Exhibit 10.31
GUARANTY
Guaranty (this "Guaranty"), dated as of June 1, 1999 of
CANDLEWOOD HOTEL COMPANY, INC., a Delaware corporation ("Guarantor") in favor of
CANDLEWOOD HOTEL COMPANY FUND I, LLC, a Delaware limited liability company (the
"Payee").
WHEREAS, Candlewood Ventures I, LLC, a Delaware limited liability
company (the "Member"), is a wholly-owned subsidiary of Guarantor and has
committed to make capital contributions to the Payee in respect of its
membership interests in the Payee in amounts set forth in that certain Limited
Liability Company Agreement of Candlewood Hotel Company Fund I, LLC, dated as of
the date hereof (the "LLC Agreement" capitalized terms used but not otherwise
defined herein shall have the meanings assigned thereto in the LLC Agreement),
by and between the Member and Boston Capital (the "Capital Contributions"); and
WHEREAS, Guarantor is willing to enter this Guaranty to induce
Payee to issue Membership Interests (as defined in the LLC Agreement) to the
Member;
NOW, THEREFORE, Guarantor hereby agrees:
Section 1. Guaranty by Guarantor.
(a) From and after the date hereof, Guarantor hereby
unconditionally guarantees the due and punctual payment of the Capital
Contributions by the Member in accordance with the terms of the LLC Agreement;
provided, however, that Guarantor shall not be liable to make any payment until
five (5) Business Days (as defined in the LLC Agreement) following receipt by
Guarantor of written notice from the Payee that a payment of an amount is due
thereunder. Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
LLC Agreement, any change in or amendment thereto, the absence of any action to
enforce the same, any waiver or consent by the Payee with respect to any
provision thereof, the recovery of any judgment against the Member or any action
to enforce the same, or any other circumstances which may otherwise constitute a
legal or equitable discharge or defense of a guarantor; provided, however, that
nothing contained herein shall be construed to be a waiver by Guarantor of
demand of payment or notice to Guarantor with respect to the LLC Agreement or
the Capital Contributions. Guarantor covenants that its obligations under this
Section 1(a) will not be discharged except by payment in full of the Capital
Contributions owing by the Member to the Payee in accordance with the terms of
the LLC Agreement.
(b) Guarantor shall make available to the Member such personnel
as may be reasonably necessary for the Member to accomplish its duties as
"manager" under and in accordance with the LLC Agreement.
(c) Guarantor hereby guarantees the performance of all of the
obligations of Candlewood Hotel Company, L.L.C., a Delaware limited liability
company, under each of the
Franchise Agreements.
(d) Guarantor covenants and agrees to execute and deliver
non-competition agreements with each Hotel Owner as contemplated by Section
3.3(d) of the LLC Agreement; provided, however, that Guarantor's obligation to
execute and deliver any such agreement shall be subject to Guarantor and the
Board reaching mutual agreement on the radius, the duration, the brands of hotel
covered and any other term of such agreement.
(e) Guarantor covenants and agrees that it will provide such
payment, performance and completion guaranties and environmental indemnities,
all in form and substance reasonably satisfactory to Candlewood, as are
reasonably required by any Construction Lender in connection with any
Construction Loan.
(f) Guarantor shall be subrogated to all rights of the Payee in
respect of any amounts paid by Guarantor pursuant to the provisions of this
Guaranty. Notwithstanding the immediately preceding sentence, Guarantor 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 the Member prior to the payment in full of the Capital
Contributions and the full and indefeasible payment and performance of Payee's
obligations under the Loan Agreement and (b) it hereby waives all rights of
reimbursement, subrogation, offset, contribution and all other similar rights
and claims against the Member 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 Payee's obligations under the Loan Agreement
or such lesser time if such payments can no longer be voided by the bankruptcy
of Guarantor.
(g) This Guaranty shall continue to be effective or reinstated,
as the case may be, if at any time any amount owed to the Payee by the Member
under the LLC Agreement is rescinded or must otherwise be returned by the Payee
upon the insolvency, bankruptcy or reorganization by Guarantor, the Member or
otherwise, all as though such payment had not been made.
Section 2. Miscellaneous
Section 2.1. Notices. All notices to Guarantor under this
Guaranty and copies of all notices to the Member with respect to Capital
Contributions owing by the Member under the LLC Agreement shall, until Guarantor
furnishes written notice to the contrary, be mailed or delivered to Guarantor at
0000 X. 00xx Xxxxxx X., Xxxxx 000, Xxxxxxx, XX 00000, and directed to the
attention of the Executive Vice President of Guarantor.
Section 2.2. Governing Law. This Guaranty shall be construed and
enforced in accordance with, and governed by, the laws of the Commonwealth of
Massachusetts.
Section 2.3. Interpretation. The headings of the sections and
other subdivisions of this Guaranty are inserted for convenience only and shall
not be deemed to constitute a part
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hereof.
Section 2.4. Attorneys' Cost. If Payee commences an action
against Guarantor to enforce any of the terms hereof or because of the breach by
Guarantor of any of the terms hereof, Guarantor shall pay Payee'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 Guarantor breaches any term of this
Agreement, Payee may employ any attorney or attorneys to protect its rights
hereunder, and in the event of such employment following any breach by
Guarantor, Guarantor shall pay the reasonable attorneys' fees and all costs and
expenses incurred by Payee, whether or not an action is actually commenced
against Guarantor by reason of such breach. Notwithstanding the foregoing, if
Guarantor prevails in any litigation with Payee regarding any enforcement action
then Guarantor shall not be required to pay the fees, costs and expenses related
to such action to Payee.
Section 2.5. Reimbursement of Certain Costs. Guarantor covenants
and agrees that it will pay any Transaction Expenses (as defined in the Loan
Agreement) owing by Payee to Lender in accordance with the terms of Section 12.3
of the Loan Agreement and reimburse Payee and Boston Capital for any Diligence
Expenses owing under the proviso in Section 8.8(a) of the LLC Agreement.
Section 2.6. Currency of Payment. Any payment to be made by
Guarantor shall be in United States Dollars.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of
the date first set forth above.
CANDLEWOOD HOTEL COMPANY, INC., a
Delaware corporation
By: /s/ XXXXXX X. FIX
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Name: Xxxxxx X. Fix
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Title: Executive Vice President,
Treasurer and Secretary
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SIGNATURE PAGE TO GUARANTY