INDEMNIFICATION AGREEMENT
This indemnity is made part of an agreement, dated July 25, 2000 (which
together with any renewals, modifications or extensions thereof, is herein
referred to as the "Agreement") by and between Xxxxxxx & Marsal, Inc. ("A&M"),
Xxxxxx X. Xxxxx (the "Officer") and Integrated Health Services, Inc. (the
"Company") for services to be rendered to the Company by A&M.
A. The Company agrees to indemnify and hold harmless each of A&M, its partners,
employees, agents and representatives (each, an "Indemnified Party" and
collectively, the "Indemnified Parties") against any and all losses, claims,
damages, liabilities, penalties, obligations and expenses (including the costs
for counsel or others as and when incurred in investigating, preparing or
defending any action or claim, whether or not in connection with litigation in
which any Indemnified Party is a party, or enforcing this agreement) caused by,
relating to, based upon or arising out of (directly or indirectly) the
Indemnified Parties' acceptance of or the performance or non-performance of
their obligations under the Agreement, provided, however, such indemnity shall
not apply to any such loss, claim, damage, liability or expense to the extent it
is found in a final judgment by a court of competent jurisdiction (not subject
to further appeal) to have resulted primarily and directly from such Indemnified
Party's gross negligence or willful misconduct (an "Excluded Liability"). The
Company also agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Company for or in
connection with the engagement of A&M, except to the extent of any such
liability for losses, claims, damages, liabilities or expenses that are found in
a final judgment by a court of competent jurisdiction (not subject to further
appeal) to have resulted primarily and directly from such Indemnified Party's
gross negligence or willful misconduct. The Company further agrees that it will
not, without the prior consent of an Indemnified Party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which such Indemnified Party seeks
indemnification hereunder (whether or not such Indemnified Party is an actual
party to such claim, action, suit or proceedings) unless such settlement,
compromise or consent includes an unconditional release of such Indemnified
Party from all liabilities arising out of such claim, action, suit or
proceeding.
B. These indemnification provisions shall be in addition to any liability which
the Company may otherwise have to the Indemnified Parties.
C. If any action, proceeding or investigation is commenced to which any
Indemnified Party proposes to demand indemnification hereunder, such Indemnified
Party will notify the Company with reasonable promptness; provided, however,
that any failure by such Indemnified Party to notify the Company will not
relieve the Company from its obligations hereunder, except to the extent that
such failure shall
have actually prejudiced the defense of such action. The Company shall promptly
pay expenses reasonably incurred by any Indemnified Party in defending or
settling any action, proceeding or investigation in which such Indemnified Party
is a party or is threatened to be made a party by reason of the engagement under
the Agreement, in advance of the final disposition of such action, proceeding,
or investigation upon submission of invoices therefor. Each Indemnified Party
hereby undertakes, and the Company hereby accepts its undertaking, to repay any
and all such amounts so advanced if it shall ultimately be determined that such
Indemnified Party is not entitled to be indemnified therefor. If any such
action, proceeding or investigation in which an Indemnified Party is a party is
also against the Company, the Company may, in lieu of advancing the expenses of
separate counsel for such Indemnified Party provide such Indemnified Party with
legal representation by the same counsel who represents the Company, provided
such counsel is reasonably satisfactory to such Indemnified Party, at no cost to
such Indemnified Party; provided, however, that if such counsel or counsel to
the Indemnified Party shall determine that due to the existence of actual or
potential conflicts of interest between such Indemnified Party and the Company
such counsel is unable to represent both the Indemnified Party and the Company,
then the Indemnified Party shall be entitled to use separate counsel of its own
choice, and the Company shall promptly advance its reasonable expenses of such
separate counsel upon submission of invoices therefor. Nothing herein shall
prevent an Indemnified Party from using separate counsel of its own choice at
its own expense. The Company will be liable for any settlement of any claim
against an Indemnified Party made with the Company's written consent, which
consent shall not be unreasonably withheld.
D. In order to provide for just and equitable contribution if a claim for
indemnification pursuant to these indemnification provisions is made but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification: then the
Company, on the one hand, and the Indemnified Parties, on the other hand, shall
contribute to the losses, claims, damages, liabilities and expenses so that the
Indemnified Parties are responsible in the aggregate for a percentage of losses,
claims, damages, liabilities and expenses equal to a fraction, the numerator of
which is the fees previously received by the Indemnified Parties pursuant to
this Agreement (less any amounts previously paid by the Indemnified Parties
through application of the provisions of this paragraph), and the denominator of
which is the market value of the outstanding shares of the Company's common
stock on the date hereof, and the Company shall be responsible for the remainder
of such losses, claims, damages, liabilities and expenses; provided however,
that if such allocation is not permitted by applicable law, then the relative
fault of the Company, on the one hand, and the Indemnified Parties, on the other
hand, in connection with the statements, acts or omissions which resulted in
such losses, claims, damages, liabilities and costs and other relevant equitable
considerations shall also be considered; and further provided that in no event
will the Indemnified Parties'
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aggregate contribution for all losses, claims, damages, liabilities and expenses
with respect to which contribution is available hereunder exceed the amount of
fees actually received by the Indemnified Parties pursuant to the Agreement. No
person found liable for a fraudulent misrepresentation shall be entitled to
contribution hereunder from any person who is not also found liable for such
fraudulent misrepresentation.
E. In connection with the process of seeking judicial authorization for the
Agreement and the engagement of A&M, and in the event the Company's case under
chapter 11 of the United States Bankruptcy Code is converted to one under
chapter 7 and the Company and A&M seek judicial approval for the assumption of
the Agreement or authorization to enter into a new engagement agreement pursuant
to either of which A&M would continue to be engaged by the Company, the Company
shall promptly pay expenses reasonably incurred by the Indemnified Parties,
including attorneys' fees and expenses, in connection with any motion, action or
claim made either in support of or in opposition to any such retention or
authorization whether in advance of or following any judicial disposition of
such motion, action or claim promptly upon submission of invoices therefor and,
in the event of a conversion of the chapter 11 case to one under Chapter 7,
regardless of whether such retention or authorization is approved by any court
provided that the indemnified parties will give the Company prior notice if
their counsel will attend or participate in any court hearing. The Company will
also promptly pay the Indemnified Parties for any expenses reasonable incurred
by them, including attorneys' fees and expenses, in seeking payment of all
amounts owed it under the Agreement (or any new engagement agreement) whether
through submission of a fee application or in any other manner, without offset,
recoupment or counterclaim, whether as a secured claim, an administrative
expense claim, an unsecured claim, a prepetition claim or a postpetition claim.
F. Neither termination of the Agreement nor termination of A&M's engagement nor
the conversion of the existing case to one under chapter 7 shall affect these
indemnification provisions, which shall hereafter remain operative and in full
force and effect.
G. The rights provided herein shall not be deemed exclusive of any other rights
to which the Indemnified Parties may be entitled under the certificate of
incorporation or bylaws of the Company, any other agreements, any vote of
stockholders or disinterested directors of the Company, any applicable law or
otherwise.
ACCEPTED AND AGREED:
Xxxxxxx & Marsal, Inc. Integrated Health Services, Inc.
By: /s/ Xxxxxx X. Xxxxx By: /s/ X. Xxxxxx Xxxxxxx
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Xxxxxx X. Xxxxx X. Xxxxxx Xxxxxxx
Managing Director EVP and CFO
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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