Document:

Second Master Modification Agreement

  Exhibit 10.23
 SECOND MASTER MODIFICATION AGREEMENT
                     THIS SECOND MASTER MODIFICATION AGREEMENT (this “Agreement”) is made as of this 20th day
of September, 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"), as further amended pursuant to the terms of that certain Second Amendment to Multifamily Note dated as of February 19, 2002, but effective as of January 1, 2002, between Borrower and Lender (the
“Second Amendment to Note”, and together with the Original Note and the First Amendment to 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, recorded among the Official
Records of Ventura County, California (the “Land Records”) on June 28, 1999 as Instrument No. 99-122405 (the “Original Deed of Trust”), 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, recorded among the Land Records on September 10, 1999 as Instrument No. 99-173435 (the “First Amendment to Deed of
Trust”), 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., recorded among the Land Records on January 31, 2001 as Instrument No. 2001-0018605-00 (the “Confirmatory
Assignment”), as further amended by that certain Second Amendment to Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of February 13, 2002, but effective as of January 1, 2002, between the
Borrower and the Lender, recorded among the Land Records on February 21, 2002 as Instrument No. 02-040888 (the “Second Amendment to Deed of Trust”, and together with the Original Deed of Trust, the First Amendment to Deed of Trust
and the Confirmatory Assignment, the “Existing Deed of Trust”); 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 
  6
 
 

  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, pursuant to the terms of that certain Master Modification
Agreement dated as of February 19, 2002, but effective as of January 1, 2002 by and among the Borrower, the Guarantor and the Lender (the “Modification Agreement”), the Borrower requested and the Lender agreed to (i) increase the
principal sum of the Loan to $11,980,000, (ii) extend the Maturity Date (as such term was defined in the Original Note, as modified by the First Amendment to Note) of the Loan to July 1, 2003, and (iii) change the interest rate of the Loan to 8.50%
(collectively, the “First Modifications”); and
                     WHEREAS,
in order to induce the Lender to agree to the First Modifications, and as additional security for the Borrower’s obligations under the Existing Note, (i) Guarantor guaranteed a portion of the Borrower’s obligations under the Existing Note
pursuant to that certain Guaranty Agreement dated as of February 19, 2002 (the “Guaranty”), which Guaranty was secured by a pledge certain partnership interests owned by Guarantor pursuant to that certain San Gabriel Retirement
Villa Partnership Interest Pledge Agreement dated as of February 19, 2002 (“SGRV Pledge”) and that certain American Retirement Villas Properties III, L.P. Partnership Interest Pledge Agreement dated as of February 19, 2002
(“ARV PIII Pledge”) and (ii) Borrower pledged cash to Lender pursuant to that certain Cash Collateral Pledge Agreement dated as of February 19, 2002 (“Cash Pledge”); 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, the Confirmatory Agreement,
the Modification Agreement, the Second Amendment to Note, the Second Amendment to Deed of Trust, the Guaranty, the SGRV Pledge, the ARV PIII Pledge and the Cash Pledge 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 hereof, to extend the Maturity Date (as such term is defined in the Existing Note) of the Loan to January 1, 2004 (the “Extension”).
                     NOW, THEREFORE, for and in consideration of the mutual entry of this Agreement by the parties
hereto, the Extension 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:
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  6                    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 January 1, 2004.
                     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 Third Amendment to Multifamily Note dated as of the date hereof between the Borrower and the Lender (the “Third Amendment to
Note”) in the form attached hereto as Exhibit A.
                     Section
4.      Amendments to Original Loan Documents.  From and after the date hereof, references to the term “Note” in the Original Loan Documents shall mean the Existing Note as amended by the Third
Amendment to Note.
                     Section 5.
      Conditions and Requirements for the Extension.  
                                   Section 5.1.
      The obligation of the Lender to enter into this Agreement is subject to the satisfaction by Borrower and Guarantor, as applicable, of the following requirement, in form and content satisfactory to the Lender
in its sole discretion:
                                     
               (a)      Receipt by the Lender of the Third Amendment to Note executed by the Borrower.
                                   The Third
Amendment to Note and any and all other documents, instruments, agreements and certificates executed by Borrower or Guarantor in connection with this Agreement and/or the Extension, may sometimes be collectively referred to herein as the
“New Loan Documents”, and together with the Original Loan Documents, the “Loan Documents”.
                                   Section
5.2.        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 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
6.       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 
 8
 
 

    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 7.  Ratification, No Novation, Effect of Modifications.  Except as may be
amended or modified by this Agreement and the Third Amendment to Note, 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 8. Amendments.  This Agreement may be amended or supplemented by and only by an
instrument executed and delivered by each party hereto.
                     Section 9. 
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 10.  Governing Law.  This Agreement shall be given effect and construed by
application of the law of the State of California.
                     Section 11. 
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 12.  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 13.  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.
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                        Section
14.  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 15.  Effectiveness.  This Agreement shall become effective on and only on
its execution and delivery by each party hereto.
                     Section 16. 
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 17.  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 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.
                     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: 
 
	  
 	  
 	  
 	 
 	 (SEAL)
 
	  
 	  
 	 Name:
 	 Abdo H. Khoury
 	  
 
	  
 	  
 	 Title:
 	 Manager
 	  
 
						

 10
 
 

      

	 WINTESS:
 	 GUARANTOR:
 
	  
 	  
 
	  
 	 ARV ASSISTED LIVING, INC.,
 
	  
 	 a Delaware corporation
 
	 
 	  
 	  
 
	  
 	  
 	 By: 
 
	  
 	  
 	  
 	 
 	 (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:
 	  
 	  
 
											

 11
 
 

    EXHIBIT A
 Third Amendment to Note
 See attached.Employment Offer Letter

  EXHIBIT 10.36
 August 16, 2002
 Thomas
Wilder
 
 Dear Tom:
 It gives me great pleasure to offer you employment with Micro Therapeutics, Inc. (MTI) on the following terms and
conditions:

	  
 	 1.
 	  
 	 Your title will be President and CEO, and you will report directly to me as Chairman and representative of the Board of Directors.  Your duties and responsibilities will
include:
 
	  
 	  
 	  
 	  
 
	  
 	  
 	 •
 	 Establish Company’s goals and objectives, and provide strong leadership over all functions.
 
	  
 	  
 	  
 	  
 
	  
 	  
 	 •
 	 Ensure that all departmental activities are aligned with overall Company goals and strategies.
 
	  
 	  
 	  
 	  
 
	  
 	  
 	 •
 	 Conduct the affairs of the Company, interpret and apply the policies of the Board of Directors, establish direction, make policy, raise capital, control operations and activities
of departments, and conduct public relations.
 
	  
 	  
 	  
 	  
 
	 Responsibility for other areas of the Company’s business may be assigned to you as the Company deems necessary.
 
	  
 
	  
 	 2.
 	  
 	 Your full time employment shall begin on a date still to be determined.
 
	  
 	  
 	  
 	  
 
	  
 	 3.
 	  
 	 You will receive a base salary of $250,000 per year.  Your status will be salaried exempt.  You will be eligible to participate in the company’s incentive bonus
program (on a pro-rated basis for 2002).  The bonus is targeted to be cash up to 40% of your base salary, and is based upon performance relative to Company goals and individual goals that will be established after your employment with MTI
commences.
 
	  
 	  
 	  
 	  
 
	  
 	 4.
 	  
 	 You will be entitled to 15 days paid vacation each year, accruing on a monthly basis.  You will also be eligible for coverage under the Company’s group health/dental
plan, and other benefits that the Company provides to comparable employees as they are established.
 

  

    Thomas Wilder
 Page 2

	  
 	 5.
 	  
 	 I am also pleased to inform you that as part of this offer, and once Confidential Information Agreements are signed, and following Board of Director’s approval, you will be
granted an option to purchase 250,000 shares of the Company’s Common Stock at the fair market value, determined by the quoted Closing Price of the Company’s Common Stock on either the date you commence employment with MTI, or the date on
which the option grant is approved by the Board, whichever is later.  Following twelve (12) months of employment, this option will be vested to the extent of twenty-five percent (25%) and, from there on, at the rate of 2.083% per month until
fully vested.  The option is subject to conditions outlined in the Company’s 1996 Incentive Stock Option (ISO) Plan.
 
	  
 	  
 	  
 	  
 
	  
 	 6.
 	  
 	 Upon commencement of employment with Micro Therapeutics, Inc., you will be paid a one time signing bonus, which will result in net proceeds to you of $50,000.  For federal
income tax reporting purposes, this bonus will be “grossed up” to reflect and assume an income tax rate of 39.6%, plus other applicable tax rates.  This bonus is subject to repayment to MTI if employment ceases due to termination or
resignation within one year following the start of employment.
 
	  
 	  
 	  
 	  
 
	  
 	 7.
 	  
 	 Reasonable costs to a maximum of $100,000 related to your move from Santa Rosa to Southern California will be covered according to the terms set forth in a separate letter from Hal
Hurwitz, MTI’s CFO.  This moving package may be repayable to Micro Therapeutics if the duration of your employment with the Company is less than one year and your employment is voluntarily terminated.
 
	  
 	  
 	  
 	  
 
	  
 	 8.
 	  
 	 If your employment is terminated by MTI for a reason other than cause or layoff, you will receive a package to include 6 months salary continuation.
 
	  
 	  
 	  
 	  
 
	  
 	 9.
 	  
 	 Employment with Micro Therapeutics, Inc. is at the mutual consent of the employee and the company.  Accordingly, while MTI has every hope that employment relationships will be
mutually beneficial and rewarding, employees and the company retain the right to terminate the employment relationship at will, at any time, with or without cause.  Please note that no individual has the authority to make any contrary agreement
or representation.  Accordingly, this constitutes a final and fully binding integrated agreement with respect to the at-will nature of the employment relationship.
 
	  
 	  
 	  
 	  
 
	  
 	 10.
 	  
 	 You agree to abide by the Company’s policies and procedures, including those set forth in the Company’s Employee Handbook.  You will be required to sign the
signature page of this Employee Handbook.
 
	  
 	  
 	  
 	  
 
	  
 	 11.
 	  
 	 You will be required to sign the Employee Confidential Information Agreement that is enclosed as well as the necessary tax and benefit enrollment forms before starting full time
employment.  You will also be required to provide proof of your identity and authorization to work in the United States as required by Federal immigration laws.
 
	  
 	  
 	  
 	  
 

  

    Thomas Wilder
 Page 3
 Tom, we look forward to you joining our effort on a
full time bases and hope the opportunity will be mutually rewarding.  To confirm that you agree to the terms stated in this letter, please sign and date the enclosed copy of this letter and return it to me.  Congratulations!

Regards,
 MICRO THERAPEUTICS, INC.

	 /s/ JAMES CORBETT
 	  
 	  
 	  
 
	 
 	  
 	  
 	  
 
	 James Corbett
 Chairman of the Board
 	  
 	   
 	   
 

 This will acknowledge my acceptance of this offer of employment.

	 /s/ THOMAS WILDER
 	  
 	  August 16, 2002
 	  
 
	 
 	  
 	 
 	  
 
	 Thomas Wilder
 	  
 	 Date

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