RIGHT OF FIRST OFFER AGREEMENT
AMONG
INTEGRATED HEALTH SERVICES, INC.,
MONARCH PROPERTIES, INC.
AND
MONARCH PROPERTIES, LP
DATED AS OF JUNE __, 1998
RIGHT OF FIRST OFFER AGREEMENT
THIS RIGHT OF FIRST OFFER AGREEMENT (this "Agreement") is made as of the
___ day of June, 1998, among Integrated Health Services, Inc., a Maryland
corporation, with principal offices at 00000 Xxx Xxx Xxxxxxxxx, Xxxxxx Xxxxx,
Xxxxxxxx 00000 ("IHS"), Monarch Properties, Inc., a Maryland corporation, with
principal offices at 0000 Xxxxxxx Xxx Xxxxxxxxx, Xxxxxx, Xxxxxxx 00000
("Monarch") and Monarch Properties, LP, a Delaware limited partnership, with
principal offices at 0000 Xxxxxxx Xxx Xxxxxxxxx, Xxxxxx, Xxxxxxx 00000 ("Monarch
LP") (Monarch and Monarch LP, collectively, the "REIT").
BACKGROUND:
A. The REIT has undertaken, or concurrently with the offering of shares of
common stock in Monarch (the "Offering"), will undertake, a series of
transactions involving the REIT, IHS and certain IHS healthcare properties,
including the acquisition of certain skilled nursing facilities and specialty
hospitals owned by IHS through its subsidiaries.
B. The REIT and IHS have determined that it is in their mutual best
interest for IHS to grant the REIT a right of first offer with respect to any
sale and leaseback or financing transactions involving all skilled nursing
facilities, specialty hospitals, assisted living facilities, hospitals, nursing
homes or other geriatric care or health care facilities now owned or hereafter
acquired by IHS or its subsidiaries that involve transactions of the type
normally engaged in by the REIT.
NOW, THEREFORE, in consideration of the mutual covenants and promises of
the parties, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings (applicable to both the singular and plural terms of the
words defined):
1.1. "Affiliate" means: (a) any other Person (as defined below)
directly or indirectly controlling, controlled by, or under common control with
the Person to which such term applies or (b) as to any natural Person, such
Person's spouse, child, grandchild, sibling, parent, aunt, uncle or cousin as
well as the spouse of any of the foregoing. In addition, (i) as to any
corporation, real estate investment trust or business trust, any Person with any
of the foregoing relationships to any Person in control of such corporation,
real estate investment trust or business trust shall be deemed to be an
Affiliate of such corporation, real estate investment trust or business trust,
and (ii) as to any partnership or limited liability company, any Person with any
of the foregoing relationships to any Person in control of such partnership or
limited liability company as a general partner or managing member or otherwise
shall be deemed to be an Affiliate of such partnership or limited liability
company. For
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purposes of this Agreement, the term "control" as applied to any Person means
the possession either directly or indirectly, of the power to direct or cause
the direction of the management, policies and decision-making of such Person
whether through the ownership of voting interest, by contract or otherwise. The
term "control" also shall include, without limitation, the possession of direct
or indirect equity or beneficial interest in more than fifty percent (50%) of
the profits or voting control of any entity.
1.2. "Basic Business Terms" means, at a minimum, the following
proposed transaction terms: (a) the purchase price; (b) the amount and terms of
any assumable third party financing; (c) the state of title to be transferred;
(d) the proposed date of closing; (e) the lease term and lessee; (f) the form of
consideration; (g) the loan amount and interest rate; and (h) all other material
business terms and conditions reasonably necessary to determine acceptance of
the proposed sale and leaseback or financing transaction.
1.3. "Covered Facility" means a skilled nursing facility, speciality
hospital, assisted living facility, hospital, geriatric care facility, nursing
home or other healthcare facility of the kind normally acquired or financed by
the REIT.
1.4. "Finance" means providing the funds to finance the construction,
acquisition or refinancing of one or more Covered Facilities (whether
individually or together with one or more other Covered Facilities). The terms
"Financing" and "Financed" shall have meanings correlative to the foregoing.
1.5. "Financing Notice" means a written notice delivered to IHS by the
REIT stating that it has accepted a Financing Offer.
1.6. "Financing Offer" means a bona fide written offer delivered to
the REIT by IHS stating that IHS or an IHS Affiliate desires to obtain Financing
for one or more Covered Facility, which notice sets forth (a) the location and,
if applicable, the name of each Covered Facility, (b) the proposed use of the
Financing (e.g., construction, acquisition or refinancing), (c) the estimated
amount of such Financing, and (d) the Basic Business Terms with respect to such
proposed Financing.
1.7. "Leaseback" means the lease or sublease by lease, master lease or
sublease whereby IHS or any IHS Affiliate leases or subleases a Covered Facility
from the REIT after a Transfer.
1.8. "Person" shall mean a natural person or a corporation, real
estate investment trust, business trust, partnership, trust, limited liability
company or other entity.
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1.9. "Purchase and Leaseback Notice" means a written notice delivered
to IHS by the REIT stating that it has accepted Transfer Leaseback of one or
more of the Covered Facilities described in the Purchase and Leaseback Offer.
1.10. "Purchase and Leaseback Offer" shall mean a bona fide written
offer made to the REIT by IHS proposing to Transfer and Leaseback transaction
involving IHS or an IHS Affiliate and the REIT, for one or more Covered
Facilities, which Purchase and Leaseback Offer sets forth (a) the name and
location of each Covered Facility subject to the Purchase and Leaseback Offer
and (b) the Basic Business Terms of the proposed purchase and leaseback of the
Covered Facilities.
1.11. "Transfer" means the sale, transfer of control or conveyance by
deed, assignment, quitclaim or otherwise whereby IHS or any IHS Affiliate
transfers its ownership interest in a Covered Facility. The terms "Transferring"
and "Transferred" shall have meanings correlative to the foregoing.
2. Term. The term of this Agreement (the "Term") shall commence as of the
date first above written and shall continue for four (4) years. Thereafter, this
Agreement shall automatically renew for successive one-year renewal Terms unless
IHS or the REIT shall have given written notice to the other, not less than six
(6) months prior to the end of the initial Term or any such renewal Term, that
it has elected to terminate this Agreement as of the end of the then current
Term.
3. Right of First Offer and Other Rights of the REIT. IHS hereby grants to
the REIT the following rights:
3.1. If, during the Term, IHS or an IHS Affiliate desires to Transfer
and Leaseback one or more Covered Facilities owned by IHS or an IHS Affiliate in
a transaction or transactions of the type normally engaged in by the REIT, IHS
shall first offer to the REIT (or at the election of the REIT, to an Affiliate
of the REIT) the opportunity, through a Purchase and Leaseback Offer, to
purchase and leaseback to IHS or an IHS Affiliate, as designated by IHS, the
applicable Covered Facilities on the same terms and conditions as contained in
any Purchase and Leaseback Offer. The REIT may accept the Purchase and Leaseback
Offer by delivery to IHS of the Purchase and Leaseback Notice within [twenty
(20)] days of receipt of the Purchase and Leaseback Offer. Upon the written
request of the REIT, IHS shall deliver to the REIT copies of all material
financial information, documents, agreements and information on the Covered
Facilities reasonably necessary for the REIT to review and analyze the Purchase
and Leaseback Offer. The parties shall enter into a definitive Purchase
Agreement and Master Lease within [fifteen (15)] business days after the
acceptance of a Purchase and Leaseback Offer by the REIT.
3.2. If, during the Term, IHS or an IHS Affiliate determines to
Finance one or more Covered Facilities presently owned by IHS or an IHS
Affiliate in
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a transaction of the type normally engaged in by the REIT, IHS shall first offer
to the REIT (or at the election of the REIT, to an Affiliate of the REIT) the
opportunity through a Finance Offer, to provide Financing with respect to such
Covered Facilities on the same terms and conditions as contained in any Finance
Offer. The REIT may accept the Finance Offer by delivery to IHS of the Finance
Notice within [twenty (20)] days of receipt of the Finance Offer. Upon the
written request of the REIT, IHS shall deliver to the REIT copies of all
material financial information, documents, agreements and information on the
Covered Facilities reasonably necessary for the REIT to review and analyze the
Finance Offer. The parties shall enter into a definitive Loan Agreement within
[fifteen (15)] business days after the acceptance of a Finance Offer by the
REIT.
4. Failure to Exercise Right of First Offer. If the REIT does not elect to
exercise a right of first offer granted under this Agreement on the terms and
conditions set forth herein, then, during the six-month period ("Six-Month
Unrestricted Period") following the expiration of the right of first offer, IHS
may only Transfer and Leaseback or Finance the applicable Covered Facilities on
the same terms and conditions contained in the most recently delivered Purchase
and Leaseback Offer or Finance Offer, as the case may be. If, upon the
expiration of the Six-Month Unrestricted Period, IHS has not consummated a
Transfer or Financing with respect to the applicable Covered Facilities, then
IHS may not Transfer or lease the applicable Covered Facilities without giving a
new Purchase Offer, Lease Offer, Finance Offer or Off-Balance Sheet Financing
Offer, as the case may be, in accordance with the terms and conditions of this
Agreement.
5. Miscellaneous.
5.1. Complete Agreement; Construction. This Agreement, and the other
agreements and documents referred to herein, shall constitute the entire
agreement between the parties with respect to the subject matter thereof and
shall supersede all previous negotiations, commitments and writings with respect
to such subject matter.
5.2. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to the
principles of conflicts of laws thereof.
5.3. Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed to be duly given upon
actual receipt, and shall be delivered (a) in person, (b) by registered or
certified mail, postage prepaid, (c) by nationally recognized overnight delivery
service or (d) by facsimile or other generally accepted means of electronic
transmission, provided that a copy of any notice delivered pursuant to this
clause (a) shall also be sent contemporaneously pursuant to clause (b),
addressed as follows (or to such other address(es) as may be specified by like
notice to the other parties):
To IHS: Integrated Health Services, Inc.
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00000 Xxx Xxx Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Fax No.: 000-000-0000
Phone No.: 000-000-0000
Copy to: Blass & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: 000-000-0000
Phone No.: 000-000-0000
To the REIT: Monarch Properties, Inc.
0000 Xxxxxxx Xxx Xxxxxxxxx - Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxx
Fax No.: 000-000-0000
Phone No.: 000-000-0000
Copy to: LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Xx., Esq.
Fax No.: 000-000-0000
Phone No.: 000-000-0000
5.4. Amendments. No amendment, modification or supplement to this
Agreement shall be binding on any party hereto unless it is in writing and
signed by the parties in interest.
5.5. Successors and Assigns. Neither this Agreement nor any rights or
obligations hereunder shall be assignable by a party to this Agreement without
the prior, express written consent of the other parties. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties to this Agreement and their respective successors and permitted assigns.
5.6. No Third-Party Beneficiaries. This Agreement is solely for the
benefit of the parties to this Agreement and shall not be deemed to confer upon
third parties any remedy, claim, liability, reimbursement, claims or action or
other right in excess of those existing without reference to this Agreement.
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5.7. Titles and Headings. Titles and headings to paragraphs and
sections in this Agreement are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning of this Agreement.
5.8. Maximum Legal Enforceability; Time of Essence. The provisions
hereof shall be considered severable such that if any provision or part hereof
is ever held to be invalid, void or illegal under any law or ruling, all
remaining provisions hereof shall remain in full force and effect to the maximum
extent permitted by law. Any non-material provision of this Agreement 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 or rendering unenforceable any of 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.
Without prejudice to any rights or remedies otherwise available to any party to
this Agreement, each party hereto acknowledges that damages would not be an
adequate remedy for any breach of the provisions of this Agreement and agrees
that the obligations of the parties hereunder shall be specifically enforceable.
Time shall be of the essence as to each and every provision of this Agreement.
5.9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.
5.10. Further Assurances. The parties to this Agreement will execute
and deliver or cause the execution and delivery of such further instruments and
documents, and will take such other actions, as any other party to the Agreement
may reasonably request in order to effectuate the purpose of this Agreement and
to carry out the terms hereof.
5.11. Non-Competition. During the Term of this Agreement, IHS or any
IHS Affiliate may not construct a Covered Facility in competition with the REIT
at any location within ten (10) miles of any Covered Facility owned, leased or
operated by the REIT. Nothing in this Agreement shall require IHS or any IHS
Affiliate to terminate any construction of a Covered Facility which did not
constitute a breach of this Agreement at the time construction of the Covered
Facility was first begun by IHS or any IHS Affiliate.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties hereto have caused this Right of First
Offer Agreement to be duly executed as of the day and year first written above.
INTEGRATED HEALTH SERVICES, INC.
By:
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Name: Xxxxxx X. Xxxxx
---------------------------------------
Title: Senior Vice President
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MONARCH PROPERTIES, INC.
By:
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Name: Xxxx X. Xxxxx
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Title: President and Chief Executive Officer
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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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