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Exhibit 10.22

August 24, 2012

VIA EMAIL:  jbuono@alcco.com
and mzakkowalczyk@ALCCO.com
and VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED

Texas ALC Partners, L.P.
ALC Properties, Inc.
Assisted Living Concepts, Inc.
c/o Assisted Living Concepts, Inc.
Attn: Mary T. Zak-Kowalcczyk, Secretary
Attn: John Buono, Chief Financial Officer
W140 N 8981 Lilly Rd
Menomonee Falls, WI 53051

 
RE:
Fannie Mae Mortgage Loan Number 27-0002463 (“Mortgage Loan”), secured by, inter
alia:

Chaparelle House, 1880 Harrison Street North, Twin Falls, Idaho 83301
(“Chaparelle House”);
Goldfinch House, 18 Reeves Road, Bridgetown, New Jersey (“Goldfinch House”);
Cameron House, 244 North Extension Road, Mesa, Arizona 85201 (“Cameron
House”).  Chaparelle House, Goldfinch House, and Cameron House are collectively,
the “Mortgaged Property”.

Dear Borrower:

Reference is hereby made to the $38,400,000 Multifamily Note dated December 29,
2003 (the “Note”), executed by Texas ALC Partners, L.P. and ALC Properties, Inc.
(together, the “Borrower”), payable to the order of Red Mortgage Capital, LLC,
f/k/a Red Mortgage Capital, Inc. (the “Servicer”).  The Note is secured by that
certain Multifamily Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing dated December 29, 2003, and recorded, among other places, with
(a) the Recorder of Deeds of Twin Falls County, Idaho, as, Instrument
2004-000845 (the “Chaparelle Security Instrument”); (b) the Recorder of Deeds of
Cumberland County, New Jersey, in Book 3254, Page 17 (the “Goldfinch Security
Instrument”); and (c) the Recorder of Deeds of Maricopa County, Arizona, at
Instrument #375004374 (the “Cameron Security Instrument”).  The Chaparelle
Security Instrument, the Goldfinch Security Instrument and the Cameron Security
Instrument arc herein collectively, the “Security Instrument.”  The Servicer
assigned, negotiated and transferred the Note and the “Security
Instrument.”  The Servicer assigned, negotiated and transferred the Note and the
Security Instrument to Fannie Mae, the current owner and holder of the Note and
the Security Instrument (“Fannie Mae”).

 
 

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Reference is made to our letter to you dated January 17, 2012, regarding
Goldfinch House and letter dated June 12, 2012, regarding Chaparelle House, in
which we advised you that the Mortgage Loan was in default in certain material
respects, as therein described, respectively, for Goldfinch House and Chaparelle
House.  Thereafter, we sent you another letter dated August 13, 2012, confirming
the various defaults under the Mortgage Loan, and giving you thirty (30) days
therefrom to cure.  The January 17, 2012; the June 12, 2012; and the August 13,
2012, letters are hereafter, the “Notice Letters,” and the defaults described
therein are the “Existing Defaults.”

We are in receipt of a letter from Assisted Living Concepts, Inc, (“Key
Principal”) dated August 16, 2012, pursuant to which Key Principal informed us
that two of the properties securing the Mortgage Loan (Goldfinch House and
Cameron House) are each the subject of letters of intent to purchase.  You
anticipate that Key Principal’s Board of Directors will shortly approve the
sales, with closing (the “Closing”) to occur within 120 days.  You have offered
that the proceeds from the sales will be used, in whole or in part, to pay off
the proportionate amount of the outstanding balance of the Note attributable to
Goldfinch House, Cameron House, and Chaparelle House, as set forth in Exhibit C
to the Note, plus any other costs and/or expenses contemplated by the Release
Conditions set forth in the Loan Documents (including without limitation payment
of lender expenses and reasonable attorney’s fees).

Accordingly, we agree to forbear from exercising any of our rights on account of
the Existing Defaults, in exchange for your prepayment as aforesaid on all three
(3) of the above-described properties by the earlier to occur of (a) December
31, 2012, or (b) the Closing.

Should we not timely receive sums sufficient to pay off the portion of the Note
attributable to the Mortgaged Property by the earlier to occur of (a) December
31, 2012, or (b) the Closing, the forbearance described herein shall be null and
void, and we shall, at our option, proceed against any or all of the properties
securing the Mortgage Loan, whether against the Mortgaged Property herein
defined or otherwise under the Loan Documents, and in addition thereto, we may
at our option proceed to exercise any or all of our rights at law, in equity,
and under the Loan Documents, including, without limitation, the right to
accelerate the Note.

Nothing contained herein shall be deemed to cure the Existing Defaults or waive
any of the Lender’s rights and remedies arising because of the Borrower’s
Existing Defaults.  Rather, the Existing Defaults and Servicer’s rights and
remedies arising therefrom on behalf of Fannie Mae are hereby
preserved.  However, if all of the conditions set forth in this letter agreement
are fully and timely satisfied, for so long as no Event of Default other than
the Existing Defaults occur, the Servicer on behalf of Fannie Mae agrees to
forbear from exercising the rights and remedies which it is entitled to exercise
as a result of the Existing Defaults with respect to the Borrowers, the Key
Principal and/or their assets.  However, if an Event of Default occurs other
than the Existing Defaults, the Servicer shall immediately be entitled to
exercise and enforce all rights and remedies which are available to the lender
under any of the Loan Documents, at law or in equity.

TIME IS STRICTLY OF THE ESSENCE AS TO ALL OF THE OBLIGATIONS OF THE BORROWERS
HEREUNDER.

 
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Please evidence your agreement to the terms hereof by your signatures below, and
return a fully executed copy of this letter to the undersigned.  This letter
agreement shall not be binding on Servicer or Fannie Mae unless and until a
fully-executed copy is returned to the Undersigned.

Sincerely,

RED MORTGAGE CAPITAL, LLC,
a Delaware limited liability company

By:
/s/ William Koerner
 
Name:
William Koerner
 
Title:
Managing Director, Loan Intervention & Risk Mitigation
 

{Signatures of Borrowers and Key Principal on Following Page}

 
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Accepted and agreed to:

TEXAS ALC PARTNERS, L.P.
       
By:
/s/ John Buono
 
Name:
John Buono
 
Title:
Sr. VP, CFO & Treasurer
       
ALC PARTNERS, INC.
       
By:
/s/ John Buono
 
Name:
John Buono
 
Title:
Sr. VP, CFO & Treasurer
       
ASSISTED LIVING CONCEPTS, INC.
       
By:
/s/ John Buono
 
Name:
John Buono
 
Title:
Sr. VP, CFO & Treasurer
 

 

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