FIRST AMENDMENT
TO
FACILITIES AGREEMENT
AMONG
LITCHFIELD INVESTMENT COMPANY, L.L.C.,
INTEGRATED HEALTH SERVICES OF XXXXXX, INC.
AND
INTEGRATED HEALTH SERVICES, INC.
AS OF SEPTEMBER 30, 1997
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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 000 Xxxxxxxxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxxx 00000
(hereinafter referred to as "Litchfield"), Integrated Health Services of Xxxxxx,
Inc., a Delaware corporation, with principal offices at 00000 Xxx Xxx Xxxxxxxxx,
Xxxxxx Xxxxx, Xxxxxxxx 00000 (hereinafter referred to as "IHS") and Integrated
Health Services, Inc., a Delaware corporation, with principal offices at 00000
Xxx Xxx Xxxxxxxxx, Xxxxxx Xxxxx, Xxxxxxxx 00000 (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
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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 000 Xxxxxxxxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxxx 00000.
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) Xxxxxx X. Xxxxx whose address is 000 Xxxxx Xxxxx
Xxxx, Xxx Xxxxxxx, Xxxxxxxxxxx 00000, (b) Xxxxx Xxxxxxxxx, whose address is 000
Xxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, and (c) Xxxxxxx X. XxXxx, whose
address is 0X Xxxxxxx Xxxx Xxxx, Xxxx Xxxxx, Xxx Xxxx 00000.
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 000 Xxxxxxxxxx Xxxx,
Xxx Xxxxxxx, Xxxxxxxxxxx 00000.
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.
x. Xxxxxxx 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
