Exhibit 10.23
Deed of Trust, Assignment and
Security Agreement
THIS DEED OF TRUST, ASSIGNMENT
AND SECURITY AGREEMENT (this “Deed of Trust” ) is
made as of the 22nd day of February, 2005, by and between EHP
PHOENIX SUITES, LLC (“EHP”), Delaware limited
liability company, and PHOENIX SUITES TRS, INC.
(“TRS”), a Maryland corporation (EHP and TRS are
sometimes hereinafter individually and collectively referred to as
the “Grantor” ), each of whose address is 100
East RiverCenter Blvd. Suite 480, Covington, Kentucky 41001, and
Stewart Title & Trust of Phoenix, Inc (the
“Trustee” ) with an address at 244 West Osborn
Road, Phoenix Arizona 85013, for the benefit of U.S. BANK
NATIONAL ASSOCIATION (the “Lender” ), with
an address at c/o Commercial Real Estate Department, 425 Walnut
Street, 10th Floor, CN-OH-W10C, Cincinnati, Ohio 45202.
WHEREAS, the EHP is the owner of a certain tract or
parcel of land described in Exhibit A attached hereto and
made a part hereof, together with the improvements now or hereafter
erected thereon; and TRS is the tenant on such land and
improvements pursuant to a Lease Agreement dated as of February 24,
2005 between EHP and TRS; and
WHEREAS, the Grantor has borrowed from the Lender in an
amount not to exceed TWENTY-TWO MILLION ONE HUNDRED THOUSAND AND
00/100 DOLLARS ($22,100,000) (the “Loan” ),
which Loan is evidenced by one or more promissory notes in favor of
the Lender (the “Note” );
NOW, THEREFORE
, for the purpose of securing the
payment and performance of the following obligations (collectively
called the “Obligations” ):
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A.
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the Loan, the Note and all other
loans, advances, debts, liabilities, obligations, covenants and
duties owing by the Grantor to the Lender or to any other direct or
indirect subsidiary of Lender or any direct or indirect parent of
Lender or any direct of indirect subsidiary of any direct or
indirect parent of Lender, of any kind or nature, present or future
(including any interest accruing thereon after maturity, or after
the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding relating to the
Grantor, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether or not evidenced
by any note, guaranty or other instrument, whether arising under
any agreement, instrument or document, whether or not for
the
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payment of money, whether arising
by reason of an extension of credit, opening of a letter of credit,
loan, equipment lease or guarantee, under any interest or currency
swap, future, option or other interest rate protection or similar
agreement, or in any other manner, whether arising out of
overdrafts on deposit or other accounts or electronic funds
transfers (whether through automated clearing houses or otherwise)
or out of the Lender’s non-receipt of or inability to collect
funds or otherwise not being made whole in connection with
depository transfer check or other similar arrangements, whether
direct or indirect (including those acquired by assignment or
participation), absolute or contingent, joint or several, due or to
become due, now existing or hereafter arising, and any amendments,
extensions, renewals or increases and all costs and expenses of the
Lender and/or the Trustees incurred in the documentation,
negotiation, modification, enforcement, collection or otherwise in
connection with any of the foregoing, including reasonable
attorneys’ fees and expenses.
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B.
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Any sums
advanced by the Lender or which may otherwise become due pursuant
to the provisions of the Note or this Deed of Trust or pursuant to
any other document or instrument at any time delivered to the
Lender to evidence or secure any of the Obligations or which
otherwise relate to any of the Obligations (as the same may be
amended, supplemented or replaced from time to time, the
“Loan Documents” ).
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The Grantor, for good and valuable
consideration, receipt of which is hereby acknowledged, and
intending to be legally bound hereby irrevocably bargains, sells,
grants, conveys, assigns, transfers and sets over unto the
Trustees, in trust with power of sale and the right of entry and
possession, forever, all of the Grantor’s right, title,
estate, claim and interest in the following described property, all
accessions and additions thereto, all substitutions therefor and
replacements and proceeds thereof, and all reversions and
remainders of such property now owned or held or hereafter acquired
(the “Property” ), to wit:
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A.
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All of the
Grantor’s estate in the following:
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All of that certain tract or
parcel of land located 4415 East Paradise Village Parkway South, in
Phoenix, Arizona, as described in Exhibit A which is
attached hereto and incorporated herein by reference for more
particular description of said land, together with and including
any other of Grantor’s land being adjacent to or a part of
the land described in Exhibit A which may not be
particularly described herein;
Together with all of the easements,
rights of way, privileges, liberties, hereditaments, gores,
streets, alleys, passages, ways, all water and water rights flowing
through, belonging or in any way appertaining to the Property, and
all of Grantor’s water rights that are personal property
under Arizona law including without limitation all type 1 and type
2 non-irrigation grandfathered rights (if applicable), all
irrigation rights, all ditch rights, rights to irrigation district
stock, all contracts for effluent, all contracts for Central
Arizona Project water, and all contractual rights to water, and
together with all rights (but none of the duties) of Grantor as
declarant under any presently recorded declaration of
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covenants, conditions, and
restrictions affecting real property; and all other rights,
royalties, and profits relating to the real property, including
without limitation all minerals, oil, gas, geothermal and similar
matters; and all of the Grantor’s estate, right, title,
interest, claim and demand therein and in the public streets and
ways adjacent thereto, either in law or in equity (the
“Land” );
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B.
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All the
buildings, structures and improvements of every kind and
description now or hereafter erected or placed on the Land, and all
facilities, fixtures, machinery, apparatus, appliances,
installations, machinery and equipment, including all building
materials to be incorporated into such buildings, all electrical
equipment necessary for the operation of such buildings and
heating, air conditioning and plumbing equipment now or hereafter
attached to, located in or used in connection with those buildings,
structures or other improvements (the
“Improvements” );
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C.
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All rents,
issues and profits arising or issuing from the Land and the
Improvements (the “Rents” ) including the Rents
arising or issuing from all leases and subleases now or hereafter
entered into covering all or any part of the Land and Improvements
(the “Leases” ), all of which Leases and Rents
are hereby assigned to the Lender by the Grantor. The foregoing
assignment shall include all fees, charges, accounts or other
payments for the use or occupancy of rooms and other public
facilities in hotels, motels, or other lodging properties, and all
cash or securities deposited under Leases to secure performance of
lessees of their obligations thereunder, whether such cash or
securities are to be held until the expiration of the terms of such
leases or applied to one or more installments of rent coming due
prior to the expiration of such terms. The foregoing assignment
extends to Rents arising both before and after the commencement by
or against the Grantor of any case or proceeding under any Federal
or State bankruptcy, insolvency or similar law, and is intended as
an absolute assignment and not merely the granting of a security
interest. The Grantor, however, shall have a license to collect,
retain and use the Rents so long as no Event of Default shall have
occurred and be continuing or shall exist. The Grantor will execute
and deliver to the Lender, on demand, such additional assignments
and instruments as the Lender may require to implement, confirm,
maintain and continue the assignment of Rents hereunder;
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D.
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All proceeds of
the conversion, voluntary or involuntary, of any of the foregoing
into cash or liquidated claims;
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TO HAVE AND TO HOLD the Property and
all other interests described above unto the Trustees; BUT IN
TRUST, NEVERTHELESS to secure to the Lender and Trustees for the
benefit of the Lender the payment and performance by the Grantor of
all of the Obligations; PROVIDED, HOWEVER, that until the
occurrence of an Event of Default, the Grantor shall have the sole
right to remain in peaceful possession of the Property; PROVIDED,
FURTHER HOWEVER, that if the Grantor shall pay, perform and satisfy
in full all of the Obligations, then, in such case, the estate,
right, title and interest of the Trustees and Lender in the
Property shall
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cease, and upon proof to the satisfaction of the
Lender that the Obligations have been paid, performed and satisfied
in full, Lender shall execute and deliver to Trustee a request for
full reconveyance without warranty and shall execute and deliver to
Grantor suitable statements of termination of any financing
statement on file evidencing Lenders security interest in the Rents
and Improvements; subject, however, to the survival of certain
rights and benefits in accordance with the provisions of the
paragraph entitled “Survival of Certain Provisions”.
Grantor shall pay any reconveyance fee required by law, if
permitted by applicable law. THIS DEED OF TRUST CONSTITUTES A
SECURITY AGREEMENT UNDER THE ARIZONA UNIFORM COMMERCIAL CODE. The
Grantor hereby grants to the Trustees and Lender a security
interest in all Property to which Article 9 of the Uniform
Commercial Code of the state of Arizona is applicable and the
proceeds (cash and noncash) thereof. Lender shall have all the
rights and remedies of a secured party under said Uniform
Commercial Code with respect to such Property.
THIS DEED OF TRUST IS GIVEN for the purpose of
creating a lien on the Property in order to secure not only any
existing indebtedness, but also future advances, whether such
advances are obligatory or to be made at the option of the Lender,
or otherwise, and whether made before or after default or maturity
or other similar events, to the same extent as if such future
advances were made on the date of the execution of this Deed of
Trust, although there may be no advance made at the time of the
execution hereof and although there may be no indebtedness
outstanding at the time any advance is made. Notwithstanding the
reduction of the amount(s) secured hereby at any time to zero, this
Deed of Trust shall remain in full force and effect until such time
as release or satisfaction thereof is filed of record by the
Lender.
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1.
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Representations and Warranties
. The Grantor represents and warrants to the
Trustees and Lender that the Grantor has good and marketable title
to an estate in fee simple absolute in the Land and Improvements
and has all right, title and interest in all other property
constituting a part of the Property, in each case free and clear of
all liens and encumbrances, except as may otherwise be set forth on
Exhibit B attached hereto. This Deed of Trust is a valid and
enforceable first lien on the Property (except as set forth on
Exhibit B ), and the Lender shall, subject to the
Grantor’s right of possession prior to an Event of Default,
quietly enjoy and possess the Property. The Grantor shall preserve
such title as it warrants herein and the validity and priority of
the lien hereof and shall forever warrant and defend the same to
the Lender against the claims of all persons.
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2.
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Affirmative Covenants
. Until all of the Obligations shall have been
fully paid, satisfied and discharged the Grantor shall:
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2.1
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Payment and
Performance of Obligations . Pay or cause to be paid and perform all
Obligations when due as provided in the Loan Documents.
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2.2
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Legal
Requirements . Promptly
comply with and conform in all material respects to all present and
future laws, statutes, codes, ordinances, orders and regulations
and all covenants, restrictions and conditions which may be
applicable to the Grantor or to any of the Property (the
“Legal Requirements” ).
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2.3
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Impositions . Before interest or penalties are due thereon
and otherwise when due, the Grantor shall pay all taxes of every
kind and nature, all charges for any easement or agreement
maintained for the benefit of any of the Property, all general and
special assessments (including, any condominium or planned unit
development assessments, if any), levies, permits, inspection and
license fees, all water and sewer rents and charges, and all other
charges and liens, whether of a like or different nature, imposed
upon or assessed against the Grantor or any of the Property (the
“Impositions” ). Within thirty (30) days after
the payment of any Imposition, the Grantor shall deliver to the
Lender evidence acceptable to the Lender of such payment. The
Grantor’s obligations to pay the Impositions shall survive
the Lender’s taking title to the Property through
foreclosure, deed-in-lieu or otherwise.
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2.4
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Maintenance
of Security . Use, and
permit others to use, the Property only for such uses as permitted
by applicable Legal Requirements and approved in writing by the
Lender. The Grantor shall keep the Property in good condition and
order and in a rentable and tenantable state of repair and will
make or cause to be made, as and when necessary, all repairs,
renewals, and replacements, structural and nonstructural, exterior
and interior, foreseen and unforeseen, ordinary and extraordinary.
The Grantor shall not remove, demolish or alter the Property nor
commit or suffer waste with respect thereto, nor permit the
Property to become deserted or abandoned. The Grantor covenants and
agrees not to take or permit any action with respect to the
Property that will in any manner impair the security of this Deed
of Trust.
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3.
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Leases . The
Grantor shall not (a) execute an assignment or pledge of the Rents
or the Leases other than in favor of the Lender; (b) accept any
prepayment of an installment of any Rents prior to thirty days
before the due date of such installment except advance deposits for
banquets, conferences or similar bookings in the ordinary course of
the hotel and conference business; or (c) enter into or amend any
of the terms of any of the Leases without the Lender’s prior
written consent. Any or all leases or subleases of all or any part
of the Property shall be subject in all respects to the
Lender’s prior written consent, shall be subordinated to this
Deed of Trust and to the Lender’s rights and, together with
any and all rents, issues or profits relating thereto, shall be
assigned at the time of execution to the Lender as additional
collateral security for the Obligations, all in such form,
substance and detail as is satisfactory to the Lender in its sole
discretion.
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4.
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Due on Sale
Clause . The
Grantor shall not sell, convey or otherwise transfer any interest
in the Property (whether voluntarily or by operation of law), or
agree to do so, without the Lender’s prior written consent,
including (a) any sale, conveyance, assignment, or other transfer
of (including installment land sale contracts), or the grant of a
security interest in, all or any part of the legal or equitable
title to the Property, except as otherwise permitted hereunder; or
(b) any sale, conveyance, assignment, or other transfer of, or the
grant of a security interest in, any membership interest in the
Grantor, except in favor of the Lender and except for any transfer
of title to the Real Estate or any transfer of a membership
interest to one or of the Guarantors (as defined in the Loan
Agreement
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of even date herewith between
Grantor and Lender (“Loan Agreement”)) or any entity
controlled 51% or more by one or more of the Guarantors, provided,
however that in connection with any such transfer, there exists no
Event of Default under this Deed of Trust and provided Lender is
given advanced written notice thereof by Grantor, and provided
further, however, that the transfer of ownership of the entirety of
the Property shall be contingent upon the transferee assuming the
Obligations pursuant to an assignment and assumption instrument
reasonably satisfactory to Lender and Promus Hotels, Inc., shall
confirm in writing that the License Agreement between Promus
Hotels, Inc., and TRS and all of such proposed transferees rights
thereunder will remain in full force and effect, the Guarantors
shall reaffirm their obligations under the Guaranty and the
Hazardous Substances Indemnity Agreement (as such documents are
defined in the Loan Agreement) and Grantor shall provide an
endorsement to Lender’s loan policy of title insurance
confirming that such transfer did not affect Lender’s rights
and benefits under such policy. Upon any transfer prohibited
hereunder, Lender may, at its option, declare immediately due and
payable all Obligations upon such sale or transfer effected without
Lender’s prior written consent. However, Lender shall not
exercise this option if such exercise is prohibited by federal law
or by Arizona law.
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5.
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Insurance . The
Grantor shall keep the Property continuously insured, in an amount
not less than the cost to replace the Property or an amount not
less than eighty percent (80%) of the full insurable value of the
Property, whichever is greater, against loss or damage by fire,
with extended coverage and against other hazards as the Lender may
from time to time require. With respect to any property under
construction or reconstruction, the Grantor shall maintain
builder’s risk insurance. The Grantor shall also maintain
comprehensive general public liability insurance, in an amount of
not less than Two Million Dollars ($2,000,000) per occurrence and
Ten Million Dollars ($10,000,000) general aggregate per location,
which includes contractual liability insurance for the
Grantor’s obligations under the Leases, and worker’s
compensation insurance. All property and builder’s risk
insurance shall include protection for continuation of income for a
period of twelve (12) months, in the event of any damage caused by
the perils referred to above. All policies, including policies for
any amounts carried in excess of the required minimum and policies
not specifically required by the Lender, shall be with an insurance
company or companies authorized to do business in the state of
Arizona and satisfactory to the Lender, shall be in form
satisfactory to the Lender, shall meet all coinsurance requirements
of the Lender, shall be maintained in full force and effect, shall
be assigned to the Lender, with premiums prepaid, as collateral
security for payment of the Obligations, shall be endorsed with a
standard mortgagee clause in favor of the Lender and shall provide
for at least thirty (30) days notice of cancellation to the Lender.
Such insurance shall also name the Lender as an additional insured
under the comprehensive general public liability policy and the
Grantor shall also deliver to the Lender a copy of the replacement
cost coverage endorsement.
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6.
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Rights of
Lender to Insurance Proceeds .
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6.1
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In the event of any loss under
any of said policies of insurance covering the Property, Grantor
shall give immediate written notice to the Lender, and
the
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Lender may, but is not obligated
to, make proof of loss if not made promptly by Grantor. Any
proceeds received from any policy of insurance shall be paid to
Lender and applied against the outstanding balance of principal,
interest and other charges due under the Obligations,
provided, however , if (i) Grantor desires to restore
the Property to its prior good condition, (ii) no Event of Default
exists hereunder, (iii) the loan to value ratio of the Mortgaged
Premises and Collateral as restored will not be more than 65% (as
may be determined by independent appraisal satisfactory to Lender
completed at Grantor’s expense), (iv) any funds in excess of
insurance proceeds necessary to complete the restoration work in
accordance with plans and specifications and budgets as approved by
the Lender shall have been deposited by Grantor with Lender, (v)
all insurance proceeds and any funds in excess thereof shall have
been deposited with Lender and the subject of appropriate pledge
and/or security agreement reasonably acceptable to Lender (pursuant
to which Lender shall have a first lien with respect to said
funds), (vi) Promus Hotels, Inc. shall confirm in writing that the
License Agreement, dated as of February
, 2005 (the
“License Agreement”) and all of Borrower’s rights
thereunder will remain in full force and effect, (vii) TRS’s
interest in the Property and all of Grantor’s rights
thereunder will remain in full force and effect, and (viii) Grantor
shall obtain confirmation from its insurance carrier that the
proceeds of rental interruption insurance sufficient to offset any
abatement of rents during the period of repair, reconstruction or
restoration will be paid monthly; then the insurance proceeds shall
be held by Lender for restoration of the Property. Lender shall
disburse so much of the proceeds to the Grantor as restoration
progresses, equal to the cost of said restoration, and subject to
reasonable conditions, including the right of Lender to withhold up
to ten percent (10%) of said amount until completion, and the
expiration of the period within which mechanic’s and
materialmen’s liens may be filed or until the receipt of
satisfactory evidence that no liens exist. Should the insurance
proceeds be less than the sum required to complete said
restoration, Grantor shall deposit the difference with the Lender,
and its failure to do so shall constitute default hereunder. Upon
payment of such sum to the Lender, the same shall be held by Lender
in a mutually acceptable interest-bearing account until
disbursement. Should said proceeds, including the interest payable
thereon, exceed the cost of completing said restoration, any
balance remaining shall be repaid to the Grantor. Grantor shall pay
to the Lender any reasonable expenses incurred by Lender in making
such disbursements and reasonable building inspections. Grantor
agrees to execute such further assignments of such proceeds and
rights of action as Lender may require.
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6.2
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Applicable
to Partial and Total Loss. In the event of a loss, as described above, all
proceeds and rights of action are hereby assigned to Lender. At its
option, in its own name, Lender shall be entitled to commence,
appear in and prosecute any action or proceedings or to make any
compromise or settlement in connection with any such loss. The
payment to the Lender of such insurance proceeds shall not cure or
waive any default or notice of default hereunder.
Notwithstanding
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such total or partial loss, all
payments under the Note and Loan Agreement shall be made without
reduction, modification or interruption and all applicable terms
and conditions of this Deed of Trust shall be applicable to Grantor
without modification or interruption.
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7.
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Installments for Insurance, Taxes and Other
Charges . Upon the Lender’s request after the
occurrence of an Event of Default, the Grantor shall pay to the
Lender monthly, an amount equal to one-twelfth (1/12) of the annual
premiums for the insurance policies referred to hereinabove and the
annual Impositions and any other item which
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