Exhibit 10.74
June 9, 1999
{LETTERHEAD OF KEYBANK}
(Via Fax and Regular Mail)
Xxxx Xxx Xxxxxxxx-Xxxxxx
President\CEO Wellcare of New York,Inc.
Corporate Headquarters
P.O. Box 4059
Kingston, New York 12402
Dear Xxxx Xxx:
This is to memorialize the terms agreed to between KeyBank National
Association and KeyCorp Leasing Ltd. ("KeyBank"), Wellcare Management Group,
Inc., Wellcare of New York, Inc. and Wellcare Development, Inc. (collectively,
"Wellcare") and GHI HMO Select, Inc. ("GHI") to settle all of Wellcare's
obligations to KeyBank:
1. KeyBank will accept a lump-sum payment of $830,000.00 (the "Settlement
Amount") in full satisfaction of all of the equipment leases itemized in our
letter dated May 6, 1999, a copy of which is attached (the "Equipment Leases"),
provided the Settlement Amount is received by KeyBank by wire transfer or setoff
against funds on deposit at KeyBank, no later than 5:00 p.m. on June 11, 1999.
$515,148.95 of the Settlement Amount shall be paid by Wellcare in full
settlement of the amounts due under Equipment Leases 5849, 6025, 7375, 7654,
7962, 8408, 9255, 10510, 6391, 6614, 7754 and 10995 (the "Wellcare Leases");
$314,851.05 of the Settlement Amount shall be paid by GHI in full settlement of
the amounts due under Equipment Leases 6935, 7193, 10855, 10877 and 11340 (the
"GHI Leases").
2. With respect to the mortgage loans from Key Bank to Wellcare, Key Bank
will agree to exercise its rights only with respect to its collateral, and will
release Wellcare from personal liability for these loans (in other words, the
loans shall be treated as nonrecourse loans). Wellcare shall cooperate fully
with KeyBank with regard to KeyBank's collateral, and, without limiting the
generality of the foregoing, shall provide KeyBank with copies of any and all
appraisals and environmental studies or reports in its possession regarding the
mortgaged properties. Wellcare shall deliver deeds in lieu of foreclosure with
respect to the mortgaged properties, if so requested by KeyBank.
3. Upon receipt of the full Settlement Amount as provided for in P. "1",
above, KeyBank shall provide a bill of sale with respect to the equipment
covered by the Wellcare Leases to Wellcare and a bill of sale with respect to
the equipment covered by the GHI Leases to GHI, without representation or
warranty whatsoever and in the forms annexed hereto.
Xxxx Xxx Xxxxxxxx-Xxxxxx
June 9, 1999
Page 2
4. Upon receipt of the full Settlement Amount as provided for in P. "1",
above, KeyBank shall discontinue any and all legal actions pending against
Wellcare and shall take all actions needed to remove the restraints currently in
place with respect to Wellcare's depository accounts maintained with KeyBank. In
the event the Settlement Amount has not been received by KeyBank prior to June
9, 1999, Wellcare will consent to an extension of the aforesaid restraints,
until such time as the Settlement Amount has been received by KeyBank.
5. Upon receipt of the full Settlement Amount as provided for in P. "1",
above, KeyBank and Wellcare shall exchange releases in the forms annexed hereto.
6. Upon receipt of the full Settlement Amount as provided for in P. "1",
above, GHI shall commence leasing from Wellcare the entire premises commonly
known as 00 Xxxxxxxxx Xxxx, Xxxxxx Xxxxxx, Xxx Xxxx (the "GHI Property") at a
rate of $12.00 per square foot (based on 15,342 square feet), on a triple net
basis except that GHI shall not be required to pay the real estate taxes, for a
term of 90 days, with a right of GHI to renew the lease for an additional 90 day
term, with 60-day extensions thereafter, subject to termination by KeyBank or
GHI on 60 days notice to the other. GHI shall not be required to remediate or
repair any environmental conditions which existed on the subject property prior
to the date of this Letter Agreement; provided, however, that KeyBank shall
likewise have no such duty and shall not be liable to or required to indemnify
GHI or Wellcare in connection with any environmental conditions existing on the
subject property at any time. GHI's rental payments as set forth above shall be
paid in monthly installments of $15,342, on or before the first day of each
month (the pro-rated rent for June, 1999 shall be included with the payment due
on July 1, 1999), and shall be paid directly by GHI to KeyBank, pursuant to
KeyBank's rights as mortgagee and assignee of rents and leases with respect to
the GHI Property. GHI shall obtain and at all times maintain a fire and hazard
insurance policy with respect to the GHI Property in an amount not less than
$1,000,000 naming KeyBank as loss payee and in a form reasonably satisfactory to
KeyBank. GHI shall also maintain the premises in good repair (except for
conditions existing prior to the date of this Letter Agreement). GHI shall
immediately vacate the GHI Property in the event it fails to make a rental
payment within 10 days after it is due. The parties understand and acknowledge
that KeyBank's rights and interest in the GHI Property are that of a mortgagee
only. Wellcare and GHI will cooperate fully with KeyBank in the event KeyBank
elects to foreclose its mortgage or accept a deed in lieu of foreclosure with
respect to the GHI Property, and such cooperation shall include, without
limitation, if requested by KeyBank, an assignment of the lease described in
this paragraph to KeyBank or its designee. Any foreclosure, sale or other
transfer of the GHI Property shall be subject to GHI's rights as set forth in
this paragraph, and shall not disturb GHI's occupancy hereunder. Wellcare, GHI
and KeyBank shall act diligently, promptly and in good faith to enter into a
more detailed written agreement or agreements governing GHI's lease of the GHI
Premises, incorporating the terms set forth in this paragraph and such other
usual and customary terms and conditions as are appropriate. GHI shall
immediately vacate the GHI Property upon 60 days written notice from
Xxxx Xxx Xxxxxxxx-Xxxxxx
June 9, 1999
Page 3
KeyBank in the event GHI fails to execute such an agreement or agreements within
90 days from the date of this Letter Agreement, provided KeyBank has attempted
in good faith to enter into such an agreement(s).
7. Upon receipt of the full Settlement Amount as provided for in P. "1",
above, Wellcare shall continue to occupy the entire premises commonly known as
Park West Building Xxx, Xxxxxx Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxx, Xxx Xxxx (the
"Wellcare Property"), at a rate of $9.00 per square foot (based on 27,000 square
feet), with Wellcare responsible for the payment of utilities, maintenance and
repairs for a term of 90 days, with a month to month tenancy thereafter.
Wellcare's obligation hereunder to maintain and repair the Wellcare Property
shall not require Wellcare to remediate or repair any environmental conditions
which existed on the subject property prior to the date of this Letter
Agreement; provided, however, that KeyBank shall likewise have no such duty and
shall not be liable to or required to indemnify Wellcare in connection with any
environmental conditions existing on the subject property at any time.
Wellcare's use and occupancy payments as set forth above shall be paid in
monthly installments of $20,250, on or before the first day of each month (the
rent for June, 1999 shall be included with the payment due on July 1, 1999), and
shall be paid directly by Wellcare to KeyBank, pursuant to KeyBank's rights as
mortgagee and assignee of rents and leases with respect to the Wellcare
Property. Wellcare shall immediately vacate the Wellcare Property in the event
it fails to make a rental payment within 10 days after it is due. The parties
understand and acknowledge that KeyBank's rights and interest in the Wellcare
Property are that of a mortgagee only. Wellcare will cooperate fully with
KeyBank in the event KeyBank elects to foreclose its mortgage or accept a deed
in lieu of foreclosure with respect to the Wellcare Property. Any foreclosure,
sale or other transfer of the Wellcare Property shall be subject to Wellcare's
rights as set forth in this paragraph, and shall not disturb Wellcare's
occupancy hereunder. Wellcare and KeyBank shall act diligently, promptly and in
good faith to enter into a more detailed written agreement or agreements
governing Wellcare's use and occupancy of the Wellcare Premises, incorporating
the terms set forth in this paragraph and such other usual and customary terms
and conditions as are appropriate.
8. The provisions of P. P. "1" through "5" are all conditioned upon the
other, and the Settlement is expressly conditioned upon each of them occurring
as set forth above. The provisions of P. P. "6" and "7" are conditioned upon the
occurrence of each of the provisions P. "1", above.
Please note that the foregoing shall not be deemed an agreement on Key
Bank's part unless and until this letter is signed by each of the parties set
forth below (facsimile signatures and signatures in counterparts are acceptable.
Key Bank hereby reserves all of its rights, remedies and recourses pursuant to
the leases, loan documents and agreements with Wellcare, and under state law,
and shall not be deemed to have waived any such rights, remedies, or recourses,
unless and until this letter agreement is signed by each of the undersigned and
Xxxx Xxx Xxxxxxxx-Xxxxxx
June 9, 1999
Page 4
returned to Key Bank.
By signing below, each party acknowledges that the foregoing contains all
of the terms and conditions agreed to between the parties.
Thank you for your attention to this matter.
Very truly yours,
KEYBANK NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Xxxxxx X. Xxxxx
Vice President
cc: Xxxxxx X. Xxxxxx, Esq.
Xxxx X. Xxxxxx, Esq.
Xxxxxx X. Xxxxx, Esq.
WELLCARE MANAGEMENT GROUP, INC. WELLCARE OF NEW YORK, INC.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxx Xxx Xxxxxxxx-Xxxxxx
--------------------------- ---------------------------------
Xxxxx X. Xxxxxx Xxxx Xxx Xxxxxxxx-Xxxxxx
Its: Acting President and CEO Its: President and CEO
WELLCARE DEVELOPMENT, INC. GHI HMO SELECT, INC.
By: /s/ Xxxxx X. Xxxxxx By:/s/ Xxxxx Xxxxx
--------------------------- ------------------------------
Xxxxx X. Xxxxxx Xxxxx Xxxxx
Its: Acting President and CEO Its: Executive Vice President
