to the Company and Manor
66
HealthCare, as applicable, incurred pursuant to or in connection with
the Pharmacy Subsidiary Agreements in an aggregate principal amount not
to exceed $60,000,000 outstanding at any time, or the Company and Manor
HealthCare, as applicable, to the Pharmacy Subsidiary (for the purposes
of this clause (g), "wholly owned Subsidiary" includes any Subsidiary
that would otherwise constitute a wholly owned Subsidiary but for
directors' qualifying shares or similar matters, and any Subsidiary the
only direct shareholders, members or participants in which are wholly
owned Subsidiaries);
(i) Indebtedness represented by notes or letters of credit
issued for the account of the Company or any Subsidiary in connection
with insurance policies and in a form substantially similar to the
notes or letters of credit issued for the account of the Company or any
Subsidiary set forth in Schedule 6.01(i) issued in connection with
existing insurance policies of the Company or such Subsidiary;
(j) Indebtedness represented by patient fund bonds, utility
bonds, performance bonds, state self insurance bonds and miscellaneous
other bonds other than those existing on the date hereof and listed in
Schedule 6.01(a) (including any extensions, renewals and replacements),
the aggregate principal amount of such Indebtedness at any one time not
to exceed $20,000,000 (subject to Section 6.01(m) to the extent in
excess of $20,000,000);
(k) Indebtedness of the Pharmacy Subsidiary; provided,
however, that Indebtedness of the Pharmacy Subsidiary to the Company
and Manor HealthCare, as applicable, shall be subject to the
limitations set forth in paragraphs (g)(iv) and (h)(iv) of Section
6.01; and provided further, that the aggregate amount of Guarantees by
the Company or any other Subsidiary of Indebtedness of the Pharmacy
Subsidiary, together with the aggregate principal amount of outstanding
Indebtedness of the Pharmacy Subsidiary to the Company and Manor
HealthCare, may not exceed $60,000,000;
(l) Indebtedness of the Company consisting of Guarantees in
connection with pension and deferred compensation arrangements arising
in connection with the Distribution; provided, however, that the
aggregate
67
amount of such Indebtedness shall not exceed
$10,000,000; and
(m) other unsecured Indebtedness of the Company in an
aggregate principal amount at any one time outstanding not to exceed
$300,000,000; provided, however, that the covenants and events of
default contained in any such Indebtedness with an aggregate principal
amount in excess of $10,000,000 shall not be more restrictive of the
Company and its Subsidiaries than those in this Agreement.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights (excluding rights of first refusal) in respect of any
thereof, except (without duplication):
(a) Liens on property or assets of the Company and its
Subsidiaries existing on the date hereof and set forth in Schedule
6.02; provided, however, that such Liens shall secure only those
obligations which they secure on the date hereof except as otherwise
permitted hereunder;
(b) any Lien existing on any property or asset prior to the
acquisition thereof by the Company or any Subsidiary; provided,
however, that (i) such Lien is not created in contemplation of or in
connection with such acquisition and (ii) such Lien does not apply to
any other property or assets of the Company or any Subsidiary;
(c) Liens for taxes not yet due or which are being
contested in compliance with Section 5.03;
(d) carriers', warehousemen's, mechanic's, materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations that are not due or which are being
contested in compliance with Section 5.03;
(e) statutory liens of landlords in respect of
property leased by the Company or any Subsidiary;
68
(f) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations;
(g) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital
Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(h) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount and do not materially detract from the
value of the property subject thereto or interfere with the ordinary
conduct of the business of the Company or any of its Subsidiaries;
(i) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or, in the case
of improvements, constructed) by the Company or any Subsidiary and
liens securing refinancings of existing mortgages; provided, however,
that (i) such security interests are incurred, and the Indebtedness
secured thereby is created, within 120 days after such acquisition, or
construction or refinancing, (ii) the Indebtedness secured thereby does
not exceed 80% of the fair market value of the subject real property,
improvements or equipment at the time of such acquisition, construction
or refinancing, and (iii) such security interests do not apply to the
subject property or assets of the Company or any Subsidiary other than
the purchased property or assets or the property or assets subject to
the mortgage being refinanced, as the case may be;
(j) mortgages on properties listed on Schedule 6.02(j);
provided, however, that (i) such mortgages do not apply to the property
or assets of the Company or any Subsidiary other than the scheduled
properties and (ii) the aggregate principal amount of the Indebtedness
secured by such security interests does not exceed $100,000,000;
(k) Liens created in favor of the Lenders;
69
(l) Liens on property or assets of the Pharmacy
Subsidiary; and
(m) other Liens to secure Indebtedness of the Company or any
Subsidiary; provided, however, that the aggregate principal amount of
the Indebtedness so secured at any time, when added to the net book
value of all property the subject of Sale and Lease-Back Transactions
at such time, does not exceed 15% of Consolidated Total Assets at such
time.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any Sale
and Lease-Back Transaction unless immediately thereafter the net book value of
all property the subject of Sale and Lease-Back Transactions, when added to the
aggregate principal amount of Indebtedness of the Company or any Subsidiary
secured at such time by Liens permitted only under Section 6.02(m), does not
exceed 15% of Consolidated Total Assets at such time; provided, however, that
notwithstanding the above, the Pharmacy Subsidiary may engage in Sale and
Lease-Back Transactions.
SECTION 6.04. Investments, Loans and Advances. Purchase, hold or
acquire any capital stock, comparable ownership interests, evidences of
indebtedness or other securities of, make or permit to exist any loans or
advances to, or make or permit to exist any investment or any other interest in,
any other person, except:
(a) investments by the Company or any Subsidiary in the
capital stock or comparable ownership interests of the Subsidiaries and
the investments and guarantees existing on the date hereof set forth on
Schedule 6.04;
(b) loans or advances by the Company to
Subsidiaries or by Subsidiaries to the Company or other
Subsidiaries;
(c) purchases by the Company of the capital stock
of Quality Hotels held by Alain Ammar;
(d) purchases by the Company of the capital stock
of IHH;
(e) advances by MNR Finance Corp., a Subsidiary, to Choice
Hotels; provided, however, that the aggregate principal amount of such
advances shall not exceed
70
$225,722,500 and the term of such advances shall be no
longer than three years;
(f) Guarantees permitted under Section 6.01(l);
(g) Permitted Investments; and
(h) other investments, capital contributions, loans and
advances not to exceed at any time 15% of Consolidated Total Assets at
such time.
SECTION 6.05. Mergers and Consolidations. Merge into or consolidate
with any other person, or permit any other person to merge into or consolidate
with it, or sell, transfer, lease or otherwise dispose of (in one transaction or
in a series of transactions) all or substantially all its assets whether now
owned or hereafter acquired, except that:
(a) (i) the Company may merge or consolidate with Manor
Healthcare or another Subsidiary (other than a Borrower) or (ii) Manor
Healthcare or another Subsidiary (other than a Borrower) may merge or
consolidate with the Company so long as the Company is the surviving
entity or, in the case of a merger or consolidation involving solely
the Company and Manor Healthcare, the surviving corporation assumes the
obligations of such other Borrower hereunder; provided, however, that,
in the case of a merger or consolidation involving the Pharmacy
Subsidiary, no Event of Default or event which, with notice or the
passage of time or both, would constitute an Event of Default exists
after giving effect to such merger or consolidation;
(b) any Subsidiary (other than a Borrower) may merge or
consolidate with a Borrower so long as the Borrower is the surviving
corporation and remains a Subsidiary; provided, however, that, in the
case of a merger or consolidation involving the Pharmacy Subsidiary, no
Event of Default or event which, with notice or the passage of time or
both, would constitute an Event of Default exists after giving effect
to such merger or consolidation;
(c) any Subsidiary (other than a Borrower) may
merge or consolidate with any Subsidiary (other than a
Borrower);
71
(d) the Company or any Subsidiary may merge or consolidate
with another person (other than a Subsidiary); provided, however, that:
(i) the Company or such Subsidiary is the
surviving entity;
(ii) no Event of Default or event which, with notice or
the passage of time or both, would constitute an Event of
Default exists after giving effect to such merger or
consolidation; and
(iii) the Agent shall receive a certificate signed by a
Financial Officer of the Company, confirming compliance with
clause (ii) above;
(e) the Company and the Subsidiaries may
consummate the Distribution.
SECTION 6.06. Asset Sales. Consummate any Asset Sale, other than Asset
Sales which, when added to the Proceeds from all other Asset Sales previously
consummated in the same fiscal year, would not exceed 10% of Consolidated Total
Assets as of the end of the preceding fiscal year.
SECTION 6.07. Transactions with Affiliates. Sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
that as long as no Default or Event of Default shall have occurred and be
continuing, the Company or any Subsidiary may (a) consummate the Distribution or
(b) engage in any of the foregoing transactions (i) in the ordinary course of
business at prices and on terms and conditions not less favorable to the Company
or such Subsidiary than could be obtained on an arm's-length basis from
unrelated third parties or (ii) between or among the Borrower and its wholly
owned Subsidiaries. Notwithstanding anything in this Section 6.07, the Company,
Manor HealthCare and the Pharmacy Subsidiary shall be permitted to enter into
and perform the Pharmacy Subsidiary Agreements; provided, however, that the
Pharmacy Subsidiary and the Company and Manor HealthCare, as applicable, shall
be permitted to amend, waive or modify the Pharmacy Subsidiary Agreements
provided that no Event of Default exists or will be continuing at the time of
such amendment, waiver or modification of the Pharmacy Subsidiary Agreement;
provided further, however, that in no event shall
72
any amendment, waiver or modification of the Pharmacy Subsidiary Agreements be
permitted if such amendment, waiver or modification will result in the happening
of an Event of Default or with the passage of time would result in the happening
of an Event of Default.
SECTION 6.08. Business of Company and Subsidiaries. Engage at any time
in any business or business activity other than the business currently conducted
by it or related or collateral activities in the health care industry; provided,
however, that, subsequent to the Distribution, it may not engage in the lodging
business or related or collateral activities in the lodging industry; provided
further, however, that this Section shall not be applicable to the Pharmacy
Subsidiary.
SECTION 6.09. Subsidiary Indebtedness. Permit any Subsidiary to
create, incur, assume or permit to exist any indebtedness except:
(i) any Indebtedness permitted by Section 6.01;
and
(ii) other Indebtedness of any Subsidiary; provided, however,
that the aggregate principal amount outstanding of all such other
Indebtedness of all Subsidiaries (excluding amounts permitted under
clause (i) above) at any time may not exceed 15% of Consolidated Total
Assets at such time.
SECTION 6.10. Agreements. Permit any Subsidiary to enter into any
agreement or incur any obligation the terms of which would impair the ability of
any Subsidiary to pay dividends, to make intercompany loans or advances or to
make distributions (it being agreed that this Section shall not be breached by
any such agreement or obligation binding upon a Subsidiary at the time it
becomes a Subsidiary and not incurred in contemplation of its becoming a
Subsidiary); provided, however, that, other than for purposes of determining
compliance with the proviso contained in paragraphs (a) and (b) of Section 6.05,
this Section shall be deemed not breached by any such agreement or obligation
binding upon the Pharmacy Subsidiary; provided further, however, that if the
Pharmacy Subsidiary enters into any such agreement or incurs any such
obligation, the Pharmacy Subsidiary shall be deemed not to be a Subsidiary for
purposes of the provisions of Sections 6.11, 6.12 and 6.13 (and the related
definitions).
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SECTION 6.11. Minimum Consolidated Net Worth. (a) Subject to Section
6.10, in the case of the Company, permit its Consolidated Net Worth, at any time
prior to the date of the Distribution, to be less than the sum of (x)
$400,361,000, (y) 50% of the Company's Consolidated Net Income accrued during
the period (treated as one accounting period) commencing on June 1, 1994, and
ending on the last day of the most recent fiscal quarter for which financial
statements have been delivered pursuant to Section 5.04 (which amount shall not
include Consolidated Net Income for any fiscal quarter in which the Company's
Consolidated Net Income is negative) and (z) the aggregate net cash proceeds
received by the Company from the issuance or sale of its capital stock since
June 1, 1994.
(b) Subject to Section 6.10, in the case of the Company, permit its
Consolidated Net Worth, at any time on or after the date of the Distribution, to
be less than the sum of (x) the amount that is equal to 75% of the net worth of
the Company and its consolidated Subsidiaries as of the last day of the month in
which the Distribution occurs, (y) 50% of the Company's Consolidated Net Income
accrued during the period (treated as one accounting period) commencing on the
last day of the month in which the Distribution occurs, and ending on the last
day of the most recent fiscal quarter for which financial statements have been
delivered pursuant to Section 5.04 (which amount shall not include Consolidated
Net Income for any fiscal quarter in which the Company's Consolidated Net Income
is negative) and (z) the aggregate net cash proceeds received by the Company
from the issuance or sale of its capital stock since the last day of the month
in which the Distribution occurs.
SECTION 6.12. Consolidated Debt Ratio. Subject to Section 6.10, in the
case of the Company, permit the Consolidated Debt Ratio at any time during the
period from and including the date hereof through the Maturity Date to exceed
0.67 to 1.0.
SECTION 6.13. Consolidated Interest Coverage Ratio. Subject to Section
6.10, in the case of the Company, permit its Consolidated Interest Coverage
Ratio at any time during the period from and including the date hereof through
the Maturity Date to be less than 3.0 to 1.0. The Consolidated Interest Coverage
Ratio shall be calculated as of the end of each fiscal quarter based on the
period of the four consecutive fiscal quarters ending on such date.
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ARTICLE VII. EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made (such
representation or warranty being deemed made as provided in Section
4.01) in or in connection with any Loan Document or the borrowings
hereunder, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other
instrument furnished in connection with or pursuant to any Loan
Document, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Loan or any Fee or any other amount (other than an amount referred
to in clause (b) above) due under any Loan Document, when and as the
same shall become due and payable, and such default shall continue
unremedied for a period of five Business Days;
(d) default shall be made in the due observance or performance
by the Company or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a) or 5.05 or in Article VI;
(e) default shall be made in the due observance or performance
by the Company or any Subsidiary of any covenant, condition or
agreement contained in any Loan Document (other than those specified in
clauses (b), (c) and (d) above) and such default shall continue
unremedied for a period of five Business Days after notice thereof from
the Agent or any Lender to the Company;
(f) the Company or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in an aggregate principal amount in excess of $10,000,000,
when and as the same shall become due and payable, or (ii) fail to
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observe or perform any other term, covenant, condition or agreement
contained in any agreement or instrument evidencing or governing any
Indebtedness in an aggregate principal amount in excess of $10,000,000
if the effect of any failure referred to in this clause (ii) is to
cause, or to permit the holder or holders of such Indebtedness or a
trustee on its or their behalf (with or without the giving of notice,
the lapse of time or both) to cause, such Indebtedness to become due
prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Company or any
Subsidiary, or of a substantial part of the property or assets of the
Company or a Subsidiary, under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal, state or
foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or any Subsidiary or
for a substantial part of the property or assets of the Company or a
Subsidiary or (iii) the winding-up or liquidation of the Company or any
Subsidiary; and such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;
(h) the Company or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title
11 of the United States Code, as now constituted or hereafter amended,
or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in clause (g) above, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Company or any
Subsidiary or for a substantial part of the property or assets of the
Company or any Subsidiary, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to pay its
debts as they become due or
76
(vii) take any action for the purpose of effecting any
of the foregoing;
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $5,000,000 shall be rendered against the
Company, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 60 consecutive days during which
execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to levy upon assets or properties
of the Company or any Subsidiary to enforce any such judgment;
(j) a Reportable Event or Reportable Events, or a failure to
make a required installment or other payment (within the meaning of
Section 412(n)(l) of the Code), shall have occurred with respect to any
Plan or Plans that reasonably could be expected to result in liability
of the Company to the PBGC or to a Plan in an aggregate amount
exceeding $5,000,000 and, within 30 days after the reporting of any
such Reportable Event to the Agent or after the receipt by the Agent of
the statement required pursuant to Section 5.06, the Agent shall have
notified the Company in writing that (i) the Required Lenders have made
a determination that, on the basis of such Reportable Event or
Reportable Events or the failure to make a required payment, there are
reasonable grounds (A) for the termination of such Plan or Plans by the
PBGC, (B) for the appointment by the appropriate United States District
Court of a trustee to administer such Plan or Plans or (C) for the
imposition of a lien in favor of a Plan and (ii) as a result thereof an
Event of Default exists hereunder; or a trustee shall be appointed by a
United States District Court to administer any such Plan or Plans; or
the PBGC shall institute proceedings to terminate any Plan or Plans;
(k) (i) the Company or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (ii) the Company or
such ERISA Affiliate does not have reasonable grounds for contesting
such Withdrawal Liability or is not in fact contesting such Withdrawal
Liability in a timely and appropriate manner and (iii) the amount of
the Withdrawal Liability specified in such notice, when aggregated with
all other amounts required to be paid
77
to Multiemployer Plans in connection with Withdrawal Liabilities
(determined as of the date or dates of such notification), exceeds
$5,000,000 or requires payments exceeding $1,000,000 in any year;
(l) the Company or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, if solely as a result of such reorganization or
termination the aggregate annual contributions of the Company and its
ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or have been or are being terminated have been or will
be increased over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed plan years by an
amount exceeding $1,000,000; or
(m) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to any Borrower
described in clause (g) or (h) above), and at any time thereafter during the
continuance of such event, the Agent, at the request of the Required Lenders,
shall, by notice to the Company, take either or both of the following actions,
at the same or different times: (i) terminate forthwith the Commitments and (ii)
declare the Loans then outstanding to be forthwith due and payable in whole or
in part, whereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrowers accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrowers, anything contained herein or in any other Loan Document
to the contrary notwithstanding; and in any event with respect to any Borrower
described in clause (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrowers accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
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ARTICLE VIII. THE AGENT
In order to expedite the transactions contemplated by this Agreement,
The Chase Manhattan Bank is hereby appointed to act as Agent on behalf of the
Lenders. Each of the Lenders hereby irrevocably authorizes the Agent to take
such actions on behalf of such Lender and to exercise such powers as are
specifically delegated to the Agent by the terms and provisions hereof, together
with such actions and powers as are reasonably incidental thereto. The Agent is
hereby expressly authorized by the Lenders, without hereby limiting any implied
authority, (a) to receive on behalf of the Lenders all payments of principal of
and interest on the Loans and all other amounts due to the Lenders hereunder,
and promptly to distribute to each Lender its proper share of each payment so
received; (b) to give notice on behalf of each of the Lenders to the Borrowers
of any Event of Default specified in this Agreement of which the Agent has
actual knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Lender copies of all notices, financial statements and other
materials delivered pursuant to this Agreement as received by the Agent.
Neither the Agent nor any of its directors, officers, employees or
agents shall be liable to the Lenders as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith (other than any
statement, representation or warranty relating to the Agent or relating to the
functions of the Agent hereunder), or be required to ascertain or to make any
inquiry concerning the performance or observance by any Borrower of any of the
terms, conditions, covenants or agreements contained in any Loan Document. The
Agent shall not be responsible to the Lenders for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement or any
other Loan Documents or other instruments or agreements. The Agent may deem and
treat the payee of any note referred to in Section 2.07 as the owner thereof for
all purposes hereof until it shall have received from the payee of such note
notice, given as provided herein, of the transfer thereof. The Agent shall in
all cases be fully protected in acting, or refraining from acting, in accordance
with written instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions and any action or
inac-
79
tion pursuant thereto shall be binding on all the Lenders. The Agent shall, in
the absence of knowledge to the contrary, be entitled to rely on any instrument
or document believed by it in good faith to be genuine and correct and to have
been signed or sent by the proper person or persons. Neither the Agent nor any
of its directors, officers, employees or agents shall have any responsibility to
any Borrower on account of the failure of or delay in performance or breach by
any Lender of any of its obligations hereunder or to any Lender on account of
the failure of or delay in performance or breach by any other Lender or any
Borrower of any of their respective obligations hereunder or under any other
Loan Document or in connection herewith or therewith. The Agent may execute any
and all duties hereunder by or through agents or employees and shall be entitled
to rely upon the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Agent shall be under no duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor subject to the written consent of the Company to
such successor (which consent will not be unreasonably withheld). If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Agent gives notice
of its resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent which shall be a bank with offices in New York, New
York and London, England, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the retiring Agent shall be discharged from its duties and
obligations hereunder. After the Agent's resignation hereunder, the provisions
of this Article and Section 10.05 shall continue in effect for its
80
benefit in respect of any actions taken or omitted to be
taken by it while it was acting as Agent.
With respect to the Loans made by it hereunder, the Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not the Agent, and
the Agent and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with any Borrower or any Subsidiary or
other Affiliate thereof as if it were not the Agent.
Each Lender agrees (i) to reimburse the Agent, on demand, in the
amount of its pro rata share (based on its Commitment hereunder or, if the
Commitments shall have been terminated, on its Commitment most recently in
effect) of any expenses incurred for the benefit of the Lenders by the Agent,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, which the Borrowers shall be
obligated to reimburse under Section 10.05 but which shall not have been
reimbursed by the Borrowers and (ii) to indemnify and hold harmless the Agent
and any of its directors, officers, employees or agents, on demand, in the
amount of such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against it in its capacity as the Agent or any of
them in any way relating to or arising out of the Agent's role under this
Agreement or any other Loan Document or any action taken or omitted by it or any
of them under this Agreement or any other Loan Document, to the extent the same
shall not have been reimbursed by the Borrowers; provided, however, that no
Lender shall be liable to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or wilful
misconduct of the Agent or any of its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents
81
and information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement or any other Loan Document, any related agreement or any document
furnished hereunder or thereunder.
The Co-Agent shall not have any responsibilities or obligations as
Co-Agent under any of the Loan Documents.
ARTICLE IX. GUARANTEE
To induce the Lenders to make the Loans the Company hereby
unconditionally and irrevocably guarantees, as a primary obligor and not merely
as a surety, the due and punctual payment and performance of all Obligations.
Each and every default in payment of the principal of and premium, if any, or
interest on any Obligations shall give rise to a separate cause of action
hereunder, and separate suits may be brought hereunder as each cause of action
arises.
The Company waives presentation to, demand of payment from and protest
to the Borrowers of any of the Obligations, and also waives notice of acceptance
of this Guarantee and notice of protest for nonpayment and all other
formalities. The obligations of the Company hereunder shall not be discharged or
impaired or otherwise affected by (a) the failure or delay of any Lender or the
Agent to assert any claim or demand or to enforce any right or remedy against
any Borrower, the Company or any other person under the provisions of any Loan
Document or otherwise; (b) any extension or renewal of any of the Obligations;
(c) any rescission, waiver, amendment or modification of any of the terms or
provisions of any Loan Document, any guarantee or any other agreement or
instrument; (d) the release of (or the failure to perfect a security interest
in) any security held by the Agent or any Lender for the performance of the
Obligations or any of them; (e) the failure or delay of any Lender or the Agent
to exercise any right or remedy against any other guarantor of the Obligations;
(f) the failure of any Lender to assert any claim or demand or to enforce any
remedy under any Loan Document, any guarantee or any other agreement or
instrument; (g) any default, failure or delay, wilful or otherwise, in the
performance of the Obligations; or (h) any other act, omission or delay to do
any other act which may or might in any manner or to any extent vary the risk of
the Company or otherwise operate as a discharge of
82
the Company as a matter of law or equity or which would impair or eliminate any
right of the Company to subrogation.
The Company further agrees that this Guarantee constitutes a guarantee
of payment when due and not of collection, and waives any right to require that
any resort be had by any Lender to any security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
such Lender in favor of any Borrower or any other person. The Lenders, in their
sole discretion, shall have the right to proceed first and directly against the
Company.
The obligations of the Company hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise.
The Company further agrees that this Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time any payment, or
any part thereof, on any Obligation is rescinded or must otherwise be restored
by any Lender upon the bankruptcy or reorganization of any Borrower or
otherwise.
In furtherance of the foregoing and not in limitation of any other
right which the Agent or any Lender may have at law or in equity against the
Company by virtue hereof, upon the failure of any Borrower to pay any Obligation
when and as the same shall become due, whether at maturity, by acceleration,
prepayment or otherwise, the Company hereby promises to and will, upon receipt
of written demand by any Lender, forthwith pay, or cause to be paid, to the
Agent for distribution to the Lenders in cash an amount equal to the sum of (i)
the unpaid principal amount of such Obligations then due, (ii) accrued and
unpaid interest on such Obligations and (iii) all other monetary Obligations
then due.
Upon payment by the Company of any sums to the Lenders hereunder, all
rights of the Company against any Borrower arising as a result thereof shall in
all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full of all the Obligations and, if
83
any payment shall be made to the Company on account of such rights prior to the
indefeasible payment in full of all the Obligations, such payment shall
forthwith be paid to the Lenders to be credited and applied against the
Obligations to the extent necessary to discharge such Obligations. Upon payment
by the Company of the sums to the Lenders hereunder, subject to the indefeasible
payment in full of all the Obligations, the Company shall be subrogated to the
rights of the Lenders to receive payments of the Obligations.
The Company waives notice of and hereby consents to any agreements or
arrangements whatsoever by the Lenders with any other person pertaining to the
Obligations, including agreements and arrangements for payment, extension,
subordination, composition, arrangement, discharge or release of the whole or
any part of the Obligations, or for the discharge or surrender of any or all
security, or for compromise, whether by way of acceptance of part payment or
otherwise, and the same shall in no way impair the Company's liability
hereunder. Nothing shall discharge or satisfy the liability of the Company
hereunder except the full performance and payment of the Obligations.
Each reference herein to the Lenders or a Lender shall be deemed to
include their or its successors and assigns, in whose favor the provisions of
this Guarantee shall also inure.
ARTICLE X. MISCELLANEOUS
SECTION 10.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed or sent by telex, graphic scanning or other telegraphic
communications equipment of the sending party, as follows:
(a) if to the Company or any other Borrower (other than as
specified in clauses (b), (c) and (e) below), to the Company, at 11155
Darnestown Road, Gaithersburg, MD 20878, Attention of General Counsel,
with a copy to the Chief Financial Officer (Telecopy No. 301-979-4007);
(b) if to Quality Hotels Europe, Inc., to it at
Sheen Lane House, 254 Upper Richmond Road West, East
Sheen, London SW14 8AG, England;
84
(c) if to Quality Hotels Europe (Jena) GmbH, to it
at Am Hauptbahnhof 12, W-6000, Frankfort Am Main I,
Germany;
(d) if to the Agent, to it at The Chase Manhattan
Bank, Agent Bank Services Group, Grand Central Tower,
140 East 45th Street, New York, NY 10017. Attention of
Janet Belden, (Telecopy No. (212) 270-0002), with a
copy to The Chase Manhattan Bank, 270 Park Avenue, New
York, New York 10017, Attention of James S. Ely, III,
(Telecopy No. 212-270-3279) and Chase Manhattan
International Limited, Trinity
Tower, 9 Thomas More Street, London, England E19YT,
Attention of Steven Hurford (Telecopy No. 011 44 71 777
2360);
(e) if to a Borrowing Subsidiary, to it at its
address as set forth in its Borrowing Subsidiary
Agreement; and
(f) if to a Lender, to it at its address (or tele- copy
number) set forth in Schedule 2.01 or in the Assignment and Acceptance
pursuant to which such Lender became a party hereto.
Except as otherwise provided in Section 10.15(c), all notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt, in
each case delivered, sent or mailed (properly addressed) to such party as
provided in this Section 10.01 or in accordance with the latest unrevoked
direction from such party given in accordance with this Section 10.01.
SECTION 10.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrowers and the Company (in its
capacity as guarantor pursuant to Article IX) herein and in the certificates or
other instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have been relied
upon by the Lenders and shall survive the making by the Lenders of the Loans,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any Fee or any other amount payable under this
Agreement or any other Loan Document is
85
outstanding and unpaid and so long as the Commitments have
not been terminated.
SECTION 10.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Company, each other Borrower and the
Agent and when the Agent shall have received copies hereof which, when taken
together, bear the signatures of each Lender, and thereafter shall be binding
upon and inure to the benefit of the Company, each other Borrower, the Agent and
each Lender and their respective successors and assigns, except that a Borrower
or the Company (in its capacity as guarantor pursuant to Article IX) may not
assign or delegate its rights or obligations hereunder or any interest herein
without the prior consent of all the Lenders.
SECTION 10.04. Successors and Assigns. (a) Whenever in this Agreement
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 Company, the Agent or the Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or an
Affiliate of such Lender, the Company and the Agent must give their prior
written consent to such assignment (which consent shall not be unreasonably
withheld), (ii) the amount of the Commitment of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Agent) shall not be less
than $5,000,000 and the amount of the Commitment of such Lender remaining after
such assignment shall not be less than $5,000,000 or shall be zero, (iii) the
parties to each such assignment shall execute and deliver to the Agent an
Assignment and Acceptance, together with a processing and recordation fee of
$2,000 and (iv) the assignee, if it shall not be a Lender, shall deliver to the
Agent an Administrative Questionnaire. Upon acceptance and recording pursuant to
Section 10.04(e), from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five Business Days after
86
the execution thereof, (A) the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement and (B) the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto (but shall continue to
be entitled to the benefits of Sections 2.13, 2.15, 2.19 and 10.05, as well as
to any Fees accrued for its account hereunder and not yet paid)).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitment, and the outstanding balances of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Acceptance, (ii) except as set forth in (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto or the financial condition of the Company or any Subsidiary or the
performance or observance by the Company or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 5.04 and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (v) such assignee will independently and
without reliance upon the Agent, such assigning Lender or any other Lender and
based on such documents and information as it shall deem
87
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their terms
all the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) The Agent shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment
of, and principal amount of the Loans owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive in the absence of manifest error and the Company, the Agent
and the Lenders may treat each person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Company and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in Section 10.04(b) and, if required, the written consent of the Company and the
Agent to such assignment, the Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Lenders.
(f) Each Lender may without the consent of the Borrowers or the Agent
sell participations to one or more banks or other entities in all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it); provided, however, that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other entities
shall be entitled to
88
the benefit of the cost protection provisions contained in Sections 2.13, 2.15
and 2.19 to the same extent as if they were Lenders but not in excess of those
cost protections to which the Lender from which it purchased its participation
would be entitled to under Sections 2.13, 2.15 and 2.19 and (iv) the Borrowers,
the Agent and the other Lenders shall continue to deal solely and directly with
such Lender (and shall not be required to deal with any participating bank or
other entity, notwithstanding any other provision contained herein) in
connection with such Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrowers relating to the Loans and to approve any amendment, modification or
waiver of any provision of this Agreement (other than amendments, modifications
or waivers decreasing any fees payable hereunder, increasing the Commitment of
such Lender or decreasing the amount of principal of or the rate at which
interest is payable on the Loans, or extending any scheduled principal payment
date or date fixed for the payment of interest on the Loans).
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 10.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender
by or on behalf of any Borrower; provided, however, that, prior to any such
disclosure of information designated by any Borrower as confidential, each such
assignee or participant or proposed assignee or participant shall execute an
agreement whereby such assignee or participant shall agree to preserve the
confidentiality of such confidential information (subject to those exceptions
set forth in Section 10.17). It is understood that confidential information
relating to the Company would not ordinarily be provided in connection with
assignments or participations of Competitive Loans.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank; provided, however, that no such
assignment shall release a Lender from any of its obligations hereunder.
SECTION 10.05. Expenses; Indemnity. (a) The Borrowers agree, jointly
and severally, to pay all reasonable out-of-pocket expenses incurred by the
Agent and its Affiliates in connection with the preparation of this
89
Agreement and the other Loan Documents and the syndication of the facilities
provided for herein or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
hereby contemplated shall be consummated) or incurred by the Agent or any Lender
in connection with the enforcement or protection of their rights (as such rights
may relate to any Borrower or any Subsidiary) in connection with this Agreement
and the other Loan Documents or in connection with the Loans made hereunder,
including the reasonable fees and disbursements of Cravath, Swaine & Moore,
counsel for the Agent, any other counsel for the Agent and counsel for any
Lender, including the allocated costs of in-house counsel.
(b) The Borrowers agree, jointly and severally, to indemnify the
Agent, each Lender and their respective directors, officers, employees, agents
and Affiliates (each such person being called an "Indemnitee") against, and to
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against any Indemnitee arising out of, in any
way connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the Transactions and the other transactions
contemplated thereby, (ii) the use of the proceeds of the Loans or (iii) any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto; provided, however, that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the negligence or misconduct of such Indemnitee. Promptly after
receipt by an Indemnitee of notice of any complaint or the commencement of any
action or proceeding with respect to which indemnification is being sought
hereunder, such person shall notify the Company of such complaint or of the
commencement of such action or proceeding, but failure so to notify the Company
will relieve any Borrower from any liability which such Borrower may have
hereunder only if, and to the extent that such failure results in the forfeiture
by such Borrower of substantial rights and defenses, and shall not in any event
relieve such Borrower from any other obligation or liability that such Borrower
may have to any Indemnitee
90
otherwise than under this Agreement. If any Borrower so elects or is requested
by such Indemnitee, such Borrower shall assume the defense of such action or
proceeding, including the employment of counsel reasonably satisfactory to the
Indemnitee and the payment of the reasonable fees and disbursements of such
counsel. In the event, however, such Indemnitee reasonably determines in its
judgment that having common counsel would present such counsel with a conflict
of interest or if the defendant in, or targets of, any such action or proceeding
include both the Indemnitee and such Borrower, and such Indemnitee reasonably
concludes that there may be legal defenses available to it or other Indemnitees
that are different from or in addition to those available to such Borrower or if
such Borrower fails to assume the defense of the action or proceeding or to
employ counsel reasonably satisfactory to such Indemnitee, in either case in a
timely manner, then the Indemnitee may employ separate counsel to represent or
defend it in any such action or proceeding and such Borrower shall pay the
reasonable fees and disbursements of such counsel. In any action or proceeding
the defense of which any Borrower assumes, the Indemnitee shall have the right
to participate in such litigation and to retain its own counsel at the
Indemnitee's own expense. Each Borrower further agrees that it shall not,
without the prior written consent of the Indemnitee, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not an Indemnitee is an actual or potential party to such claim,
action, suit or proceeding) unless such settlement, compromise or consent
includes (i) an unconditional release of each Indemnitee hereunder from all
liability arising out of such claim, action, suit or proceeding or (ii) a
covenant not to sue each Indemnitee, or another similar alternative which is
consented to by each Indemnitee party to such claim, action, suit or proceeding,
which covenant not to sue or other approved alternative has the effect of an
unconditional release of each Indemnitee hereunder from all liability arising
out of such claim, action, suit or proceeding.
(c) The provisions of this Section shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the
91
Agent or any Lender. All amounts due under this Section shall be payable on
written demand therefor.
SECTION 10.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of any Borrower or the Company (in its capacity as
guarantor pursuant to Article IX) against any of and all the obligations of any
Borrower now or hereafter existing under this Agreement and other Loan Documents
held by such Lender, irrespective of whether or not such Lender shall have made
any demand under this Agreement or such other Loan Document and although such
obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 10.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICTS OF LAWS PRINCIPLES OR
PROVISIONS.
SECTION 10.08. Waivers; Amendment. (a) No failure or delay of the
Agent or any Lender in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Agent and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies which they would otherwise have. No waiver
of any provision of this Agreement or any other Loan Document or consent to any
departure by any Borrower therefrom shall in any event be effective unless the
same shall be permitted by Section 10.08(b), and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on any Borrower in any case shall entitle such
Borrower to any other or further notice or demand in similar or other
circumstances.
92
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders; provided, however, that
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan or Fees, or waive or excuse any such payment or any
part thereof, or decrease the rate of interest on any Loan, without the prior
written consent of each Lender affected thereby, (ii) increase the Commitment or
change the Facility Fees of any Lender without the prior written consent of such
Lender, or (iii) amend or modify the provisions of Section 2.16, the provisions
of this Section or the definition of the "Required Lenders", without the prior
written consent of each affected Lender; provided further that no such agreement
shall amend, modify or otherwise affect the rights or duties of the Agent
hereunder without the prior written consent of the Agent.
SECTION 10.09. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the applicable interest rate, together
with all fees and charges which are treated as interest under applicable law
(collectively the "Charges"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Lender, shall exceed the maximum lawful rate (the
"Maximum Rate") which may be contracted for, charged, taken, received or
reserved by such Lender in accordance with applicable law, together with all
Charges payable to such Lender, shall be limited to the Maximum Rate.
SECTION 10.10. Entire Agreement. This Agreement and the other Loan
Documents and the letter agreements referred to in Section 2.06(b) constitute
the entire contract between the parties relative to the subject matter hereof.
Any previous agreement among the parties with respect to the subject matter
hereof is superseded by this Agreement and the other Loan Documents. Nothing in
this Agreement or in the other Loan Documents, expressed or implied, is intended
to confer upon any party other than the parties hereto and thereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
other Loan Documents.
SECTION 10.11. Waiver of Jury Trial; Punitive Damages. Each party
hereto hereby waives, to the fullest
93
extent permitted by applicable law, (a) any right it may have to a trial by jury
in respect of any litigation directly or indirectly arising out of, under or in
connection with this Agreement or any of the other Loan Documents and (b) any
claims for punitive damages (to the extent such claims arise from the use of
proceeds of the Loans for the purpose of acquisitions). Each party hereto (i)
certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other parties hereto have been induced to enter into this
Agreement and the other Loan Documents, as applicable, by, among other things,
the mutual waivers and certifications in this Section.
SECTION 10.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
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 10.13. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 10.03.
SECTION 10.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 10.15. Jurisdiction; Consent to Service of Process; Judgment
Currency. (a) Each Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City
and the High Court of Justice in London, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
94
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State court or the High Court of Justice in
London or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against any
Borrower or its properties in the courts of any jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this agreement or the other Loan
Documents in any New York State or Federal court or the High Court of Justice in
London. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(c) The non-U.S. Borrowers (the "Foreign Borrowers") hereby
irrevocably and unconditionally appoint the Company as their agent to receive on
behalf of the Foreign Borrowers and their property service of copies of the
summons and complaint and any other process which may be served in any such
action and agrees promptly to appoint a successor process agent in The City of
New York (which successor process agent shall accept such appointment in form
and substance satisfactory to the Agent) prior to the termination for any reason
of the appointment of the Company as initial process agent. In any such action
or proceeding in such New York State or Federal court sitting in The City of New
York or the High Court of Justice in London such service may be made on the
Foreign Borrowers by delivering a copy of such process to the Foreign Borrowers
in care of the Company or such successor process agent at the Company's address
set forth in Section 10.01, or in the case of any successor process agent, at
such process agent's address as set forth in its appointment and by depositing a
copy of such process in the mails by certified or registered
95
airmail, addressed to the Foreign Borrowers at their addresses specified in
Section 10.01 (such service to be effective upon such receipt by the Company or
such successor process agent and the depositing of such process in the mails as
aforesaid), and the Foreign Borrowers hereby irrevocably and unconditionally
authorize and direct the Company or such successor process agent to accept such
service on their behalf. Each other Borrower and each other party hereto
consents to service of process in the manner provided for notices in Section
10.01. Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
(d) If for the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder in one currency into another currency,
the parties hereto agree, to the fullest extent that they may effectively do so
under applicable law, that the rate of exchange used shall be the spot rate at
which in accordance with normal banking procedures the first currency could be
purchased in New York City with such other currency by the person obtaining such
judgment on the Business Day preceding that on which final judgment is given.
(e) The parties agree, to the fullest extent that they may effectively
do so under applicable law, that the obligations of each Borrower to make
payments in any currency of the principal of and interest on the Loans of such
Borrower and any other amounts due from such Borrower hereunder to the Agent as
provided in Section 2.16 (i) shall not be discharged or satisfied by any tender,
or any recovery pursuant to any judgment (whether or not entered in accordance
with Section 10.15(d)), in any currency other than the relevant currency, except
to the extent that such tender or recovery shall result in the actual receipt by
the Agent at its relevant office as provided in Section 2.16 on behalf of the
Lenders of the full amount of the relevant currency expressed to be payable in
respect of the principal of and interest on the Loans and all other amounts due
hereunder (it being assumed for purposes of this clause (i) that the Agent will
convert any amount tendered or recovered into the relevant currency on the date
of such tender or recovery), (ii) shall be enforceable as an alternative or
additional cause of action for the purpose of recovering in the relevant
currency the amount, if any, by which such actual receipt shall fall short of
the full amount of the relevant currency so expressed to be payable and (iii)
shall
96
not be affected by an unrelated judgment being obtained for
any other sum due under this Agreement.
SECTION 10.16. Confidentiality. Unless otherwise agreed to in writing
by the Company, the Agent and each Lender hereby agree to keep all Proprietary
Information (as defined below) confidential and not to disclose or reveal any
Proprietary Information to any person other than the Agent's or such Lender's
directors, officers, employees, Affiliates and agents and to actual or potential
assignees and participants, and then only on a confidential basis; provided,
however, that the Agent or any Lender may disclose Proprietary Information (a)
as required by law, rule, regulation or judicial process, (b) to its attorneys
and accountants, (c) as requested or required by any state or Federal or foreign
authority or examiner regulating banks or banking or (d) subject to appropriate
confidentiality protections, in any legal proceedings between the Agent or such
Lender and any Borrower or the Company (in its capacity as guarantor pursuant to
Article IX) arising out of this Agreement. For purposes of this Agreement, the
term "Proprietary Information" shall include all information about each of the
Borrowers or any of their Affiliates which has been furnished by any Borrower or
any of its Affiliates, whether furnished before or after the date hereof, and
regardless of the manner in which it is furnished; provided, however, that
Proprietary Information does not include information which (x) is or becomes
generally available to the public other than as a result of a disclosure by the
Agent or any Lender not permitted by this Agreement, (y) was obtained or
otherwise became available to the Agent or any Lender on a nonconfidential basis
prior to its disclosure to the Agent or such Lender by any Borrower or any of
its Affiliates or (z) becomes available to the Agent or any Lender on a
nonconfidential basis from a person other than any Borrower or its Affiliates
who, to the best knowledge of the Agent or such Lender, as the case may be, is
not otherwise bound by a confidentiality agreement with any Borrower or any of
its Affiliates, or is not otherwise
prohibited from transmitting the information to the Agent or
such Lender.
IN WITNESS WHEREOF, the Borrowers, the Company (in its
capacity as guarantor pursuant to Article IX), the Agent and the Lenders have
caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
MANOR CARE, INC., as a
Borrower and as a guarantor,
by
/s/ James H. Rempe
Name: James H. Rempe
Title: Senior Vice President
MANOR HEALTHCARE CORP., as a
Borrower,
by
/s/ James H. Rempe
Name: James H. Rempe
Title: Senior Vice President
CHOICE HOTELS INTERNATIONAL, INC.,
as a Borrower,
by
/s/ James H. Rempe
Name: James H. Rempe
Title: Senior Vice President
by
Name:
Title:
QUALITY HOTELS EUROPE, INC., as a
Borrower,
by
/s/ James H. Rempe
Name: James H. Rempe
Title: Senior Vice President
QUALITY HOTELS EUROPE (JENA) GmbH,
as a Borrower,
by
/s/ James H. Rempe
Name: James H. Rempe
Title: Senior Vice President
THE CHASE MANHATTAN BANK,
individually and as Agent,
by
/s/ Dawn Lee Lum
Name: Dawn Lee Lum
Title: Vice President
NATIONSBANK, N.A., individually
and as Co-Agent,
by
/s/ S. Walker Choppin
Name: S. Walker Choppin
Title: Senior Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
by
/s/ Wyatt R. Richie
Name: Wyatt R. Richie
Title: Managing Director
THE BANK OF TOKYO-MITSUBISHI,
LTD., NEW YORK BRANCH,
by
/s/ J. Andrew Don
Name: J. Andrew Don
Title: Vice President and
Manager
CREDIT LYONNAIS NEW YORK BRANCH,
by
/s/ Farboud Tavangar
Name: Farboud Tavangar
Title: Vice President
CRESTAR BANK,
by
/s/ Greg D. Wheeless
Name: Greg D. Wheeless
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LTD.,
by
/s/ Roland C. Wolinsky
Name: Roland C. Wolinsky
Title: Vice President and
Group Leader
DEUTSCHE BANK AG, New York and/or
Cayman Islands Branches,
by
/s/ Colin T. Taylor
Name: Colin T. Taylor
Title: Director
by
/s/ Alka Jain Goyal
Name: Alka Jain Goyal
Title: Assistant Vice
President
THE FIRST NATIONAL BANK OF
CHICAGO,
by
/s/ Patricia Schneeberger
Name: Patricia Schneeberger
Title: Assistant Vice
President
THE FIRST NATIONAL BANK OF
MARYLAND,
by
/s/ Michael B. Stueck
Name: Michael B. Stueck
Title: Vice President
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by
/s/ Joseph H. Towell
Name: Joseph H. Towell
Title: Senior Vice President
FLEET NATIONAL BANK,
by
/s/ Catherine L. Frisch
Name: Catherine L. Frisch
Title: Vice President
MELLON BANK, N.A.,
by
/s/ Colleen Cunniffe
Name: Colleen Cunniffe
Title: Banking Officer
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Karen M. George
Name: Karen M. George
Title: Assistant Vice
President
THE SANWA BANK LIMITED,
by
/s/ Dominic J. Sorresso
Name: Dominic J. Sorresso
Title: Vice President
TORONTO DOMINION (NEW YORK), INC.,
by
/s/ Jorge Garcia
Name: Jorge Garcia
Title: Vice President
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
The Chase Manhattan Bank, as Agent for
the Lenders referred to below,
270 Park Avenue
New York, NY 10017
Attention of Mr. James S. Ely, III
[Date]
Dear Sirs:
The undersigned, Manor Care, Inc. (the "Company"), refers to the
Amended and Restated Competitive Advance and Multi-Currency Revolving Credit
Facility Agreement dated as of November 30, 1994, as amended and restated as of
September 6, 1996 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Company, the
Borrowers named therein, the Lenders named therein, NationsBank, N.A., as
Co-Agent, and The Chase Manhattan Bank, as Agent. Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement. The Company hereby gives you notice pursuant to Section
2.03(a) of the Credit Agreement that it requests a Competitive Borrowing under
the Credit Agreement, and in that connection sets forth below the terms on which
such Competitive Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day) ______________________
(B) Principal Amount of
Competitive Borrowing(1) ______________________
(C) Interest rate basis(2)
- ----------------------
- --------
1 In Dollars not less than $5,000,000 (and in integral multiples of
$1,000,000) or greater than the Total Commitment then available.
2 Eurodollar Loan or Fixed Rate Loan.
2
(D) Interest Period and the last
day thereof3 ______________________
Upon acceptance of any or all of the Loans offered by the
Lenders in response to this request, the Company shall be deemed to have
represented and warranted that the conditions to lending specified in Section
4.01(b) and (c) of the Credit Agreement have been satisfied.
Very truly yours,
by
Title: [Responsible Officer]
Copy to:
Chase Manhattan International Limited (London),
on behalf of the Agent for the
Lenders referred to below
Trinity Tower
9 Thomas More Street
London, England E19YT
Attention of Mr. Steve Hurford
- --------
3 Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date.
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Name of Bank]
[Address]
New York, NY
Attention:
[Date]
Dear Sirs:
Reference is made to the Amended and Restated Competitive
Advance and Multi-Currency Revolving Credit Facility Agreement dated as of
November 30, 1994, as amended and restated as of September 6, 1996 (as it may
hereafter be amended, modified, extended or restated from time to time, the
"Credit Agreement"), among the Company, the Borrowers named therein, the Lenders
named therein, NationsBank, N.A., as Co-Agent, and The Chase Manhattan Bank, as
Agent. Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Credit Agreement. The Company made a
Competitive Bid Request on , 19 , pursuant to Section 2.03(a) of the Credit
Agreement, and in that connection you are invited to submit a Competitive Bid by
[Date]/[Time].(4) Your Competitive Bid must comply with Section 2.03(b) of the
Credit Agreement and the terms set forth below on which the Competitive Bid
Request was made:
(A) Date of Competitive Borrowing ____________________
(B) Principal amount of
Competitive Borrowing ____________________
(C) Interest rate basis ____________________
- --------
4 The Competitive Bid must be received by the Agent (i) in the case of
Eurodollar Loans, not later than 9:30 a.m., New York City time, three
Business Days before a proposed Competitive Borrowing and (ii) in the case
of Fixed Rate Loans, not later than 9:30 a.m., New York City time, on the
Business Day of a proposed Competitive Borrowing.
2
(D) Interest Period and the
last day thereof ____________________
Very truly yours,
THE CHASE MANHATTAN BANK,
as Agent,
by
-----------------------------
Title:
EXHIBIT A-3
FORM OF COMPETITIVE BID
The Chase Manhattan Bank, as Agent for
the Lenders referred to below,
270 Park Avenue
New York, NY 10017
Attention of Mr. James S. Ely, III
[Date]
Dear Sirs:
The undersigned, [Name of Bank], refers to the Amended and
Restated Competitive Advance and Multi-Currency Revolving Credit Facility
Agreement dated as of November 30, 1994, as amended and restated as of September
6, 1996 (as it may hereafter be amended, modified, extended or restated from
time to time, the "Credit Agreement"), among Manor Care, Inc. (the "Company"),
the Borrowers named therein, the Lenders named therein, NationsBank, N.A., as
Co-Agent, and The Chase Manhattan Bank, as Agent. Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement. The undersigned hereby makes a Competitive Bid pursuant
to Section 2.03(b) of the Credit Agreement, in response to the Competitive Bid
Request made by the Company on , 19 , and in that connection sets forth below
the terms on which such Competitive Bid is made:
(A) Principal Amount5 ____________________
(B) Competitive Bid Rate6
- --------------------
- --------
5 In Dollars not less than $5,000,000 or greater than the requested
Competitive Borrowing and in integral multiples of $1,000,000. Multiple
bids will be accepted by the Agent.
6 I.e., LIBO Rate + or - %, in the case of Eurodollar Loans or %, in the case
of Fixed Rate Loans.
2
(C) Interest Period and last
day thereof ____________________
The undersigned hereby confirms that it is prepared, subject
to the conditions set forth in the Credit Agreement, to extend credit to the
Company upon acceptance by the Company of this bid in accordance with Section
2.03(d) of the Credit Agreement.
Very truly yours,
[NAME OF LENDER,]
by
-----------------------
Title:
Copy to:
Chase Manhattan International Limited (London),
on behalf of the Agent for the
Lenders referred to below
Trinity Tower
9 Thomas More Street
London, England E19YT
Attention of Mr. Steve Hurford
EXHIBIT A-4
FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
The Chase Manhattan Bank, as Agent for
the Lenders referred to below,
270 Park Avenue
New York, NY 10017
Attention of Mr. James S. Ely, III
[Date]
Dear Sirs:
The undersigned, Manor Care, Inc. (the "Company"), refers to
the Amended and Restated Competitive Advance and Multi-Currency Revolving Credit
Facility Agreement dated as of November 30, 1994, as amended and restated as of
September 6, 1996 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Credit Agreement"), among the Company, the
Borrowers named therein, the Lenders named therein, NationsBank, N.A., as
Co-Agent, and The Chase Manhattan Bank, as Agent.
In accordance with Section 2.03(c) of the Credit Agreement, we
have received a summary of bids in connection with our Competitive Bid Request
dated and in accordance with Section 2.03(d) of the Credit Agreement, we hereby
accept the following bids for maturity on [date]:
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
$ [%]/[+/-. %]
$
We hereby reject the following bids:
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
$ [%]/[+/-. %]
$
2
The $ should be deposited in Chemical Bank account number [ ]
on [date].
Very truly yours,
MANOR CARE, INC.,
by
------------------------
Name:
Title:
Copy to:
Chase Manhattan International Limited (London),
on behalf of the Agent for the
Lenders referred to below
Trinity Tower
9 Thomas More Street
London, England E19YT
Attention of Mr. Steve Hurford
EXHIBIT A-5
FORM OF STANDBY BORROWING REQUEST
The Chase Manhattan Bank, as Agent for
the Lenders referred to below,
270 Park Avenue
New York, NY 10017
Attention of Mr. James S. Ely, III
[Date]
The undersigned, (the "Borrower"), refers to the Amended and
Restated Competitive Advance and Multi-Currency Revolving Credit Facility
Agreement dated as of November 30, 1994, as amended and restated as of September
6, 1996 (as it may hereafter be amended, modified, extended or restated from
time to time, the "Credit Agreement"), among Manor Care, Inc. (the "Company"),
the Borrowers named therein, the Lenders named therein, NationsBank, N.A., as
Co-Agent, and The Chase Manhattan Bank, as Agent. Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement. The Borrower hereby gives you notice pursuant to
Section 2.04 of the Credit Agreement that it requests a Standby Borrowing under
the Credit Agreement, and in that connection sets forth below the terms on which
such Standby Borrowing is requested to be made:
(A) Date of Standby Borrowing
(which is a Business Day) ____________________
(B) Principal Amount of
Standby Borrowing(7)
- --------------------
- --------
7 Not less than $5,000,000 (and in integral multiples of $1,000,000) or
greater than the Total Commitment then available. For Eurocurrency
Borrowings, express in Equivalent Dollar Amount.
2
(C) Interest rate basis(8)
- --------------------
(D) Interest Period and the last
day thereof(9) ____________________
(E) For Eurocurrency Borrowings:
(1) Type of Alternative Currency
(2) Funds are requested to be
disbursed to the following:
Bank Name:
Bank Address:
For Credit to:
Account Name:
Account Number:
Upon acceptance of any or all of the Loans made by the Lenders in
response to this request, the Borrower shall be deemed to have represented and
warranted that the conditions to lending specified in Section 4.01(b) and (c) of
the Credit Agreement have been satisfied.
Very truly yours,
by
Title: [Responsible Officer]
Copy to:
Chase Manhattan International Limited (London),
on behalf of the Agent for the
Lenders referred to below
- --------
8 Eurocurrency Loan, Eurodollar Loan, CD Loan or ABR Loan.
9 Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date.
3
Trinity Tower
9 Thomas More Street
London, England E19YT
Attention of Mr. Steve Hurford
EXHIBIT B
ADMINISTRATIVE QUESTIONNAIRE
MANOR CARE, INC.
ADMINISTRATIVE QUESTIONNAIRE
Please accurately complete the following information and return via FAX to the
attention of Katherine Wolf at The Chase Manhattan Bank as soon as possible.
Fax Number: 212-622-0122
LEGAL NAME TO APPEAR IN DOCUMENTATION:
- -----------------------------------------------------------------------------
- ---------
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
Institution Name:
----------------------------------------------------
------
Street Address:
----------------------------------------------------
-------
City, State, Zip Code:
----------------------------------------------------
------
GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:
Institution Name:
----------------------------------------------------
------
Street Address:
----------------------------------------------------
-------
City, State, Zip Code:
----------------------------------------------------
------
2
CONTACTS/NOTIFICATION METHODS:
CREDIT CONTACTS:
Primary Contact:
----------------------------------------------------
-------
Street Address:
----------------------------------------------------
-------
City, State, Zip Code:
----------------------------------------------------
------
Phone Number:
--------------------------------------------------
-------
FAX Number:
--------------------------------------------------
-------
Backup Contact:
----------------------------------------------------
-------
Street Address:
----------------------------------------------------
-------
City, State, Zip Code:
----------------------------------------------------
------
Phone Number:
----------------------------------------------------
-------
FAX Number:
--------------------------------------------------
-------
TAX WITHHOLDING:
Non Resident Alien _____________________Y* _____________________N
3
*Form 4224 Enclosed
Tax ID Number
----------------------------------------------------
-----
CONTACTS/NOTIFICATION METHODS:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, INTEREST, FEES, ETC.
Contact:
--------------------------------------------------
-------
Street Address:
----------------------------------------------------
-------
City, State, Zip Code:
----------------------------------------------------
------
Phone Number:
--------------------------------------------------
-------
FAX Number:
--------------------------------------------------
-------
BID LOAN NOTIFICATION:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, INTEREST, FEES, ETC.
Contact:
--------------------------------------------------
-------
Street Address:
----------------------------------------------------
-------
City, State, Zip Code:
----------------------------------------------------
------
4
Phone Number:
--------------------------------------------------
-------
FAX Number:
--------------------------------------------------
-------
PAYMENT INSTRUCTIONS:
Name of Bank where funds are to be transferred:
----------------------------------------------------------------------------
Routing Transit/ABA number of Bank where funds are to be transferred:
----------------------------------------------------------------------------
Name of Account, if applicable:
----------------------------------------------------------------------------
Account Number:
--------------------------------------------------
-------
Additional Information:
- ----------------------------------------------------------------
MAILINGS:
Please specify who should receive financial information:
Name:
----------------------------------------------------
-------
Street Address:
----------------------------------------------------
-------
City, State, Zip Code:
----------------------------------------------------
------
5
It is very important that all of the above information is accurately filled in
and returned promptly. If there is someone other than yourself who should
receive this questionnaire, please notify us of their name and FAX number and we
will FAX them a copy of the questionnaire. If you have any questions, please
call me on 212-622-9360.
EXHIBIT C
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Competitive Advance and
Multi-Currency Revolving Credit Facility Agreement dated as of November 30,
1994, as amended and restated as of September 6, 1996 (as it may hereafter be
amended, modified, extended or restated from time to time, the "Credit
Agreement"), among Manor Care, Inc. (the "Company"), the Borrowers named
therein, the Lenders named therein, NationsBank, N.A., as Co-Agent, and The
Chase Manhattan Bank, as Agent. Terms defined in the Credit Agreement are used
herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth on the reverse
hereof, the interests set forth on the reverse hereof (the "Assigned Interest")
in the Assignor's rights and obligations under the Credit Agreement, including,
without limitation, the interests set forth on the reverse hereof in the
Commitment of the Assignor on the Effective Date and the Competitive Loans and
Standby Loans owing to the Assignor which are outstanding on the Effective Date.
Each of the Assignor and the Assignee hereby makes and agrees to be bound by all
the representations, warranties and agreements set forth in Section 10.04(c) of
the Credit Agreement, a copy of which has been received by each such party. From
and after the Effective Date (i) the Assignee shall be a party to and be bound
by the provisions of the Credit Agreement and, to the extent of the interests
assigned by this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to
the extent of the interests assigned by this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
2. This Assignment and Acceptance is being delivered to the Agent
together with (i) if the Assignee is organized under the laws of a jurisdiction
outside the United States, the forms specified in Section 2.19(f) of the Credit
Agreement, duly completed and executed by such Assignee, (ii) if the Assignee is
not already a Bank under the Credit Agreement, an Administrative Questionnaire
in the form of Exhibit B to the Credit Agreement and (iv) a processing and
recordation fee of $2,000.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
conflicts of laws principles or provisions.
2
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
Percentage Assigned of
Facility and Commitment
Thereunder (as set forth,
to at least 8 decimals, as
a percentage of the Facility
and the aggregate Commitments
Facility Principal Amount Assigned of all Lenders thereunder)
- -------- ------------------------- --------------------------
ABR Loans:
CD Loans:
Eurocurrency Loans:
Eurodollar Competitive
Loans:
Eurodollar Standby Loans:
Fixed Rate Competitive
Loans:
The terms set forth above and on
the reverse side hereof are hereby
agreed to: Accepted:(1)
, as Assignor THE CHASE MANHATTAN BANK, as agent
- ------------------------------
By: By:
-------------------------- -------------------------------
Name: Name:
Title: Title:
, as Assignee [Name of Borrower]
- ------------------------------
By: By:
-------------------------- ------------------------------
Name: Name:
Title: Title:
EXHIBIT D-1
BORROWING SUBSIDIARY AGREEMENT dated as of
, 19 , among MANOR CARE, INC., a
Delaware corporation (the "Company"), [Names of the other
Borrowers](the foregoing corporations being collectively called
the "Borrowe s"), [Name of Subsidiary], a [ ] corporation (the
"Subsidiary"), the guarantors whose names appear at the foot of
the Credit Agreement referred to below (the "Guarantors", which
term shall also include the Borrowers), the Required Lenders (as
defined in the Credit Agreement referred to below), NationsBank,
N.A., as Co-agent (the "Co-Agent") and THE CHASE MANHATTAN BANK,
a New York banking corporation, as agent (the "Agent") for the
lenders (the "Lenders") party to the Amended and Restated
Competitive Advance and Multi-Currency Revolving Credit Facility
Agreement dated as of November 30, 1994, as amended and restated
as of September 6, 1996 (the "Credit Agreement"), among the
Borrowers, the Co-agent, the Agent and the Lenders.
Under the Credit Agreement, the Lenders have agreed, upon the terms and
subject to the conditions therein set forth, to make Loans to the Borrowers and
to subsidiaries (as defined in the Credit Agreement) of the Company which
execute and deliver to the Agent Borrowing Subsidiary Agreements in the form of
this Agreement. The Company represents that the Subsidiary is a subsidiary (as
so defined) of the Company. The Company covenants and agrees with each Lender
that the Company shall, so long as this Agreement shall remain in effect,
directly or indirectly maintain the Subsidiary as a subsidiary (as so defined)
of the Company. The parties hereto agree that the guarantee of the Company
contained in Article IX of the Credit Agreement applies to the obligations of
the Subsidiary. In consideration of being permitted to borrow under the Credit
Agreement upon the terms and subject to the conditions set forth therein, the
Subsidiary agrees that from and after the date of this Agreement it will be, and
will be liable for the observance and performance of all the obligations of, a
Borrowing Subsidiary under the Credit Agreement (including as a Borrower
thereunder), as the same may be amended from time to time, to the same extent as
if it had been one of the original parties to the Credit Agreement including,
without limitation, Section 10.15 thereof.
4
If at any time no Loans are outstanding to the Subsidiary then this
Agreement can be terminated by notice from the Company and the Subsidiary to the
Agent in accordance with Section 10.01 of the Credit Agreement.
Notices under the Credit Agreement shall be made as follows:
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized officers as of the date first appearing above.
MANOR CARE, INC., as a Borrower and a
guarantor,
by
Title:
[Name of Borrower], as a Borrower,
by
Title:
[Name of Borrower], as a Borrower,
by
Title:
[Name of Borrower], as a Borrower,
by
Title:
5
[Name of Subsidiary],
by
Title:
Accepted as of the date first appearing
above:
THE CHASE MANHATTAN BANK, individually and as
Agent,
by
Title:
NATIONSBANK, N.A., individually and as
Co-Agent,
by
Title:
[OTHER LENDERS],
by
Title:
EXHIBIT D-2
SUBSTANCE OF OPINION
OF COUNSEL TO BE DELIVERED
ON THE DATE OF THE FIRST BORROWING
BY EACH BORROWING SUBSIDIARY
1. The Borrowing Subsidiary (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted and as proposed to be
conducted, (c) is qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to qualify would not
result in a Material Adverse Effect, and (d) has the power and authority to
execute, deliver and perform its obligations under each of the Loan Documents
and each other agreement or instrument contemplated thereby to which it is or
will be a party and to borrow thereunder.
2. The execution, delivery and performance by the Borrowing
Subsidiary of each of the Loan Documents to which it is a party and the
borrowings thereunder (collectively, the "Transactions") have been duly
authorized by all requisite action and, if required, stockholder action on the
part of the Borrowing Subsidiary.
3. The Agreement has been duly executed and delivered by the
Borrowing Subsidiary and constitutes, and each other Loan Document when executed
and delivered by the Borrowing Subsidiary will constitute, a legal, valid and
binding obligation of the Borrowing Subsidiary enforceable against the Borrowing
Subsidiary in accordance with its terms.
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms................................................ 2
SECTION 1.02. Terms Generally............................................. 24
ARTICLE II
The Credits
SECTION 2.01. Commitments................................................. 25
SECTION 2.02. Loans....................................................... 25
SECTION 2.03. Competitive Bid Procedure................................... 28
SECTION 2.04. Standby Borrowing Procedure................................. 31
SECTION 2.05. Refinancings.................................................32
SECTION 2.06. Fees........................................................ 33
SECTION 2.07. Evidence of Indebtedness;
Repayment of Loans.............................. 33
SECTION 2.08. Interest on Loans........................................... 34
SECTION 2.09. Default Interest............................................ 35
SECTION 2.10. Alternate Rate of Interest.................................. 36
SECTION 2.11. Termination and Reduction of Commitments........ 37
SECTION 2.12. Prepayment.................................................. 38
SECTION 2.13. Reserve Requirements; Change in
Circumstances................................. 38
SECTION 2.14. Change in Legality.......................................... 41
SECTION 2.15. Indemnity................................................... 42
SECTION 2.16. Pro Rata Treatment.......................................... 43
SECTION 2.17. Sharing of Setoffs.......................................... 43
SECTION 2.18. Payments.................................................... 44
SECTION 2.19. Taxes....................................................... 45
ARTICLE III
Representations And Warranties
SECTION 3.01. Organization; Powers........................................ 48
SECTION 3.02. Authorization............................................... 49
SECTION 3.03. Enforceability.............................................. 49
SECTION 3.04. Governmental Approvals...................................... 50
SECTION 3.05. Financial Statements........................................ 50
SECTION 3.06. No Material Adverse Change.................................. 50
SECTION 3.07. Title to Properties; Possession Under
Leases........................................ 50
i
SECTION 3.08. Subsidiaries................................................ 51
SECTION 3.09. Litigation; Compliance with Laws............................ 51
SECTION 3.10. Agreements.................................................. 51
SECTION 3.11. Federal Reserve Regulations................................. 52
SECTION 3.12. Investment Company Act; Public Utility
Holding Company Act. ......................... 52
SECTION 3.13. Use of Proceeds. ........................................... 52
SECTION 3.14. Tax Returns................................................. 52
SECTION 3.15. No Material Misstatements. ................................. 52
SECTION 3.16. Employee Benefit Plans...................................... 53
SECTION 3.17. Environmental Matters....................................... 53
SECTION 3.18. Solvency.................................................... 53
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Borrowings.............................................. 54
SECTION 4.02. First Borrowing............................................. 55
SECTION 4.03. First Borrowing by Each Borrowing
Subsidiary.................................... 57
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties........................ 59
SECTION 5.02. Insurance................................................... 59
SECTION 5.03. Obligations and Taxes....................................... 60
SECTION 5.04. Financial Statements, Reports, etc.......................... 60
SECTION 5.05. Litigation and Other Notices................................ 61
SECTION 5.06. ERISA....................................................... 62
SECTION 5.07. Maintaining Records; Access to Properties
and Inspections............................... 63
SECTION 5.08. Use of Proceeds............................................. 63
SECTION 5.09. Ownership................................................... 63
SECTION 5.10. Spin-Off Transactions............................63
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness................................................ 64
SECTION 6.02. Liens....................................................... 67
SECTION 6.03. Sale and Lease-Back Transactions............................ 69
SECTION 6.04. Investments, Loans and Advances............................. 69
SECTION 6.05. Mergers and Consolidations.................................. 70
SECTION 6.06. Asset Sales................................................. 71
ii
SECTION 6.07. Transactions with Affiliates................................ 71
SECTION 6.08. Business of Company and Subsidiaries........................ 72
SECTION 6.09. Subsidiary Indebtedness..................................... 72
SECTION 6.10. Agreements.................................................. 72
SECTION 6.11. Minimum Consolidated Net Worth.............................. 73
SECTION 6.12. Consolidated Debt Ratio..................................... 73
SECTION 6.13. Consolidated Interest Coverage Ratio........................ 73
ARTICLE VII
Events of Default 74
ARTICLE VIII
The Agent 78
ARTICLE IX
Guarantee 81
ARTICLE X
Miscellaneous
SECTION 10.01. Notices.................................................... 83
SECTION 10.02. Survival of Agreement...................................... 84
SECTION 10.03. Binding Effect............................................. 85
SECTION 10.04. Successors and Assigns..................................... 85
SECTION 10.05. Expenses; Indemnity........................................ 88
SECTION 10.06. Right of Setoff............................................ 91
SECTION 10.07. Applicable Law............................................. 91
SECTION 10.08. Waivers; Amendment......................................... 91
SECTION 10.09. Interest Rate Limitation................................... 92
SECTION 10.10. Entire Agreement........................................... 92
SECTION 10.11. Waiver of Jury Trial; Punitive
Damages...................................... 92
SECTION 10.12. Severability............................................... 93
SECTION 10.13. Counterparts............................................... 93
SECTION 10.14. Headings................................................... 93
SECTION 10.15. Jurisdiction; Consent to Service of
Process; Judgment Currency. ................. 93
SECTION 10.16. Confidentiality. .......................................... 96
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
iii
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Competitive Bid
Accept/Reject Letter
Exhibit A-5 Form of Standby Borrowing Request
Exhibit B Form of Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D-1 Form of Borrowing Subsidiary Agreement
Exhibit D-2 Form of Opinion of Counsel to Borrowing
Subsidiary
Schedule 1.01 Spin-Off Subsidiaries
Schedule 2.01 Commitments
Schedule 3.08 Subsidiaries
Schedule 6.01(a) Permitted Indebtedness
Schedule 6.01(i) Insurance Programs
Schedule 6.01(j) Existing Bonds
Schedule 6.02 Permitted Liens
Schedule 6.02(j) Permitted Mortgages
Schedule 6.04 Permitted Investments
Schedule 6.06 Investment Properties
iv