AMENDMENT TO EMPLOYMENT AGREEMENT
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This AMENDMENT is made effective as of January 1, 1995 (the
"Effective Date"), by and between INTEGRATED HEALTH SERVICES, INC., a Delaware
corporation (hereinafter referred to as the "Company"), and LAWRENCE P. CIRKA
(hereinafter referred to as the "Executive").
W I T N E S S E T H:
WHEREAS, effective January 1, 1994, the Executive entered into
an employment agreement with the Company (the "Agreement");
WHEREAS, the parties desire to amend the Agreement;
WHEREAS, Section 5.3 of the Agreement permits the parties to
amend the Agreement in a writing signed by both parties.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained, the parties, intending to be legally
bound, hereby agree to amend to the Agreement as follows:
1. The first sentence of Section 1.1 of the Agreement shall be revised
to read as follows: "The Company and the Executive agree that the Executive
shall be employed as President and Chief Operating Officer of the Company."
2. The Term of the Agreement as defined in Section 1.3 shall be five
(5) years and all references to three (3) years within Section 1.3 are hereby
amended to read five (5) years.
3. The Executive's Salary as defined in Section 2.1 of the Agreement
shall be Five Hundred Fifty Thousand Dollars ($550,000) and all references to
Four Hundred Thousand
Dollars ($400,000) within Section 2.1 are hereby amended to read Five Hundred
Fifty Thousand Dollars ($550,000).
4. Within Section 2.2 of the Agreement concerning the Executive's
Bonus, all references to "6-1/4%" are hereby amended to read "12-1/2%"; all
references to "no less than 25%" are hereby amended to read "50%"; and all
references to "cash" are hereby amended to read "cash or shares of the Company's
common stock pursuant to the Company's Cash Bonus Replacement Plan or any
combination thereof."
5. Within Section 2.3 of the Agreement, Section 2.3(e) is revised to
read as follows: "(e) one hundred percent (100%) of a one-time initiation fee
and one-half (1/2) of the cost of dues, assessments and other charges for a full
membership in a country club of the Executive's choice;" and the following
Section 2.3(g) shall be added to Section 2.3 of the Agreement: "(g) Executive
shall be eligible to participate in the Company's Supplemental Executive
Retirement Plan (SERP)."
6. The following paragraph is added to Section 2.4 of the Agreement:
"As additional compensation for the performance by the Executive of his
services hereunder, the Company shall grant to the Executive an
incentive stock option to purchase 300,000 shares of common stock of
the Company pursuant to the Company's Senior Executives' Stock Option
Plan, as amended, or any other plan, subject to the approval of the
shareholders of the Company at the May 1996 Annual Meeting of
Shareholders (the "Option"). The Option shall become exercisable
according to the following schedule: 25% shall become exercisable
immediately following shareholder approval and 75% shall become
exercisable in equal annual installments over four (4) years from the
date on which the Option was approved by the Board of Directors of the
Company. The price per share for purposes of this Section 2.4 shall be
the price on the date on which the Board of Directors approves this
Option. In the event that Executive is terminated by the Company
without cause or the Executive terminates this Agreement according to
Section 3.3, the unvested portion of the Option granted under this
Section 2.4 shall vest immediately. In the event that the shareholders
do not approve the Option at the May 1996 meeting, the
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Company shall give Executive a similar economic incentive of equal
value to be mutually agreed upon by Executive and the Company."
7. The following sentence is hereby added to the end of Section 1.2 of
the Agreement: "Subject to the consent of the Chief Executive Officer and
subject to the limitations of Section 4.2, from time to time the Executive may
furnish services to other companies, provided that furnishing such services does
not materially interfere with his duties hereunder."
8. The fist two (2) sentences of Section 3.4(a) of the Agreement are
amended to read in their entirety as follows:
"If the Executive resigns for Good Reason, or is terminated
without Cause, or if the Company gives the Executive notice of its
intention not to extend the Term, in accordance with Article II, the
Company shall cause to become fully vested and immediately exercisable
the Executive's outstanding options which are not immediately
exercisable and any employee benefits (including, without limitation,
any benefits under the Company's Supplemental Executive Retirement
Plan) which are then held by the Executive, and shall cause to lapse
any restrictions on equity held by the Executive which are scheduled to
lapse solely through the passage of time (such events collectively
referred to as "Acceleration of Equity Rights"). In addition, the
Company shall pay the Executive an amount (the "Severance Amount")
equal to five (5) times the sum of (1) his Salary; and (2) the "Bonus
Amount" which shall be the greatest of (i) 100% of the Executive's
Salary in the year of termination, (ii) the Executive's Bonus in the
immediately preceding calendar year, or (iii) the Executive's Bonus in
the calendar year which was immediately prior to the year immediately
preceding the year of termination."
9. Within Section 3.4 (a) concerning Severance, the reference in the
second paragraph to "thirty-six (36) months" is hereby amended to read "sixty
(60) months."
10. Within Section 3.4 (b) concerning excise tax on "excess parachute
payments," the reference to "three-quarters (3/4)" is hereby amended to read
"one-hundred percent (100%)."
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11. Section 3.4 (b) of the Agreement is further amended by adding
thereto the following:
"To effect this indemnification, the Company shall pay the Executive an
additional amount that is sufficient to pay any excise tax imposed on
the Executive by Section 4999 of the Code, plus the excise tax, income
tax (federal, state and local), employment taxes and medicare
hospitalization taxes imposed on the Executive on account of the
Company's indemnification payments. The determination of any additional
amount that must be paid under this section must be made by the Company
in good faith."
12. The last sentence of Section 4.2 of the Agreement is struck in its
entirety and the following new sentence is added in its place: "Subject to the
provisions of Section 1.2, this provision shall not be construed to prohibit the
Executive from (i) acting as an employee, director, or consultant for, or owning
more than 10% of, the outstanding voting shares of the equity securities of,
Speciality Care PLC ("Speciality Care") or Community Care of America, Inc.
("Community Care"), or (ii) owning up to 10% of the outstanding voting shares of
the equity securities of any company whose common stock is listed for trading on
any national securities exchange or on the NASDAQ System or (iii) serving as a
director of any company which is not directly in the business of owning,
operating or managing any subacute healthcare facility (other than Speciality
Care or Community Care)."
13. All capitalized terms within this Amendment shall have the meanings
set forth in the Agreement.
14. The amendments contained herein are the only amendments to the
Agreement and all other provisions of the Agreement shall remain in full force
and effect.
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15. This Amendment shall be binding upon and inure to the benefit of
the Company and the Executive and their respective heirs, legal representatives,
executors, administrators, successors and permitted assigns.
16. This Amendment constitutes the entire agreement between the parties
and supersedes the Agreement and all other prior agreements, either oral or
written, with respect to the provisions stated herein; provided, however, that
this Agreement does not supersede any agreements pertaining to stock options
which have been previously granted, except to the extent that any such option
agreement contains provisions which are contrary to the provisions of this
Agreement (including provisions regarding the Acceleration of Equity Rights).
IN WITNESS WHEREOF, the Company has caused this Amendment to be signed
by its duly authorized officers and its corporate seal to be hereunto affixed,
and the Executive has hereunto set the Executive's hand on the day and year
first above written.
COMPANY EXECUTIVE
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Integrated Health Services, Inc.,
a Delaware corporation
By: /s/ Robert Elkins /s/ Lawrence P. Cirka
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Lawrence P. Cirka
Name: Robert Elkins
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Title: Chairman & CEO
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