Exhibit 10.111
(Golden Creek Inn)
(Hillcrest Inn)
DEBT SERVICE RESERVE ESCROW
AND SECURITY AGREEMENT
THIS DEBT SERVICE RESERVE ESCROW AND SECURITY AGREEMENT (this "Agreement"),
dated as of July ___, 2002, is by and between ARV HILLCREEK, LLC, a California
limited liability company, (herein, the "Borrower"), and GMAC COMMERCIAL
MORTGAGE CORPORATION, a California corporation (together with its successors,
transferees and assignees, the "Lender").
RECITALS:
1) The Borrower is indebted to the Lender pursuant to a loan in the principal
sum of $24,000,000.00 (the "Loan") evidenced by that certain Loan Agreement of
even date herewith (as the same may hereafter be amended, the "Loan Agreement")
by and between Borrower and Lender. Capitalized terms used herein without
definition shall have the meanings ascribed to such terms in the Loan Agreement.
2) Pursuant to the Loan Agreement, Lender requires the establishment and
maintenance of a debt service reserve escrow account to serve as a debt service
reserve fund in connection with the Loan and further requires the assignment and
pledge of such account to Lender as security for the Loan Obligations (as
defined in the Loan Agreement).
AGREEMENT:
NOW, THEREFORE, in consideration of the above and the mutual promises
contained in this Agreement, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender agree as follows:
1. Establishment of Escrow Account. Borrower hereby deposits with Lender,
the amount of $508,881.00 (which funds, together with interest from time to time
earned thereon, are collectively referred to herein as the "Debt Service Reserve
Funds").
2. Investment of Debt Service Reserve Funds. The Debt Service Reserve
Funds shall be invested and reinvested, from time to time, in certificates of
deposit having a maturity of three (3) months as offered to Borrower by Lender.
In the event that Lender, upon the occurrence of any Event of Default or upon
any other event for which this Agreement or the Loan Agreement permits
withdrawal of Debt Service Reserve Funds, does cause to be withdrawn all or any
part of the Debt Service Reserve Funds, then Borrower acknowledges that a
substantial penalty and loss of interest otherwise accrued may be imposed upon
Borrower as a result of such withdrawal prior to the maturity of the investment.
All the Debt Service Reserve Funds as invested are
herein referred to as the "Debt Service Reserve Funds Escrow Account". All
interest which shall accrue on the Debt Service Reserve Funds shall remain in
the Debt Service Reserve Funds Escrow Account to be disbursed to Borrower
annually provided that there is no outstanding Event of Default under the Loan
Agreement.
3. Grant of Security Interest. In order to secure the Loan Obligations,
the Borrower hereby assigns, sells, transfers, pledges, sets over and delivers
to the Lender and grants Lender a security interest in the Debt Service Reserve
Funds then held by Lender in the Debt Service Reserve Funds Escrow Account,
including all accrued interest thereon which from time to time has not been
disbursed to Borrower, together with all instruments now or hereafter existing
evidencing the Debt Service Reserve Funds Escrow Account.
4. Powers of Lender. The Borrower hereby constitutes and appoints the
Lender the true and lawful attorney of the Borrower, with full power of
substitution, (a) to ask, demand, collect, receive, receipt for, sue for,
compound and give acquittance for any and all amounts which may be or become due
or payable under the Debt Service Reserve Funds Escrow Account; (b) to execute
any and all withdrawal receipts or other orders for the payment of money on the
Debt Service Reserve Funds Escrow Account; (c) to endorse the name of the
Borrower on any instrument given in evidence, payment, or partial payment
thereof; (d) in its discretion, to file any claim or take any other action or
proceeding, either in its own name or in the name of the Borrower or otherwise,
which the Lender may deem necessary or appropriate to protect and preserve its
right, title, and interest hereunder; and, (e) without limiting the foregoing
the Lender shall have and is hereby given full power to transfer the Debt
Service Reserve Funds Escrow Account into the name of the Lender or its nominee.
5. Payment Upon Default. The Borrower hereby authorizes and empowers the
Lender, without further order, notice, or direction from or to the Borrower upon
the occurrence of any Event of Default pursuant to the Loan Agreement, to apply
all or any part of the Debt Service Reserve Funds (including any interest which
has accrued thereon and has not yet been disbursed to Borrower) in full or
partial payment of the Loan Obligations, whether or not then due, in such order,
manner, and extent as the Lender may elect. Should Lender elect to withdraw any
declaration of an Event of Default, then upon request of the Lender, Borrower
will replenish any funds applied by Lender to the Loan Obligations from the Debt
Service Reserve Funds Escrow Account.
6. Representations and Warranties. The Borrower hereby represents and
warrants that the Borrower has full power and authority to pledge and grant to
Lender a security interest in the Debt Service Reserve Funds in the Debt Service
Reserve Funds Escrow Account, and that the Debt Service Reserve Funds Escrow
Account is free and clear of all liens and encumbrances of any nature whatsoever
(other than the assignment, pledge and security interest created hereby), and
Borrower will not further encumber the Debt Service Reserve Funds Escrow Account
without Lender's prior written consent which may be withheld in its sole and
absolute discretion.
7. Termination of Agreement. This is a continuing pledge and security
interest, and this Agreement shall remain in full force and effect until such
time as either (a) the Borrower pays in full all Loan Obligations and such
payments have become final and are not subject to being refunded or rescinded
under the federal Bankruptcy Code or other applicable law, or (b)
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Golden Creek has achieved an annual average occupancy level of ninety percent
(90% as measured at the end of the most recent fiscal quarter of the Facility)
and a Debt Service Ratio for the Facility after Assumed Management Fees of not
less than 1.25 to 1.0 for three (3) consecutive months at which time this
Agreement shall become null and void; otherwise, it shall remain in full force
and effect until proper release thereof is made in writing by the Lender. Upon
termination of this Agreement, all funds on deposit in the Debt Service Reserve
Funds Escrow Account shall be disbursed by the Lender to the Borrower.
8. No Waivers or Releases by Lender to Affect Agreement. The Lender may
take or release any other security and may release any party primarily or
secondarily liable for any obligation hereby secured, including, without
limitation, the Loan Obligations and may grant extensions, renewals, or
indulgences of such obligations, or any of them, all without releasing or in any
way affecting this Agreement. Lender may proceed under this Agreement without
first resorting to any other collateral or making demand on any other party
liable on the obligations hereby secured.
9. Severability. The provisions of this Agreement are severable;
inapplicability or unenforceability of any provision shall not limit or impair
the operation or validity of any other provisions of this Agreement.
10. Successors and Assigns. This Agreement and all representations and
warranties, powers, and rights contained herein shall bind the successors and
assigns of the Borrower and shall inure to the benefit of the Lender and its
successors and assigns.
11. Notices. All notices and other communications provided for hereunder
shall be given and deemed received in accordance with the Loan Agreement.
12. Tax Identification Number. Borrower's federal tax identification number
is 32-0018418 and all interest accruing from time to time on the Debt Service
Reserve Funds Escrow Account will be reported under such number to the Internal
Revenue Service and disbursements to Borrower will be subject to any applicable
withholding requirements, notwithstanding anything to the contrary contained
herein.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one agreement.
14. Controlling Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE JURISDICTION IN WHICH THE PROJECT IS LOCATED.
15. Waiver of Jury Trial. EACH OF BORROWER AND LENDER HEREBY WAIVES ANY
RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF,
DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN ANY WAY RELATED TO
THIS AGREEMENT OR THE LOAN, OR (B) IN ANY WAY CONNECTED WITH OR PERTAINING OR
RELATED TO OR INCIDENTAL TO ANY DEALINGS OF LENDER AND/OR BORROWER WITH RESPECT
TO THE LOAN DOCUMENTS OR IN CONNECTION WITH THIS AGREEMENT OR THE EXERCISE OF
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ANY PARTY'S RIGHTS AND REMEDIES UNDER THIS AGREEMENT OR OTHERWISE, OR THE
CONDUCT OR THE RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES
WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT
OR OTHERWISE. BORROWER AGREES THAT LENDER MAY FILE A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED AGREEMENT
OF BORROWER IRREVOCABLY TO WAIVE ITS RIGHTS TO TRIAL BY JURY AS AN INDUCEMENT TO
LENDER TO MAKE THE LOAN, AND THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY DISPUTE OR CONTROVERSY WHATSOEVER (WHETHER OR NOT MODIFIED HEREIN) BETWEEN
BORROWER WITH LENDER SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION
BY A JUDGE SITTING WITHOUT A JURY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
properly executed as of the day and year first above written.
BORROWER:
WITNESS: ARV HILLCREEK, LLC, a California
limited liability company
By: (SEAL)
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Abdo H. Khoury
Manager
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Print Name:
ACKNOWLEDGMENT
State of _______________________)
) ss:
County of ______________________)
On _______, ____, before me,________________________________________
(name, title of officer,
e.g., "Jane Doe, Notary Public")
personally appeared
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(name(s) of signer(s))
( ) personally known to me -OR-
( ) proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity/ies, and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which person(s) acted,
executed the instrument.
Witness my hand and official seal.
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(Signature of Notary)
LENDER:
WITNESS: GMAC COMMERCIAL MORTGAGE CORPORATION,
a California corporation
By: (SEAL)
- ---------------------------- ----------------------------
Name:
- ---------------------------- ----------------------------
Print Name:
Title:
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