EX-10 7 exhibit105.htm (Type a title for your page here)

EXHIBIT 10.5

LETTER OF CREDIT AGREEMENT

This “Agreement” is entered into as of April 9, 2002 between the Entities Listed
on Schedule 1 (collectively, “Beneficiary”), and Alterra Healthcare Corporation,
a Delaware corporation (“Tenant”), as an inducement to Beneficiary to enter into
that certain Master Lease with Tenant dated the date hereof (the “Lease”). All
initially capitalized terms used but not otherwise defined herein have the
meanings given them in the Lease. Thus, for valuable consideration, the receipt
and sufficiency of which are acknowledged, the parties agree as follows:

     1.        LETTER(S) OF CREDIT. On or before April 10, 2002, Tenant shall
cause U.S. Bank National Association to issue a letter of credit in the amount
of $2,214,925.82 in form and substance acceptable to Landlord in its sole and
absolute discretion (the “Initial Letter of Credit”). “Letter(s) of Credit” as
used herein shall mean any letter of credit issued pursuant to this Agreement or
the Lease, including the Initial Letter of Credit and any “Supplemental or
Replacement Letter(s) of Credit” therefor, all of which, other than the Initial
Letter of Credit but including any Supplement or Replacement Letter of Credit
issued with respect to any Initial Letter of Credit, shall be substantially in
the form of Exhibit A. Each Letter of Credit issued hereunder shall constitute
partial collateral for the Lease obligations. The aggregate amount of all issued
and outstanding Letters of Credit shall at all times be equal to the amount
required under the Lease, and each Letter of Credit shall be issued by an Issuer
complying with the provisions of Section 3 and shall be for a term of not less
than twelve (12) months with automatic extensions for additional periods of one
(1) year from any expiration date unless ninety (90) days prior to such date
Issuer delivers written notice by express, registered or certified mail to
Beneficiary that it elects not to renew the Letter of Credit. Tenant shall, at
its expense, cause an Issuer to issue to Beneficiary one or more
(a) “Replacement Letters of Credit” at least thirty (30) days prior to any such
expiration date, and (b) “Supplemental Letters of Credit” within two (2)
business days after all or any portion of any Letter of Credit is drawn against
by Beneficiary or at such other times as may be required under Section 4 of the
Lease, such that at all times during the term of this Agreement, Beneficiary
shall have the ability to draw on Letters of Credit totaling the amount required
under Section 4 of the Lease. If Issuer does not issue to Beneficiary such
Replacement or Supplemental Letter of Credit within the respective periods set
forth in this Section 1, it shall be an immediate default by Tenant under this
Agreement and an immediate Event of Default under the Lease without any
requirement of notice to Tenant or any right of Tenant to cure such default and
Event of Default.

     2.        BENEFICIARY'S RIGHT TO DRAW. Beneficiary shall be entitled to
draw on each Letter of Credit one or more times for the purpose of compensating
Beneficiary for any amounts due it under the Lease by reason of an Event of
Default thereunder or under this Agreement by reasons of a default hereunder or
as otherwise provided in any Letter of Credit. Any amount so drawn by
Beneficiary shall not be deemed to: (a) fix or determine the amounts to which it
is entitled to recover under the Lease or otherwise; (b) waive or cure any
default under the Lease or otherwise; or (c) limit or waive its right to pursue
any remedies provided for in the Lease or otherwise. If Tenant fails to cause
the issuance of any required Replacement or Supplemental Letter of Credit at the
times and in the manner required hereunder, then in addition to all other rights
and remedies available at law or equity, Beneficiary shall have the immediate
right to draw the full amount of the then issued and outstanding Letters of
Credit without any requirement of notice to Tenant or any right of Tenant to
cure such default and Event of Default. Tenant hereby acknowledges that it has
or will have no, and hereby waives any, interest in or right or title to any
proceeds from any draw on any Letter of Credit, whether legal, equitable,
beneficial or otherwise.

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     3.        REPLACEMENT OF ISSUER. Replacement and Supplemental Letters of
Credit may be issued by a substitute “Issuer” reasonably acceptable to
Beneficiary; provided that Beneficiary shall have no obligation to approve any
person that is not a financial institution with tangible net worth, as
determined in accordance with generally accepted accounting principles
consistently applied, in excess of Two Hundred Fifty Million Dollars
($250,000,000). If an Issuer's net worth is ever less than such amount, or if an
Issuer shall (i) in Beneficiary's reasonable determination become otherwise not
sufficiently creditworthy, (ii) admit in writing its inability to pay its debts
generally as they become due, (iii) file a petition in bankruptcy or a petition
to take advantage of any insolvency statute, (iv) consent to the appointment of
a receiver or conservator of itself or the whole or any substantial part of its
property, (v) file a petition or answer seeking reorganization or arrangement
under the Federal Bankruptcy Laws, (vi) have a receiver or conservator appointed
for it, or (vii) become subject to operational supervision by any regulatory
authority, then within thirty (30) days after Beneficiary's written demand,
Tenant shall obtain a Replacement Letter of Credit from a substitute “Issuer”
meeting the criteria set forth above.

     4.        ATTORNEYS' FEES. If any legal action or proceeding (or appeal
thereof) is commenced to interpret, enforce or recover damages for the breach of
any term of or obligation arising out of this Agreement, the non- prevailing
party shall reimburse the prevailing party for all its related reasonable
attorneys' and expert fees, costs and expenses.

     5.        NOTICES. All notices, requests and demands under this Agreement
shall be in writing and sent by personal delivery, U.S. certified or registered
mail (return receipt requested, postage prepaid) or FedEx or similar generally
recognized overnight carrier regularly providing proof of delivery, addressed as
follows:

If to Tenant:

Alterra Healthcare Corporation
10000 Innovation Drive
Milwaukee, Wisconsin 53226
Attention: Mark W. Ohlendorf
Facsimile: (414) 918-5055

With a copy to:

Rogers & Hardin LLP
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303-1601
Attention: Miriam J. Dent
Facsimile: (404) 525-2224

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If to Landlord:

Nationwide Health Properties, Inc.
610 Newport Center Drive, Suite 1150
Newport Beach, California 92660-6429
Attention: President and General Counsel
Facsimile: (949) 759-6876

With a copy to:

Sherry, Meyerhoff & Hanson LLP
610 Newport Center Drive, Suite 1200
Newport Beach, California 92660
Attention: Kevin L. Sherry, Esq.
Fax No. (949) 719-1212

A party may designate a different address by notice as provided above. Any
notice, demand or request so delivered (whether accepted or refused) shall be
deemed to have been given and received on the date of delivery established by
the U.S. Post Office return receipt or the carrier's proof of delivery or, if
not so given, upon on the day received (provided that such notice or instrument
shall be deemed received on the next succeeding business day if received after
5:00 p.m. (local time)). Delivery to any officer, general partner of principal
of a party shall be deemed delivery to such party. If Beneficiary notifies
Tenant of the name and address of any lender, Tenant shall deliver a copy of all
its notices concurrently to such lender.

     6.        MISCELLANEOUS. The titles and headings in this Agreement are for
convenience of reference only and shall not in any way affect the meaning or
construction of any provision. Since each party has been represented by counsel
and this Agreement has been freely and fairly negotiated, all provisions shall
be interpreted according to their fair meaning and shall not be strictly
construed against any party. If any part of this Agreement shall be determined
to be invalid or unenforceable, the remainder shall nevertheless continue in
full force and effect. Time is of the essence, and whenever action must be taken
(including the giving of notice or the delivery of documents) hereunder during a
certain period of time or by a particular date that ends or occurs on a
Saturday, Sunday or federal holiday, then such period or date shall be extended
until the immediately following business day. Whenever the words “including”,
“include” or “includes” are used in this Agreement, they shall be interpreted in
a non-exclusive manner as though the words “without limitation” immediately
followed. Whenever the words day or days are used in this Agreement, they shall
mean “calendar day” or “calendar days” unless expressly provided to the
contrary. Unless otherwise expressly provided, any reference to any “Section”
means a section of this Agreement (including all subsections), and any reference
to any “Exhibit” or “Schedule” means an exhibit or schedule attached hereto. If
more than one Person is Tenant hereunder, their liability and obligations
hereunder shall be joint and several. This Agreement (a) contains the entire
agreement of the parties as to the subject matter hereof and supersedes all
prior or contemporaneous verbal or written agreements or understandings, (b) may
be executed in several counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same document, (c) may only be
amended by a writing executed by the parties, (d) and any outstanding Letter of
Credit may be assigned by Beneficiary (including any assignment for security
purposes) to any assignee of, or successor in interest to, its rights under the
Lease, (e) shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties, (f) shall be governed by and construed and
enforced in accordance with the laws of the State of California, without regard
to the conflict of laws rules thereof, and (g) incorporates by this reference
any Exhibits and Schedules attached hereto.

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     IN WITNESS WHEREOF, this Agreement has been executed by Tenant and
Beneficiary as of the date first above written.

“TENANT”

Alterra Healthcare Corporation,
a Delaware corporation

By:  /s/ Mark W. Ohlendorf
Name:  Mark W. Ohlendorf
Title:  Senior Vice President

Witness:  J.C. Hansen                Witness:  Amy Hickmann

“BENEFICIARY”
NATIONWIDE HEALTH PROPERTIES, INC.,
a Maryland corporation

By:  /s/ Donald D. Bradley
Name:        Donald D. Bradley
Title:        Senior Vice President and General Counsel

Witness:  /s/ Kevin L. Sherry                    Witness:  /s/ Andi L. Brockway

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NH TEXAS PROPERTIES LIMITED PARTNERSHIP,
a Texas limited partnership

By:  MLD TEXAS CORPORATION,
     a Texas corporation,
     its General Partner

                By:  /s/ Donald D. Bradley
                Name:        Donald D. Bradley
                Title:        Senior Vice President and General Counsel

Witness:  /s/ Kevin L. Sherry                    Witness:  /s/ Andi L. Brockway

NHP Silverwood Investments, Inc.,

a Nevada corporation

By:  /s/ Donald D. Bradley
Name:        Donald D. Bradley
Title:        Senior Vice President and General Counsel

Witness:  /s/ Kevin L. Sherry                    Witness:  /s/ Andi L. Brockway

NHP Westwood Investments, Inc.,
a Nevada corporation

By:  /s/ Donald D. Bradley
Name:        Donald D. Bradley
Title:        Senior Vice President and General Counsel

Witness:  /s/ Kevin L. Sherry                    Witness:  /s/ Andi L. Brockway

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MLD Delaware Trust,
a Delaware business trust

By:  /s/ Donald D. Bradley
     Donald D. Bradley, not in his individual
        capacity, but solely as Trustee

Witness:  /s/ Kevin L. Sherry                    Witness:  /s/ Andi L. Brockway

MLD Properties, LLC,
a Delaware limited liability company

BY:        MLD PROPERTIES, INC.,
           a Delaware corporation,
                its Sole Member

                By:  /s/ Donald D. Bradley
                Name:        Donald D. Bradley
                Title:        Senior Vice President and General Counsel

Witness:  /s/ Kevin L. Sherry                    Witness:  /s/ Andi L. Brockway

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SCHEDULE 1

LANDLORD ENTITIES

Nationwide Health Properties, Inc., a Maryland corporation

NH Texas Properties Limited Partnership, a Texas limited partnership

NHP Silverwood Investments, Inc., a Nevada corporation

NHP Westwood Investments, Inc., a Nevada corporation

MLD Delaware Trust, a Delaware business trust

MLD Properties, LLC, a Delaware limited liability company

Schedule 1

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EXHIBIT A

NAME] BANK

IRREVOCABLE LETTER OF CREDIT NO. _________
DATE: ________________________
EXPIRATION DATE: ____________________

[Landlord Entities]
c/o Nationwide Health Properties, Inc.
610 Newport Center Drive, Suite 1150
Newport Beach, CA 92660

Ladies and Gentlemen:

We hereby establish our Irrevocable Letter of Credit in your favor for the
account of Alterra Healthcare Corporation, a Delaware corporation (“Customer”)
available by your draft(s) on us payable at sight in an amount not to exceed a
total of ________________________ Dollars ($____________) when accompanied by
the following documents:

1.        A certificate which on its face appears to have been executed by an
officer, managing member or general partner, as applicable, of any of the
following Nationwide Health Properties, Inc., a Maryland corporation, NH Texas
Properties Limited Partnership, a Texas limited partnership, NHP Silverwood
Investments, Inc., a Nevada corporation, NHP Westwood Investments, Inc., a
Nevada corporation, MLD Delaware Trust, a Delaware business trust, and MLD
Properties, LLC, a Delaware limited liability company (individually and
collectively, “Beneficiary”), stating the amount which Beneficiary is drawing
and that one or more of the following events has occurred: (i) an Event of
Default has occurred under the Master Lease dated as of April 9, 2002 between
Beneficiary, as landlord, and Customer, as tenant, as amended from time to time
(as amended, the “Lease”); (ii) a default has occurred under that certain Letter
of Credit Agreement dated April 9, 2002 between Beneficiary and Customer, as
amended; or (iii) at least one of the entities comprising Customer (a) has
ceased to generally pay its debts as they become due, has admitted in writing
its inability to pay its debts generally, or has made an assignment of all or
substantially all of its property for the benefit of creditors, (b) has had a
receiver, trustee or liquidator appointed for it or any of its property, or
(c) has filed a voluntary petition, or has had filed against it any other
petition, under any federal bankruptcy or state law to be adjudicated as
bankrupt or for any arrangement or other debtor's relief.

Exhibit A-1

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2.        The original Letter of Credit must accompany all drafts unless a
partial draw is presented, in which case the original must accompany the final
draft.

This Letter of Credit may be transferred or assigned by Beneficiary to any
successor or assign of its interests under the Lease or to any lender obtaining
a lien or security interest in the property covered by the Lease. Each draft
hereunder by any assignee or successor shall be accompanied by a copy of the
fully executed documents or judicial orders evidencing such encumbrance,
assignment or transfer. Any draft drawn hereunder shall be in the form attached
hereto as Schedule 1. Partial drawings are permitted with the amount of the
Letter of Credit being reduced, without amendment, by the amount(s) drawn
hereunder. This Letter of Credit shall expire at 2:00 p.m., Los Angeles time, on
the expiration date set forth above. Notwithstanding the foregoing, this Letter
of Credit shall be automatically extended for additional periods of one (1) year
from the present or each future expiration date unless we have notified you in
writing, not less than ninety (90) days before any such expiration date, that we
elect not to renew this Letter of Credit. Our notice of any such election shall
be sent by express, registered or certified mail to the address shown above.

     Except so far as otherwise expressly stated, this Letter of Credit is
subject to the “Uniform Customs and Practice for Documentary Credits (1/1/94
Revision), International Chamber of Commerce Publication No. 500.” We hereby
agree with you and all persons negotiating such drafts that all drafts drawn and
negotiated in compliance with the terms of this Letter of Credit will be duly
honored upon presentment and delivery of the documents specified above by
certified or registered mail to _____________________________________________,
if negotiated on or before the expiration date shown above.

Very truly yours,

                            
Authorized Signature

                            

Exhibit A-2

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SCHEDULE 1 TO EXHIBIT A

SIGHT DRAFT

TO:                       
                            
                  
Attention:        

PAY TO THE ORDER OF:

Nationwide Health Properties, Inc.,
a Maryland corporation,
c/o Wells Fargo Bank
420 Montgomery Street
San Francisco, California
ABA No. 121000248
for the benefit of Nationwide Health Properties, Inc.
Account No. 4692089329

THE SUM OF:

_________________________________ Dollars ($_________)

DRAWN ON:

Irrevocable Letter of Credit No. ____________
dated ____________, 20__ issued by
_______________________ Bank

[SIGNATURE BLOCK]