INDEMNITY AGREEMENT
BETWEEN
INTEGRATED HEALTH SERVICES, INC.
AND
MONARCH PROPERTIES, INC.
DATED AS OF JUNE 23, 1998
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Indemnity Agreement") is executed and
delivered as of the 23rd day of June, 1998 (the "Effective Date") between
INTEGRATED HEALTH SERVICES, INC., a Delaware corporation ("IHS") and MONARCH
PROPERTIES, LP, a Delaware limited partnership ("Monarch").
The circumstances underlying the execution and delivery of this Agreement
are as follows:
A. Capitalized terms used but not otherwise defined herein have the
respective meanings given them in the Facilities Purchase Agreement, dated the
date hereof, among the entities described on attached EXHIBIT A (each a "Seller"
and, collectively, "Sellers"), IHS and Monarch (the "Purchase Agreement"), or,
if not defined in the Purchase Agreement, then the respective meanings given
them in the Master Lease, dated the date hereof, between Lyric Health Care
Holdings III, Inc. ("Lyric Holdings") and Monarch.
B. Lyric Holdings is a wholly owned subsidiary of Lyric Health Care LLC.
Sellers are corporations that are wholly owned by Lyric Holdings. IHS is a 50%
member of Lyric. Sellers also are the respective owners of Sellers' Assets.
Sellers desire to sell, and Purchaser desires to acquire and lease to Lyric
Holdings, Sellers' Assets. The purchase and lease of Seller's Assets will
benefit IHS.
C. As a condition precedent to its agreement to purchase Sellers' Assets,
Monarch has required that IHS indemnify Monarch on the terms and conditions
hereinafter set forth with respect to certain environmental matters.
NOW, THEREFORE, IHS and Monarch agree as follows:
1. INDEMNIFICATION. IHS shall indemnify and hold Monarch harmless from and
against any and all damages, losses, liabilities, costs, actions, suits,
proceedings, demands, assessments, and judgments, including, but not limited to,
reasonable and documented attorneys' fees and reasonable costs and expenses of
litigation, arising out of or in any manner related to the claims of third
parties resulting from:
(a) Any failure of Sellers and Lyric Holdings to complete as and when
required to do so by the terms of the Escrow Agreement the environmental
remediation described on Exhibit B thereof;
(b) Any failure of Sellers and Lyric Holdings to complete if, as and
when required to do so by the terms of the Master Lease such environmental
remediation as may be required by Article 18 thereof.
2. PROCEDURE. If Monarch asserts that IHS is subject to a claim for
indemnification hereunder, Monarch shall describe the claim in sufficient detail
in order to permit IHS to evaluate
1
the nature and cause of the claim. If the asserted claim arises or is in
connection with a claim, suit, or demand filed by a third party, IHS shall be
entitled to defend against such claim with counsel reasonably satisfactory to
Monarch. Monarch may also employ counsel of its own, but the costs of Monarch's
separate counsel shall be borne by Monarch as long as IHS continues to so
defend. If IHS fails to respond or does not admit responsibility for
indemnification, Monarch may take such necessary steps to defend itself and any
reasonable costs associated therewith may be included as part of the asserted
claim for indemnification. If the claims do not arise from a third party, within
thirty (30) days of receipt of written notice from Monarch describing the claim
in reasonable detail, IHS shall notify Monarch as to whether or not it believes
such claim is covered by this Indemnity Agreement, and if IHS believes such
claim is not covered, including the specific reasons for its position. With
respect to claims by third parties, (a) if Monarch declines to accept a bona
fide offer of settlement that is recommended by the IHS, which settlement
without cost to Monarch releases Monarch from all liability, the maximum
liability of IHS shall not exceed that amount for which it would have been
liable had such settlement been accepted, and (b) if IHS declines to accept a
bona fide offer of settlement recommended by Monarch, IHS shall be liable for
whatever outcome results from such third party claim, provided, however, that
IHS shall not settle any claim covered by this Indemnity Agreement without
either the written consent of Monarch or a full and complete release of Monarch.
3. NOTICES. Any notice, request or other communication to be given by any
party hereunder shall be in writing and shall be sent by registered or certified
mail, postage prepaid, by overnight delivery or hand delivery to the following
address:
To IHS: Integrated Health Services, Inc.
00000 Xxx Xxx Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Copy to: Xxxxxxxx X. Xxxxxx, Esq.
Telephone No.: 410/000-0000
Facsimile No.: 410/998-8695
To Monarch: Monarch Properties, LP
0000 Xxxxxxx Xxx Xxxxxxxxx - Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxx
Telephone No.: 941/000-0000
Facsimile No.: 941/566-6082
2
With copy to Xxxx X. Xxxxxx, Xx.
(which shall not LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
constitute notice): 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone No.: 212/000-0000
Facsimile No.: 212/424-8500
Notices shall be deemed given upon actual receipt.
4. CHOICE OF LAW. This Indemnity Agreement shall be governed by and
construed in accordance with the laws of New York, except as to matters which
under the laws of the State, or under applicable procedural conflicts of laws
rules, require the application of laws of the States in which the Leased
Property is located.
IHS CONSENTS TO IN PERSONAM JURISDICTION BEFORE THE STATE AND FEDERAL
COURTS OF THE STATES OF NEW YORK AND THE STATES IN WHICH THE LEASED PROPERTY IS
LOCATED, AND AGREES THAT ALL DISPUTES CONCERNING THIS INDEMNITY AGREEMENT BE
HEARD IN THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK OR THE
STATES IN WHICH THE LEASED PROPERTY IS LOCATED. IHS AGREES THAT SERVICE OF
PROCESS MAY BE EFFECTED UPON IT UNDER ANY METHOD PERMISSIBLE UNDER THE LAWS OF
THE STATE OF NEW YORK OR THE STATES IN WHICH THE LEASED PROPERTY IS LOCATED AND
IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN THE STATE AND FEDERAL COURTS OF THE
STATE OF NEW YORK OR THE STATES IN WHICH THE LEASED PROPERTY IS LOCATED.
SIGNATURE PAGE FOLLOWS
3
IN WITNESS WHEREOF, the parties hereby execute this Indemnity Agreement as
of the day and year first set forth above.
INTEGRATED HEALTH SERVICES, INC.
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------------------
Title: Senior Vice President
--------------------------------------
MONARCH PROPERTIES, LP
By: MP Operating, Inc.,
its General Partner
By:
-----------------------------------------
Name: Xxxx X. Xxxxx
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
S-1
