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EXHIBIT 10.6
CREDIT FACILITY AGREEMENT
THIS CREDIT FACILITY AGREEMENT (this "Agreement") is entered into as
of this 11th day of November 1996, by and between Candlewood Hotel Company,
Inc., a Delaware corporation ("Candlewood Inc"), and Doubletree Corporation, a
Delaware corporation ("Doubletree").
RECITALS
A. Doubletree, the Warren D. Fix Family Partnership, L.P. (the "Fix
Partnership"), and JPD Corporation, a Kansas corporation, formed Candlewood Inc
in August 1996 to succeed to the business of Candlewood Hotel Company, L.L.C., a
Delaware limited liability company ("Candlewood LLC").
B. The membership interests in Candlewood LLC were owned 50% by
Doubletree, 42.5% by JPD Corporation and 7.5% by the Fix Partnership.
C. Pursuant to the Limited Liability Company Agreement of Candlewood
Hotel Company, L.L.C. (the "Candlewood LLC Agreement"), Doubletree agreed to
contribute to Candlewood LLC up to $15 million as requested by the members of
Candlewood LLC. The Candlewood LLC Agreement provided that Doubletree would
receive a preferred return on each such contribution equal to seven percent (7%)
per annum for the first twelve months following its contribution, ten percent
(10%) per annum for the second twelve months and fifteen percent (15%) per annum
thereafter.
D. Prior to the proposed public offering (the "Offering") of Common
Stock of Candlewood Inc, the amount of capital in excess of $200,100 previously
contributed to Candlewood LLC by Doubletree, together with a preferred return on
such amount (collectively, the "Excess Contribution Amount"), will be
distributed to Doubletree.
E. Candlewood Inc desires to obtain from Doubletree, prior to the
Offering, a $15 million subordinated credit facility.
G. Doubletree is willing to lend to Candlewood Inc an aggregate of
up to $15 million upon the terms and subject to the conditions set forth herein.
NOW THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS:
1. Initial Loan Disbursement. Concurrently with the execution of,
and subject to the terms and conditions of, this Agreement, Doubletree shall
make a loan (the "Initial Loan") to Candlewood Inc in a principal amount equal
to the Excess Contribution Amount, to be evidenced by a promissory note (the
"First Note") in the form attached as Exhibit A. The terms of the Initial Loan
shall be governed by the First Note.
2. Additional Loan Disbursements. Subsequent to the date of the
Initial Loan, subject to the terms and conditions of this Agreement, Doubletree
shall make
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additional loans (the "Additional Loans") to Candlewood Inc, at such times as
requested by Candlewood Inc upon 30 days' written notice, in increments of not
less than $100,000, each such loan to be evidenced by a promissory note (an
"Additional Note") in the form attached as Exhibit B. The terms of each
Additional Loan shall be governed by the applicable Additional Note. The
aggregate principal amount of the Initial Loan and the Additional Loans shall
not exceed $15 million. Repayment of the Initial Loan or any of the Additional
Loans shall not affect this $15 million limit. For example, if the aggregate
principal amount of the Initial Loan and the Additional Loans were $13 million
(leaving $2 million available for borrowing hereunder) and Candlewood repaid $5
million of that principal amount, the total principal amount available for
borrowing hereunder would remain $2 million.
3. Conditions Precedent. Doubletree's obligation to make the Initial
Loan is subject to its receipt of the Initial Note, fully executed and
acknowledged. Doubletree's obligation to make an Additional Loan is subject to
its receipt of (i) a written request for such Additional Loan from Candlewood
Inc at least 5 days (or such shorter time as shall be agreed upon by the
parties) prior to the date on which Candlewood Inc. requests that the Additional
Loan be disbursed and (ii) an Additional Note, fully executed and acknowledged;
provided, however that if (a) any proceedings shall be commenced by or against
Candlewood Inc, as debtor, under any bankruptcy, reorganization, insolvency,
readjustment of debt, arrangement, receivership or liquidation law or statute of
the federal or any state government and such proceeding has not been dismissed
or an order for relief granted with respect thereto or (b) if an event which
would, or which with the giving of notice or passage of time would, permit any
of the Note or the Additional Notes to be accelerated and to become immediately
due at the option of the holder thereof, shall have occurred and be continuing
or would occur and exist after the funding of such Additional Loan, and such
event shall not have been waived or consented to by the holders of the Note or
the Additional Note, Doubletree shall be under no obligation to make an
Additional Loan.
4. Miscellaneous.
(a) All notices, requests and other communications required or
permitted to be made hereunder shall, except as otherwise provided, be in
writing and may be delivered personally or sent by telegram, telecopy,
telex or certified mail, postage prepaid, addressed as follows:
To Doubletree: Doubletree Corporation
410 North 44th Street, Suite 700
Phoenix, Arizona 85008
Attention: David L. Stivers
Senior Vice President, General Counsel and
Secretary
Telecopy number: (602) 220-6602
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To Candlewood Inc: Candlewood Hotel Company, Inc.
Lakepoint Office Park
9342 East Central
Wichita, Kansas 67206-2555
Attention: Warren D. Fix
Executive Vice President, Chief
Financial
Officer and Secretary
Telecopy number: (316) 631-1333
with a copy to: Latham & Watkins
650 Town Center Drive, Suite 2000
Costa Mesa, California 92626
Attention: Charles K. Ruck
Telecopy number: (714) 755-8290
Such notices, requests and other communications sent shall be effective
upon receipt, unless sent by (i) overnight courier, in which case they
shall be effective exactly one (1) business day after deposit with such
overnight courier, or (ii) mail, in which case they shall be effective
exactly three (3) business days after deposit in the United States mail.
Either party may change its address or other information by giving notice
thereof to the other party hereto in conformity with this paragraph.
(b) This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
(c) This Agreement or any provision hereof may be changed,
waived, or terminated only by a statement in writing signed by the party
against which such change, waiver or termination is sought to be enforced.
(d) All rights of Doubletree hereunder shall inure to the
benefit of its successor and assigns. Candlewood Inc shall not assign any
of its interest under this Agreement without the prior written consent of
Doubletree; provided that Candlewood Inc shall be entitled to direct loans
made pursuant hereto to be paid to any of its directly or indirectly
wholly owned subsidiaries. Any purported assignment inconsistent with this
provision shall, at the option of Doubletree, be null and void.
(e) In any action or proceeding brought to enforce any
provision of this Agreement, or to seek damages for a breach of any
provision hereof, or where any provision hereof is validly asserted as a
defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
(f) If any provision of this Agreement should be found to be
invalid or unenforceable, all of the other provisions shall nonetheless
remain in full force and effect to the maximum extent permitted by law.
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(g) This Agreement, together with the Initial Note and
Additional Notes, is intended by the parties as a final expression of
their agreement and is intended as a complete and exclusive statement of
the terms and conditions thereof. Acceptance of or acquiescence in a
course of performance rendered under this Agreement shall not be relevant
to determine the meaning of this Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and
opportunity for objection.
(h) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same agreement.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement
as of the date set forth above.
DOUBLETREE CORPORATION, CANDLEWOOD HOTEL COMPANY, INC.,
a Delaware corporation a Delaware corporation
By: /s/ Richard M. Kelleher By: /s/ Warren D. Fix
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Name: Richard M. Kelleher Warren D. Fix
Title: President and CEO Executive Vice President, Chief
Financial Officer and Secretary
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