EXHIBIT 10.34
KEY PRINCIPAL RECOURSE AGREEMENT
This Key Principal Recourse Agreement ("Agreement") is made as of this
1st day of June, 1999 by Candlewood Hotel Company, Inc., a Delaware corporation
("Candlewood") for the benefit of Boston Capital Institutional Advisors LLC, a
Delaware limited liability company (the "Lender").
WITNESSETH:
WHEREAS, Candlewood owns certain interests in Candlewood Hotel Company
Fund I, LLC (the "Borrower"); and
WHEREAS, the Lender intends to enter into a certain Loan Agreement of
even date herewith (as amended, modified and from time to time in effect, the
"Loan Agreement") pursuant to which the Lender will make certain loan advances
to the Borrower to enable the Borrower through Wholly Owned Subsidiaries to
finance a portion of the cost of acquisition of certain parcels of real property
and the construction of extended-stay hotel projects thereon; and
WHEREAS, the Loan is to be evidenced by a certain Promissory Note of
even date herewith (as amended, modified and from time to time in effect, the
"Note") from the Borrower to the order of the Lender;
WHEREAS, as a condition to the Lender entering into the Loan Agreement
and making the Loan, Candlewood is required to execute and deliver this
Agreement; and
WHEREAS, Candlewood desires to execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and notwithstanding any contrary provisions contained in
the Note or any of the other Loan Documents, Candlewood hereby agrees with and
for the benefit of the Lender as follows:
1. Certain Definitions. Capitalized terms used herein and not otherwise
defined herein are used herein as defined in the Loan Agreement.
2. Certain Recourse Matters.
2.1. Loan Obligations. Following any Triggering Event (as
hereinafter defined), Candlewood agrees to be liable for the full
payment and performance of all Loan Obligations to the Lender, whether
direct or indirect, absolute or contingent, due or to become due,
secured or unsecured, now existing or subsequently arising by contract,
operation of law or otherwise, including, without limitation, those
arising under or in connection with the Note, the Loan Agreement and the
other Loan Documents. Candlewood's obligations hereunder are not
conditioned upon any requirement that the Lender first attempt to
collect any of the Loan Obligations from the Borrower or any of the
other Obligors or to enforce any of the Loan Obligations against the
Borrower or any of the other Obligors.
2.2. Indemnity. Following any Triggering Event, Candlewood
hereby covenants and agrees (a) to indemnify and hold the Lender
harmless from and against any and all losses, damages, costs, expenses
(including reasonable attorneys' fees) or disbursements of any kind
whatsoever which may at any time be suffered or incurred by the Lender
in connection with the Loan or any Loan Document including without
limitation all costs and expenses under Section 9.1 of the Loan
Agreement; and (b) to defend the Lender from and against any and all
claims, demands, causes of action, actions, suits, liabilities and
obligations which may be asserted against the Lender in connection with
the Loan or any Loan Document.
2.3. Triggering Event. The term "Triggering Event" means any of
the following: (a) fraud or intentional misrepresentation by the
Borrower, Candlewood or any Hotel Owner or any representative thereof in
connection with the execution, delivery, or performance of any Loan
Document; (b) the Borrower's or any Hotel Owner's application or
appropriation in intentional violation of the Loan Documents of any
amounts (including without limitation all rents, revenues, profits and
capital contributions and all loan, insurance and taking proceeds)
received by the Borrower or such Hotel Owner in respect of any Approved
Project including, without limitation, any prohibited Distribution; (c)
any act of intentional waste or arson by the Borrower, Candlewood or any
Hotel Owner with respect to any Approved Project; (d) the Borrower or
any Hotel Owner paying any fees, commissions, amounts or any other
Distributions in intentional violation of the terms of any Loan Document
or the Borrower's or any Hotel Owner's Charter (regardless of whether
Candlewood receives or benefits from such payments); (e) a voluntary
bankruptcy filing by Borrower ("Voluntary Bankruptcy"); or (f) an
involuntary bankruptcy filing against Borrower brought by the
undersigned or any entity controlled directly or indirectly by (meaning
more than fifty percent (50%) of the beneficial interest in such entity
is owned, directly or indirectly, by) the undersigned ("Related Party
Filing"). Notwithstanding the foregoing, any action or inaction
(including a Voluntary Bankruptcy or Related Party Filing) of Borrower
or a Hotel Owner that would otherwise be a Triggering Event as
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herein defined shall not be a Triggering Event if such action or
inaction is performed or caused solely by BCIA CW Member, LLC or its
successors and assigns.
3. Intentionally Omitted.
4. Representations and Warranties. Candlewood hereby represents and
warrants to the Lender as follows:
4.1. Consideration. (a) it is directly or indirectly the owner
and holder of the membership interests in the Borrower and a vendor to
the Hotel Owners; (b) the Loan will inure directly or indirectly to its
benefit; and (c) after giving effect to its probable liability under
this Agreement, it is receiving at least reasonably equivalent
consideration from the Lender for entering into this Agreement.
4.2. Authority. (a) it is a duly organized and validly existing
corporation, in good standing under the laws of Delaware with power
adequate for the execution, delivery and performance of its obligations
under each Loan Document to which it is a party and grant to the Lender
the security interest in the Loan Security owned by it to secure the
Loan Obligations; (b) it has full power and authority to carry on its
business; and (c) its Board of Directors has approved the Loan and the
Letter of Intent dated February 17, 1999 relating to the Loan and
certain associated transactions.
4.3. Execution and Deliver; Binding Obligation. (a) each Loan
Document to which it is a party has been duly executed and delivered on
its behalf pursuant to authority legally adequate therefor; (b) each
Loan Document to which it is a party is in full force and effect and has
not been amended; and (c) each Loan Document to which it is a party is a
legal, valid and binding obligation of Candlewood, enforceable against
Candlewood in accordance with its terms, subject to the effect of
federal and state bankruptcy, insolvency and similar laws, and general
principals of equity.
4.4. No Violation. (a) it is not in violation of any term or
provision of its Charter or By-laws or of any agreement or other
instrument which is material to its business or assets, or, to its
knowledge, of any judgment, decree, governmental order, statute, rule or
regulation by which it is bound or to which any of its assets are
subject which is material to its business or assets; (b) the execution,
delivery and performance of each Loan Document to which it is a party
and the consummation of the transactions contemplated thereby will not
violate or constitute a default under any term or provision of its
Charter or By-laws or of any other document or agreement to which it is
a party or by which it may be bound or affected which is material to its
business or assets and none of such instruments imposes or is made in
contemplation of any obligation which is or will be inconsistent with
any other obligations imposed upon it under any Loan Document; and (c)
to its knowledge, no approval by, authorization of, or filing with
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any board, agency or authority is necessary in connection with its
execution and delivery of any Loan Document.
4.5. Deliveries; Financial Matters. (a) all statements,
financial or otherwise, submitted by it to the Lender in connection with
the transactions contemplated by the Loan are true and correct in all
material respects (but the Lender acknowledges that the proforma
financial statements are not a guarantee that the projected results will
actually occur); and (b) it has made no additional borrowings and
incurred no additional material liabilities since December 31, 1998
which would, individually or in the aggregate, have a material effect
upon such financial statements.
4.6. No Proceedings. (a) there are no actions, suits,
proceedings (including, without limitation, any condemnation proceeding,
any proceeding in the nature of bankruptcy or for reorganization or
arrangement or any proceeding by any governmental authority) or
investigations at law or in equity before or by any court or public
board or body pending or, to its knowledge, threatened or contemplated
against or affecting it, wherein an unfavorable decision, ruling or
finding would in any material respect adversely affect the validity or
enforceability of any Loan Document to which it is a party, its
condition (financial or otherwise) or its ability to meet its
obligations under any Loan Document to which it is a party, except
actions, suits, proceedings or investigations fully covered by insurance
and fully disclosed to the Lender; and (b) it is not in violation or
default with respect to any order, writ, injunction, decree or demand of
any court or any governmental authority affecting it which violation or
default would in any material respect adversely affect its business or
assets.
5. Waivers.
5.1. Waivers Generally. Candlewood hereby acknowledges receipt
of a copy of the Loan Agreement and each other Loan Document as in
effect on the date hereof, and consents to all of the terms and
provisions thereof, as the same may be from time to time hereafter
amended or changed. Candlewood hereby waives (a) presentment, demand for
payment and protest of nonpayment of any of the Loan Obligations, and
notices of protest, dishonor and nonperformance; (b) notice of
acceptance of this Agreement and notice that loan advances have been
made by the Lender in reliance hereon; (c) notice of any Event of
Default; (d) demand for performance or observance of, and any
enforcement of any provision of, or any pursuit or exhaustion of rights
or remedies with respect to the Loan Agreement or any other Loan
Document or any Obligor or guarantor of the Loan Obligations and any
requirements of diligence or promptness on the Lender's part in
connection therewith; (e) any defense based on an election of remedies
by the Lender; (f) to the extent it lawfully may do so, any defense
based upon any statute or rule of law which provides that the obligation
of a surety must be neither larger in amount nor in other respects more
burdensome than that of the principal; and (g) to the extent it lawfully
may do so, any and all demands and notices
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of every kind and description with respect to the foregoing or which may
be required to be given by any statute or rule of law, and defense
(other than payment) of any kind which it may now or hereafter have with
respect to the Loan Agreement or any other Loan Document, or any
guaranty of or any collateral securing the Loan Obligations. No delay or
omission on the Lender's part in exercising any right under the Loan
Agreement or any other Loan Document, or under any guaranty of the Loan
Obligations, or with respect to any other collateral securing the Loan
Obligations, shall operate as a waiver or relinquishment of such right.
To the extent Candlewood may lawfully do so, it hereby agrees to waive,
and does hereby absolutely and irrevocably waive and relinquish the
benefit and advantage of, and does hereby covenant not to assert, any
appraisement, valuation, stay, extension, redemption or similar laws,
now or at any time hereafter in force, which might delay, prevent or
otherwise impede the performance or enforcement of the Loan Obligations.
The obligations of Candlewood under this Agreement shall not be affected
by the invalidity or unenforceability of any of the Loan Obligations as
against any other person. For purposes of this Agreement, the Loan
Obligations shall be due and payable when and as the same shall be so
due and payable under the terms of the Loan Agreement or any other Loan
Document, notwithstanding the fact that the collection or enforcement
thereof may be stayed or enjoined under Title 11 of the United States
Code, as from time to time in effect, or other applicable law.
5.2. Waivers of Subrogation. Candlewood hereby covenants and
agrees that (a) it will not enforce or otherwise exercise any rights of
reimbursement, subrogation, offset, contribution or other similar rights
or claims with respect to the obligations and indemnification provided
for herein against any Person, including, without limitation, the
Borrower or any other Obligor, prior to the full and indefeasible
payment and performance of the Loan Obligations; and (b) it hereby
waives all rights of reimbursement, subrogation, offset, contribution
and all other similar rights and claims against the Borrower or any
other Obligor arising whether by contract or operation of law out of or
in connection with any payment made under this Agreement prior to the
full payment and performance of the Loan Obligations and within one year
after the full payment and performance of the Loan Obligations or such
lesser time if such payments can no longer be voided by the bankruptcy
of Candlewood. The provisions set forth in this Section 5.2 may not be
altered, amended or waived without the express written consent of the
Lender and shall survive the full payment and performance of the Loan
Obligations and the termination of this Agreement.
5.3. The Lender's Power to Waive. Candlewood hereby grants to
the Lender full power in its uncontrolled discretion, without notice to
it, such notice being hereby expressly waived, and without in any way
affecting its liability under this Agreement (a) to waive compliance
with and any Event of Default under, and to consent to any amendment or
change of any terms of the Loan Agreement or any other Loan Document
other than this Agreement, and any guaranty thereof, each to the extent
that
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it affects the Loan Obligations from time to time; (b) to grant any
extensions or renewals of the Loan Obligations and any other indulgence
with respect thereto, and to effect any release, compromise or
settlement with respect thereto; and (c) to take other Loan Security in
any form for the Loan Obligations and to consent to the addition to or
the substitution, exchange, release or other disposition of, and to deal
in any other manner with, all or any part of the security which secures
the Loan Obligations, whether or not the property, if any received upon
the exercise of such power shall be of a character or value the same as
or different from the character or value of any property disposed of.
6. Notices. All notices or other communications required or permitted to
be given hereunder shall be in writing and delivered by hand or mailed, postage
prepaid, by registered or certified mail, return receipt requested or by a
nationally recognized overnight courier for delivery the next Business Day.
Notices shall be deemed given (a) when delivered if delivered by hand, (b) three
(3) Business Days after mailing by registered or certified mail or (c) the next
Business Day following deposit with a nationally recognized overnight courier.
All notices shall be addressed:
If to Candlewood, to:
Candlewood Hotel Company, Inc.
0000 Xxxx 00xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Fix
with a copy to:
Xxxxxx & Xxxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
If to the Lender, to:
Boston Capital Institutional Advisors LLC
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
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with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxx III, Esq.
with an additional copy to
Massachusetts Mutual Life Insurance Company
Real Estate Finance Group
0000 Xxxxx Xxxxxx X000
Xxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx
Either party hereto may from time to time change its address by
providing notice to the other party hereto in accordance with the requirements
of this Section 6.
If the Lender commences an action against Candlewood to enforce any of
the terms hereof or because of the breach by Candlewood of any of the terms
hereof, or for the recovery of any sum secured hereby, Candlewood shall pay to
the Lender's reasonable attorneys' fees and all costs and expenses. The right to
such reasonable attorneys' fees and all costs and expenses shall be deemed to
have accrued on the commencement of such action, and shall be enforceable
whether or not such action is prosecuted to judgment. If Candlewood breaches any
term of this Agreement, the Lender may employ any attorney or attorneys to
protect its rights hereunder, and in the event of such employment following any
breach by Candlewood, Candlewood shall pay the reasonable attorneys' fees and
all costs and expenses incurred by the Lender, whether or not an action is
actually commenced against Candlewood by reason of such breach. All such fees,
costs and expenses shall become part of the Loan Obligations. Notwithstanding
the foregoing, if Candlewood prevails in any litigation with the Lender
regarding any enforcement action then Candlewood shall not be required to pay
the fees, costs and expenses related to such action to the Lender.
7. Venue; Service of Process. Each of the Lender and Candlewood:
(a) Irrevocably submits to the nonexclusive jurisdiction of the state
courts of The Commonwealth of Massachusetts and to the nonexclusive jurisdiction
of the United States District Court for the District of Massachusetts for the
purpose of any suit, action or other proceeding arising out of or based upon
this Agreement or any other Loan Document or the subject matter hereof or
thereof;
(b) Waives to the extent not prohibited by applicable law, and agrees
not to assert, by way of motion, as a defense or otherwise, in any such
proceeding brought in any of the above-
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named courts, any claim that it is not subject personally to the jurisdiction of
such court, that its property is exempt or immune from attachment or execution,
that such proceeding is brought in an inconvenient forum, that the venue of any
such proceeding is improper, or that this Agreement or any other Loan Document,
or the subject matter hereof or thereof, may not be enforced in or by such
court; and
(c) Consents to service of process in any such proceeding in any manner
permitted by Chapter 223A of the General Laws of The Commonwealth of
Massachusetts and agrees that service of process by registered or certified
mail, return receipt requested, at its address specified in or pursuant to
Section 6 is reasonably calculated to give actual notice.
8. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF the Lender AND CANDLEWOOD WAIVES, AND COVENANTS
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY
RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND OR
ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE LOAN
OBLIGATIONS OR IN ANY WAY CONNECTED WITH THE DEALINGS OF THE LENDER OR
CANDLEWOOD IN CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE.
Candlewood acknowledges that it has been informed by the Lender that the
provisions of this Section 9 constitute a material inducement upon which the
Lender has relied, is relying and will rely in entering into the Loan Agreement
and any other Loan Document, and that it has reviewed the provisions of this
Section 9 with its counsel. the Lender or Candlewood may file an original
counterpart or a copy of this Section 9 with any court as written evidence of
the consent of the Lender and Candlewood to the waiver of the right to trial by
jury.
9. Successors and Assigns. This Agreement shall be binding upon
Candlewood and its successors and assigns and inure to the benefit of the Lender
and its successors and assigns.
10. Amendments or Waivers. This Agreement may not be waived, changed or
discharged orally but only by an agreement in writing and, with respect to
waivers or discharges, signed by the Lender and, with respect to other changes,
signed by the Lender and Candlewood, and any oral waiver, change or discharge of
any term or provision of this Agreement shall be without authority and of no
force or effect.
11. Intentionally Omitted.
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12. Miscellaneous. All covenants, agreements, representations and
warranties made in this Agreement or any other Loan Document or in certificates
delivered pursuant hereto or thereto shall be deemed to have been relied on by
the Lender and shall survive the execution and delivery to the Lender hereof and
thereof. The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof and any invalid or unenforceable provision shall be modified so as to be
enforced to the maximum extent of its validity or enforceability. The headings
in this Agreement are for convenience of reference only and shall not limit,
alter or otherwise affect the meaning hereof. This Agreement and the other Loan
Documents constitute the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral. This Agreement is a Loan
Document and may be executed in any number of counterparts which together shall
constitute one instrument. This Agreement shall be interpreted in accordance
with and governed by the laws (other than the conflict of laws rules) of The
Commonwealth of Massachusetts.
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IN WITNESS WHEREOF, this instrument has been executed and delivered by
Candlewood, under seal, as of the day and year first written above.
CANDLEWOOD HOTEL COMPANY, INC.
By: /s/ XXXXXX X. FIX
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Name: Xxxxxx X. Fix
Title: Executive Vice President,
Treasurer and Secretary
