RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
Calderwood & Harkness LLP One Liberty Plaza, 52nd Floor New York, NY 10006
Attention: Sophie Tremblay
SPACE ABOVE THIS LINE FOR RECORDER'S USE
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FIXTURE FILING
This document constitutes a fixture filing under California Commercial Code Section 9502(c)
Assessor's Parcel Numbers:
Documentary Transfer Tax: Computed per applicable California county requirements; documentary transfer tax to be affixed separately per California Revenue and Taxation Code Section 11932. The amount of Documentary Transfer Tax is not shown on this document pursuant to Revenue and Taxation Code Section 11932 and is being paid concurrently with the recording of this instrument on a separate form filed with the applicable County Recorder.
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FIXTURE FILING (as it may be amended, restated, supplemented, or otherwise modified from time to time, this "Deed of Trust") is made and entered into as of July 21, 2022, by and among:
TRUSTOR:
VERIMARK RESORT PROPERTIES LLC, a Delaware limited liability company, with its principal place of business at 8200 West Palmetto Park Road, Suite 1500, Boca Raton, Florida 33433 (a wholly-owned subsidiary of Verimark Hospitality Group Inc., a Delaware corporation) (herein called "Trustor");
TRUSTEE:
CONTINENTAL FIDELITY TITLE COMPANY, a California corporation, having an office at 1221 Brickell Avenue, Suite 900, Miami, Florida 33131 (acting through its authorized California agent and office, as applicable under the California Civil Code) (herein called "Trustee");
BENEFICIARY:
CRESCENT HARBOR BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States, in its capacity as Collateral Agent for the Secured Parties under the Credit Agreement (as defined below), with an address at 600 Lexington Avenue, 34th Floor, New York, New York 10022 (herein called "Beneficiary").
RECITALS
WHEREAS, Verimark Hospitality Group Inc., a Delaware corporation ("VHG" or the "Borrower"), the Guarantors party thereto (including Trustor), Crescent Harbor Bank, National Association, in its capacity as Administrative Agent and Collateral Agent ("Crescent Harbor"), and the Lenders from time to time party thereto have entered into that certain Credit Agreement dated as of July 21, 2022 (as amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), pursuant to which the Lenders have agreed to extend credit to the Borrower in the form of a Seven Hundred Million Dollar ($700,000,000) Senior Secured Term Loan B facility (CUSIP: 92347LAB8; Crescent Harbor internal loan number: CHB-LF-2022-07814);
WHEREAS, Trustor is a Guarantor under that certain Guarantee Agreement dated as of July 21, 2022 (as amended, restated, supplemented, or otherwise modified from time to time, the "Guarantee Agreement"), among the Borrower, the Guarantors party thereto, and Crescent Harbor Bank, National Association, as Collateral Agent, pursuant to which Trustor has guaranteed the payment and performance of the Secured Obligations (as defined in the Credit Agreement and the Guarantee Agreement);
WHEREAS, Trustor has granted a security interest in certain of its personal property and other assets pursuant to that certain Pledge and Security Agreement dated as of July 21, 2022 (as amended, restated, supplemented, or otherwise modified from time to time, the "Pledge and Security Agreement"), among the Borrower, the Guarantors party thereto, and Crescent Harbor Bank, National Association, as Collateral Agent;
WHEREAS, Crescent Harbor Bank, National Association, in its capacity as Collateral Agent for the Term Loan B Lenders, and Crescent Harbor Bank, National Association, in its capacity as agent for the lenders under the Four Hundred Million Dollar ($400,000,000) revolving credit facility (the "RCF Agent"), have entered into that certain Amended and Restated Intercreditor Agreement dated as of July 21, 2022 (as amended, restated, supplemented, or otherwise modified from time to time, the "Intercreditor Agreement"), governing the pari passu sharing of first-lien collateral between the $700,000,000 Term Loan B facility and the $400,000,000 revolving credit facility;
WHEREAS, it is a condition precedent to the obligations of the Lenders under the Credit Agreement that Trustor execute and deliver this Deed of Trust to secure the Secured Obligations; and
WHEREAS, Trustor has determined that its execution and delivery of this Deed of Trust directly benefits Trustor and is in the best interests of Trustor.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure the full and prompt payment and performance of the Secured Obligations, Trustor hereby agrees as follows:
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ARTICLE I — DEFINITIONS
Section 1.01 — Defined Terms
Capitalized terms used and not otherwise defined in this Deed of Trust shall have the meanings ascribed to such terms in the Credit Agreement dated as of July 21, 2022. As used in this Deed of Trust, the following terms shall have the following meanings:
"Beneficiary" means Crescent Harbor Bank, National Association, a national banking association, in its capacity as Collateral Agent for the Secured Parties under the Credit Agreement, and its successors and assigns in such capacity.
"Credit Agreement" means that certain Credit Agreement dated as of July 21, 2022, among Verimark Hospitality Group Inc. (as Borrower), the Guarantors party thereto, Crescent Harbor Bank, National Association (as Administrative Agent and Collateral Agent), and the Lenders from time to time party thereto, providing for a $700,000,000 Senior Secured Term Loan B facility, as the same may be amended, restated, amended and restated, supplemented, refinanced, replaced, or otherwise modified from time to time.
"Deed of Trust" means this Deed of Trust, Assignment of Leases and Rents, Security Agreement, and Fixture Filing, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Event of Default" has the meaning ascribed to such term in the Credit Agreement.
"Guarantee Agreement" means that certain Guarantee Agreement dated as of July 21, 2022, among the Borrower, the Guarantors party thereto, and Crescent Harbor Bank, National Association, as Collateral Agent, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Intercreditor Agreement" means that certain Amended and Restated Intercreditor Agreement dated as of July 21, 2022, among Crescent Harbor Bank, National Association (in its capacity as Collateral Agent for the Term Loan B Lenders), Crescent Harbor Bank, National Association (in its capacity as RCF Agent for the revolving credit facility lenders), and the other parties thereto from time to time, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Loan Documents" has the meaning ascribed to such term in the Credit Agreement and includes, without limitation, the Credit Agreement, the Guarantee Agreement, the Pledge and Security Agreement, this Deed of Trust, and each other "Loan Document" as defined therein.
"Permitted Liens" has the meaning ascribed to such term in the Credit Agreement.
"Pledge and Security Agreement" means that certain Pledge and Security Agreement dated as of July 21, 2022, among the Borrower, the Guarantors party thereto, and Crescent Harbor Bank, National Association, as Collateral Agent, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Properties" means, collectively, the five (5) California hotel properties described in Exhibit A attached hereto and made a part hereof, together with all Improvements, Fixtures, and other items constituting part of the Trust Estate with respect thereto.
"Secured Obligations" means all "Secured Obligations" as defined in the Credit Agreement and the Guarantee Agreement, including, without limitation, all obligations of the Borrower and each Guarantor (including Trustor) with respect to the due and punctual payment of (a) the principal of and premium, if any, and interest on the Term Loans under the Credit Agreement (including interest accruing during the pendency of any bankruptcy, insolvency, receivership, or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) all fees, costs, expenses, indemnities, and other amounts payable by the Borrower or any Guarantor under any Loan Document, and (c) all obligations of the Borrower or any Guarantor under any Secured Hedge Agreement or any Secured Cash Management Agreement.
"Secured Parties" has the meaning ascribed to such term in the Credit Agreement.
"Trust Estate" has the meaning set forth in Section 2.01 of this Deed of Trust.
"Trustee" means Continental Fidelity Title Company, a California corporation, acting through its authorized California agent and office, or any successor trustee appointed or substituted in accordance with Section 11.11 of this Deed of Trust and applicable provisions of the California Civil Code.
"Trustor" means Verimark Resort Properties LLC, a Delaware limited liability company, and its permitted successors and assigns.
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of California (or, where applicable with respect to the perfection or priority of security interests, the Uniform Commercial Code as in effect in the State of Delaware or any other relevant jurisdiction).
Section 1.02 — Rules of Construction
(a) Unless the context otherwise requires, all references in this Deed of Trust to the Credit Agreement or any other Loan Document shall be deemed to include all amendments, supplements, restatements, amendments and restatements, refinancings, replacements, and other modifications thereto or thereof that are made in accordance with the terms thereof. All references to any statute, regulation, or rule shall be deemed to include all amendments, supplements, replacements, and successor statutes, regulations, or rules.
(b) The definitions of terms herein shall apply equally to 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." The word "will" shall be construed to have the same meaning and effect as the word "shall." Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument, or other document herein shall be construed as referring to such agreement, instrument, or other document as from time to time amended, restated, supplemented, or otherwise modified (subject to any restrictions on such amendments, restatements, supplements, or modifications set forth therein or in any Loan Document), (ii) any reference herein to any Person shall be construed to include such Person's successors and assigns, and (iii) the words "herein," "hereof," and "hereunder," and words of similar import, shall be construed to refer to this Deed of Trust in its entirety and not to any particular provision hereof.
(c) This Deed of Trust shall be interpreted and construed in accordance with the laws of the State of California as to all matters relating to real property, the creation, perfection, priority, and enforcement of liens on real property, the assignment of leases and rents, and the exercise of any power of sale or other non-judicial or judicial foreclosure remedy. California-specific statutory references include, without limitation, the California Civil Code, the California Code of Civil Procedure, the California Commercial Code, and the California Revenue and Taxation Code. To the extent that any provision of this Deed of Trust conflicts with any non-waivable provision of California law, the provisions of such California law shall control.
(d) The recitals set forth above are incorporated herein by this reference and made a part of this Deed of Trust.
ARTICLE II — GRANTING CLAUSES
Section 2.01 — Grant of Trust Estate
For the purpose of securing the Secured Obligations, Trustor hereby irrevocably GRANTS, TRANSFERS, CONVEYS, and ASSIGNS to Trustee, IN TRUST, WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, for the benefit of Beneficiary and the Secured Parties, all of Trustor's right, title, and interest in, to, and under the following property, rights, interests, and estates, whether now owned or hereafter acquired (collectively, the "Trust Estate"):
(a) Land. All those certain parcels of real property described in Exhibit A attached hereto and incorporated herein by this reference (individually, a "Parcel" and collectively, the "Land"), being five (5) hotel properties located in the State of California owned by Trustor. The Land constitutes part of the broader portfolio of forty-two (42) hotel properties owned by Verimark Resort Properties LLC across multiple states, which properties are part of Verimark Hospitality Group Inc.'s portfolio of seventy-four (74) hotel properties across eighteen (18) states, appraised in the aggregate at approximately Three Billion One Hundred Million Dollars ($3,100,000,000), with the forty-two (42) Trustor-owned properties appraised at approximately Two Billion One Hundred Eighty Million Dollars ($2,180,000,000).
(b) Improvements. All buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements, and improvements now or hereafter located upon the Land (collectively, the "Improvements"), including, without limitation, the five (5) hotel buildings, conference and banquet facilities, parking structures and garages, swimming pools, spas, fitness centers, restaurants, bars, retail areas, lobbies, guest rooms, back-of-house facilities, maintenance buildings, landscaping, signage, and all related hospitality improvements situated thereon.
(c) Easements and Appurtenances. All easements, rights-of-way, strips, gores, and appurtenances belonging to or inuring to the benefit of the Land and Improvements, including, without limitation, all rights of ingress and egress, all air rights, water rights, mineral rights, development rights, and all rights in any streets, roads, alleys, passages, or other rights-of-way included in, adjacent to, or used in connection with the Land or Improvements.
(d) Fixtures. All fixtures, machinery, equipment, and other articles of personal property now or hereafter attached to, located on, or used in connection with the Land and Improvements, and all replacements, substitutions, and additions thereto and therefor (collectively, the "Fixtures"), including, without limitation, all heating, ventilating, and air conditioning systems and equipment, boilers, furnaces, hot water heaters, elevators, escalators, plumbing systems, sprinkler systems, fire suppression and detection systems, electrical systems, security and surveillance systems, telecommunications systems, kitchen equipment, laundry equipment, and all other building systems and equipment. This instrument shall serve and constitute a fixture filing under California Commercial Code Section 9502(c).
(e) Leases and Rents. All leases, subleases, licenses, concessions, management agreements, franchise agreements, hotel operating agreements, and other occupancy agreements now or hereafter affecting the Land and Improvements or any part thereof (collectively, the "Leases"), together with all rents, issues, profits, revenues, royalties, income, room charges, food and beverage receipts, parking receipts, and other payments arising from the use, occupancy, or enjoyment of the Land, Improvements, and Fixtures, or any part thereof (collectively, the "Rents"), subject to the assignment set forth in Article IV hereof.
(f) Permits and Licenses. All permits, licenses, approvals, certificates, variances, consents, authorizations, and other governmental and quasi-governmental approvals relating to the construction, ownership, use, occupancy, or operation of the Properties (to the extent assignable under applicable law), including, without limitation, building permits, certificates of occupancy, environmental permits, health department permits, liquor licenses, and zoning approvals.
(g) Insurance Proceeds. All policies of insurance covering or relating to the Trust Estate, all unearned premiums thereunder, and all proceeds, payments, awards, and other rights arising from any such insurance policies, including, without limitation, loss of rents insurance, business interruption insurance, and all proceeds of property and casualty insurance.
(h) Condemnation Awards. All awards, compensation, settlements, and other proceeds of or relating to any condemnation, taking, or acquisition by eminent domain of all or any part of the Trust Estate, whether by permanent or temporary taking, and all rights to receive and retain such awards, compensation, settlements, and proceeds.
(i) Accounts and Contract Rights. All accounts, contract rights, and general intangibles arising from or relating to the Properties, including, without limitation, all rights under purchase agreements, construction contracts, architectural agreements, engineering agreements, management agreements, franchise agreements, service contracts, utility contracts, and all other contracts and agreements pertaining to the ownership, operation, or maintenance of the Properties.
(j) Personal Property. All tangible and intangible personal property located on or used in connection with the Properties, including, without limitation, all furniture, furnishings, and equipment ("FF&E"), operating supplies, inventories (including food and beverage inventories and gift shop inventories), linens, towels, uniforms, hotel operating equipment, guest room furnishings, lobby furnishings, restaurant equipment, exercise equipment, pool equipment, maintenance equipment, vehicles, signage, artwork, computer hardware and software (to the extent transferable), telephone and communications systems, reservation systems, property management systems, and all replacements, additions, and substitutions thereof and therefor.
(k) Proceeds. All proceeds (as defined in the UCC) of and from the foregoing, including, without limitation, all cash and non-cash proceeds, insurance proceeds, condemnation awards, and other compensation or payments received on account of any sale, lease, license, exchange, collection, or other disposition of any of the foregoing.
All of the foregoing property, rights, interests, and estates described in clauses (a) through (k) above are collectively referred to herein as the "Trust Estate."
TO HAVE AND TO HOLD the Trust Estate, together with all rights, privileges, and appurtenances thereunto belonging or in anywise appertaining, unto Trustee, its successors and assigns, forever, IN TRUST, NEVERTHELESS, upon the terms and conditions and for the uses and purposes herein set forth.
Section 2.02 — Obligations Secured
This Deed of Trust and the Trust Estate granted, conveyed, transferred, and assigned hereby secure the full, faithful, and punctual payment and performance of all Secured Obligations under the Credit Agreement, the Guarantee Agreement, and the other Loan Documents, including, without limitation:
(a) The full and punctual payment of the principal amount of Seven Hundred Million Dollars ($700,000,000) outstanding under the Credit Agreement (subject to quarterly amortization of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000) per quarter, being 1.00% per annum of the original principal amount of $700,000,000), together with all interest thereon, including interest at the rate of Adjusted Term SOFR plus 375 basis points per annum (with a SOFR floor of 0.50%), and, upon the occurrence and during the continuance of an Event of Default, default interest at the applicable rate plus 200 basis points per annum;
(b) The full and punctual payment of all fees, costs, expenses, indemnification obligations, reimbursement obligations, and other amounts now or hereafter payable by the Borrower, Trustor, or any other Guarantor under or pursuant to the Credit Agreement, the Guarantee Agreement, this Deed of Trust, or any other Loan Document;
(c) The full and punctual performance and observance of all covenants, agreements, obligations, and liabilities of the Borrower, Trustor, or any other Guarantor under or pursuant to the Credit Agreement, the Guarantee Agreement, this Deed of Trust, or any other Loan Document; and
(d) All obligations of the Borrower or any Guarantor under any Secured Hedge Agreement or any Secured Cash Management Agreement.
The maximum maturity date for the Secured Obligations secured by this Deed of Trust is July 21, 2029. The lien of this Deed of Trust is pari passu with the liens securing the Four Hundred Million Dollar ($400,000,000) revolving credit facility, as set forth in and subject to the terms and conditions of the Intercreditor Agreement.
PROVIDED, HOWEVER, that upon the full and final payment, satisfaction, and discharge of all Secured Obligations and the termination of all commitments under the Credit Agreement, Beneficiary shall request Trustee to reconvey the Trust Estate to Trustor in accordance with Section 11.10 of this Deed of Trust.
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF TRUSTOR
Trustor hereby represents and warrants to Beneficiary and the Secured Parties as follows:
Section 3.01 — Organization and Authority
(a) Trustor is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware. Trustor is duly qualified to transact business and is in good standing in the State of California and in each other jurisdiction where the nature of its business or the ownership of its properties requires such qualification, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect.
(b) Trustor has full limited liability company power and authority to own and operate the Properties, to execute and deliver this Deed of Trust, to grant the Trust Estate as provided herein, and to perform its obligations hereunder. The sole member and parent of Trustor is Verimark Hospitality Group Inc., a Delaware corporation, and all necessary limited liability company action and corporate action (including all requisite approvals by VHG as sole member of Trustor) have been duly taken to authorize the execution, delivery, and performance by Trustor of this Deed of Trust and the grant of the Trust Estate.
(c) The individual(s) executing this Deed of Trust on behalf of Trustor are duly authorized to do so and have full power and authority to bind Trustor to all of the terms, conditions, and provisions hereof.
Section 3.02 — Title
(a) Trustor holds good, marketable, and indefeasible fee simple title to each of the five (5) California Properties described in Exhibit A hereto, subject only to the Permitted Liens set forth in Exhibit B hereto and as defined in the Credit Agreement.
(b) The Trust Estate is free and clear of all liens, charges, claims, security interests, encumbrances, easements, restrictions, and other title defects or exceptions of any kind, other than Permitted Liens. Trustor has not previously assigned, transferred, pledged, hypothecated, or otherwise encumbered its right, title, or interest in any portion of the Trust Estate, except as contemplated by the Loan Documents and the Permitted Liens.
(c) This Deed of Trust creates a valid and enforceable lien on and security interest in the Trust Estate, and upon recording of this Deed of Trust in the official real property records of the applicable California counties and the filing of all necessary UCC financing statements, such lien and security interest will constitute a perfected, first-priority lien on and security interest in the Trust Estate (subject only to Permitted Liens and the terms of the Intercreditor Agreement).
Section 3.03 — No Conflicts
The execution, delivery, and performance by Trustor of this Deed of Trust and the grant of the Trust Estate do not and will not: (a) violate any provision of Trustor's certificate of formation, limited liability company agreement, or other organizational documents; (b) violate any applicable federal, state, or local law, statute, rule, regulation, order, writ, judgment, injunction, or decree applicable to Trustor or the Trust Estate; (c) result in a breach of, constitute a default under, or give rise to a right of termination, cancellation, or acceleration under any material agreement, indenture, mortgage, deed of trust, lease, or other instrument to which Trustor is a party or by which Trustor or any of the Trust Estate may be bound; or (d) result in the creation or imposition of any lien, charge, or encumbrance on the Trust Estate other than the lien created by this Deed of Trust and the Permitted Liens.
Section 3.04 — Enforceability
This Deed of Trust has been duly executed and delivered by Trustor and constitutes the legal, valid, and binding obligation of Trustor, enforceable against Trustor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and similar laws of general applicability affecting the enforcement of creditors' rights generally, and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
Section 3.05 — Taxes and Assessments
All real property taxes, assessments, water charges, sewer charges, and other governmental charges and levies imposed upon or assessed against the Properties that are currently due and payable have been paid in full. There are no pending special assessments against any Property that have not been disclosed to Beneficiary. Trustor has not received any notice of any proposed increase in the assessed valuation of any Property that would materially increase the tax burden on such Property.
Section 3.06 — Compliance with Laws
The Properties and the use, occupancy, and operation thereof comply in all material respects with all applicable laws, statutes, ordinances, rules, regulations, codes, and requirements of any governmental authority having jurisdiction, including, without limitation, all applicable zoning laws and regulations, building codes, fire safety codes, health and safety regulations, the Americans with Disabilities Act of 1990, as amended, and all regulations promulgated thereunder, and all applicable state and local accessibility requirements. Trustor has not received any notice of violation or noncompliance from any governmental authority with respect to any Property that remains uncured or unresolved.
Section 3.07 — Environmental Matters
(a) To the knowledge of Trustor, no Hazardous Materials (as defined in the Credit Agreement) are present on, under, at, or about the Properties in quantities or concentrations that violate or could reasonably be expected to give rise to liability under any applicable Environmental Law (as defined in the Credit Agreement).
(b) There are no pending or, to the knowledge of Trustor, threatened actions, suits, proceedings, investigations, claims, demands, or notices of any kind relating to the environmental condition of the Properties or alleging any violation of or liability under any Environmental Law with respect to the Properties.
(c) Trustor has not received any written notice from any governmental authority regarding any actual or potential liability under any Environmental Law with respect to the Properties, nor has Trustor received any written request for information from any governmental authority relating to the release or threatened release of Hazardous Materials at, on, under, or from the Properties.
(d) No underground storage tanks are located on or under any Property, except as disclosed in the environmental reports delivered to Beneficiary prior to the date hereof, all of which have been properly registered and are in compliance with applicable law.
Section 3.08 — Condemnation; Litigation
(a) No condemnation or eminent domain proceedings are pending or, to the knowledge of Trustor, threatened against or affecting any Property or any portion thereof, and Trustor has not received any written notice that any such proceeding is contemplated.
(b) There are no actions, suits, proceedings, or investigations pending or, to the knowledge of Trustor, threatened against or affecting any Property or the use, occupancy, or operation thereof that could reasonably be expected to have a Material Adverse Effect or that could reasonably be expected to affect the validity or enforceability of this Deed of Trust or the priority of the lien created hereby.
Section 3.09 — Insurance
Trustor maintains or causes to be maintained insurance with respect to each Property in types, amounts, and with carriers as required by the Credit Agreement. Each such insurance policy names Beneficiary (in its capacity as Collateral Agent for the Secured Parties) as mortgagee, loss payee, and additional insured, as applicable, in each case pursuant to a standard mortgagee clause or lender's loss payable endorsement in form and substance satisfactory to Beneficiary. All premiums due and payable on such insurance policies have been paid, and no notice of cancellation, non-renewal, or material modification of coverage has been received by Trustor.
Section 3.10 — Flood Zone Status
Based upon surveys and flood certifications obtained in connection with the origination of the Term Loan B, those Properties, or portions thereof, located within a Special Flood Hazard Area, as designated by the Federal Emergency Management Agency, maintain flood insurance coverage in amounts and on terms required by the Credit Agreement and applicable federal law, including the Flood Disaster Protection Act of 1973, as amended by the National Flood Insurance Reform Act of 1994 and the Biggert-Waters Flood Insurance Reform Act of 2012. Trustor has delivered to Beneficiary copies of all flood zone determinations and flood insurance policies applicable to the Properties.
ARTICLE IV — ASSIGNMENT OF LEASES AND RENTS
Section 4.01 — Assignment
(a) As additional security for the Secured Obligations, Trustor hereby absolutely, presently, and unconditionally assigns, transfers, conveys, and sets over unto Beneficiary all of Trustor's right, title, and interest in, to, and under all Leases now existing or hereafter entered into with respect to the Properties, or any part thereof, and all Rents now due, past due, or to become due thereunder or in connection with the Properties.
(b) This assignment is intended to be and shall constitute a present, absolute, and unconditional assignment and not merely the granting of a security interest or the creation of a lien. This assignment is made in accordance with and shall be governed by the provisions of California Civil Code Section 2938, as amended. The assignment of Rents contained herein shall be fully enforceable without the necessity of further action on the part of Beneficiary and regardless of whether Beneficiary takes possession of the Properties.
(c) Trustor represents and warrants that Trustor has not executed and will not execute any prior or other assignment of the Leases or Rents, except to the extent contemplated by the Loan Documents and the Intercreditor Agreement.
Section 4.02 — License Back to Trustor
(a) Notwithstanding the foregoing absolute assignment, Beneficiary hereby confers upon Trustor a revocable, non-exclusive license (the "License") to collect, receive, use, and enjoy the Rents from the Properties as they become due, subject to the terms of the Credit Agreement and the other Loan Documents, so long as no Event of Default has occurred and is continuing.
(b) Upon the occurrence and during the continuance of an Event of Default, the License granted pursuant to this Section 4.02 shall automatically and immediately terminate without notice to or demand upon Trustor, and Beneficiary shall be entitled to exercise all rights and remedies set forth in Section 4.03 hereof, including, without limitation, the right to collect and receive all Rents directly from the tenants, licensees, concessionaires, and other occupants of the Properties.
(c) Any Rents collected by Trustor after the occurrence of an Event of Default (and after termination of the License) shall be held by Trustor in trust for the benefit of Beneficiary and the Secured Parties and shall be promptly turned over to Beneficiary.
Section 4.03 — Enforcement
(a) Upon the occurrence and during the continuance of an Event of Default, Beneficiary may, in addition to exercising any other remedies available under this Deed of Trust, the Credit Agreement, or applicable law, exercise all rights and remedies available under California Civil Code Sections 2938 et seq., including, without limitation:
(i) Entering upon and taking possession of the Properties, or any part thereof, and managing and operating the same;
(ii) Collecting all Rents directly from tenants, licensees, concessionaires, and other occupants of the Properties, and applying such Rents to the Secured Obligations in such order and manner as Beneficiary shall determine in its sole discretion, after deducting all expenses of collection and operation;
(iii) Directing any tenant, licensee, concessionaire, or other occupant of the Properties to pay Rents directly to Beneficiary, and any such tenant, licensee, concessionaire, or occupant shall be authorized to rely upon and comply with any such direction from Beneficiary without any obligation to inquire as to the existence or continuance of an Event of Default;
(iv) Applying to any court of competent jurisdiction for the appointment of a receiver to take possession of and manage the Properties and collect the Rents, pursuant to California Code of Civil Procedure Section 564 and other applicable provisions of law, and Trustor hereby consents to the appointment of such receiver and agrees not to oppose any such application; and
(v) Exercising any and all other rights and remedies available at law or in equity with respect to the Leases and Rents.
(b) The exercise by Beneficiary of any rights or remedies under this Article IV shall not cure or waive any Event of Default or notice of default hereunder, or invalidate any act done pursuant to such notice, and shall not operate to make Beneficiary a mortgagee in possession of the Properties.
Section 4.04 — Subordination of Leases
(a) Unless Beneficiary shall otherwise elect in writing, all Leases now existing or hereafter entered into with respect to the Properties shall be subject and subordinate to the lien of this Deed of Trust.
(b) Notwithstanding the foregoing, Beneficiary may, in its discretion, agree to execute subordination, non-disturbance, and attornment agreements ("SNDAs") with tenants, hotel operators, managers, or franchisees occupying or operating all or any portion of the Properties, on such terms and conditions as Beneficiary may approve. Trustor shall use commercially reasonable efforts to obtain from any existing tenants, operators, or managers such SNDAs in form and substance reasonably satisfactory to Beneficiary, upon request by Beneficiary.
(c) In the event of any foreclosure of this Deed of Trust or any conveyance in lieu of foreclosure, at the election of Beneficiary or any purchaser at a foreclosure sale, any tenant, licensee, concessionaire, or other occupant of the Properties shall attorn to and recognize such purchaser or transferee as the landlord under the applicable Lease, and the applicable Lease shall continue in full force and effect as a direct lease between such tenant or occupant and such purchaser or transferee upon the same terms and conditions as set forth therein.
ARTICLE V — COVENANTS OF TRUSTOR
Trustor hereby covenants and agrees with Beneficiary and the Secured Parties as follows:
Section 5.01 — Payment of Secured Obligations
Trustor shall promptly pay and perform all Secured Obligations as and when due and payable, in accordance with the terms of the Credit Agreement, the Guarantee Agreement, and the other Loan Documents. Without limiting the generality of the foregoing, Trustor shall cause the Borrower to make all payments of principal, interest, fees, and other amounts as and when required under the Credit Agreement and shall fulfill all obligations of Trustor as a Guarantor under the Guarantee Agreement.
Section 5.02 — Maintenance and Repair
(a) Trustor shall maintain, preserve, and keep the Properties and all Improvements, Fixtures, FF&E, and other components of the Trust Estate in good condition, order, and repair, consistent with the standards of a first-class, full-service hotel operation, and shall make or cause to be made all necessary and appropriate repairs, renewals, replacements, additions, and improvements thereto so that the condition and efficiency of the Properties shall at all times be maintained and preserved.
(b) Trustor shall not commit or permit any waste of the Properties, nor shall Trustor remove, demolish, or materially alter any Improvement or Fixture without the prior written consent of Beneficiary (which consent shall not be unreasonably withheld, conditioned, or delayed in connection with renovations, repairs, and improvements in the ordinary course of business), except as otherwise permitted under the Credit Agreement. Trustor shall not permit any act or condition that would materially impair the value of the Properties or the security of this Deed of Trust.
(c) Trustor shall complete promptly and in a good and workmanlike manner any building or other improvement that may be constructed on the Land and shall promptly restore in like manner any Improvement that may be damaged or destroyed.
Section 5.03 — Insurance
(a) Trustor shall maintain, or cause to be maintained, at its sole cost and expense, insurance with respect to the Properties and the Trust Estate in such types, amounts, and with such insurers as are required by the Credit Agreement, including, without limitation:
(i) Property and casualty insurance covering all Improvements, Fixtures, and FF&E against loss or damage by fire, windstorm, and all other risks covered by an "all risk" or "special form" policy, in amounts not less than the full replacement cost of the Improvements;
(ii) Comprehensive general liability insurance covering bodily injury and property damage occurring on, in, or about the Properties, with per occurrence and aggregate limits as required by the Credit Agreement;
(iii) Business interruption or loss of rents insurance in an amount sufficient to cover not less than twelve (12) months of projected revenue;
(iv) Flood insurance with respect to any Property or portion thereof located in a Special Flood Hazard Area, in amounts and on terms required by the Credit Agreement and applicable law;
(v) Workers' compensation insurance and employer's liability insurance as required by applicable law; and
(vi) Such other insurance as may be required by the Credit Agreement or as Beneficiary may reasonably require.
(b) All insurance policies required hereunder shall name Crescent Harbor Bank, National Association, as Collateral Agent, as additional insured and loss payee pursuant to a standard mortgagee clause or lender's loss payable endorsement, in form and substance satisfactory to Beneficiary. Trustor shall deliver to Beneficiary evidence of all insurance policies and renewals thereof in accordance with the Credit Agreement.
(c) Trustor shall not obtain or carry separate insurance concurrent in form or contributing in the event of loss with that required hereunder unless Beneficiary is included therein as additional insured and loss payee.
Section 5.04 — Taxes and Other Charges
(a) Trustor shall pay and discharge, or cause to be paid and discharged, before delinquency, all real property taxes, assessments, water rates, sewer charges, and all other governmental charges and levies now or hereafter imposed upon or assessed against the Properties or any part thereof, or upon any Rents or other income therefrom.
(b) Trustor shall pay and discharge, or cause to be paid and discharged, before delinquency, all charges for utilities and services furnished to the Properties.
(c) Notwithstanding the foregoing, Trustor shall not be required to pay any tax, assessment, charge, or levy so long as the validity or amount thereof is being contested in good faith by appropriate proceedings diligently pursued and so long as Trustor has established adequate reserves therefor in accordance with GAAP and in accordance with the Credit Agreement, and such contest does not subject any Property to risk of forfeiture or sale.
(d) Upon request by Beneficiary, Trustor shall deliver to Beneficiary receipts or other evidence of payment of all taxes, assessments, and other charges required to be paid hereunder.
Section 5.05 — Compliance with Laws
Trustor shall comply, and shall cause each Property to comply, in all material respects with all applicable laws, statutes, ordinances, rules, regulations, codes, and requirements of any federal, state, or local governmental authority having jurisdiction over the Properties, including, without limitation, all applicable zoning and land use laws, building codes, fire safety codes, health and safety regulations, the Americans with Disabilities Act of 1990 (as amended), the California Building Code, the California Fire Code, and all other applicable California-specific requirements. Trustor shall promptly notify Beneficiary of any notice of violation or noncompliance received from any governmental authority with respect to any Property.
Section 5.06 — Environmental Compliance
(a) Trustor shall not cause or permit the presence, use, storage, generation, release, discharge, or disposal of any Hazardous Materials on, under, at, or about the Properties, or the transportation of any Hazardous Materials to or from the Properties, except for such Hazardous Materials as are reasonably necessary for the operation and maintenance of the Properties as first-class hotel operations and that are used, stored, and disposed of in compliance with all applicable Environmental Laws.
(b) Trustor shall comply, and shall cause each Property to comply, with all applicable Environmental Laws, and shall promptly remediate any contamination of the Properties with Hazardous Materials that is required to be remediated under applicable Environmental Laws.
(c) Trustor shall promptly notify Beneficiary in writing of (i) any release or threatened release of Hazardous Materials on, under, at, or from the Properties that is required to be reported under applicable Environmental Laws, (ii) any written notice or claim received by Trustor from any governmental authority or third party relating to any actual or potential liability under any Environmental Law with respect to the Properties, and (iii) any environmental lien filed against any Property.
(d) Trustor shall indemnify, defend, and hold harmless Beneficiary, the Secured Parties, and Trustee from and against any and all losses, liabilities, damages, penalties, costs, and expenses (including reasonable attorneys' fees and expenses) arising out of or relating to any Hazardous Materials on, under, at, or from the Properties or any violation of any Environmental Law with respect to the Properties.
Section 5.07 — Defense of Title
Trustor shall forever warrant and defend the Trust Estate and every part thereof against the claims, demands, and actions of all persons whomsoever, and shall preserve and protect the priority and validity of the lien of this Deed of Trust. Trustor shall promptly notify Beneficiary of any action, suit, proceeding, or claim affecting the title to any Property or any portion of the Trust Estate.
Section 5.08 — Further Assurances
Trustor shall, from time to time, at its sole cost and expense, execute, acknowledge, and deliver, or cause to be executed, acknowledged, and delivered, such further instruments, documents, certificates, and assurances as Beneficiary may reasonably request in order to (a) perfect and protect the lien and security interest of this Deed of Trust and the other Loan Documents on the Trust Estate, (b) carry out the purposes and intent of this Deed of Trust, (c) correct any errors or omissions in this Deed of Trust or in the legal descriptions contained in Exhibit A hereto, or (d) subject to the lien and security interest of this Deed of Trust any after-acquired property of Trustor that should have been included in the Trust Estate.
Section 5.09 — No Liens
Trustor shall not create, incur, assume, or suffer to exist any lien, charge, claim, security interest, or encumbrance on or affecting the Properties or any part of the Trust Estate, other than Permitted Liens. Trustor shall promptly notify Beneficiary of any lien or claim of lien filed against any Property and shall cause any such lien (other than a Permitted Lien) to be released, bonded, or discharged within the time period specified in the Credit Agreement.
Section 5.10 — No Transfer
Trustor shall not sell, convey, assign, transfer, lease (except as permitted under Section 5.11), exchange, or otherwise dispose of, or encumber, any Property or any interest therein, or suffer the same to be seized or taken under any legal process (other than Permitted Liens), without the prior written consent of Beneficiary, except as expressly permitted by the Credit Agreement. Any transfer in violation of this Section 5.10 shall be void and shall constitute an Event of Default.
Section 5.11 — Leasing Restrictions
Trustor shall not enter into, modify, amend, terminate, surrender, or accept the surrender of any Lease or any hotel management agreement, franchise agreement, or other occupancy agreement with respect to any Property, except in accordance with the terms and conditions of the Credit Agreement. To the extent required by the Credit Agreement, Trustor shall submit any proposed new Lease or material amendment to an existing Lease to Beneficiary for review and approval prior to execution thereof.
Section 5.12 — Books and Records; Inspection
(a) Trustor shall maintain complete and accurate books and records regarding the Properties, including, without limitation, records relating to income and expenses, leases, occupancy rates, average daily rates, revenue per available room, capital expenditures, environmental compliance, insurance, taxes, and all other matters pertaining to the ownership, operation, and financial condition of the Properties.
(b) Beneficiary, and its agents, representatives, and designees, shall have the right, upon reasonable prior notice to Trustor (provided that no notice shall be required during the continuance of an Event of Default), to enter upon and inspect the Properties, examine and copy all books and records of Trustor relating to the Properties, and conduct such tests, appraisals, audits, and investigations as Beneficiary may deem necessary or desirable, all at such times and as often as Beneficiary may reasonably request.
(c) Trustor shall deliver to Beneficiary such financial statements, operating reports, rent rolls, budgets, and other information regarding the Properties as may be required by the Credit Agreement.
Section 5.13 — Condemnation Proceeds
(a) Trustor shall promptly notify Beneficiary of any actual or threatened condemnation, taking, or acquisition by eminent domain of any Property or any portion thereof, and shall deliver to Beneficiary copies of all papers, notices, and documents received by Trustor in connection therewith.
(b) All condemnation awards and other proceeds of any condemnation or taking shall be paid to Beneficiary and applied as specified in the Credit Agreement. Trustor hereby irrevocably assigns to Beneficiary all of Trustor's right, title, and interest in and to all condemnation awards, judgments, and settlements with respect to any Property.
(c) Beneficiary shall have the right, but not the obligation, to participate in any condemnation proceedings affecting any Property and to be represented by counsel of its choice in any such proceedings.
ARTICLE VI — CASUALTY AND CONDEMNATION
Section 6.01 — Casualty
(a) If any Property or any portion of the Trust Estate is damaged or destroyed by fire, flood, earthquake, windstorm, or other casualty (a "Casualty"), Trustor shall promptly give written notice thereof to Beneficiary, describing in reasonable detail the nature and extent of such damage or destruction and the estimated cost of repair and restoration.
(b) All insurance proceeds payable as a result of any Casualty (other than proceeds of liability insurance payable to a third-party claimant) shall be paid to Beneficiary and shall be held by Beneficiary or applied as follows:
(i) If the conditions for restoration set forth in Section 6.03 hereof and in the Credit Agreement are satisfied, Beneficiary shall make such insurance proceeds available to Trustor for the restoration of the damaged or destroyed Property, subject to such conditions and requirements as are set forth in the Credit Agreement; or
(ii) If the conditions for restoration are not satisfied, Beneficiary shall apply such insurance proceeds to the prepayment of the Secured Obligations in accordance with the Credit Agreement, including, without limitation, the mandatory prepayment provisions thereof.
(c) No Casualty shall relieve Trustor of any obligation under this Deed of Trust, the Credit Agreement, or any other Loan Document, and Trustor's obligation to make all payments of the Secured Obligations and to perform all covenants hereunder shall continue in full force and effect notwithstanding any Casualty.
Section 6.02 — Condemnation
(a) If all or any portion of any Property shall be taken or condemned by any governmental or quasi-governmental authority, or if any right of access thereto shall be changed or limited by any such authority, or if proceedings for any such purpose shall have been commenced or threatened (each, a "Condemnation"), Trustor shall promptly give written notice thereof to Beneficiary.
(b) Beneficiary is hereby authorized and empowered to participate in and consent to any settlement of, or to commence, appear in, and prosecute in its own name, any action or proceeding relating to any Condemnation, and to settle or compromise any claim in connection therewith. Trustor shall not settle any Condemnation claim without the prior written consent of Beneficiary.
(c) All awards, compensation, damages, judgments, decrees, proceeds, and settlements payable or receivable in connection with any Condemnation (collectively, "Condemnation Proceeds") are hereby assigned to and shall be paid directly to Beneficiary. Condemnation Proceeds shall be applied to the prepayment of the Secured Obligations or made available for restoration, as provided in Section 6.03 hereof and in the Credit Agreement.
Section 6.03 — Restoration
(a) Insurance proceeds or Condemnation Proceeds may be used by Trustor for the repair, restoration, rebuilding, or replacement of the damaged, destroyed, or taken Property (collectively, "Restoration"), provided that all of the following conditions are satisfied:
(i) No Event of Default has occurred and is continuing;
(ii) The applicable insurance proceeds or Condemnation Proceeds, together with any additional funds deposited by Trustor with Beneficiary, are sufficient in Beneficiary's reasonable judgment to complete the Restoration;
(iii) Restoration can be completed prior to the maturity date of the Secured Obligations and within a reasonable time after the Casualty or Condemnation;
(iv) The applicable Property can be restored to an economic unit not less valuable and not less useful than the same was prior to the Casualty or Condemnation;
(v) All conditions for Restoration set forth in the Credit Agreement have been satisfied; and
(vi) Such other conditions as Beneficiary may reasonably require have been satisfied, including, without limitation, Trustor's delivery to Beneficiary of detailed plans and specifications, a construction budget and schedule, and evidence of all necessary governmental approvals.
(b) If the conditions for Restoration set forth above are satisfied, insurance proceeds or Condemnation Proceeds shall be disbursed by Beneficiary to Trustor in installments as the Restoration progresses, subject to customary construction disbursement conditions, including, without limitation, receipt of lien waivers, architect's certifications, and satisfactory evidence of completion of the applicable portion of the Restoration.
(c) If the conditions for Restoration are not satisfied or Trustor does not elect to pursue Restoration within the applicable time period specified in the Credit Agreement, the insurance proceeds or Condemnation Proceeds shall be applied to the mandatory prepayment of the Secured Obligations in accordance with the Credit Agreement.
ARTICLE VII — EVENTS OF DEFAULT
Section 7.01 — Events of Default
Each of the following shall constitute an "Event of Default" under this Deed of Trust:
(a) The occurrence of any "Event of Default" as defined in and under the Credit Agreement (including, without limitation, those set forth in Article VII thereof), each of which is hereby incorporated by reference as though fully set forth herein, including, without limitation:
(i) Failure by the Borrower to pay any principal of any Loan when due, whether at stated maturity, upon acceleration, upon mandatory prepayment, or otherwise;
(ii) Failure by the Borrower to pay any interest on any Loan, or any fee or other amount payable under any Loan Document, within five (5) Business Days after the date on which such payment becomes due;
(iii) Any representation or warranty made or deemed made by or on behalf of the Borrower or any Guarantor (including Trustor) in any Loan Document, or in any certificate, report, financial statement, or other document furnished pursuant to or in connection with any Loan Document, proving to have been incorrect in any material respect when made or deemed made;