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EXHIBIT 10.103
REGULATORY AGREEMENT U.S. DEPARTMENT OF HOUSING
NURSING HOMES AND URBAN DEVELOPMENT
Office of Housing
Federal Housing Commissioner
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Project Number Mortgagee
121-22031-PM-ALF/REF Red Capital Mortgage, Inc.,
an Ohio corporation
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Amount of Mortgage Note Date
$2,985,800.00 February 1, 2001
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Mortgage Recorded (State) County Date
California Alameda February 1, 2001
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Book Page
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This Agreement entered into as of the 1st day of February, 2001 between
RETIREMENT INNS II, LLC, a Delaware limited liability company whose address is
245 Fischer Avenue, Suite D-1, Costa Mesa, California 92626 (jointly and
severally, hereinafter referred to as Lessee) and the undersigned FEDERAL
HOUSING COMMISSIONER, (hereinafter called Commissioner).
In consideration of the consent of the Commissioner to the leasing of
the aforesaid project by ARV FREMONT, L.P., a California limited partnership,
Mortgagor, and in order to comply with the requirements of the National Housing
Act and the Regulations adopted by the Commissioner pursuant thereto, Lessees
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 Commissioner shall be the owner, holder or reinsurer of
the mortgage, or during any time the Commissioner is obligated to insure a
mortgage on the mortgaged property:
(1) The lease shall be subject and subordinate to the mortgage
securing the note or other obligation endorsed for insurance
by the commissioner;
(2) Lessee shall make payments under lease when due;
(3) Payments by the lessee to the lessor shall be sufficient to
pay all mortgage payments including payments to reserves for
taxes, insurance, etc., payments to the Reserve for
Replacements, and to take care of necessary maintenance. If at
the end of any calendar year, or any fiscal year if the
project operates on the basis of a fiscal
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year, payments under the lease have not been sufficient to
take care of the above items, the lessor and lessee upon
request in writing from the Commissioner shall renegotiate the
amounts due under the lease so that such amounts shall be
sufficient to take care of such items; the Commissioner shall
be furnished by the lessee, within thirty days after being
called upon to do so, with a financial report in form
satisfactory to the Commissioner covering the operations of
the mortgaged property and of the project;
(4) The lessee shall not sublease the project or any part thereof
without the consent of the Commissioner;
(5) The lessee shall at all times maintain in full force and
effect a license from the State or other licensing authority
to operate the project as a nursing home, but the owner shall
not be required to maintain such a license;
(6) Lessee shall maintain in good repair and condition any parts
of the project for the maintenance of which lessee is
responsible under the terms of the lease;
(7) Lessee shall not remodel, reconstruct, add to, or demolish any
part of the mortgaged property or subtract from any real or
personal property of the project;
(8) Lessee shall not use the project for any purpose except the
operation of a nursing home;
(9) If a default is declared by the Commissioner under the
provisions of Paragraph 10 of the Regulatory Agreement entered
into by the lessor-mortgagor and the Commissioner on the 1st
day of February, 2001, a copy of notice of default having been
given to the lessee, the lessee will thereafter make all
future payments under the lease to the Commissioner;
(10) The lease may be cancelled upon thirty days written notice by
the Commissioner given to the lessor and the lessee for a
violation of any of the above provisions unless the violation
is corrected to the satisfaction of the Commissioner within
said thirty day period.
(11) The Commissioner must approve any change in or transfer of
ownership of the lessee entity, and any change in or transfer
of the management operation, or control of the project.
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(12) The lessee shall not reduce or expand, allow to be reduced or
expanded, or cause the expansion or reduction of the bed
capacity of the project without the consent of the
Commissioner. Any change in the bed capacity shall violate
this Regulatory Agreement.
(13) The lessee shall not enter into any management contract
involving the project, unless such shall contain a provision
that, in the event of default under the Regulatory Agreement
as recited in paragraph 9 (above) of this Agreement, the
management agreement shall be subject to termination without
penalty upon written request of the Commissioner. Upon such
request the lessee shall immediately arrange to terminate the
contract within a period of not more than thirty (30) days and
shall make arrangements satisfactory to the Commissioner for
continuing proper management of the project.
(14) 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
Commissioner or his duly authorized agents. Lessee 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 Commissioner or
his/her duly authorized agents.
(15) There shall be full compliance with the provisions of (1) any
State or local laws prohibiting discrimination in housing on
the basis of race, color, creed, or national origin; and (2)
with the Regulations of the Federal Housing Administration
providing for non-discrimination and equal opportunity in
housing. It is understood and agreed that failure or refusal
to comply with any such provisions shall be a proper basis for
the Commissioner to take any corrective action he may deem
necessary including, but not limited to, the refusal to
consent to a further renewal of the lease between the
mortgagor-lessor and the lessee, the rejection of applications
for FHA mortgage insurance and the refusal to enter into
future contracts of any kind with which the lessee is
identified; and further, if the lessee is a corporation or any
other type of business association or organization which may
fail or refuse to comply with the aforementioned provisions,
the Commissioner shall have a similar right of corrective
action (1) with respect to any individuals who are officers,
directors, trustees, managers, partners, associates or
principal stockholders of the lessee; and (2) with respect to
any other type of business association, or organization with
which the officers, directors, trustees, managers, partners,
associates or principal stockholders of the lessee may be
identified.
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IN WITNESS WHEREOF, the parties hereto have set their hands and seals
on the date first hereinabove written.
RETIREMENT INNS II, LLC
By: AMERICAN RETIREMENT VILLAS
PROPERTIES II
Its sole member
By: ARV Assisted Living, Inc.
Its General Partner
By:
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Douglas Armstrong
Vice President
February 1, 2001
SECRETARY OF HOUSING AND URBAN
DEVELOPMENT ACTING BY AND
THROUGH THE FEDERAL HOUSING
COMMISSIONER
By:
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Authorized Agent
February 1, 2001
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