EXHIBIT 10.8
GUARANTY BY INTEGRATED HEALTH SERVICES, INC.
GUARANTY dated as of January 1, 2000 made by INTEGRATED HEALTH
SERVICES, INC., a Delaware corporation ("Guarantor") in favor of HRES1
PROPERTIES TRUST, a Maryland real estate investment trust (with its successor
and assigns, "Landlord").
W I T N E S S E T H :
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WHEREAS, Landlord and IHS Acquisition No. 135, Inc., a Delaware
corporation ("IHS 135") are parties to a Lease Agreement dated as of February
11, 1994, as amended (the "Original Lease"), originally between HRPT Properties
Trust (f/k/a "Health and Rehabilitation Properties Trust"), a Maryland real
estate investment trust ("HRPT"), as landlord, and Horizon Healthcare
Corporation, a Delaware corporation ("Horizon"), as tenant;
WHEREAS, Landlord has succeeded to the interest of HRPT as landlord
under the Original Lease;
WHEREAS, pursuant to an Assignment and Assumption of Real Property
Lease dated as of December 31, 1997 by and between Horizon/CMS Healthcare
Corporation (the successor to Horizon), as assignor, and IHS Acquisition No.
151, Inc., a Delaware corporation ("IHS 151"), as assignee, IHS 151 acquired all
right, title and interest of Horizon/CMS Healthcare Corporation under the
Original Lease;
WHEREAS, pursuant to an Assignment and Assumption of Real Property
Lease dated as of December 31, 1997 by and between IHS 151, as assignor, and IHS
135, as assignee, IHS 135 acquired all right, title and interest of IHS 151
under the Original Lease;
WHEREAS, pursuant to a Consent, Assumption and Guaranty Agreement dated
as of December 31, 1997 (the "IHS Consent") among Guarantor, IHS 135 and certain
other subsidiaries of Guarantor, HealthSouth Corporation, Horizon, HRPT and
Indemnity Collection Corporation, Guarantor and IHS 135 assumed the obligations
of Horizon under the Original Lease;
WHEREAS, Landlord claims that by a notice dated January 25, 2000,
Landlord notified IHS 135 that the Original Lease was terminated by virtue of an
Event of Default under the Original Lease;
WHEREAS, on February 3, 2000, Guarantor and certain of its
subsidiaries, including IHS 135, filed voluntary petitions for relief
(collectively, the "Cases") under chapter 11 of the United States Bankruptcy
Code, ss.ss.101 et seq. (the "Bankruptcy Code") with the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court");
WHEREAS, Guarantor and IHS 135 are continuing to operate their
businesses and manage their respective properties as debtors-in-possession
pursuant to ss.ss.1107 and 1108 of the Bankruptcy Code;
WHEREAS, pursuant to, and in accordance with, a Settlement Agreement
dated as of April 11, 2000 among, inter alia, Guarantor, Landlord and IHS 135
(as amended, amended and restated, modified or supplemented from time to time,
the "Settlement Agreement"), Landlord has agreed to rescind its alleged
termination of the Original Lease, Landlord and IHS 135 have agreed to amend and
restate the Original Lease as set forth in an Amended and Restated Lease
Agreement dated as of even date herewith (as amended, amended and restated,
modified or supplemented from time to time, the "Lease") between IHS 135 and
Landlord, and Guarantor has agreed to guaranty the obligations of IHS 135 under
the Lease;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor hereby agrees with Landlord as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are defined in
the Lease and used herein are so used as so defined. In addition, the following
terms shall have the meanings set forth below:
"Consolidated Financials" shall mean, for any fiscal year or
other accounting period of Guarantor and its consolidated Subsidiaries,
its annual Form 10-K and quarterly Form 10-Q prepared pursuant to the
Securities and Exchange Act of 1934, as amended, or comparable
financial statement.
"Lease Documents" shall mean, collectively, the Lease and any
sublease or assumption of lease entered into by a Related Entity
pursuant to Article 17 of the Lease, as any of the same may from time
to time be amended, modified or supplemented.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, property, condition (financial or
otherwise) or prospects of Guarantor and its Subsidiaries taken as a
whole, (b) the ability of Guarantor to perform its obligations under
this Guaranty, or (c) the validity or enforceability of this Guaranty,
or the rights of Landlord hereunder.
"Obligations" shall mean the payment and performance of each
and every obligation and liability of Tenant (and each of them) to
Landlord under any Lease Document, whether now existing or hereafter
arising or created, joint or several, direct or indirect, absolute or
contingent, due or to become due, matured or unmatured, liquidated or
unliquidated, arising by contract, operation of law or otherwise, and
including, without limitation, all Minimum Rent and Additional Rent
under the Lease, and all fees and charges, and all costs and expenses,
payable under any Lease Document.
"Subsidiary" shall mean any corporation of which more than
fifty percent of the outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether or not at the time capital stock of any other
class or classes of such corporation shall or might have voting power
upon the occurrence of any contingency) is at the time directly or
indirectly owned by Guarantor, or Guarantor and one or more other
Subsidiaries, or by one or more Subsidiaries.
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"Tenant" shall mean and be a reference to each of IHS 135 and
any Related Entity (as such term is defined in Section 17.1 of the
Lease) that is an assignee of IHS 135's interest in the Lease or a
sublessee of any portion of the Leased Property from IHS 135.
2. Guaranty. The Guarantor hereby unconditionally and irrevocably guarantees to
Landlord the prompt and complete payment and performance by Tenant, when due
(whether at stated maturity, by acceleration or otherwise), of the Obligations.
The Guarantor further agrees to pay any and all reasonable expenses (including,
without limitation, all reasonable fees and disbursements of counsel to
Landlord) which may be paid or incurred by Landlord in enforcing any of its
rights under this Guaranty. This Guaranty is a guaranty of payment and not of
collectibility and is absolute and in no way conditional or contingent. The
Guarantor's liability hereunder is direct and unconditional and may be enforced
after nonpayment or nonperformance by Tenant of any Obligation without requiring
Landlord to resort to any other Person (including without limitation Tenant) or
any other right, remedy or collateral. This Guaranty shall remain in full force
and effect until the Obligations are paid in full following the termination of
all Lease Documents.
3. Costs and Expenses of Collection. The Guarantor agrees, as principal obligor
and not as a guarantor only, to pay to Landlord forthwith upon demand, in
immediately available funds, all reasonable costs and expenses (including,
without limitation, all court costs and all reasonable fees and disbursements of
counsel to Landlord) incurred or expended by Landlord in connection with the
enforcement of this Guaranty, together with interest on such amounts from the
time such amounts become due until payment at the Overdue Rate. It shall be a
condition of the obligations of Guarantor to pay any fees and expenses payable
by it under this Guaranty that Landlord shall have, or shall have caused to
have, provided Guarantor with a writing describing such fees and/or expenses in
reasonable detail.
4. Subrogation and Contribution. Until the Obligations shall have been paid and
performed in full after the termination of the Lease Documents, Guarantor
irrevocably and unconditionally waives any and all rights to which it may be
entitled, by operation of law or otherwise, to be subrogated, with respect to
any payment made by Guarantor hereunder, to the rights of Landlord against
Tenant, or otherwise to be reimbursed, indemnified or exonerated by Tenant in
respect thereof or to receive any payment, in the nature of contribution or for
any other reason, from any other guarantor of the Obligations with respect to
any payment made by Guarantor hereunder. Until the Obligations shall have been
paid and performed in full after the termination of the Lease Documents,
Guarantor waives any defense it may have based upon any election of remedies by
Landlord which impairs Guarantor's subrogation rights or Guarantor's rights to
proceed against Tenant for reimbursement (including without limitation any loss
of rights Guarantor may suffer by reason of any rights, powers or remedies of
Tenant in connection with any anti-deficiency laws or any other laws limiting,
qualifying or discharging any indebtedness to Landlord). Until the Obligations
shall have been paid, performed and satisfied in full after the termination of
the Lease Documents, Guarantor further waives any right to enforce any remedy
which Landlord now has or may in the future have against Tenant, any other
guarantor or any other Person and any benefit of, or any right to participate
in, any security whatsoever now or in the future held by Landlord.
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5. Effect of Bankruptcy Stay. If acceleration of the time for payment or
performance of any of the Obligations is stayed upon the insolvency, bankruptcy
or reorganization of Tenant or any other Person or otherwise, all such amounts
otherwise subject to acceleration shall nonetheless be payable by Guarantor
under this Guaranty forthwith upon demand.
6. Receipt of Lease Documents, etc. Guarantor confirms, represents and warrants
to Landlord that (i) it has received true and complete copies of all the Lease,
and has read the contents thereof and reviewed the same with legal counsel of
its choice; (ii) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(iii) Landlord has made no representation to Guarantor as to the
creditworthiness of IHS 135; and (iv) Guarantor has established adequate means
of obtaining from Tenant on a continuing basis information regarding Tenant's
financial condition. The Guarantor agrees to keep adequately informed from such
means of any facts, events, or circumstances which might in any way affect
Guarantor's risks under this Guaranty, and Guarantor further agrees that
Landlord shall have no obligation to disclose to Guarantor any information or
documents acquired by Landlord in the course of its relationship with Tenant.
7. Amendments, etc. with Respect to the Obligations. The obligations of
Guarantor under this Guaranty shall remain in full force and effect without
regard to, and shall not be released, altered, exhausted, discharged or in any
way affected by any circumstance or condition (whether or not Tenant shall have
any knowledge or notice thereof), including without limitation (a) any amendment
or modification of or supplement to any Lease Document, or any obligation, duty
or agreement of Tenant or any other Person thereunder or in respect thereof; (b)
any assignment or transfer in whole or in part of any of the Obligations; any
furnishing, acceptance, release, nonperfection or invalidity of any direct or
indirect security or guaranty for any of the Obligations; (c) any waiver,
consent, extension, renewal, indulgence, settlement, compromise or other action
or inaction under or in respect of any Lease Document, or any exercise or
nonexercise of any right, remedy, power or privilege under or in respect of any
such instrument (whether by operation of law or otherwise); (d) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or similar proceeding with respect to Tenant or any other Person or any of their
respective properties or creditors or any resulting release or discharge of any
Obligation (including without limitation any rejection of any lease pursuant to
Section 365 of the Federal Bankruptcy Code); (e) any new or additional financing
arrangements entered into by Tenant or by any other Person on behalf of or for
the benefit of Tenant; (f) the merger or consolidation of Tenant with or into
any other Person or of any other Person with or into Tenant; (g) the voluntary
or involuntary sale or other disposition of all or substantially all the assets
of Tenant or any other Person; (h) the voluntary or involuntary liquidation,
dissolution or termination of Tenant or any other Person; (i) any failure on the
part of Tenant or any other Person (other than Landlord) for any reason to
perform or comply with any term of any Lease Document or any other agreement; or
(j) any other act, omission or occurrence whatsoever, whether similar or
dissimilar to the foregoing. The Guarantor authorizes each Tenant, each other
guarantor in respect of the Obligations and Landlord at any time in its
discretion, as the case may be, to alter any of the terms of any of the
Obligations.
8. Guarantor as Principal. If for any reason (other than Landlord's material
default, negligence or willful misconduct), Tenant, or any of them, or any other
Person is under no legal obligation to discharge any Obligation, or if any other
moneys included in the Obligations have
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become unrecoverable from Tenant, or any of them, or any other Person by
operation of law or for any other reason (other than Landlord's material
default, negligence or willful misconduct), including, without limitation, the
invalidity or irregularity in whole or in part of any Obligation or of any Lease
Document, the legal disability of Tenant or any other obligor in respect of
Obligations, any discharge of or limitation on the liability of Tenant or any
other Person or any limitation on the method or terms of payment under any
Obligation, or of any Lease Document, which may now or hereafter be caused or
imposed in any manner whatsoever (whether consensual or arising by operation of
law or otherwise), this Guaranty shall nevertheless remain in full force and
effect and shall be binding upon Guarantor to the same extent as if Guarantor at
all times had been the principal obligor on all Obligations.
9. Waiver of Demand, Notice, Etc. The Guarantor hereby waives, to the extent not
prohibited by applicable law, all presentments, demands for performance, notice
of nonperformance, protests, notices of protests and notices of dishonor in
connection with the Obligations or any Lease Document, including but not limited
to (a) notice of the existence, creation or incurring of any new or additional
obligation or of any action or failure to act on the part of Tenant, Landlord,
any endorser or creditor of Tenant or any other Person; (b) any notice of any
indulgence, extensions or renewals granted to any obligor with respect to the
Obligations; (c) any requirement of diligence or promptness in the enforcement
of rights under any Lease Document, or any other agreement or instrument
directly or indirectly relating thereto or to the Obligations; (d) any
enforcement of any present or future agreement or instrument relating directly
or indirectly thereto or to the Obligations; (e) notice of any of the matters
referred to in Paragraph 8 above; (f) any defense of any kind which Guarantor
may now have with respect to his liability under this Guaranty (other than the
defense of payment); (g) any right to require Landlord, as a condition of
enforcement of this Guaranty, to proceed against Tenant or any other Person or
to proceed against or exhaust any security held by Landlord at any time or to
pursue any other right or remedy in Landlord's power before proceeding against
Guarantor; (h) any defense that may arise by reason of the incapacity, lack of
authority, death or disability of any other Person or Persons or the failure of
Landlord to file or enforce a claim against the estate (in administration,
bankruptcy, or any other proceeding) of any other Person or Persons; (i) any
defense based upon an election of remedies by Landlord; (j) any defense arising
by reason of any "one action" or "anti-deficiency" law or any other law which
may prevent Landlord from bringing any action, including a claim for deficiency,
against Guarantor, before or after Landlord's commencement of completion of any
foreclosure action, either judicially or by exercise of a power of sale; (k) any
defense based upon any lack of diligence by Landlord in the collection of any
Obligation; (l) any duty on the part of Landlord to disclose to Guarantor any
facts Landlord may now or hereafter know about Tenant or any other obligor in
respect of Obligations; (m) any defense arising because of an election made by
Landlord under Section 1111(b)(2) of the Federal Bankruptcy Code; and (n) any
defense based on any borrowing or grant of a security interest under Section 364
of the Federal Bankruptcy Code. Guarantor acknowledges and agrees that each of
the waivers set forth herein on the part of Guarantor is made with Guarantor's
full knowledge of the significance and consequences thereof and that, under the
circumstances, the waivers are reasonable. If any such waiver is determined to
be contrary to applicable law such waiver shall be effective only to the extent
not prohibited by such applicable law.
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10. Reinstatement. This Guaranty shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
Landlord upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Tenant or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for,
Tenant or any substantial part of its property, or otherwise, all as though such
payments had not been made.
11. Payments. The Guarantor hereby agrees that the Obligations will be paid to
Landlord without set-off or counterclaim in U.S. Dollars at the office of
Landlord located at 400 Centre Street, Newton, Massachusetts 02458, or to such
other location as Landlord shall notify Guarantor.
12. Covenants. The Guarantor hereby covenants and agrees with Landlord that,
from and after the date of this Guaranty until the Obligations are paid in full
and all Lease Documents have been terminated:
(a) Notices. The Guarantor shall endeavor to give prompt
notice to Landlord of any event which will, or that may reasonably be expected
to, result in a material adverse change in the financial condition or operation
of Guarantor and its Subsidiaries taken as a whole, provided, however the
Guarantor's failure to do so shall not be deemed to be a default of the
Guarantor hereunder.
(b) Financial Statements. The Guarantor shall furnish the
following statements to Landlord:
(i) within sixty (60) days after each of the first
three quarters of any Fiscal Year, the Consolidated Financials
for such fiscal quarter; and
(ii) within one hundred twenty (120) days after the
end of each Fiscal Year, the Consolidated Financials for such
Fiscal Year.
Landlord may at any time, and from time to time, provide any lender to Landlord
with copies of any of the foregoing statements.
(c) Reports. The Guarantor shall cause the Tenant to provide
such certificates, reports and other documents required of it hereunder and
under the Lease Documents.
(d) Legal Existence. The Guarantor shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence (subject as provided in Paragraph 13(f) hereof).
(e) Merger; Sale of Assets, Etc. The Guarantor shall not enter
into any transaction of merger or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, sub-lease, transfer or otherwise dispose of in one transaction or a
series of transactions, all or substantially all of its business, property or
assets, whether now owned or hereafter acquired, except that Guarantor may merge
or consolidate with any Person, or convey, transfer or lease substantially all
of its assets so long as
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the successor formed by such consolidation or the survivor of such merger, if
not the Guarantor, or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of Guarantor, as the case may be, shall assume
the obligations of the Guarantor hereunder to the same extent and with the same
effect as though such corporation was a party hereto and was named and defined
as the "Guarantor" herein.
13. Severability. Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
14. Additional Guaranties. This Guaranty shall be in addition to any other
guaranty or other security for the Obligations, and it shall not be prejudiced
or rendered unenforceable by the invalidity of any such other guaranty or
security.
15. Paragraph Headings. The paragraph headings used in this Guaranty are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
16. No Waiver; Cumulative Remedies, Documentation of Expenses. Landlord shall
not by any act (except by a written instrument pursuant to Paragraph 18 hereof),
delay, indulgence, omission or otherwise, be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of Landlord, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by
Landlord of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Landlord would otherwise have on
any future occasion. The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
17. Waivers and Amendments; Successors and Assigns. None of the terms or
provisions of this Guaranty may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by Guarantor and Landlord,
provided that any provision of this Guaranty may be waived by Landlord in a
letter or agreement executed by Landlord or by telecopy from Landlord. This
Guaranty shall be binding upon the successors and assigns of Guarantor and shall
inure to the benefit of Landlord and its successors and assigns.
18. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; GOVERNING LAW. THE GUARANTOR
HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO A JURY TRIAL
IN ANY SUIT, ACTION OR PROCEEDING WHICH ARISES OUT OF OR BY REASON OF THIS
GUARANTY, ANY LEASE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY.
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BY ITS EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR (1)
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
GUARANTY, ANY LEASE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
IN ADDITION TO ANY OTHER COURT IN WHICH SUCH ACTION, SUIT OR PROCEEDING MAY BE
BROUGHT; (2) IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED BY ANY SUCH
COURT IN ANY SUCH ACTION, SUIT OR PROCEEDING IN WHICH IT SHALL HAVE BEEN SERVED
WITH PROCESS IN THE MANNER HEREINAFTER PROVIDED; AND (3) TO THE EXTENT THAT IT
MAY LAWFULLY DO SO, WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE, IN SUCH ACTION, SUIT OR PROCEEDING ANY CLAIM THAT IT IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT ITS PROPERTY IS
EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE ACTION, SUIT OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER.
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
19. Notices. All notices under this Guaranty shall be in writing, and shall be
delivered by hand, by a nationally recognized commercial overnight delivery
service, by first class mail or by telecopy, delivered, addressed or
transmitted, if to Landlord, at 400 Centre Street, Newton, Massachusetts 02458,
Attention: President (telecopy no. 617-796-8349), with a copy to Sullivan &
Worcester LLP, One Post Office Square, Boston, Massachusetts 02109, Attention:
Alexander A. Notopoulos, Jr. Esq. (telecopy no. 617-338-2880), and if to
Guarantor, at its address or telecopy number set out below its signature in this
Guaranty. Such notices shall be effective: in the case of hand deliveries, when
received and acknowledged in writing; in the case of an overnight delivery
service, on the next business day after being placed in the possession of such
delivery service, with delivery charges prepaid; in the case of mail, five
business days after deposit in the postal system, first class postage prepaid;
and in the case of telecopy notices, the first business day following the date
when electronic indication of receipt is received. Either party may change its
address and telecopy number by written notice to the other delivered in
accordance with the provisions of this Paragraph.
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IN WITNESS WHEREOF, the undersigned has caused this Guaranty
to be duly executed and delivered as of the date first above written.
INTEGRATED HEALTH SERVICES, INC.
By /s/ Daniel J. Booth
Name: Daniel J. Booth
Title: Senior Vice President
Address for Notices:
Integrated Health Services, Inc.
The Highlands
910 Ridgebrook Road
Sparks, MD 21152
Telecopy no.: (410) 773-1020
Attn: Daniel J. Booth, Senior Vice President,
Finance
with a copy to:
Parker Chapin LLP
405 Lexington Avenue
New York, NY 10174
Telecopy no.: 212-704-6288
Attention: Charles P. Greenman, Esq.
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