EXHIBIT 10.73
EMPLOYMENT AGREEMENT
This AGREEMENT is made effective as of February 1, 1998 (the "Effective
Date"), by and between LYRIC HEALTH CARE LLC, a Delaware limited liability
company (hereinafter referred to as the "Company" or "Lyric"), and TIMOTHY F.
NICHOLSON (hereinafter referred to as the "Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to employ the Executive as the Managing
Director of the Company and to ensure the continued services of the Executive
for the Term (as hereinafter defined), and the Executive desires to be employed
by the Company for such Term, upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing premise and the mutual
agreements herein contained, the parties, intending to be legally bound, hereby
agree as follows:
ARTICLE I
EMPLOYMENT RELATIONSHIP
1.1. Employment. The Company hereby employs the Executive in the position
of Managing Director of the Company. The responsibilities and duties of the
Executive shall be those specified for the Managing Director of the Company
under Article 8 (and other relevant provisions) of the Amended and Restated
Operating Agreement of the Company dated as of the date hereof (the "Operating
Agreement"). The Executive shall report to and be responsible to the Members of
the Company, and the Executive hereby accepts such employment.
As of the date of this Agreement, the Company has two Members--TFN
Healthcare Investors, LLC, a Delaware limited liability company ("N-Co"), which
is controlled by the Executive, and Integrated Health Services, Inc., a Delaware
corporation ("IHS").
During the Term, the Executive agrees to devote such working time as is
reasonably required for the discharge of his duties hereunder and to perform
such services faithfully and to the best of his ability. Notwithstanding the
foregoing, nothing in this Agreement shall preclude the Executive from (a)
engaging in charitable and community affairs, and (b) managing his personal
investments or conducting other business activities, subject to section 4.2.
1.2. Term. Unless sooner terminated pursuant to Article III below, the term
of this Agreement (the "Term") shall commence on the Effective Date, and be in
effect for approximately five (5) years expiring December 31, 2002; provided,
however, that on January 1, 2003, and on each January 1st thereafter, the then
current term of this Agreement automatically shall be extended by an additional
period of twelve (12) months if not terminated as set forth below.
Notwithstanding the foregoing, either the Executive (or IHS on behalf of the
Company) may elect not to so extend this Agreement by giving written notice of
such election to the other on or before the July 1st immediately preceding the
expiration of the then current term.
ARTICLE II
COMPENSATION
2.1. Salary. (a) The Executive shall receive a base salary at an initial
rate of Two Hundred Fifty Thousand Dollars ($250,000) per year (the "Salary"),
payable in substantially equal installments in accordance with the pay policy
established by the Company from time to time, but not less frequently than
monthly. The Salary shall be reviewed by IHS for possible increase, based upon
the performance of the Executive, promptly after January 1, 1998 and annually as
of each January 1st thereafter. Any increases following such review shall
require the approval of IHS.
(b) The Executive shall receive Revenue Salary Adjustments in
accordance with Appendix "2" if, as, and when, the Company achieves the revenue
targets specified in Appendix "2" hereto.
2.2. Bonuses. If the Company meets its goals of profitability, revenue
growth and business expansion, as set forth in business plans approved by the
Members from time to time (the "Target"), the Company shall pay the Executive an
annual discretionary bonus up to, but not exceeding one-third (33 1/3%) of the
Executive's Salary ("Bonus"), based on the Executive's performance, benefit to
the Company at large, and the extent to which the Company equals or exceeds the
Target. In addition, the Members may, but shall not be obligated to, award the
Executive a bonus for extraordinary service to the Company, as determined by the
Members in their discretion.
2.3. Executive Benefits and Perquisites. During the Term, the Company shall
provide and/or pay for employee medical and health care benefits as follows:
(a) comprehensive individual health insurance, including dependent
coverage;
(b) life insurance coverage in the amount of two times the Executives'
Salary not to exceed $500,000; any proceeds of which shall be payable to
the Executive's designated beneficiary or his estate; and
(c) accidental death and dismemberment insurance in the amount of two
times the Executives' Salary not to exceed $500,000; and
(d) disability insurance coverage in a monthly benefit amount equal to
the sum of 66 2/3% of the Executive's monthly Salary.
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Once increased, the level of benefits shall not be decreased without the
Executive's consent. The Company represents and agrees that the employee
benefits provided to the Executive under clauses (a) through (d) above are --
and during the Term shall continue to be -- similar to those provided to an
employee of IHS in a similar capacity as the Executive, except that the
Executive will not participate in IHS' Senior Executive Retirement Program.
2.4. Business Expense Reimbursement. The Company will reimburse the
Executive for reasonable business-related expenditures (including travel, meals,
lodging and other appropriate items). Business-related travel will be deemed to
include up to four round-trips to London, England business class prior to June
30, 1998.
ARTICLE III
TERMINATION AND SEVERANCE
3.1. Termination; Nonrenewal. The Company shall have the right to terminate
the Executive's employment, at any time during the Term, for "Cause" (as defined
below). Upon the Executive's termination or resignation for "Cause" or upon the
expiration of the Term following the Company's election not to renew this
Agreement, the Executive shall be entitled to no severance. If the Executive's
employment is terminated because of a Permanent Disability (as defined in
Section 3.5), the Executive shall receive the benefits and payments described in
Section 3.5. The Executive shall have the right to terminate the Executive's
employment for "Good Reason" as set forth below.
3.2. Termination For Cause.
(a) The Company (by sole vote of IHS) may terminate this Agreement for
Cause following a determination by IHS that Cause exists. For purposes of this
Agreement, Cause means any or all of the following:
(i) the Executive materially fails to perform his duties
hereunder;
(ii) a material breach by the Executive of his covenants under
Sections 4.1 or 4.2;
(iii) the Executive is convicted of any felony or any misdemeanor
involving moral turpitude, or commits larceny, embezzlement, or theft
of the Company's tangible or intangible property; or
(iv) N-Co disposes of more than 50% of its interest in the
Company (whether to IHS or any other person or entity), otherwise
ceases to be a Member of the Company, or defaults in any obligation
under the Operating Agreement.
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(b) Notwithstanding anything in Section 3.2(a) to the contrary, a
termination shall not be for Cause unless (i) IHS notifies the Executive, in
writing, of intention to terminate the Executive for Cause (which notice shall
set forth the conduct alleged to constitute Cause) (the "Cause Notice"); and
(ii) the Executive does not cure his conduct (to the reasonable satisfaction of
IHS), within sixty (60) days after the receipt of the Cause Notice. (This
Section 3.2(b) shall not apply to a termination under (a) (iii) or (iv) above).
3.3. Termination for Good Reason. The Executive may terminate this
Agreement for Good Reason, provided he gives both the Company and IHS prior
written notice that Good Reason exists (the "Good Reason Notice"). For purposes
of this Agreement, Good Reason shall mean one or both of the following:
(a) a material breach of the Agreement by the Company (including,
without the Executive's prior written consent, the failure of the Company
to pay the Executive amounts when due under this Agreement),
(b) the resignation by the Executive within one (1) year after: (i) a
"Change of Control" (as defined in Appendix "2" hereto) occurs with respect
to IHS; or (ii) IHS and N-Co together no longer have a majority of the
Membership Percentages of the Company; or (iii) if N-Co is diluted to a
Membership Percentage in the Company of less than 33-1/3% and N-Co has sold
its interest in the Company pursuant to under Article 16 of the Company's
Operating Agreement.
Notwithstanding the foregoing, a termination on account of a reason described in
paragraph (a), shall be deemed not to be for Good Reason unless the Executive
(i) gives the Company the opportunity to cure the condition that purports to be
Good Reason, and (ii) the Company fails to cure that condition within sixty (60)
days after the receipt of the Good Reason Notice (or, with respect to the
failure to make any payment when due to the Executive within ten (10) days after
the receipt of such notice).
3.4. Severance. (a) If the Executive resigns for Good Reason, or is
terminated without Cause, the Company shall pay the Executive an amount (the
"Severance Amount") equal to his annual Salary in effect on the date of
resignation or termination, as applicable, plus a bonus amount equal to the
average of the Executive's last two annual bonuses. Such Severance Amount shall
be payable in cash as follows:
(x) no later than 10 days after the effective date of Executive's
termination, the Company shall pay the Executive one-half (1/2) of the
Severance Amount in a lump sum;
(y) commencing on the first day of the month following the effective
date of Executive's termination and on the first day of the next eleven
months the Company shall pay to the Executive, in equal monthly
installments, the remaining one-half (1/2) of the Severance Amount;
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provided, however, that if the Executive's employment terminates other than for
Cause within one (1) year following an event described in Section 3.3(b)(i) or
(ii), the Company shall, in lieu of the making the payments described in (x) and
(y), pay the Executive the Severance Amount in one lump sum cash payment within
ten (10) days after the effective date of the Executive's termination.
In addition, for a period of one (1) year following the effective date of
the Executive's termination other than for Cause, the Company shall provide
continued employee benefits and coverage for the Executive and his dependents of
the type and at a level of coverage comparable to the coverage in effect at the
time of his termination ("Continued Benefits") including, but not limited to
those benefits and perquisites set forth in Section 2.3 hereof.
(b) If the Executive resigns under 3.3(b)(iii) above within 30 days
after both the dilution of N. Co. to less than 33-1/3% and the sale of its
interest in the Company by N. Co., the Severance Amount under 3.4(a) shall be:
(x) three times (3x) the Executive's annual salary in effect on the date of
resignation if and provided that such resignation occurs more than 18 complete
calendar months after the date of this Agreement; or (y) if such resignation
occurs earlier, an amount equal to 18 months' annual salary at the rate in
effect on the date of such resignation.
A Severance Payment due under (x) above shall be paid one-third (1/3) as a
lump sum within ten (10) days after the date of the Executive's termination and
two-thirds (2/3) in equal monthly installments over the 24 months from such
date. A Severance Payment due under (y) above shall be payable one-half (1/2) as
a lump sum within ten (10) days after the effective date of termination and
one-half (1/2) in equal monthly installments over the 18 months from such date.
3.5. Termination for Disability. The Company may terminate the Executive
following a reasonable determination by IHS that the Executive has a Permanent
Disability; provided, however, that (except for death) no such termination shall
be effective (i) prior to the expiration of the six (6) month period following
the date the Executive first incurred the condition which is the basis for the
Permanent Disability or (ii) if the Executive begins to substantially perform
the significant aspects of his regular duties prior to the proposed effective
date of such termination. For purposes of this Agreement, "Permanent Disability"
shall mean the Executive's inability, by reason of any physical or mental
impairment to substantially perform the significant aspects of his regular
duties, as contemplated by this Agreement, which inability is reasonably
contemplated to continue for at least one (1) year from its incurrence and at
least ninety (90) days from the effective date of the Executive's termination.
"Permanent Disability" shall also mean death. Any question as to the existence,
extent, or potentiality of the Executive's Permanent Disability shall be
determined by a qualified independent physician selected by the Executive (or,
if the Executive is unable to make such selection, by an adult member of the
Executive's immediate family) and reasonably acceptable to IHS.
3.6. Death or Disability After Termination. Should the Executive die or
become disabled before receipt of any or all payments to which the Executive is
entitled under Section 3.4, then the balance of the payments and Continued
Benefits to which the Executive and his
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dependents, if any, is entitled under Section 3.4 shall continue to be paid to
the Executive (in the case of his disability) or to the executors or
administrators of the Executive's estate (in the event of the Executive's
death), and the Executive (in the case of his disability) and his dependents, if
any, shall continue to receive the Continued Benefits for the balance of the one
year period; provided, however, that the Company may, at any time within its
discretion, accelerate any payments and pay the Executive or his estate the
present value of such payments in a lump sum cash payment. For purposes of
determining the present value under this Section 3.6, the interest rate shall be
the prime rate of Citibank, N.A.
3.7. Termination for Cause. If the Executive is terminated for Cause at any
time, the Company shall pay the Executive no severance amount.
3.8. Transition Period. If the Executive's employment terminates under any
of Sections 3.1, 3.2, or 3.3 [excluding 3.2(a)(iii) or 3.3(a)] and if IHS so
requests in writing, the Executive will continue to perform his duties as if
this Agreement remained in effect during the transition period while the Company
seeks a successor Managing Director. In such event the Executive's date of
termination or resignation shall be deemed to be the actual date when such
transition period ends; provided, however, that such transition period shall not
continue for more than six months unless IHS and the Executive agree otherwise.
ARTICLE IV
COVENANTS OF THE EXECUTIVE
4.1. Confidential Information. In connection with his employment at the
Company, the Executive will have access to confidential information consisting
of some or all of the following categories of information:
(a) Financial Information, including but not limited to information
relating to the Company's earnings, assets, debts, prices, pricing
structure, volume of purchases or sales or other financial data whether
related to the Company or generally, or to particular products, services,
geographic areas, or time periods;
(b) Supply and Service Information, including but not limited to
information relating to goods and services, suppliers' names or addresses,
terms of supply or service contracts or of particular transactions, or
related information about potential suppliers to the extent that such
information is not generally known to the public, and the extent that the
combination of suppliers or use of a particular supplier, though generally
known or available, yields advantages to the Company details of which are
not generally known;
(c) Marketing Information, including but not limited to information
relating to details about ongoing or proposed marketing programs or
agreements by or on behalf of the Company, sales forecasts, advertising
formats and methods or results of marketing efforts or information about
impending transactions;
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(d) Personnel Information, including but not limited to information
relating to employees' personnel or medical histories, compensation or
other terms of employment, actual or proposed promotions, hirings,
resignation, disciplinary actions, terminations or reasons therefor,
training methods, performance, or other employee information;
(e) Customer Information, including but not limited to information
relating to past, existing or prospective customers' names, addresses or
backgrounds, records of agreements and prices, proposals or agreements
between customers and the Company, status of customers' accounts or credit,
or related information about actual or prospective customers as well as
customer lists;
(f) Acquisition Information, including but not limited to information
relating to past, present or prospective acquisitions of businesses,
facilities or personnel; and
(g) The Proprietary Materials (as defined in the Master Franchise
Agreement, between Integrated Health Services Franchising Co., Inc. and the
Company, dated as of January 13, 1998) or other information of any kind
received by the Executive in connection with such Master Franchise
Agreement and/or the Master Management Agreement between the Company and
IHS Facility Management, Inc., dated as of January 13, 1998 and any and all
matters or activities covered by either or both of those Agreements.
All of the foregoing are hereinafter referred to as "Trade Secrets." (For
the avoidance of doubt, "Trade Secrets" shall not be construed to include
materials which represent "industry standard" information which is generally
available.) The Company and the Executive consider their relation one of
confidence with respect to Trade Secrets. Therefore, during and after the
employment by the Company, regardless of the reasons that such employment ends,
the Executive agrees:
(aa) To hold all Trade Secrets in confidence and not discuss,
communicate or transmit to others, or make any unauthorized copy of or
use the Trade Secrets in any capacity, position or business except as
it directly relates to the Executive's employment by Company;
(bb) To use the Trade Secrets only in furtherance of proper
employment related reasons of the Company to further the interests of
the Company;
(cc) To take all reasonable actions that the Company deems
necessary or appropriate, to prevent unauthorized use or disclosure of
or to protect the Company's interest in the Trade Secrets; and
(dd) That any of the Trade Secrets, whether prepared by the
Executive or which may come into the Executive's possession during the
Executive's employment hereunder, are and remain the property of the
Company and its affiliates, and all such Trade Secrets, including
copies thereof, together with all
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other property belonging to the Company or its affiliates, or used in
their respective businesses, shall be delivered to or left with the
Company.
This Agreement does not apply to (i) information that by means other then
the Executive's deliberate or inadvertent disclosure becomes known to the
public; (ii) disclosure compelled by judicial or administrative proceedings
provided the Executive affords the Company the opportunity to obtain assurance
that compelled disclosures will receive confidential treatment; and (iii)
information independently developed by the Executive, the development of which
was not a breach of this Agreement.
4.2. Non-Competition. A. During the Term, the Executive agrees that he will
not, without the express written consent of Lyric, for the Executive or on
behalf of any other person, firm, entity or other enterprise (i) directly or
indirectly solicit for employment or recommend to any subsequent employer of the
Executive the solicitation for employment of any person who, at the time of such
solicitation is employed by Lyric or any affiliate thereof, (ii) directly
solicit, divert, or endeavor to entice away any customer of Lyric or any
affiliate thereof, or otherwise engage in any activity intended to terminate,
disrupt, or interfere with Lyric's or any affiliate's relationship with a
customer, supplier, lessor or other person, or (iii) be employed by, be a
director, officer or manager of, act as a consultant for, be a partner or member
in, have a proprietary interest in, give advice to (all the foregoing
activities, collectively, "Competing Activities") any person, enterprise,
partnership, association, corporation, limited liability company, joint venture
or other entity which is directly in the business of owning, operating or
managing, any healthcare facility of any kind, including but not limited to, any
subacute healthcare facility, rehabilitation hospital, nursing home, assisted
living facility, or home healthcare business of a type which Lyric is conducting
at the time in question (all such enterprises, collectively the "Healthcare
Businesses"); and, in the case of any facility or business described, in either
case, which competes with any such type of facility or business then operated by
Lyric or any of its subsidiaries, provided however, that this Section shall not
prohibit the Executive from:
(a) engaging in any of the activities or businesses disclosed on
Appendix "1" hereto;
(b) performing Competing Activities for assisted living facilities,
and assisted living facilities operated in conjunction with Healthcare
Businesses provided that the primary activity of any such enterprise is not
attributable to the Healthcare Businesses;
(c) performing Competing Activities for Healthcare Businesses located
in Canada unless and until Lyric opens its/their first Healthcare
Businesses in Canada, provided that the Executive may continue any
Competing Activities in which he is engaged at the time such first
Healthcare Businesses are opened;
(d) performing Competing Activities for Healthcare Businesses located
in The United Kingdom unless and until Lyric opens its/their first
Healthcare Businesses in The
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United Kingdom, provided that the Executive may continue any Competing
Activities in which he is engaged at the time such first Healthcare
Businesses are opened;
(e) performing Competing Activities for Healthcare Businesses located
in New York State unless and until New York State removes the restrictions
that now prevent enterprises like Lyric and any of its Members from owning,
operating or managing Healthcare Businesses in New York State and Lyric
commences activities in New York State, provided that the Executive may
continue any Competing Activities in which he is engaged at the time such
restrictions are removed; and
(f) owning up to 10% of the outstanding voting shares of the equity
securities of any company that directly or indirectly owns, operates or
manages Healthcare Businesses, whose common stock is or could be listed for
trading on any national securities exchange or on the NASDAQ System.
B. During the period of one year after the termination for any reason
of the Executive's employment with Lyric, the Executive will continue to be
bound by, and agrees to comply with, the limitations in (i) and (ii) of 4.2A but
the limitations of (iii) of such 4.2 A will apply only for six months after such
termination and only to the Executive's service as an officer or manager of a
direct competitor of Lyric.
4.3. Third Party Beneficiary. For purposes of this Article (excluding,
however, Section 4.2), the term "Company" shall be deemed to include IHS in its
individual capacity, as distinct from its interest as a Member in the Company.
IHS shall be deemed to be a third party beneficiary entitled to enforce the
provisions of this Article IV independently of Lyric Health Care LLC.
4.4. Remedies For Breach of Article IV. If the Executive materially
violates the covenants contained in this Article IV, after his termination of
employment under circumstances which entitle him to payments or benefits under
Section 3.4, the Company may, at its election, upon ten (10) days' prior notice,
terminate the Severance Period and cease providing the Executive with such
payments and benefits. In addition, the Executive agrees that the amount of
damages in the event of the Executive's breach of this Article IV will be
difficult, if not impossible, to ascertain. The Executive therefore agrees that
the Company, in addition to, and without limiting any other remedy or right it
may have, shall have the right to an injunction enjoining any breach of the
covenants made by the Executive in this Article IV (although this Section shall
not be construed to limit the right of the Company to claim damages).
4.5. Disclosure of Existing and Pending Activities. Attached as Appendix
"1" hereto is a list of corporations and other entities engaged in Healthcare
Businesses (i) of which the Executive is presently an officer, director,
manager, or general partner, or (ii) in which the Executive presently, through
ownership of shares, limited partnership interests, or other interests, owns
more than 10% of the equity. (Appendix "1" includes, also, any such matters
which are now pending but not complete). Appendix "1" sets forth, also,
transactions as to which the
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Executive is acting as a broker as of the date of this Agreement, which the
Executive is deemed to have offered to the Company and IHS.
4.6. Disclosure of Future Activities. On the first day of January and July
of each calendar year after the date of this Agreement the Executive will give
IHS a list of the Executive's positions and activities in the categories
described in Section 4.5, updated as of the applicable date. Upon request of
IHS, also, the Executive will furnish a brief but reasonable explanation of the
nature of the Executive's role in any such matter and the nature of the business
involved.
4.7. Brokerage. This Article 4 shall not be construed to prohibit the
Executive from acting as a broker for the acquisition, sale, lease, or financing
of Healthcare Businesses in which Lyric is presently operating, provided that
the Executive shall first offer to Lyric and IHS each opportunity of such type
which he proposes to broker, and that IHS declines for itself and Lyric to
pursue such opportunity. IHS shall be deemed to have declined an opportunity for
itself and Lyric if IHS does not give written notice to the Executive expressing
active interest within 14 days after IHS receives a written presentation from
the Executive (which should include the proposed business terms, prior three
years' financial statements, and other information as customarily required by
sophisticated investors in similar transactions at such time). If IHS Company
concludes a transaction presented by the Executive, he will be entitled to a
market-rate commission. If Lyric concludes a transaction presented by the
Executive, the Executive will receive no commission, but N-Co. will receive a
credit to its capital account under Lyric's Operating Agreement in an amount
equal to the commission which would otherwise have been earned, provided,
however, that if and to the extent that the Executive would incur an income tax
liability by reason of such credit, the Executive shall receive a cash payment
in an amount estimated at the Employee's highest marginal tax bracket on the
amount of such credit, and the capital account credit shall be reduced by the
amount of such cash payment.
ARTICLE V
AMENDMENT AND ASSIGNMENT
5.1. Right of the Executive to Assign. The Executive may not assign,
transfer, pledge or hypothecate or otherwise transfer his rights, obligations,
interest and benefits under this Agreement and any attempt to do so shall be
null and void.
5.2. Right of Company to Assign. This Agreement shall not be assignable and
transferable by the Company. This Agreement shall inure to the benefit of and be
binding upon the Executive and the Executive's heirs and personal
representatives, and the Company and its successors.
5.3. Amendment/Waiver. No change or modification of this Agreement shall be
valid unless it is in writing and signed by both parties hereto. No waiver of
any provisions of this Agreement shall be valid unless in writing and signed by
the person or party to be charged.
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ARTICLE VI
GENERAL
6.1. Governing Law. This Agreement shall be subject to and governed by the
laws of the State of Maryland.
6.2. Binding Effect. This Agreement 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.
6.3. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all other prior agreements, either oral or
written, between the parties hereto.
6.4. Mitigation. The Executive shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise nor may any payments provided for under this Section be
reduced by any amounts earned by the Executive, except as provided in Article
IV.
6.5. Survivorship. The respective rights and obligations of the parties
hereunder shall survive the termination of this Agreement to the extent
necessary to preserve the rights and obligations of the parties under this
Agreement.
6.6. Notices. All notices, demands, requests, consents, approvals or other
communications required or permitted hereunder shall be in writing and shall be
delivered by hand, registered or certified mail with return receipt requested or
by a nationally recognized overnight delivery service, in each case with all
postage or other delivery charges prepaid, and to the address of the party to
whom it is directed as indicated below, or to such other address as such party
may specify by giving notice to the other in accordance with the terms hereof.
Any such notice shall be deemed to be received (i) when delivered, if by hand,
(ii) on the next business day following timely deposit with a nationally
recognized overnight delivery service or (iii) on the date shown on the return
receipt as received or refused or on the date the postal authorities state that
delivery cannot be accomplished, if sent by registered or certified mail, return
receipt requested.
If to the Company: 8889 Pelican Bay Boulevard, Suite 500
Naples, Florida 34103
If to the Executive: 304 Gilbert Road
Dillsburg, PA 17019
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If to IHS: 8889 Pelican Bay Boulevard, Suite 500
Naples, Florida 34103
with a copy to:
10065 Red Run Boulevard
Owings Mills, MD 21117
Attention: Eleanor C. Harding
Marshall A. Elkins, Esq.
6.7. Indemnification. The Company agrees to maintain Director's and
Officer's liability insurance in such amounts as the Members determine to be
commercially reasonable. To the extent not covered by such liability insurance,
the Company shall indemnify and hold the Executive harmless as set forth in
Section 14.6 of the Operating Agreement.
6.8. Attorneys' Fees. Upon presentation of an invoice, the Company shall
pay directly or reimburse the Executive for all reasonable attorneys' fees and
costs incurred by the Executive in connection with any dispute brought by the
Executive over the terms of this Agreement unless there is a determination that
the Executive had no reasonable basis for his claim.
6.9. Arbitration. Except as otherwise provided in Section 4.3, any dispute
or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration, conducted before a panel of three
arbitrators in Baltimore, Maryland, in accordance with the rules of the American
Arbitration Association then in effect, and judgement may be entered on the
arbitrators' award in any court having jurisdiction. The Company shall pay all
costs of the American Arbitration Association and the arbitrator. Each party
shall select one arbitrator, and the two so designated shall select a third
arbitrator. If either party shall fail to designate an arbitrator within seven
(7) days after arbitration is requested, or if the two arbitrators shall fail to
select a third arbitrator within fourteen (14) days after arbitration is
requested, then an arbitrator shall be selected by the American Arbitration
Association upon application of either party. Notwithstanding the foregoing, the
Executive shall be entitled to seek specific performance from a court of the
Executive's right to be paid until the date of termination during the pendency
of any dispute or controversy arising under or in connection with this Agreement
and the Company shall have the right to obtain injunctive relief from a court.
6.10. Severability. No provision in this Agreement if held unenforceable
shall in any way invalidate any other provisions of this Agreement, all of which
shall remain in full force and effect.
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IN WITNESS WHEREOF, the Company has caused this Agreement 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
LYRIC HEALTH CARE LLC
By: Integrated Health Services, Inc.
By: /s/ Daniel J. Booth /s/ Timothy F. Nicholson
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Name: Daniel J. Booth Timothy F. Nicholson
----------------------------
Title: Senior Vice President
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Appendix "1"
APPENDIX:
A) Trans Health Network Inc.
Director, and less than 10% shareholder (Principal shareholder is Anthony
Misitano)
B) To be formed. New York State company engage in management and ownership of
assisted living and retirement facilities and possibly nursing homes in New
York State. May be in conjunction with Paz Inc and/or Azzie Reckiss
C) Building, leasing and/or operating assisted living facilities in
conjunction with Balanced Care Corp and/or other assisted living companies
D) Specialty Care Plc - England - Integrated Health Services is a shareholder
in this company
E) Ancillary Services Company to be formed in conjunction with Reg Petersen,
in Canada
Appendix 1-1
Appendix "2"
"Change of Control"; Revenue Salary Adjustments
A. Change of Control.
For purposes of this Agreement, a "Change of Control" shall be deemed
to occur if (i) there shall be consummated (x) any consolidation, reorganization
or merger of IHS in which IHS is not the continuing or surviving corporation or
pursuant to which shares of IHS's common stock would be converted into cash,
securities or other property, other than a merger of IHS in which the holders of
IHS's common stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger, or (y) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all, or substantially all, of the assets
of IHS, or (ii) the stockholders of IHS shall approve any plan or proposal for
liquidation or dissolution of IHS, or (iii) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act, including any
"group" ( as defined in Section 13(d)(3) of such Act) (other than the Employee
or any group controlled by the Employee)) shall become the beneficial owner
(within the meaning of Rule 13d-3 under such Act) of twenty percent (20%) or
more of IHS's outstanding common stock (other than pursuant to a plan or
arrangement entered into by such person and IHS) and such person discloses its
intent to effect a change in the control or ownership of IHS in any filing with
the Securities and Exchange Commission, or (iv) within any twenty-four (24)
month period beginning on or after the Effective Date, the persons who were
directors of IHS immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death, disability or
retirement) to constitute at least a majority of the Board or the board of
directors of any successor to IHS, provided that, any director who was not a
director as of the Effective Date shall be deemed to be an Incumbent Director if
such director was elected to the Board by, or on the recommendation of or with
the approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
3.3(b)(iv) unless such election, recommendation or approval was the result of
any actual or threatened election contest of the type contemplated by Regulation
14a-11 promulgated under the Exchange Act or any successor provision.
B. Revenue Salary Adjustment
If for any fiscal year the Company achieves the following revenue
targets (excluding operations of merged or acquired facilities or subsidiaries
for periods before the applicable merger or acquisition) then, for any fiscal
year* and ensuing years [subject to later increases under this paragraph or
increases under Section 2.1(a)] the Executive's Salary under Section 2.1(a)
shall be as follows:
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* Any adjustments for the current fiscal year shall be retroactive to
January 1st of such year if and after applicable revenue target is
achieved during such year.
Appendix 2-1
IF REVENUES EXCEEDED
IN THE LAST FISCAL YEAR SALARY
$150 million 275,000
$250 million 300,000
$450+ million 350,000
Appendix 2-2