Exhibit 10.102
REGULATORY AGREEMENT FOR U.S. DEPARTMENT OF HOUSING
MULTIFAMILY HOUSING PROJECTS AND URBAN DEVELOPMENT
Office of Housing
Federal Housing Commissioner
Under Sections 207, 220, 221(d)(4), 231 and 232, Except Nonprofits
Project No. 143-22014 PM/ALF/REF
Mortgagee: RED MORTGAGE CAPITAL, INC.
Amount of Mortgage Note: $2,386,100.00 Date: as of January 1, 2002
Mortgage: Recorded: State: California County: Orange Date: January ___, 2002
Concurrently Herewith Book __________ Page ____________
Originally endorsed for insurance under Section 232 pursuant to Section
223(f) of the National Housing Act, as amended.
This Agreement entered into as of this 1st day of January, 2002, between
ARV ACACIA VILLA, L.P., a California limited partnership whose address is 245
Fischer Avenue, Suite D-1, Costa Mesa, California 92626, their successors,
heirs, and assigns (jointly and severally, hereinafter referred to as Owners)
and the undersigned SECRETARY OF HOUSING AND URBAN DEVELOPMENT and his
successors (hereinafter referred to as Secretary).
In consideration of the endorsement for insurance by the Secretary of the
above described note or in consideration of the consent of the Secretary to the
transfer of the mortgaged property or the sale and conveyance of the mortgaged
property by the Secretary, and in order to comply with the requirements of the
National Housing Act, as amended, and the Regulations adopted by the Secretary
pursuant thereto, Owners agree for themselves, their successors, heirs and
assigns, that in connection with the mortgaged property and the project operated
thereon and so long as the contract of mortgage insurance continues in effect,
and during such further period of time as the Secretary shall be the owner,
holder or reinsurer of the mortgage, or during any time the Secretary is
obligated to insure a mortgage on the mortgage property:
1. Owners, except as limited by paragraph 17 hereof, assume and agree to
make promptly all payments due under the note and mortgage.
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2. (a) Owners shall establish or continue to maintain a reserve fund for
replacements by the allocation to such reserve fund in a separate
account with the mortgagee or in a safe and responsible depository
designated by the mortgagee, concurrently with the beginning of
payments towards amortization of the principal of the mortgage insured
or held by the Secretary of an amount equal to $1,926.08 per month
unless a different date or amount is approved in writing by the
Secretary. Said monthly deposit consists of $1,499.33 for Realty and
$426.75 for Non-Realty. In addition, the Owner has made an initial
deposit to the fund of $190,559.00 ($5,662.00 to Realty and
$184,897.00 to Non-Realty). Such fund, whether in the form of a cash
deposit or invested in obligations of, or fully guaranteed as to
principal by, the United States of America shall at all times be under
the control of the mortgagee. Disbursements from such fund, whether
for the purpose of effecting replacement of structural elements and
mechanical equipment of the project or for any other purpose, may be
made only after receiving the consent in writing of the Secretary. In
the event that the owner is unable to make a mortgage note payment on
the due date and that payment cannot be made prior to the due day of
the next such installment or when the mortgagee has agreed to forgo
making an election to assign the mortgage to the Secretary based on a
monetary default, or to withdraw an election already made, the
Secretary is authorized to instruct the mortgagee to withdraw funds
from the reserve fund for replacements to be applied to the mortgage
payment in order to prevent or cure the default. In addition, in the
event of a default in the terms of the mortgage, pursuant to which the
loan has been accelerated, the Secretary may apply or authorize the
application of the balance in such fund to the amount due on the
mortgage debt as accelerated.
(b) Where Owners are acquiring a project already subject to an
insured mortgage, the reserve fund for replacements to be established
will be equal to the amount due to be in such fund under existing
agreements or charter provisions at the time Owners acquire such
project, and payments hereunder shall begin with the first payment due
on the mortgage after acquisition, unless some other method of
establishing and maintaining the fund is approved in writing by the
Secretary.
3. Real property covered by the mortgage and this agreement is described
in Exhibit A attached hereto.
(This paragraph 4 is not applicable to cases insured under Section
232).
4. (a) If the mortgage is originally a Secretary-held purchase money
mortgage, or is originally endorsed for insurance under any Section
other than Sections 231 or 232 and is not designed primarily for
occupancy by elderly persons, Owners shall not in selecting tenants
discriminate against any person or persons by reason of the fact that
there are children in the family.
(b) If the mortgage is originally endorsed for insurance under
Section 221, Owners shall in selecting tenants give to displaced
persons or families an absolute preference or priority of occupancy
which shall be accomplished as follows:
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(1) For a period of sixty (60) days from the date of original
offering, unless a shorter period of time is approved in
writing by the Secretary, all units shall be held for such
preferred applicants, after which time any remaining
unrented units may be rented to non-preferred applicants;
(2) Thereafter, and on a continuing basis, such preferred
applicants shall be given preference over non-preferred
applicants in their placement on a waiting list to be
maintained by the Owners; and
(3) Through such further provisions agreed to in writing by the
parties.
(c) Without the prior written approval of the Secretary not more than
25% of the number of units in a project insured under Section 231
shall be occupied by persons other than elderly persons.
(d) All advertising or efforts to rent a project insured under
Section 231 shall reflect a bona fide effort of the Owners to obtain
occupancy by elderly persons.
5. Owners shall not without the prior written approval of the Secretary:
(a) Convey, transfer, or encumber any of the mortgaged property, or
permit the conveyance, transfer or encumbrance of such property.
(b) Assign, transfer, dispose of, or encumber any personal property of
the project, including rents, or pay out any funds except from surplus
cash, except for reasonable operating expenses and necessary repairs.
(c) Convey, assign, or transfer any beneficial interest in any trust
holding title to the property, or the interest of any general partner
in a partnership owning the property, or any right to manage or
receive the rents and profits from the mortgaged property.
(d) Remodel, add to, reconstruct, or demolish any part of the
mortgaged property or subtract from any real or personal property of
the project.
(e) Make, or receive and retain, any distribution of assets or any
income of any kind of the project except surplus cash and except on
the following conditions:
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(1) All distributions shall be made only as of and after the end
of a semiannual or annual fiscal period, and only as
permitted by the law of the applicable jurisdiction;
(2) No distribution shall be made from borrowed funds, prior to
the completion of the project or when there is any default
under this Agreement or under the note or mortgage;
(3) Any distribution of any funds of the project, which the
party receiving such funds is not entitled to retain
hereunder, shall be held in trust separate and apart from
any other funds; and
(4) There shall have been compliance with all outstanding
notices of requirements for proper maintenance of the
project.
(f) Engage, except for natural persons, in any other business or
activity, including the operation of any other rental project, or
incur any liability or obligation not in connection with the project.
(g) Require, as a condition of the occupancy or leasing of any unit in
the project, any consideration or deposit other than the prepayment of
the first month's rent plus a security deposit in an amount not in
excess of one month's rent to guarantee the performance of the
covenants of the lease. Any funds collected as security deposits shall
be kept separate and apart from all other funds of the project in a
trust account the amount of which shall at all times equal or exceed
the aggregate of all outstanding obligations under said account.
(h) Permit the use of the dwelling accommodations or nursing
facilities of the project for any purpose except the use which was
originally intended, or permit commercial use greater than that
originally approved by the Secretary.
6. Owners shall maintain the mortgaged premises, accommodations and the
grounds and equipment appurtenant thereto, in good repair and
condition. In the event all or any of the buildings covered by the
mortgage shall be destroyed or damaged by fire or other casualty, the
money derived from any insurance on the property shall be applied in
accordance with the terms of the mortgage.
7. Owners shall not file any petition in bankruptcy or for a receiver or
in insolvency or for reorganization or composition, or make any
assignment for the benefit of creditors or to a trustee for creditors,
or permit an adjudication in bankruptcy or
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the taking possession of the mortgaged property or any part thereof by
a receiver or the seizure and sale of the mortgaged property or any
part hereof under judicial process or pursuant to any power of sale,
and fail to have such adverse actions set aside within forty-five (45)
days.
8. (a) Any management contract entered into by Owners or any of them
involving the project shall contain a provision that, in the event of
default hereunder, it shall be subject to termination without penalty
upon written request by the Secretary. Upon such request Owners shall
immediately arrange to terminate the contract within a period of not
more than thirty (30) days and shall make arrangements satisfactory to
the Secretary for continuing proper management of the project.
(b) Payment for services, supplies, or materials shall not exceed the
amount ordinarily paid for such services, supplies, or materials in
the area where the services are rendered or the supplies or materials
furnished.
(c) The mortgaged property, equipment, buildings, plans, offices,
apparatus, devices, books, contracts, records, documents, and other
papers relating thereto shall at all times be maintained in reasonable
condition for proper audit and subject to examination and inspection
at any reasonable time by the Secretary or his duly authorized agents.
Owners shall keep copies of all written contracts or other instruments
which affect the mortgaged property, all or any of which may be
subject to inspection and examination by the Secretary or his duly
authorized agents.
(d) The books and accounts of the operations of the mortgaged
property and of the project shall be kept in accordance with the
requirements of the Secretary.
(e) Within sixty (60) days following the end of each fiscal year the
Secretary shall be furnished with a complete annual financial report
based upon an examination of the books and records of mortgagor
prepared in accordance with the requirements of the Secretary,
prepared and certified to by an officer or responsible Owner and, when
required by the Secretary, prepared and certified by a Certified
Public Accountant, or other person acceptable to the Secretary.
(f) At the request of the Secretary, his agents, employees, or
attorneys, the Owners shall furnish monthly occupancy reports and
shall give specific answers to questions upon which information is
desired from time to time relative to
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income, assets, liabilities, contracts, operation, and condition of
the property and the status of the insured mortgage.
(g) All rents and other receipts of the project shall be deposited in
the name of the project in a financial institution, whose deposits are
insured by an agency of the Federal Government. Such funds shall be
withdrawn only in accordance with the provisions of this Agreement for
expenses of the project or for distributions of surplus cash as
permitted by paragraph 6(e) above. Any Owner receiving funds of the
project other than by such distribution of surplus cash shall
immediately deposit such funds in the project bank account and failing
so to do in violation of this Agreement shall hold such funds in
trust. Any Owner receiving property of the project in violation of
this Agreement shall hold such funds in trust. At such time as the
Owners shall have lost control and/or possession of the project, all
funds held in trust shall be delivered to the mortgagee to the extent
that the mortgage indebtedness has not been satisfied.
(h) If the mortgage is insured under Section 232:
1. The Owners or lessees shall at all times maintain in full
force and effect from the state or other licensing authority such
license as may be required to operate the project as a nursing
home and shall not lease all or part of the project except on
terms approved by the Secretary.
2. The Owners shall suitably equip the project for nursing home
operations.
3. The Owners shall execute a Security Agreement and Financing
Statement (or other form of chattel lien) upon all items of
equipment, except as the Secretary may exempt, which are not
incorporated as security for the insured mortgage. The Security
Agreement and Financing Statement shall constitute a first lien
upon such equipment and shall run in favor of the mortgagee as
additional security for the insured mortgage.
(i) If the mortgage is insured under Section 231, Owners or lessees
shall at all times maintain in full force and effect from the state or
other licensing authority such license as may be required to operate
the project as housing for the elderly.
9. Owners will comply with the provisions of any Federal, State, or local
law prohibiting discrimination in housing on the grounds of race,
color, religion or
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creed, sex, or national origin, including Title VIII of the Civil
Rights Act of 1968 (Public Law 90-284; 82 Stat. 73), as amended,
Executive Order 11063, and all requirements imposed by or pursuant to
the regulations of the Department of Housing and Urban Development
implementing these authorities (including 24 CFR Parts 100, 107 and
110, and Subparts I and M of Part 200).
10. Upon a violation of any of the above provisions of this Agreement by
Owners, the Secretary may give written notice thereof, to Owners, by
registered or certified mail, addressed to the addresses stated in
this Agreement, or such other addresses as may subsequently, upon
appropriate written notice thereof to the Secretary, be designated by
the Owners as their legal business address. If such violation is not
corrected to the satisfaction of the Secretary within thirty (30) days
after the date such notice is mailed or within such further time as
the Secretary determines is necessary to correct the violation,
without further notice the Secretary may declare a default under this
Agreement effective on the date of such declaration of default and
upon such default the Secretary may:
(a) (i) If the Secretary holds the note - declare the whole of said
indebtedness immediately due and payable and then proceed
with the foreclosure of the mortgage;
(ii) If said note is not held by the Secretary - notify the
holder of the note of such default and request holder to
declare a default under the note and mortgage, and holder
after receiving such notice and request, but not otherwise,
at its option, may declare the whole indebtedness due, and
thereupon proceed with foreclosure of the mortgage, or
assign the note and mortgage to the Secretary as provided in
the Regulations;
(b) Collect all rents and charges in connection with the operation of
the project and use such collections to pay the Owners' obligations
under this Agreement and under the note and mortgage and the necessary
expenses of preserving the property and operating the project.
(c) Take possession of the project, bring any action necessary to
enforce any rights of the Owners growing out of the project operation,
and operate the project in accordance with the terms of this Agreement
until such time as the Secretary in his discretion determines that the
Owners are again in a position to operate the project in accordance
with the terms of this Agreement and in compliance with the
requirements of the note and mortgage. (d) Apply to any court, state
or Federal, for specific performance of this Agreement, for an
injunction against any violation of the Agreement, for the appointment
of a receiver to take over and operate the project in accordance with
the terms of the Agreement, or for such other relief as may be
appropriate, since the injury to the Secretary arising from a default
under any of the terms of this Agreement would be irreparable and the
amount of damage would be difficult to ascertain.
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(d) Apply to any court, state or Federal, for specific performance of
this Agreement, for an injunction against any violation of the
Agreement, for the appointment of a receiver to take over and operate
the project in accordance with the terms of the Agreement, or for such
other relief as may be appropriate, since the injury to the Secretary
arising from a default under any of the terms of this Agreement would
be irreparable and the amount of damage would be difficult to
ascertain.
11. As security for the payment due under this Agreement to the reserve
fund for replacements, and to secure the Secretary because of his
liability under the endorsement of the note for insurance, and as
security for the other obligations under this Agreement, the Owners
respectively assign, pledge and mortgage to the Secretary their rights
to the rents, profits, income and charges of whatsoever sort which
they may receive or be entitled to receive from the operation of the
mortgaged property, subject, however, to any assignment of rents in
the insured mortgage referred to herein. Until a default is declared
under this Agreement, however, permission is granted to Owners to
collect and retain under the provisions of this Agreement such rents,
profits, income, and charges, but upon default this permission is
terminated as to all rents due or collected thereafter.
12. As used in this Agreement the term:
(a) "Mortgage" includes "Deed of Trust", "Chattel Mortgage",
"Security Instrument", and any other security for the note identified
herein, and endorsed for insurance or held by the Secretary;
(b) "Mortgagee" refers to the holder of the mortgage identified
herein, its successors and assigns;
(c) "Owners" refers to the persons named in the first paragraph
hereof and designated as Owners, their successors, heirs and assigns;
(d) "Mortgaged Property" includes all property, real, personal or
mixed, covered by the mortgage or mortgages securing the note endorsed
for insurance or held by the Secretary;
(e) "Project" includes the mortgaged property and all its other
assets of whatsoever nature or wheresoever situate, used in or owned
by the business conducted on said mortgaged property, which business
is providing housing and other activities as are incidental thereto;
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(f) "Surplus Cash" means any cash remaining after:
(1) the payment of:
(i) All sums due or currently required to be paid under the
terms of any mortgage or note insured or held by the
Secretary;
(ii) All amounts required to be deposited in the reserve
fund for replacements;
(iii) All obligations of the project other than the insured
mortgage unless funds for payment are set aside or
deferment of payment has been approved by the
Secretary; and
(2) the segregation of:
(i) An amount equal to the aggregate of all special funds
required to be maintained by the project; and
(ii) All tenant security deposits held.
(g) "Distribution" means any withdrawal or taking of cash or any
assets of the project, including the segregation of cash or assets for
subsequent withdrawal within the limitations of Paragraph 6(e) hereof,
and excluding payment for reasonable expenses incident to the
operation and maintenance of the project.
(h) "Default" means a default declared by the Secretary when a
violation of this Agreement is not corrected to his satisfaction
within the time allowed by this Agreement or such further time as may
be allowed by the Secretary after written notice;
(i) "Section" refers to a Section of the National Housing Act, as
amended.
(j) "Displaced persons or families" shall mean a family or families,
or a person, displaced from an urban renewal area, or as the result of
government action, or as a result of a major disaster as determined by
the President pursuant to the Disaster Relief Act of 1970.
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(k) "Elderly person" means any person, married or single, who is
sixty-two years of age or over.
13. This instrument shall bind, and the benefits shall inure to, the
respective Owners, their heirs, legal representatives, executors,
administrators, successors in office or interest, and assigns, and to
the Secretary and his successors so long as the contract of mortgage
insurance continues in effect, and during such further time as the
Secretary shall be the owner, holder, or reinsurer of the mortgage, or
obligated to reinsure the mortgage.
14. Owners warrant that they have not, and will not, execute any other
agreement with provisions contradictory of, or in opposition to, the
provisions hereof, and that, in any event, the requirements of this
Agreement are paramount and controlling as to the rights and
obligations set forth and supersede any other requirements in conflict
therewith.
15. The invalidity of any clause, part or provision of this Agreement
shall not affect the validity or the remaining portions thereof.
16. The following Owners: ARV Acacia Villa, L.P., a California limited
partnership, and all present and future limited and general partners
thereof, do not assume personal liability for payments due under the
note and mortgage, or for the payments to the reserve for
replacements, or for matters not under their control, provided that
said Owners shall remain liable under this Agreement only with respect
to the matters hereinafter stated; namely:
(a) for funds or property of the project coming into their hands
which, by the provisions hereof, they are not entitled to retain; and
(b) for their own acts and deeds or acts and deeds of others which
they have authorized in violation of the provisions hereof.
(To be executed with formalities for recording a deed to real estate)
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All references herein to the terms "nursing home" or nursing homes" shall
mean and include the terms "assisted living facility" and "assisted living
facilities."
See Rider I attached hereto and made a part hereof.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals on
the date first hereinabove written.
ARV ACACIA VILLA, L.P.
a California limited partnership
By: CASA BONITA FULLERTON, LTD.
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a California limited partnership
General Partner
By: ARV ASSISTED LIVING, INC.
a Delaware corporation
General Partner
By:
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Douglas Armstrong
Vice President
As of January 1, 2002
SECRETARY OF HOUSING AND URBAN
DEVELOPMENT ACTING BY AND
THROUGH THE FEDERAL HOUSING
COMMISSIONER
By:
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Authorized Agent
As of January 1, 2002