LETTER OF CREDIT AGREEMENT
AMONG
MONARCH PROPERTIES, LP,
LYRIC HEALTH CARE HOLDINGS III, INC.
AND
THE ENTITIES DESCRIBED ON ATTACHED EXHIBIT A
DATED AS OF JUNE 23, 1998
LETTER OF CREDIT AGREEMENT
THIS LETTER OF CREDIT AGREEMENT (this "Agreement"), is made and entered
into as of June 23, 1998 among MONARCH PROPERTIES, LP, a Delaware limited
partnership ("Lessor"), LYRIC HEALTH CARE HOLDINGS III, INC., a Delaware
corporation ("Lessee") and the entities described on attached EXHIBIT A (each a
"Sublessee" and, collectively, the "Sublessees").
RECITALS:
A. Lessee owns all of the shares of each of the Sublessees. Each Sublessee
has subleased the healthcare Facility set forth opposite its name on EXHIBIT A
hereto from Lessee pursuant to a Facility Sublease dated as of the date hereof
("Facility Sublease"), which in turn leases all of the Facilities from Lessor
pursuant to a Master Lease dated as of the date hereof ("Master Lease"). Each
Facility Sublease contains substantially the same provisions as the Master Lease
except for provisions concerning rent and other matters specific to the
individual Facility. In this Agreement, "LC Lease" means the Master Lease and
the Facility Sublease as applicable to each Facility.
B. As a condition to Lessor's execution of the LC Lease, Lessee and the
Sublessees agreed to deliver the security deposit (the "Security Deposit")
referred to therein in the amounts set forth on attached EXHIBIT A.
C. Pursuant to the LC Lease, Lessee and the Sublessees have the option to
provide the Security Deposit to Lessor in the form of either cash or a letter of
credit.
D. Lessee and Sublessees have agreed to fulfill the Security Deposit
requirement of the LC Lease by delivering to Lessor a Letter of Credit (as
defined below) on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in order to induce Lessor to enter into the LC Lease and
for other good and valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties agree as follows:
1. Definitions. Terms used but not otherwise defined in this Agreement
shall have the respective meanings given them in the LC Lease. In addition, the
following terms used in this Agreement shall have the meanings set forth below:
"Bank" means a commercial bank that has a rating of "A" or better by
Standard & Poor's Corporation or Xxxxx'x Investors Service, or similar,
nationally recognized, credit rating agency, and that serves as the issuer of
the Letter of Credit.
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"Letter of Credit" means an irrevocable letter of credit that (a) is issued
by a Bank in the form of attached EXHIBIT B (with such changes thereto as Lessor
may approve in its sole discretion), (b) names Lessor and its assigns as
beneficiary and (c) is delivered by Lessees to Lessor pursuant to this
Agreement, together with any and all substitutes and replacements for such
irrevocable letter of credit.
"Term of this Agreement" means the period of time commencing on the
Commencement Date of the LC Lease and ending thirty (30) business days after the
expiration or earlier termination of the term of the LC Lease.
2. Letter of Credit. Upon execution of this Agreement, Lessees shall
deliver or cause to be delivered to Lessor a Letter of Credit in the amount of
[Insert Amount] ($__________) [SIX MONTHS RENT] (the "Initial Letter of Credit
Amount"). Any replacement of the Letter of Credit in whole or in part shall be
issued by a Bank. The term of the Letter of Credit shall be for a minimum of one
(1) year. The Letter of Credit shall contain a provision providing for the
automatic renewal of the Letter of Credit for additional periods of one (1) year
in the Initial Letter of Credit Amount; however, if Lessee, before the
expiration of the Letter of Credit, provides to Lessor, pursuant to the LC
Lease, a cash Security Deposit or a separate replacement Letter of Credit in an
amount equal to all or any portion of the Initial Letter of Credit Amount, then
the automatic renewal of the Letter of Credit shall be in an amount equal to the
difference between the Initial Letter of Credit Amount and the sum of the cash
Security Deposits and/or substitute Letters of Credit provided to Lessor by
Lessee pursuant to the LC Lease.
3. Replacement or Substitution of Letter of Credit. If Lessor reasonably
determines that the credit rating of the Bank (or its holding company) has been
reduced by one or more nationally recognized credit rating agenc(y)(ies) to a
level lower than such agency's "A" rating, then at any time thereafter Lessor
may give notice of such event to Lessees. Within thirty (30) days of the
delivery of such notice by Lessor, Lessees shall deliver or cause to be
delivered to Lessor (a) a replacement Letter of Credit that has a term of at
least twelve (12) months or that otherwise is acceptable to Lessor in its sole
discretion or (b) a cash Security Deposit in the Initial Letter of Credit
Amount.
4. Drafts under the Letter of Credit. Lessor shall have the right to draw
upon any Letter of Credit provided by Lessee and the Sublessees to Lessor at any
time from and after (i) a failure by Lessee to deliver to Lessor, when and if
required by Section 3 of this Agreement, a cash Security Deposit and/or a
replacement Letter of Credit in an aggregate amount equal to the Initial Letter
of Credit Amount; or (ii) Lessor's receipt of a notice of non-renewal from the
issuer of the Letter of Credit; or (iii) the expiration or termination of the
Term of the LC Lease if any amount remains owing from Lessee under the LC Lease;
or (iv) the occurrence of an Event of Default under the LC Lease. Lessor shall
provide Lessee with notice of any drawing under a Letter of Credit promptly
after any drawing has been made, but the giving of any such notice shall not be
a condition to the making of a draw under any Letter of Credit. The Letter of
Credit shall
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permit Lessor to make multiple draws from time to time, provided that the total
of such draws shall not exceed the Initial Letter of Credit Amount .
5. Application of Amounts Drawn Under Letter of Credit. Lessor shall apply
all amounts drawn under the Letter of Credit to pay Rent, Additional Charges and
any other sums due under the LC Lease. If for any reason the amount drawn
exceeds the amount owing at the time of the drawing under the Letter of Credit,
Lessor shall retain the excess amount so drawn as a Security Deposit under the
LC Lease and shall hold such cash pursuant to the terms of the LC Lease
providing for the treatment of cash held as a Security Deposit under the LC
Lease.
6. Transferability. The Letter of Credit shall provide that it is
transferrable by Lessor in connection with any transfer by Lessor of its
interest in the LC Lease; however, if Lessor wishes to transfer the Letter of
Credit with respect to the LC Lease it shall notify Lessee, who shall, within
fifteen (15) business days of such Notice, deliver to Lessor or Lessor's
assignee one or more replacement Letters of Credit in the Initial Letter of
Credit Amount.
7. Bankruptcy or Insolvency of Lessees. None of (a) the dissolution,
insolvency or business failure of Lessee or any of the Sublessees, (b) an
assignment for the benefit of creditors of Lessee or any of the Sublessees, (c)
the commencement of any bankruptcy, reorganization, arrangement, moratorium or
other debtor relief proceeding by or against Lessee or any of the Sublessees,
(d) the appointment of a receiver for any property of Lessee or any of the
Sublessees or (e) the issuance of a writ of attachment or the enforcement of any
order of any court of legal process affecting any property of Lessee or any of
Sublessees shall in any manner affect or impair the Letter of Credit or Lessor's
rights thereunder, or under this Agreement. Lessee and the Sublessees
acknowledge and agree that (a) the Letter of Credit is a distinct and separate
contract between Lessor and the Bank, (b) the Letter of Credit is not and shall
not be deemed or construed to be an asset, property, possession or contract of
any kind whatsoever owned or held by any of Lessee or the Sublessees, (c) any
payments received by Lessor pursuant to the Letter of Credit shall not
constitute a preferential payment and (d) all funds paid by the Bank pursuant to
the Letter of Credit are the separate funds of the Bank.
8. Notices. Any notice, request or other communication to be given by any
party hereunder shall be in writing and shall be sent by registered or certified
mail, postage prepaid, by overnight delivery or hand delivery to the following
addresses:
To Lessee or any Sublessee:
c/o Lyric Health Care LLC
00000 Xxx Xxx Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Copy to: Xxxxxxxx X. Xxxxxx, Esq.
Telephone No.: 410/000-0000
Facsimile No.: 410/998-8695
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To Lessor: Monarch Properties, LP
0000 Xxxxxxx Xxx Xxxxxxxxx - Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxx
Telephone No.: 941/000-0000
Facsimile No.: 941/566-6082
With copy to LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
(which shall not 000 Xxxx 00xx Xxxxxx
constitute notice): Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxx, Xx.
Telephone No.: 212/000-0000
Facsimile No.: 212/424-8500
Notices shall be deemed given upon actual receipt.
9. Miscellaneous.
9.1 Except as required by law for the posting of notices, all notices,
requests, demands and other communications hereunder shall be given in
accordance with the terms of the LC Lease.
9.2 Any delay on the part of Lessor in exercising any power, privilege
or right under the LC Lease, this Agreement or any other instrument or document
executed by Lessee or the Sublessees in connection herewith shall not operate as
a waiver thereof. Neither a single or partial exercise thereof, nor the exercise
of any other power, privilege or right shall preclude other or further exercise
thereof or the exercise of any other power, privilege or right. The waiver by
Lessor of any default by Lessee or any of Sublessees shall not constitute a
waiver of any subsequent defaults or a waiver of the same or any similar default
by Lessee or such Sublessee or any of the other Sublessees but shall be
restricted to the default so waived.
9.3 All rights, remedies and powers of Lessor hereunder are
irrevocable and cumulative, and not alternative or exclusive, and shall be in
addition to all rights, remedies and powers given by the LC Lease, any other
document executed and/or delivered in connection therewith or any other
applicable laws now existing or hereafter enacted.
9.4 Whenever the singular shall be used hereunder, it shall be deemed
to include the plural (and vice versa), and reference to one gender shall be
construed to include all other genders, including neuter, whenever the context
of this Agreement so requires. Section captions or headings used in this
Agreement are for convenience and reference only and shall not affect the
construction hereof.
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9.5 Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
of the remaining provisions of this Agreement.
9.6 This Agreement may be executed in separate counterparts, each of
which shall be considered an original when each party has executed and delivered
to the other one or more copies of this Agreement but all of which taken
together shall constitute one agreement.
9.7 The rights and privileges of Lessor, Lessee and Sublessees
hereunder shall inure to the benefit of their successors and assigns, and this
Agreement shall be binding on all assigns and successors of Lessee and the
Sublessees.
9.8 Lessee and Sublessees shall, at the request of Lessor, execute
such other agreement, documents or instruments in connection with this Agreement
as Lessor reasonably requires.
9.9 In the event of any action to enforce this Agreement, the party
that does not prevail agrees to pay the costs and expenses of the party that
prevails in such action, together with reasonable attorneys' fees (including
fees incurred in appeals and post-judgment enforcement proceedings).
9.10 No amendment of this Agreement shall be effective unless it is in
writing and signed by the parties.
9.11 Nothing contained in this Agreement shall be construed as in any
way modifying or limiting the effect of terms or conditions set forth in the LC
Lease, but each and every term and condition hereof shall be in addition
thereto. Lessee and each of Sublessees waives, to the fullest extent permitted
by law, any right to (i) require Lessor to proceed against or exhaust any
collateral or security held by Lessor pursuant to the LC Lease and/or any of the
other documents executed and/or delivered by Lessee or any of the Sublessees to
Lessor in connection therewith or (ii) pursue any other remedy in Lessor's
power.
9.12 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT THE LAWS OF THE STATE IN
WHICH A FACILITY IS LOCATED SHALL GOVERN THIS AGREEMENT (I) TO THE EXTENT
NECESSARY TO OBTAIN THE BENEFIT OF THE RIGHTS AND REMEDIES OF LESSOR WITH
RESPECT TO SUCH FACILITY AND (II) WITH RESPECT TO PROCEDURAL REQUIREMENTS THAT
ARE GOVERNED BY THE LAWS OF SUCH STATE.
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9.13 LESSEE AND EACH OF THE SUBLESSEES CONSENTS TO IN PERSONAM
JURISDICTION BEFORE THE STATE AND FEDERAL COURTS OF THE RESPECTIVE STATES IN
WHICH THE FACILITIES ARE LOCATED AND IN NEW YORK AND AGREES THAT ALL DISPUTES
CONCERNING THIS AGREEMENT BE HEARD IN THE STATE AND FEDERAL COURTS LOCATED IN
THE RESPECTIVE STATES IN WHICH THE FACILITIES ARE LOCATED AND IN NEW YORK.
LESSEE AND EACH OF SUBLESSEES AGREES THAT SERVICE OF PROCESS MAY BE EFFECTED
UPON IT UNDER ANY METHOD PERMISSIBLE UNDER THE LAWS OF THE RESPECTIVE STATES IN
WHICH THE FACILITIES ARE LOCATED OR NEW YORK AND IRREVOCABLY WAIVES ANY
OBJECTION TO VENUE IN THE STATE, AND FEDERAL COURTS OF SUCH STATES.
SIGNATURE PAGES FOLLOW
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IN WITNESS WHEREOF, the parties have executed this Letter of Credit
Agreement as of the day and date first written above.
SUBLESSEES:
[INSERT SUBLESSEES]
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
LESSEE:
LYRIC HEALTH CARE HOLDINGS III, INC.
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
LESSOR:
MONARCH PROPERTIES, LP
By: MP Operating, Inc.
Its: General Partner
By:
-----------------------------------------
Name: Xxxx X. Xxxxx
Title: President and Chief Executive Officer
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