EXHIBIT 10.22
FIRST AMENDMENT
TO
FACILITIES AGREEMENT
AMONG
LITCHFIELD INVESTMENT COMPANY, L.L.C.,
INTEGRATED HEALTH SERVICES OF LESTER, INC.
AND
INTEGRATED HEALTH SERVICES, INC.
AS OF SEPTEMBER 30, 1997
FIRST AMENDMENT
TO
FACILITIES AGREEMENT
THIS FIRST AMENDMENT TO FACILITIES AGREEMENT ("First Amendment"), is
made and entered into as of the 30th day of September, 1997, among Litchfield
Investment Company, L.L.C., a Connecticut limited liability company, with
principal offices at 128 Litchfield Road, New Milford, Connecticut 06776
(hereinafter referred to as "Litchfield"), Integrated Health Services of Lester,
Inc., a Delaware corporation, with principal offices at 10065 Red Run Boulevard,
Owings Mills, Maryland 21117 (hereinafter referred to as "IHS") and Integrated
Health Services, Inc., a Delaware corporation, with principal offices at 10065
Red Run Boulevard, Owings Mills, Maryland 21117 (hereinafter referred to as
"Integrated").
W I T N E S S E T H:
WHEREAS, pursuant to an Agreement to Convey, dated as of June 30, 1997,
between Litchfield Asset Management Corp. (hereinafter referred to as "LAMC")
and Litchfield, Litchfield is the present owner of the real property,
improvements and personal property constituting forty-one (41) skilled nursing
home facilities and two (2) retirement centers, as described on Exhibit A
attached hereto and made a part hereof for all purposes (hereinafter referred
to, collectively, as the "Facilities"); and
WHEREAS, pursuant to forty-three (43) Leases, each dated as of August
31, 1994 (hereinafter referred to, collectively, as the "Prior Leases"), between
LAMC and IHS, LAMC leased the Facilities to IHS, during the term from September
1, 1994 (hereinafter referred to as the "Effective Date of the Prior Leases") to
September 30, 1997; and
WHEREAS, pursuant to forty-three (43) Purchase Option Agreements, each
dated as of August 31, 1994 (hereinafter referred to, collectively, as the
"Prior Purchase Option Agreements"), between LAMC and IHS, LAMC granted to IHS
options to purchase each of the Facilities; and
WHEREAS, pursuant to the Termination of Leases and Purchase Option
Agreements, dated as of September 30, 1997, between Litchfield and IHS,
Litchfield and IHS terminated the Prior Leases and the Prior Purchase Option
Agreements; and
WHEREAS, Litchfield and IHS have (a) entered into forty-three (43)
Leases, each dated as of September 30, 1997 (hereinafter referred to,
collectively, as the "Leases"), whereby Litchfield has leased each of the
Facilities to IHS and (b) entered into forty-three (43) Purchase Option
Agreements, each dated as of September 30, 1997 (hereinafter referred to,
collectively, as the "Purchase Option Agreements"), whereby Litchfield granted
to IHS options to purchase each of the Facilities; and
WHEREAS, concurrently with the execution and delivery of this First
Amendment, the Leases and the Purchase Option Agreements, among other things (a)
Litchfield, the Principal Members of Litchfield, Integrated and
IHS will enter into the Amended and Restated Non-Competition and Secrecy
Agreement, dated as of September 30, 1997 (hereinafter referred to as the
"Non-Competition and Secrecy Agreement"), (b) Litchfield and IHS will enter into
the Amended and Restated Participation Agreement, dated as of September 30, 1997
(hereinafter referred to as the "Participation Agreement"), and (c) Integrated
will execute the Guaranty, dated as of September 30, 1997 (hereinafter referred
to as the "Guaranty"), as to payment of certain obligations of IHS under the
Leases and the Prior Leases; and
WHEREAS, to refinance the secured indebtedness encumbering the
Facilities, German American Capital Corporation, a Maryland corporation
(hereinafter referred to as the "Lender") shall make a loan to Litchfield,
subject to the terms and conditions of the Credit Agreement, dated as of
September 30, 1997, between Litchfield and Lender (hereinafter referred to as
the "Loan Agreement"); and
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained in this First Amendment and other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Section 1.15 of the Facilities Agreement is amended and restated as
follows:
1.15 Guaranty. "Guaranty" shall mean the Guaranty, dated as of
September 30, 1997, from Integrated for the benefit of Litchfield.
2. Section 1.25 of the Facilities Agreement is amended and restated as
follows:
1.25 Knowledge. "Knowledge" of a party shall mean (a) actual
knowledge of an officer or management level employee of such party, with respect
to a corporation, including actual knowledge of any of the Principal Members of
Litchfield, (b) actual knowledge of a general partner or management level
employee of such party, with respect to a partnership, or (c) actual knowledge
of the person with respect to a natural person.
3. Section 1.27 of the Facilities Agreement is amended as follows:
1.27 Leases or Lease. "Leases" shall mean, collectively, the
forty-three (43) leases, each dated as of September 30, 1997, between Litchfield
and IHS. Reference to any one of the Leases individually and not specifically
shall be referred to herein as a "Lease".
4. Section 1.28 of the Facilities Agreement is amended and restated as
follows:
1.28 Litchfield. "Litchfield" shall mean Litchfield Investment
Company, L.L.C., a Connecticut limited liability company, with principal offices
at 128 Litchfield Road, New Milford, Connecticut 06776.
5. Section 1.34 of the Facilities Agreement is amended and restated as
follows:
1.34 Non-Competition and Secrecy Agreement. "Non-Competition
and Secrecy Agreement" shall mean the Amended and Restated Non-Competition and
Secrecy Agreement, dated as of September 30, 1997, among Litchfield, the
Principal Members of Litchfield, Integrated and IHS.
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6. Section 1.35 of the Facilities Agreement is amended and restated as
follows:
1.35 Participation Agreement. "Participation Agreement" shall mean
the Amended and Restated Participation Agreement, dated as of September 30,
1997, between IHS and Litchfield.
7. Section 1.40 of the Facilities Agreement is amended and restated as
follows:
1.40 Principal Members of Litchfield. "Principal Members of
Litchfield" shall mean (a) Eugene H. Rosen whose address is 139 North Shore
Road, New Preston, Connecticut 06777, (b) Bruce Weinstein, whose address is 562
Tepi Drive, Southbury, Connecticut 06488, and (c) Michael S. McGee, whose
address is 5A Davison Lane West, West Islip, New York 11795.
8. Section 1.41 of the Facilities Agreement is amended and restated as
follows:
1.41 Purchase Option Agreements or Purchase Option Agreement.
"Purchase Option Agreements" shall mean, collectively, the forty-three (43)
purchase option agreements, each dated as of September 30, 1997, between
Litchfield and IHS. Reference to any one of the Purchase Option Agreements
individually and not specifically shall be referred to herein as a "Purchase
Option Agreement".
9. Section 1.45 of the Facilities Agreement is amended and restated as
follows:
1.45 Transaction Documents. "Transaction Documents" shall mean (a)
the Facilities Agreement; (b) the First Amendment; (c) the Leases; (d) the
Purchase Option Agreements; (e) the Memoranda of Lease; (f) the Memoranda of
Option to Purchase Real Estate; (g) the Non-Competition and Secrecy Agreement;
(h) the Guaranty; (i) the Warrant; (j) the Participation Agreement; (k) the
Litchfield Shareholders Notes; (l) the Integrated Loan Agreements; (m) the
Assignment of Litchfield Leases; (n) the Guaranties, dated as of August 31,
1994, by each of the Principal Members of Litchfield; (o) the Guaranty referred
to in Section IX hereof, dated as of August 31, 1994, by AVE; (p) the Guaranty
referred to in Section IX hereof, dated as of August 31, 1994, by LAMC; (q) the
Security Agreement/ Proceeds, dated as of August 31, 1994, by and between
Litchfield and IHS; (r) the Termination of Lease and Purchase Option, dated as
of August 31, 1994, among LAMC, IHS, IHS at Hanover and Heritage/Highlands; (s)
the Termination of Lease and Purchase Option, dated as of August 31, 1994, by
and among LAMC, IHS, IHS at Hawthorne, and Charlotte; (t) the Termination of
Management Agreement, dated as of August 31, 1994, by and among LAMC, IHS, IHS
at Great Bend and Manorwood; (u) the Termination of Management Agreement, dated
as of August 31, 1994, by and among LAMC, IHS, IHS at Wichita and Manorwood (v)
the Prior Leases, each dated as of August 31, 1994, by and between LAMC and IHS;
(w) the Prior Purchase Option Agreements, each dated as of August 31, 1994, by
and between LAMC and IHS; (x) the Security Agreement/Proceeds, dated as of
September 30, 1997, by and between Litchfield and IHS; and (y) the Termination
of Leases and Purchase Option Agreements, dated as of September 30, 1997, by and
between Litchfield and IHS.
10. Article I is amended by adding the following definitions to the end
thereof:
1.47 Prior Leases. "Prior Leases" shall mean, collectively, the
forty-three (43) leases, each dated as of August 31, 1994, between LAMC and IHS.
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1.48 Prior Purchase Option Agreements. "Prior Purchase Option
Agreements" shall mean, collectively, the forty-three (43) purchase option
agreements, each dated as of August 31, 1994, between LAMC and IHS.
1.49 LAMC. "LAMC" shall mean Litchfield Asset Management Corp., a
Connecticut corporation, with principal offices at 128 Litchfield Road, New
Milford, Connecticut 06776.
11. Subsections (a) and (b) of Section 15.7 of the Facilities Agreement
are amended and restated as
follows:
(a) Litchfield shall indemnify and hold harmless IHS, Integrated,
and their respective officers, directors, shareholders, employees, agents, and
assigns (collectively, the "IHS Indemnified Parties"), from any and all
liabilities, obligations, losses, demands, judgments, actions, suits, causes of
action, claims, proceedings, investigations, citations, matters, damages,
penalties, sanctions, costs, expenses, and disbursements (including, without
limitation reasonable attorneys' and consultants' fees and expenses), whether or
not subject to litigation, (hereinafter collectively referred to as the
"Claims") of any kind or character imposed upon, arising out of, in connection
with, incurred or in any way attributed or relating to the following:
(i) the use, operation, possession, or
management of the Facilities prior to the Effective Date of
the Prior Leases, whether or not IHS or Integrated is a party;
provided, however, that this indemnification does not relate
to any Claims relating to the use, operation, possession or
management of the IHS Leased Facilities by IHS at Hawthorne
accruing or arising on or after April 1, 1993, and IHS at
Hanover accruing or arising on or after July 7, 1992, or the
IHS Managed Facilities by IHS at Great Bend and IHS at Wichita
accruing or arising on or after July 16, 1993;
(ii) the breach or failure of any
representation, warranty or covenant that is contained in the
Facilities Agreement, the First Amendment or contained in any
other agreement or Transaction Documents to which Litchfield,
LAMC, any principal shareholder or member of Litchfield, LAMC
and AVE, on the one hand, and IHS or Integrated, on the other
hand, are parties;
(iii) other than the IHS Leased Facilities
and the IHS Managed Facilities (except as otherwise agreed
upon by Litchfield), the termination of any and all management
agreements pertaining to the Facilities in effect prior to the
Effective Date of the Prior Leases, including, but not limited
to, all management agreements with Health Care Capital;
(iv) all cancellation fees, if any,
attributable to IHS's termination of the HSG Contracts for
which Litchfield is liable in accordance with Section 11.13
herein.
(v) any and all matters arising out of the
cause of action entitled, "Life Care Centers of America, Inc.
v. Charles Town Associates Limited Partnership, et al.,"
United States District Court, Eastern District of Tennessee,
Southern Division, No. 1:92-CV-170;
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(vi) any and all Claims accruing prior to
the Effective Date of the Prior Leases relating to any current
or former employee, consultant or independent contractor of
the Partnerships, Litchfield, LAMC, or any of the Facilities,
including, but not limited to, (A) the termination or
discharge of any current or former employee, consultant, or
independent contractor of the Partnerships or Litchfield or
LAMC or any of the Facilities prior to the Effective Date of
the Prior Leases; (B) Claims under federal, state, or local
laws, rules or regulations, accruing prior to the Effective
Date of the Prior Leases, related to wages, hours, fair
employment practices, unfair labor practices, or other terms
and conditions of employment and claims arising under the
Worker Adjustment and Retraining Notification Act or any
analogous state statute; (C) matters arising from any
severance policy, claim, agreement or contract; or (D) any and
all Claims that accrue after the Effective Date of the Prior
Leases with respect to the matters provided for in Section
11.16 herein and Section 3.4 of the Prior Leases;
(vii) any and all Claims asserted by or on
behalf of any of the Limited Partners of any of the
Partnerships in connection with or relating to the activities
of LAMC or Litchfield or any of the General Partners of such
Partnerships and their respective affiliates in respect of the
transactions contemplated in this Agreement and the other
Transaction Documents;
(viii) any and all Claims that relate to
information provided by or on behalf of any of the
Partnerships or LAMC or Litchfield concerning the Facilities,
Litchfield, LAMC, any of the Partnerships, any of the General
Partners and their respective affiliates, to third parties
which was used or relied upon to effect the transactions
contemplated in this Agreement, the First Amendment, and by
the other Transaction Documents;
(ix) subject to the provisions of Section
11.13 hereof, any and all Claims for any termination,
cancellation, acceleration or modification, penalties or
payments or performance obligations relating to Contracts or
Leases provided for under Section 11.13 herein;
(x) other than for the (A) liens, claims or
encumbrances established under the Loan Documents, or (B)
liens, claims or encumbrances necessary to effect the
transactions contemplated in this Agreement, the First
Amendment, and the other Transaction Documents, any mortgage,
pledge, lien, or encumbrance made on any of the Facilities or
assets relating to any of the Facilities, and any claims
asserted therefrom, other than and except for the Permitted
Liens; provided, however, that this subparagraph shall have no
application to any Claims which did not arise from, accrue or
result from any action or inaction prior to the Effective Date
of the Prior Leases;
(xi) any and all Claims with respect to any
qualified or non-qualified retirement or benefit plans or
arrangements established before the Effective Date of the
Prior Leases involving any current or former employee,
consultant or independent contractor of the Partnerships,
Litchfield, LAMC or any of the Facilities;
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(xii) except as otherwise set forth in this
Agreement, in particular Section 11.13 herein, any and all
Claims accruing prior to the Effective Date of the Prior
Leases with respect to admission agreements, patient
contracts, or agreements with others at the Facilities;
(xiii) any deficiencies or inaccuracies
relating to patient funds and accounts associated therewith at
the Facilities, which arose or accrued prior to the Effective
Date of the Prior Leases;
(xiv) any Claims arising out of LAMC's or
the Partnerships' failure to have kept or maintained patient
records and other related records at the Facilities in
accordance with applicable Law; or
(xv) the violation of any Environmental Law
or the existence, presence or Release of any Hazardous
Material (collectively, "Environmental Liability") where the
Environmental Liability is based on an event or condition at
or relating to any Facility that commenced or existed prior to
the Effective Date of the Prior Leases; provided, however,
that Litchfield's indemnification obligation hereunder shall
be limited solely to Claims (of any kind and nature
whatsoever) (i) for remediation of and response actions
related to such Environmental Liability (including, without
limitation, any such Claim for cleanup, treatment, corrective
action, compliance, financial assurance, restoration, removal,
abatement, encapsulation, containment, revegetation,
monitoring, sampling, investigation, study, assessment, and
the protection of, or mitigative action related to, wildlife,
aquatic species, wetlands, vegetation, flora and fauna) and
(ii) asserted by a third party relating to such Environmental
Liability (including, without limitation, any Claim involving
natural resource damages, property damage, payment of fines or
penalties or settlement amounts, or any other action or cause
of action by, or obligation to, a third party (including,
without limitation, any Claim for personal injury or death,
contribution or cost recovery)). Notwithstanding the
foregoing, Litchfield and IHS will share equally the liability
for Hazardous Materials in existence on the Effective Date of
the Prior Leases, but not in violation of Environmental Law on
the Effective Date of the Prior Leases, whether as a result of
limits permissible under applicable Environmental Law, lack of
restriction or prohibition under applicable Environmental Law
(i.e., non-friable asbestos) or changes in Environmental Law.
Litchfield further covenants and agrees to defend the IHS
Indemnified Parties on account of said Claims and to pay any judgment against
the IHS Indemnified Parties, or any other amount as indicated in this Section
15.7(a), along with all reasonable costs and expenses relative to any such
Claims, including attorneys' fees and expenses; provided, however, that the IHS
Indemnified Parties shall, nevertheless, have the right, if they so elect, to
participate (with counsel of their choosing, which counsel must be approved by
Litchfield, which approval may not be unreasonably withheld) in the defense of
any such Claim in which they may be a party without relieving Litchfield of the
obligation to defend the same. To the extent applicable, the IHS Indemnified
Parties covenant not to settle or compromise any Claim under this section
without the written consent of Litchfield, which consent may not be unreasonably
withheld or delayed under the circumstances. Failure to comply with the
preceding covenant shall be deemed a complete waiver of any rights that the IHS
Indemnified Parties have or may have under this Section 15.7(a).
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(b) IHS shall indemnify and hold harmless Litchfield and its
officers, members, directors, shareholders, employees, agents, and assigns (the
"Litchfield Indemnified Parties") from any and all liabilities, obligations,
losses, demands, judgments, actions, suits, causes of action, claims,
proceedings, investigations, citations, matters, damages, penalties, sanctions,
costs, expenses, and disbursements (including, without limitation reasonable
attorneys' and consultants' fees and expenses), whether or not subject to
litigation, (hereinafter collectively referred to as the "Claims") of any kind
or character imposed upon, arising out of, in connection with, incurred or in
any way attributed or relating to the following:
(i) the breach or failure of any
representation, warranty or covenant made by IHS that is
contained in the Facilities Agreement or the First Amendment
or contained in any other agreement or Transaction Documents
to which Litchfield, LAMC or IHS are parties; provided,
however, for purposes of this subsection (i) only, the term
Transaction Documents shall not include the Leases or the
Prior Leases;
(ii) any and all Claims related to information
provided by or on behalf of IHS or Integrated concerning IHS
and Integrated, to third parties which was used or relied upon
to effect the transactions contemplated in this Agreement, the
First Amendment and by the other Transaction Documents;
(iii) any and all Claims arising out of, in
connection with, or resulting from the use, operation,
management or possession of the Hawthorne Nursing Center by
IHS of Hawthorne from April 1, 1993 until the Effective Date
of the Prior Leases;
(iv) any and all Claims arising out of, in
connection with or resulting from the use, operation,
management or possession of the Hanover House Nursing Center
by IHS at Hanover from December 7, 1992 until the Effective
Date of the Prior Leases;
(v) any and all Claims arising out of, in
connection with or resulting from the use, operation,
management or possession of the IHS Managed Facilities by IHS
at Great Bend and IHS as Wichita from July 16, 1993 until the
Effective Date of the Prior Leases; and
(vi) any and all Claims arising out of, in
connection with or resulting from the cancellation of the HSG
Contracts for which IHS is liable pursuant to the provisions
of Section 11.13 hereof.
IHS further covenants and agrees to defend the Litchfield
Indemnified Parties on account of said Claims and to pay any judgment against
the Litchfield Indemnified Parties, or any other amount as indicated in this
Section 15.7(b), along with all reasonable costs and expenses relative to any
such Claims, including attorneys' fees and expenses; provided, however, that the
Litchfield Indemnified Parties shall, nevertheless, have the right, if they so
elect, to participate (with counsel of their choosing, which counsel must be
approved by IHS, which approval may not be unreasonably withheld) in the defense
of any such Claim in which it may be a party without relieving IHS of the
obligation to defend the same. To the extent applicable, the Litchfield
Indemnified Parties covenant not to settle or compromise any Claim under this
section without the written consent of IHS, which consent may not be
unreasonably
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withheld or delayed under the circumstances. Failure to comply with the
preceding covenant shall be deemed a complete waiver of any rights that the
Litchfield Indemnified Parties have or may have under this Section 15.7(b).
12. Section 15.8 of the Facilities Agreement is deleted.
13. Section 15.9 of the Facilities Agreement is amended and restated as
follows:
15.9 Sales, Assignments or Transfers of Litchfield and the
Facilities; Right of First Refusal. The ownership interest of Litchfield held by
the Principal Members of Litchfield on the Effective Date or Litchfield's
ownership interest in the Facilities may not be sold, assigned or transferred,
in whole or in part, by Litchfield, any of the Principal Members of Litchfield
or any other person or entity and furthermore, any such sale or assignment shall
be void ab initio, except as follows:
(a) From the Effective Date and until the end of the eleventh
month of the fourth Lease Year, no more than forty-nine percent (49%)
of the total ownership interest in Litchfield may be sold, assigned or
transferred, in whole or in part, to any other person or entity other
than the Principal Members of Litchfield so that from the Effective
Date and until the end of the eleventh month of the fourth Lease Year,
the Principal Members of Litchfield shall at all times retain a
fifty-one percent (51%) ownership interest in Litchfield; provided,
however, that any such sale, assignment or transfer pursuant to this
subsection (a) shall be subject to the written approval of IHS, which
approval may not be unreasonably withheld and subject to the
limitations set forth in subsection (f) hereof.
(b) From the first day of the twelth month of the fourth Lease
Year and until the expiration of the Term (as defined in the Leases),
all or any part of the ownership interest in Litchfield may be sold,
assigned or transferred, to any person or entity other than the
Principal Members of Litchfield, subject to IHS's rights under the
Leases, the Purchase Option Agreements and the Participation Agreement;
provided, however, that any such sale, assignment or transfer pursuant
to this subsection (b) shall be subject to the written approval of IHS,
which approval may not be unreasonably withheld and subject to the
limitations set forth in subsection (f) hereof.
(c) From the Effective Date and until the end of the eleventh
month of the third Lease Year, no form of ownership interest
(including, but not limited to, the Leases) in any one or more of the
Facilities may be sold, assigned or transferred, in whole or in part,
except pursuant to the Purchase Option Agreements.
(d) From the date commencing with the first day of the twelth
month of the third Lease Year and until the expiration of the Term, all
or part of the ownership interest (including, but not limited to, the
Leases) in any one or more of the Facilities may be sold, assigned or
transferred to any person or entity, subject to IHS's rights under the
Leases, the Purchase Option Agreements and the Participation Agreement;
provided, however, that any such sale, assignment or transfer pursuant
to this subsection (d) shall be subject to the written approval of IHS,
which approval may not be unreasonably withheld and subject to the
limitations set forth in subsections (f) and (h) hereof.
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(e) Except as set forth on the leasehold policies of title
provided to IHS by Fidelity National Title as of September 30, 1997,
the loan described in the First Amendment and subsequent first lien
secured indebtedness on the Facilities, from the Effective Date and
until the expiration of the Term, no ownership interest in any one or
more of the Facilities and no ownership interest in Litchfield may be
mortgaged, pledged, subjected to a security interest, or otherwise
voluntarily encumbered, in whole or in part, without the written
approval of IHS, which written approval shall not be unreasonably
withheld.
(f) Any sale, assignment or transfer of interest in Litchfield
or an ownership interest (including, but not limited to, the Leases) in
any one or more of the Facilities, as permitted under subsections (a),
(b) and (d) hereof, shall subject to the following condition precedents
(except as waived by IHS in writing), such that the buyer, assignee or
transferee must: (i) have a net worth calculated in accordance with
GAAP of not less than $5,000,000 immediately prior to the sale,
assignment or transfer and (ii) not be a Direct Competitor of IHS,
Integrated or any of its Affiliates. For purposes of this subsection
(f), a "Direct Competitor" shall be deemed to mean, any person or
entity in the business, through itself or one or more Affiliates
thereof, of providing health care services then being provided by IHS,
Integrated or its or their Affiliates, including, but not limited to,
nursing home care, assisted living services, residential geriatric
services, hospital-based nursing care, subacute and postacute health
care services (including, but not limited to complex care, ventilator
care and wound management services), nursing services, rehabilitation
services, home health care services, pharmaceutical services,
diagnostic services and specialized treatment for Alzheimer's disease.
(g) For purposes of this Section 15.9, the merger or
consolidation of Litchfield with or into another person or entity or
the transfer of any of the securities of Litchfield or the interests of
the Principal Members of Litchfield shall be deemed to be a transfer of
Litchfield's ownership interest that shall be subject to the terms and
conditions of this Section 15.9; provided, however, that Litchfield
shall have the right to merge with or consolidate into any corporation,
limited partnership, limited liability company or other entity
controlled by the Principal Members of Litchfield.
(h) In the event that Litchfield desires to sell, assign or
transfer its ownership interest (including, but not limited to, the
Leases) in any or all of the Facilities to a third party, as permitted
under subsection (d) hereof, Litchfield shall, as a condition precedent
to its right to do so, by notice in writing, offer to sell Litchfield's
ownership interest in the respective Facility or Facilities to IHS upon
the same terms and conditions specified in such third party offer. IHS
shall have ten (10) business days after its receipt of Litchfield's
notice to accept such offer by delivering written notice of its
acceptance to Litchfield. If IHS does not accept Litchfield's offer,
Litchfield shall be free to dispose of its ownership interest in the
respective Facility or Facilities on terms substantially similar to
those contained in Litchfield's offer. If Litchfield does not
consummate a sale, assignment or transfer of its ownership interests in
or ownership of the respective Facility or Facilities with respect to
such notice and offer, then the sale, assignment or transfer of its
ownership interest the respective Facility or Facilities shall again be
subject in all respects to the terms, conditions and restrictions
provided in this subsection (h).
(i) Notwithstanding the foregoing to the contrary, nothing
herein shall restrict any (a) sale, transfer or conveyance of any
interest in Litchfield among the Principal Members of Litchfield or (b)
the
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sale, transfer or conveyance of the interest of any of the Principal
Members of Litchfield by gift, devise, bequest or inheritance,
provided, however, that any such donee, devisee or other recipient
shall be bound by the terms and conditions of this Section 15.9, except
clause (i) of subsection (f) thereof.
14. Litchfield hereby represents and warrants as of the date hereof to
each of the other parties to this First Amendment that:
(a) Corporate Organization; Good Standing; Corporate
Information. Litchfield is a limited liability company, duly organized, validly
existing and in good standing under the laws of the State of Connecticut, and
has the corporate power and authority to own and lease all of the Facilities, to
carry on its businesses as and in the places where such businesses are now
conducted and where such properties are now owned and leased, and to enter into
the transactions and perform their obligations under the Facilities Agreement,
the First Amendment, the other Transaction Documents and any other documents and
instruments required to be delivered to which it is or is to become a party and
Litchfield is duly qualified as a foreign corporation to do business in all
jurisdictions in which any of the Facilities are located or in which failure so
to qualify would impair its ability to perform its obligations under the
Facilities Agreement, the First Amendment, or any other Transaction Document.
(b) Authorization; Enforceability. The execution, delivery and
performance by Litchfield of the First Amendment, the other Transaction
Documents and of all of the documents and instruments contemplated to be
executed and delivered by Litchfield are within the legal and corporate power
and authority of Litchfield and have been duly authorized by all necessary legal
and corporate action of Litchfield. The Facilities Agreement, the First
Amendment, the other Transaction Documents, and the other documents and
instruments required to be delivered by Litchfield will be, when executed and
delivered, the valid and binding obligations of Litchfield, enforceable against
Litchfield in accordance with their respective terms.
(c) No Violation or Conflict. To the best of its Knowledge,
after reasonable inquiry, the execution, delivery and performance of the
Facilities Agreement, the First Amendment, the Transaction Documents and all of
the other documents and instruments contemplated to be executed and delivered by
Litchfield do not and will not conflict with or violate any material Law,
judgment, or any order or decree binding on Litchfield or the Operating
Agreement of Litchfield.
(d) No Litigation. To the best of its Knowledge, there is no
material litigation, arbitration proceeding, governmental investigation,
citation, suit, action, proceeding or claim of any kind pending or threatened,
against Litchfield that would relate to the Facilities or any portion thereof or
the ability of Litchfield to perform its obligations under the Transaction
Documents.
15. IHS hereby represents and warrants as of the date hereof to each of
the other parties to this First Amendment that:
(a) Organization. IHS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
full corporate power and authority to enter into and perform its obligations
under the Facilities Agreement, the First Amendment, the other Transaction
Documents and any other documents and instruments required to be delivered to
which it is or is to become a party and IHS is duly qualified as
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a foreign corporation to do business in all jurisdictions in which any of the
Facilities are located or in which failure to so qualify would impair its
ability to perform its obligations under the Facilities Agreement, the First
Agreement, or any other Transaction Document.
(b) Authorization; Enforceability. The execution, delivery and
performance by IHS of the Facilities Agreement, the First Amendment, the other
Transaction Documents and all of the documents and instruments contemplated to
be executed and delivered by IHS are within the corporate power of IHS and have
been duly authorized by all necessary corporate action of IHS. The Facilities
Agreement, the First Amendment, the other Transaction Documents, and the other
documents and instruments required hereby to be delivered by IHS will be, when
executed and delivered, the valid and binding obligations of IHS, enforceable
against IHS in accordance with their respective terms.
(c) No Violation or Conflict. To the best of IHS's Knowledge,
after reasonable inquiry, the execution, delivery and performance of the
Facilities Agreement, the First Amendment, the other Transaction Documents and
all of the documents and instruments contemplated to be executed and delivered
by IHS does not and will not conflict with or violate the Certificate of
Incorporation or By-Laws of IHS or any material Law, judgment, order or decree
binding on IHS.
(d) No Litigation. To the best of its Knowledge, there is no
material litigation, arbitration proceeding, governmental investigation,
citation, suit, action, proceeding or claim of any kind pending or threatened,
against IHS that would relate to the Facilities or any portion thereof or the
ability of IHS to perform its obligations under the Transaction Documents.
16. This First Amendment shall be construed and interpreted according
to the laws of the State of New York, without regard to provisions governing
conflicts of law.
17. All communications, notices and disclosures required or permitted
by the Facilities Agreement shall be in writing and shall be deemed to have been
given at the earlier of the date when actually delivered to an officer of the
other party or when deposited in the United States mail, certified or registered
mail, postage prepaid, return receipt requested, by personal delivery or by
overnight courier service with signed receipt, and addressed as follows, unless
and until either of such parties notifies the other in accordance with this
Section of a change of address:
To Litchfield: Litchfield Investment Company, L.L.C.
128 Litchfield Road
P.O. Box 3039
New Milford, Connecticut 06776
Attention: Eugene H. Rosen
Copy to: Owens, Clary & Aiken, L.L.P.
Suite 2400
1717 Main Street
Dallas, Texas 75201
Attention: Leighton Aiken, Esq.
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To Integrated or IHS: Integrated Health Services, Inc.
or Integrated Health Services of Lester, Inc.
10065 Red Run Boulevard
Owings Mills, Maryland 21117
Attention: Daniel J. Booth
Copy to: LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019
Attention: John R. Fallon, Jr., Esq.
18. This First Amendment may be executed in several counterparts, each
of which shall be deemed an original, but such counterparts shall together
constitute but one and the same First Amendment.
19. Unless otherwise expressly amended or deleted by this First
Amendment, the provisions of the Facilities Agreement shall remain the same and
are in full force and effect as of the date hereof; provided, however, all
representations, covenants and warranties contained in the Facilities Agreement
were made on and as of the Closing Date and are not re-certified or updated by
the parties to this First Amendment as of the date hereof; and, provided,
further, all representations, covenants, warranties and indemnities of the
parties to the Facilities Agreement and this First Amendment shall not terminate
by this First Amendment and shall survive the execution and delivery of this
First Amendment in accordance with Section 16.12 of the Facilities Agreement.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties have caused this First Amendment to
Facilities Agreement to be duly executed and delivered as a sealed instrument as
of September 30, 1997.
LITCHFIELD INVESTMENT COMPANY, L.L.C.
By: /s/ Eugene H. Rosen
---------------------------------------------
Name: Eugene H. Rosen
Title: President and Member
(Seal)
INTEGRATED HEALTH SERVICES OF LESTER, INC.
By: /s/ Daniel J. Booth
---------------------------------------------
Name: Daniel J. Booth
Title: Senior Vice President
(Seal)
INTEGRATED HEALTH SERVICES, INC.
By: /s/ Daniel J. Booth
---------------------------------------------
Name: Daniel J. Booth
Title: Senior Vice President
(Seal)
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