Exhibit 10.106
MASTER MODIFICATION AGREEMENT
THIS MASTER MODIFICATION AGREEMENT (this "Agreement") is made
as of this 19th day of February, 2002 and effective as between the parties
hereto as of January 1, 2002, by and among RETIREMENT INNS III, LLC, a Delaware
limited liability company (the "Borrower"), ARV ASSISTED LIVING, INC., a
Delaware corporation (the "Guarantor"), and RED MORTGAGE CAPITAL, INC., an Ohio
corporation, formerly known as Provident Mortgage Capital, Inc.,
successor-in-interest to Banc One Capital Funding Corporation (the "Lender").
RECITALS
WHEREAS, the Lender has previously made a loan to the Borrower
in the original principal sum of Eight Million Two Hundred Nine Thousand Nine
Hundred Dollars ($8,209,900) (the "Loan") pursuant to the terms of that certain
Multifamily Note dated as of June 27, 1999, by the Borrower to the order of the
Lender (the "Original Note"), as amended pursuant to the terms of that certain
First Amendment to Multifamily Note dated as of December 28, 2000 between
Borrower and Lender (the "First Amendment to Note" and together with the
Original Note, the "Existing Note"), and is secured, in part, by a first
mortgage lien on the real property (the "Mortgaged Property") described on
Exhibit A to that certain Multifamily Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing dated as of June 27, 1999 by the Borrower
for the benefit of the Lender (the "Original Deed of Trust"), recorded among the
Official Records of Ventura County, California (the "Land Records") on June 28,
1999 as Instrument No. 99-122405, as amended by that certain Amendment to
Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing dated as of August 31, 1999 between the Borrower and the Lender (the
"First Amendment to Deed of Trust"), recorded among the Land Records on
September 10, 1999 as Instrument No. 99-173435, as affected by that certain
Confirmatory Assignment of Multifamily Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing dated as of December 12, 2000, effective
as of October 2, 2000, by Banc One Capital Funding Corporation, an Ohio
corporation to Provident Mortgage Capital, Inc., now known as Red Mortgage
Capital, Inc. (the "Confirmatory Assignment", and together with the Original
Deed of Trust and the First Amendment to Deed of Trust, the "Existing Deed of
Trust"), recorded among the Land Records on January 31, 2001 as Instrument
No. 2001-0018605-00; and
WHEREAS, the Guarantor, in order to induce the Lender to make
the Loan to the Borrower, executed and delivered that certain Limited Guaranty
dated as of June 27, 1999 to and for the benefit of the Lender, thereby
guaranteeing, under certain enumerated circumstances set forth therein, the
payment and performance obligations of the Borrower to the Lender under the
Original Note (which Limited Guaranty, as the same may be from time to time
renewed, extended, amended, restated, supplemented or otherwise modified is
herein called the "Limited Guaranty"); and
WHEREAS, as additional security for the Borrower's obligations
under the Original Note to the Lender, the Borrower and the Lender entered into
that certain Replacement Reserve and Security Agreement dated as of June 27,
1999 (the "Replacement Reserve Agreement") whereby the Borrower agreed to make
monthly deposits into the Replacement Reserve (as such term is defined in the
Replacement Reserve Agreement) to maintain the Mortgaged Property; and
WHEREAS, as additional security for the Borrower's obligations
under the Original Note to the Lender, the Borrower, the Guarantor and the
Lender also entered into that certain Assignment and Subordination of Management
Agreement dated as of June 27, 1999 (the "Assignment and Subordination") whereby
the Borrower assigned all of its right, title and interest in and to the
Management Agreement (as such term is defined in the Assignment and
Subordination) and the Guarantor agreed, among other things, (i) to subordinate
its right of payment to certain fees under the Management Agreement to the Loan
and to the liens terms, covenants and conditions of the Existing Deed of Trust,
(ii)
to attorn to the Lender upon an Event of Default (as such term is defined in the
Existing Deed of Trust) under the Existing Deed of Trust and continue to manage
and operate the Mortgaged Property upon the occurrence of an Event of Default at
the request of, and in cooperation with the Lender, due to the special
regulatory requirements of the Mortgaged Property as a seniors housing facility,
until a replacement manager/operator has been obtained, and (iii) to assign to
the Lender all of its right, title and interest in and to all permits, licenses,
operating contracts, certificates and agreements of any nature relating to the
ownership, occupancy, use, operation or management of the Mortgaged Property;
and
WHEREAS, as additional security for the Borrower's obligations
under the Original Note to the Lender, the Borrower and Lender also entered into
that certain (i) Note and Agreement dated as of June 27, 1999 (the "Additional
Note"), (ii) Letter Agreement dated June 27, 1999 (the "Side Letter Agreement")
and (iii) Agreement to Amend or Comply dated as of June 27, 1999 (the "Agreement
to Amend or Comply"); and
WHEREAS, pursuant to the terms of that certain Confirmatory
Agreement dated as of December 28, 2000 by and among the Borrower, the Guarantor
and the Lender (the "Confirmatory Agreement"), and the First Amendment to Note,
the Maturity Date (as such term was defined in the Original Note) of the Loan
was extended to January 1, 2002; and
WHEREAS, the Original Note, the Original Deed of Trust, the
Limited Guaranty, the Replacement Reserve Agreement, the Assignment and
Subordination, the Additional Note, the Side Letter Agreement, the Agreement to
Amend or Comply and any and all other documents, instruments, agreements and
certificates (including, but not limited to, the Certificate of Borrower dated
June 27, 1999 executed by Borrower) originally executed in connection with the
Loan, as well as the First Amendment to Note, the First Amendment to Deed of
Trust, the Confirmatory Assignment and the Confirmatory Agreement may sometimes
be collectively referred to herein as the "Original Loan Documents"; and
WHEREAS, the Borrower has requested and the Lender has agreed,
subject to the terms and conditions of this Agreement, to (i) increase the
principal sum of the Loan to $11,980,000 ) (the "Increase"), (ii) extend the
Maturity Date (as such term is defined in the Existing Note) of the Loan to July
1, 2003 (the "Extension"), and (iii) change the interest rate of the Loan to
8.50% (the "Rate Change"); and
WHEREAS, as a condition to granting the Extension, the
Increase and the Rate Change, Lender has required the Borrower to make a cash
deposit to the Lender and the Guarantor to guaranty a portion of Loan, such
guaranty secured in part by a pledge of certain partnership interests owned by
the Guarantor.
NOW, THEREFORE, for and in consideration of the mutual entry
of this Agreement by the parties hereto, the Extension, the Increase and the
Rate Change and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged by each party hereto, the parties
hereby agree as follows:
Section 1. Recitals. The Recitals are hereby incorporated
into this Agreement as a substantive part hereof.
Section 2. Loan Modifications. The Borrower, the
Guarantor and the Lender hereby acknowledge and agree:
(a) The Maturity Date of the Loan (defined in
Paragraph 3(b) thereof) is hereby extended to
July 1, 2003;
(b) The interest rate of the Loan (referenced in
the first paragraph thereof) is changed to
8.50%; and
(c) The principal sum of the Loan (referenced in
the first paragraph thereof) is increased to
$11,980,000.
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Section 3. Amendments to Existing Note. The Existing Note
shall be amended in accordance with the provisions of Section 2 hereof and as
further set forth in the Second Amendment to Multifamily Note dated as of the
date hereof between the Borrower and the Lender (the "Second Amendment to Note")
in the form attached hereto as Exhibit A.
Section 4. Amendment to Existing Deed of Trust. The Existing
Deed of Trust shall be amended as set forth in the Second Amendment to
Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing dated as of the date hereof between the Borrower and the Lender (the
"Second Amendment to Deed of Trust") in the form attached hereto as Exhibit B.
Section 5. Amendments to Original Loan Documents. To the
extent not amended by Sections 2, 3 and 4 hereof, all references to the
principal sum of the Loan in the Original Loan Documents (referenced therein as
$8,209,900) is hereby changed to $11,980,000. From and after the date hereof,
references to the terms "Note" and "Deed of Trust" in the Original Loan
Documents shall mean Existing Note as amended by the Second Amendment to Note on
the one hand, and the Existing Deed of Trust as amended by the Second Amendment
to Deed of Trust on the other hand.
Section 6. Clarification of the Agreement to Amend or Comply.
The Residual Savings (as defined in the Agreement to Amend or Comply), as
calculated in the Agreement to Amend or Comply, shall be calculated utilizing
the interest rate set forth in the Original Note (i.e., 9.15%).
Section 7. Conditions and Requirements for the Extension,
the Increase and the Rate Change.
Section 7.1. The obligation of the Lender to enter into
this Agreement is subject to the satisfaction by Borrower and Guarantor, as
applicable, of the following requirements, each in form and content satisfactory
to the Lender in its sole discretion:
(a) Receipt by the Lender of the Second Amendment
to Note executed by the Borrower;
(b) Receipt by the Lender of the Second Amendment
to Deed of Trust executed by the Borrower;
(c) Receipt by the Lender of that certain Cash
Collateral Pledge Agreement executed by the Borrower for the benefit of the
Lender dated as of the date hereof (the "Cash Pledge Agreement"), pursuant to
which the Borrower will deposit the sum of Two Million Dollars ($2,000,000) (the
"Deposit") with the Lender;
(d) Receipt by the Lender of the Deposit pursuant
to the Cash Pledge Agreement;
(e) Receipt by the Lender of that certain Guaranty
Agreement executed by Guarantor for the benefit of the Lender dated as of the
date hereof (the "Guaranty");
(f) Receipt by the Lender of that certain San
Gabriel Retirement Villa Partnership Interest Pledge Agreement executed by
Guarantor for the benefit of the Lender dated as of the date hereof (the "SGRV
Pledge Agreement");
(g) Receipt by the Lender of that certain American
Retirement Villas Properties III, L.P. Partnership Interest Pledge Agreement
executed by Guarantor for the benefit of the Lender dated as of the date hereof
(the "ARV PIII Pledge Agreement");
(h) Receipt by the Lender of a "date-down"
endorsement to Policy Number 27-042-92-1219845 issued by Fidelity National Title
Company ("Fidelity") on June 28, 1999 (the "Title Policy") (or a new title
policy if so elected by Fidelity in lieu of a date-down endorsement) showing
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no other exceptions to title than as excepted in Schedule B-II of the Title
Policy and increasing the insured amount thereof to $11,980,000;
(i) Receipt by the Lender of an Extension Fee in the
amount of Fifty-Nine Thousand Eight Hundred Fifty and 00/100 Dollars
($59,850.00); and
(j) Receipt by the Lender of a Financing Fee of Forty
Thousand and 00/100 Dollars ($40,000.00).
The Second Amendment to Note, the Second Amendment to Deed of
Trust, the Guaranty, the ARV PIII Pledge Agreement (ARV), the SGRV Pledge
Agreement, the Cash Pledge Agreement and any and all other documents,
instruments, agreements and certificates executed by Borrower or Guarantor in
connection with this Agreement, the Extension, the Increase or the Rate Change
may sometimes be collectively referred to herein as the "New Loan Documents",
and together with the Original Loan Documents, the "Loan Documents".
Section 7.2. The obligation of the Lender to enter into this
Agreement shall be further subject to the requirement that the Borrower and the
Guarantor, as applicable, or any other party, execute and deliver to the Lender
such other documents in addition to the New Loan Documents as the Lender may
reasonably require in connection with this Agreement. In addition, the Borrower
shall also pay to the Lender on demand, all costs and expenses both now and
hereafter paid or incurred in connection with the extension and modification of
the Loan pursuant hereto, including, but not limited to, attorney's fees and
expenses, title fees and expenses, recording costs, and surveyor fees and
expenses.
Section 8. Representations and Warranties. The Borrower and
the Guarantor represent and warrant to the Lender as of the date hereof that:
(a) No Event of Default exists under any of the Loan
Documents and no event or circumstance has occurred which with the passage of
time would constitute an Event of Default under any of the Loan Documents;
(b) All of the representations and warranties given by
each such party in the Original Loan Documents are true and complete in all
material respects on the date hereof as if made on the date hereof;
(c) As of the date hereof, there are no actions, suits
or proceedings pending, or to the knowledge of the Borrower and the Guarantor,
threatened, (i) against or affecting the Mortgaged Property, or (ii) involving
the validity or enforceability of the Deed of Trust or the priority of the lien
thereof, or (iii) against the Borrower or the Guarantor, at law or in equity or
before or by any governmental authority except (a) actions, suits and
proceedings against the Borrower or the Guarantor fully covered by insurance and
as to each of which the Borrower or the Guarantor has provided information
satisfactory to the Lender, (b) actions, suits and proceedings against the
Borrower or the Guarantor which will not materially adversely affect their
respective business, financial condition or operations, or (c) otherwise
previously disclosed to the Lender in the Original Loan Documents; and to the
knowledge of the Borrower or the Guarantor, neither the Borrower nor the
Guarantor is in default with respect to any order, writ, injunction, decree or
demand of any court or any governmental authority.
(d) All federal, state and local tax returns and reports
of the Borrower and the Guarantor required by law to be filed have been duly
filed, and all taxes, assessments, fees and other governmental charges upon the
Borrower and the Guarantor and their respective properties, assets, income and
franchises which are due and payable have been paid in full. The Borrower and
the Guarantor maintain adequate reserves and/or accruals in respect of federal,
state and local taxes for all fiscal periods, and neither the Borrower nor the
Guarantor know of any unpaid assessments for any taxes or any basis therefor.
Section 9. Ratification, No Novation, Effect of Modifications.
Except as may be amended or modified by this Agreement, the Second Amendment to
Note and the Second Amendment to
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Deed of Trust, the terms of the Original Loan Documents are hereby ratified,
affirmed and confirmed and shall otherwise remain in full force and effect. To
the extent not otherwise specifically provided herein, it is the intention of
the Borrower, the Guarantor and the Lender that nothing in this Agreement shall
be construed to extinguish, release, or discharge or constitute, create or
effect a novation of, or an agreement to extinguish, release or discharge, any
of the obligations, indebtedness and liabilities of the Borrower or the
Guarantor or any other party under the provisions of the Original Loan
Documents. In the event of any conflict between the terms of the Original Loan
Documents and this Agreement, the terms of this Agreement shall control.
Section 10. Amendments. This Agreement may be amended or
supplemented by and only by an instrument executed and delivered by each party
hereto.
Section 11. Waiver. The Lender shall not be deemed to have
waived the exercise of any right which it holds under the Original Loan
Documents unless such waiver is made expressly and in writing (and no delay or
omission by the Lender in exercising any such right shall be deemed a waiver of
its future exercise). No such waiver made as to any instance involving the
exercise of any such right shall be deemed a waiver as to any other such
instance, or any other such right. Without limiting the operation and effect of
the foregoing provisions hereof, no act done or omitted by the Lender pursuant
to the powers and rights granted to it hereunder shall be deemed a waiver by the
Lender of any of its rights and remedies under any of the provisions of the
Original Loan Documents executed in connection with the Loan, and this Agreement
is made and accepted without prejudice to any of such rights and remedies.
Section 12. Governing Law. This Agreement shall be given
effect and construed by application of the law of the State of California.
Section 13. Headings. The headings of the sections,
subsections, paragraphs and subparagraphs hereof are provided herein for and
only for convenience of reference, and shall not be considered in construing
their contents.
Section 14. References. As used herein, all references made
(i) in the neuter, masculine or feminine gender shall be deemed to have been
made in all such genders and (ii) in the singular or plural number shall be
deemed to have been made, respectively, in the plural or singular number as
well.
Section 15. Severability. No determination by any court,
governmental body or otherwise that any provision of this Agreement or any
amendment hereof is invalid or unenforceable in any instance shall affect the
validity or enforceability of (i) any other such provision or (ii) such
provision in any circumstance not controlled by such determination. Each such
provision shall be valid and enforceable to the fullest extent allowed by, and
shall be construed wherever possible as being consistent with, applicable law.
Section 16. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Guarantor, and the Lender and
their respective successors and assigns.
Section 17. Effectiveness. This Agreement shall become
effective on and only on its execution and delivery by each party hereto.
Section 18. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original and
all of which shall constitute one and the same instrument.
Section 19. WAIVER OF JURY TRIAL. THE BORROWER, THE GUARANTOR,
THE ADDITIONAL GUARANTOR AND THE LENDER EACH (i) AGREES NOT TO ELECT A TRIAL BY
JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AMENDMENT, THE NOTE, ANY
OTHER ORIGINAL LOAN DOCUMENT, OR THE RELATIONSHIP BETWEEN THE PARTIES, AS
LENDER, GUARANTOR AND BORROWER, THAT IS TRIABLE OF RIGHT BY A JURY AND (ii)
WAIVES ANY RIGHT TO TRIAL BY
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JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR
IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH
PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
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IN WITNESS WHEREOF, each of the parties hereto have executed
and delivered this Agreement under their respective seals as of the day and year
first written above.
WITNESS: BORROWER:
RETIREMENT INNS III, LLC,
__________________ a Delaware limited liability company
By: /s/ Abdo H. Khoury (SEAL)
-----------------------------
Name: Abdo H. Khoury
Title: Manager
WITNESS: GUARANTOR:
ARV ASSISTED LIVING, INC.,
__________________ a Delaware corporation
By: /s/ Abdo H. Khoury (SEAL)
-----------------------------
Name: Abdo H. Khoury
Title: President
WITNESS: LENDER:
RED MORTGAGE CAPITAL, INC.,
__________________ an Ohio corporation, formerly known as
Provident Mortgage Capital, Inc.,
successor-in-interest to Banc One
Capital Funding Corporation
By: (SEAL)
-----------------------------
Name:
Title:
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