EXHIBIT 10.69 AMENDED AND RESTATED MASTER MANAGEMENT AGREEMENT

EXHIBIT 10.69

AMENDED AND RESTATED

MASTER MANAGEMENT AGREEMENT

BETWEEN

LYRIC HEALTH CARE LLC

AND

IHS FACILITY MANAGEMENT, INC.

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DATED AS OF DECEMBER 31, 1998

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TABLE OF CONTENTS

PART I

MANAGEMENT TERMS AND CONDITIONS

ARTICLE I RETENTION OF MANAGER
ARTICLE II TERM
ARTICLE III RIGHTS AND DUTIES OF MANAGER
ARTICLE IV RIGHTS AND DUTIES OF OWNER
ARTICLE V COMPENSATION AND DISTRIBUTIONS
ARTICLE VI INTENTIONALLY OMITTED
ARTICLE VII INTENTIONALLY OMITTED
ARTICLE VIII TERMINATION RIGHTS
ARTICLE IX INDEMNIFICATION
ARTICLE X CONFIDENTIALITY; NON-SOLICITATION
ARTICLE XI CONDEMNATION
ARTICLE XII SUCCESSORS AND ASSIGNS
ARTICLE XIII MISCELLANEOUS PROVISIONS

PART II
OTHER TERMS AND CONDITIONS

ARTICLE I INTENTIONALLY OMITTED
ARTICLE II REPRESENTATIONS AND WARRANTIES
ARTICLE III TERMINATION RIGHTS

ARTICLE IV INSURANCE
ARTICLE V MISCELLANEOUS PROVISIONS

AMENDED AND RESTATED
MASTER MANAGEMENT AGREEMENT

THIS AMENDED AND RESTATED MASTER MANAGEMENT AGREEMENT (this "Agreement") is
made and entered into as of December 31, 1998, between LYRIC HEALTH CARE LLC, a
Delaware limited liability company, with offices at ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lyric") and IHS FACILITY MANAGEMENT, INC., a
Delaware corporation, with offices at ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Manager").

INTRODUCTORY STATEMENT

Pursuant to a Master Management Agreement, dated as of January 13, 1998, as
amended by the First Amendment to Master Management Agreement, dated as of March
31, 1998 and by the Second Amendment to Master Management Agreement, dated as of
December 3, 1998 (the "Prior Master Management Agreement"), between Lyric and
Manager, Lyric and Manager entered into an agreement whereby Lyric granted to
Manager the sole and exclusive right to supervise, manage, and operate the
Facilities listed on Schedule 1 thereto.

Lyric and Manager now wish to amend and restate the Prior Master Management
Agreement pursuant to the terms and conditions of this Agreement.

Lyric owns, indirectly, all of the shares of each of the corporations
listed on Schedule 1 hereto (each, an "Owner" and collectively, the "Owners").
Each Owner operates the health care facility set forth opposite its name on
Schedule 1 hereto (each facility and the equipment, furnishings, and other
tangible personal property to be used in connection therewith shall be referred
to as a "Facility", and they shall be referred to collectively as the
"Facilities").

The Owners sublease their Facilities pursuant to Facility Subleases from
the wholly owned subsidiary of Lyric described on Schedule 2 hereto ("Lessor"),
which Lessor in turn leases its Facilities from the owner of the Facilities
under the specified Master Lease (the "Master Lease") described on Schedule 2
hereto. Each of the Facility Subleases contains substantially the same
provisions as the associated Master Lease except for provisions concerning rent
and other matters specific to the Facility. In this Agreement "Lease" means the
Master Lease and the Facility Sublease as applicable to each Facility.

Each Owner has entered into a Facility Franchise Agreement with Integrated
Health Services Franchising Co., Inc. (each, a "Franchise Agreement") for the
use of certain "Proprietary Information" and the "IHS Systems" (as defined
therein) and the provision of certain services in order to facilitate the
operation of its Facility.

Manager is engaged in the operation of facilities similar to the
Facilities, and is experienced in various phases of the management, operation
and ownership thereof.

Lyric and Manager are entering into this Agreement to set forth the general
terms by which all of the Facilities shall be managed. This Agreement also sets
forth the responsibilities of Manager with respect to the Franchise Agreements.

Simultaneously herewith, Manager shall enter into a Facility Management
Agreement with the Owner of each Facility. By entering into a Facility
Management Agreement, each Owner and Manager shall adopt the terms of Part I of
this Agreement by reference (except as expressly provided therein) and agree
upon certain additional terms and conditions for the management of each
Facility.

NOW, THEREFORE, in consideration of the promises and covenants herein
contained and intending to be legally bound hereby, the parties agree as
follows:

PART I

MANAGEMENT TERMS AND CONDITIONS

Lyric and Manager hereby agree to the following terms and conditions for
the management of each Facility:

ARTICLE I

RETENTION OF MANAGER

1.1 RETENTION. For and during the term of this Agreement, Owner hereby
grants to Manager the sole and exclusive right, and employs Manager to
supervise, manage, and operate the Facility in the name and for the account of
Owner upon the terms and conditions hereinafter set forth.

1.2 ACCEPTANCE. Manager accepts such appointment and agrees that it will
(a) perform its duties and responsibilities hereunder in accordance with this
Agreement, (b) use commercially reasonable efforts to supervise and direct the
management and operation of the Facility in an efficient manner, and (c) consult
with Owner and keep Owner advised of all major policy matters relating to the
Facility. Subject to the foregoing and to the other provisions of this
Agreement, Manager, without the approval of Owner (unless such approval is
herein specifically required as to policies and manner of operation), shall have
the unrestricted control and sole discretion with regard to the operation and
management of the Facility for all customary purposes (including the exercise of
its rights and performance of its duties provided for in Article III hereof),
and the right to determine all policies affecting the appearance, maintenance,
standards of operation, quality of service, and any other matter affecting the
Facility or the operation thereof.

1.3 INDEPENDENT CONTRACTOR. It is expressly agreed by Owner and Manager
that Manager is at all times acting and performing under this Agreement as an
independent contractor, and that no act, commission or omission by either Owner
or Manager shall be

construed to make or constitute the other its partner, member, principal, agent,
joint venturer or associate, except to the extent specified herein.

1.4 OWNERSHIP. Owner shall be the owner and/or holder of all licenses,
permits and contracts obtained with respect to the Facility (subject to Section
3.7 hereof), and shall be the "provider" within the meaning of all third-party
contracts for the Facility. Specifically, and without limitation, Owner shall
own (a) the Medicare provider number, (b) the Medicare provider agreement with
Health Care Financing Administration (HCFA), and (c) the Medicare certification.

ARTICLE II

TERM

The initial term of this Agreement began on the Commencement Date, as
defined in the Prior Master Management Agreement (the "Commencement Date") and
shall continue for the same period as the Term, as defined in the Lease. This
Agreement shall automatically renew for each extension or renewal term of the
Lease (the "Renewal Terms"), should Owner renew the Lease for one or more such
terms under the Lease; provided, however, Manager may decide not to renew in any
such case by giving notice to Owner not less than six (6) months prior to the
expiration of the Initial Term or any Renewal Term.

ARTICLE III

RIGHTS AND DUTIES OF MANAGER

During the Term of this Agreement, and in the course of its management and
operation of each Facility:

3.1 EMPLOYEES. Manager, on Owner's behalf, shall hire, promote, discharge,
and supervise the work of the Facility's Administrator, Assistant Administrator,
Department Heads, and all operating and service employees performing services in
and about the Facility. All of such employees shall be employees of Owner,
except for the Administrator and the Director of Nursing, who shall be employees
of Manager, and the aggregate compensation, including fringe benefits, with
respect to such employees, including the Administrator and the Director of
Nursing, shall be charged to Owner as an expense of the operation of the
Facility. The term "fringe benefits" as used herein shall include, but not be
limited to, the employer's contribution of FICA, unemployment compensation, and
other employment taxes, retirement plan contributions, ▇▇▇▇▇▇▇'▇ compensation,
group life, accident, and health insurance premium, profit sharing
contributions, disability, and other similar benefits paid or payable by Manager
with respect to other facilities which may be managed by Manager. All such
employees of Manager shall be covered by appropriate malpractice and/or errors
and omissions insurance as approved by Manager and Owner. The cost of same shall
be charged to Owner as an expense of the operation

of said Facility. Manager shall be responsible, also, for coordinating health
insurance coverages (including COBRA matters) for the employees of each
Facility.

3.2 LABOR CONTRACTS. Manager, if requested by Owner, will negotiate, on
Owner's behalf and at Owner's expense, with any labor union lawfully entitled to
represent the employees at the Facility, but any collective bargaining agreement
or labor contract resulting therefrom must first be approved by Owner who shall
be the only person authorized to execute the same. Owner agrees that all fees
and costs of outside professionals in conducting and concluding such
negotiations shall be paid by Owner out of Facility Funds.

3.3 CONCESSIONAIRES, ETC. Manager shall negotiate and consummate in the
name and at the expense of Owner, contracts or arrangements with
concessionaires, licensees, tenants, and other intended users of the Facility.
Any fees and expenses incurred in connection therewith shall be charged to Owner
as an expense of the operation of the Facility.

3.4 ANCILLARY SERVICES, UTILITIES ETC. Manager shall enter into such
contracts in the name of and at the expense of Owner as may be deemed necessary
or advisable for the furnishing of all ancillary services, utilities,
concessions, supplies and other services as may be needed from time to time for
the maintenance and operation of the Facility. Manager is authorized to contract
for or provide ancillary services, including, but not limited to, pharmacy (drug
and I.V.), rehabilitation and respiratory therapy services, and mobile
diagnostic services, through providers which are affiliates of Manager, provided
that such services are rendered at levels of quality and pricing that are
competitive with those available in the community.

3.5 PURCHASES. Manager shall supervise the purchasing by Facility staff of
food, beverages, operating supplies, and other materials and supplies, in the
name of and for the account and at the expense of Owner, as may be needed from
time to time for the maintenance and operation of the Facility.

3.6 REPAIRS. Manager shall make or install or cause to be installed at
Owner's expense and in the name of Owner any proper repairs, replacements,
additions, and improvements in and to the Facility and the furnishings and
equipment in order to keep and maintain the same in good repair, working order
and condition, and outfitted and equipped for the proper operation thereof in
accordance with (a) industry standards comparable to those prevailing in other
similar facilities, (b) all applicable state or local rules, regulations, or
ordinances, and (c) the terms and conditions of the Lease.

3.7 LICENSES AND PERMITS. Manager shall apply for and use commercially
reasonable efforts to obtain and maintain in the name and at the expense of
Owner, all licenses and permits required in connection with the management and
operation of the Facility. If Manager is required by law to obtain any license
or permit in its name, Manager agrees to use commercially reasonable efforts to
obtain and maintain such license or permit in its name, at Owner's expense.
Owner agrees to cooperate with Manager in applying for, obtaining, and
maintaining such licenses and permits.

3.8 GOVERNMENTAL REGULATION.

(A) Manager shall use commercially reasonable efforts to take such
action as shall be reasonably necessary to insure that the Facility and the
management thereof by Manager complies with all federal, state and local laws,
regulations and ordinances applicable to the Facility or the management thereof
by Manager, including the particular laws and regulations applicable to health
care facilities.

(B) Manager shall promptly provide to Owner as and when received by
Manager, all notices, reports or correspondence from governmental agencies that
assert deficiencies or charges against the Facility or that otherwise relate to
the suspension, revocation, or any other action adverse to any approval,
authorization, certificate, determination, license or permit required or
necessary to own or operate the Facility. Manager may appeal any action taken by
any governmental agency against the Facility; provided, however, that Owner
shall adequately secure and protect Manager from loss, cost, damage or expense
by bond or other means satisfactory to Manager in order to contest by proper
legal proceedings the validity of any such statute, ordinance, law, regulation
or order, provided that such contest shall not result in the suspension of
operations of the Facility; and provided, further, that Owner shall have no
obligation to secure and protect Manager from any loss, cost, damage or expense
that arises directly out of Manager's material breach of any of its covenants
under this Agreement.

3.9 TAXES. Manager shall cause all taxes, assessments, and charges of every
kind imposed upon the Facility by any governmental authority, including interest
and penalties thereon (collectively, "Taxes"), to be paid when due from Facility
Funds (as defined in Section 3.10 below), subject to the terms of the Lease, and
in accordance with the Budget (as defined in Section 3.17 hereof) and in the
order of priority set forth in Section 3.10 below. Manager shall not cause such
Taxes to be paid if (a) such Taxes are in good faith being contested by Owner at
its sole expense and without cost to Manager, (b) enforcement for nonpayment of
such Taxes is stayed, and (c) Owner shall have given Manager written notice of
such contest and stay and authorized the non-payment thereof, not less than ten
(10) days prior to the date on which such Taxes are due and payable. Interest or
penalty payments shall be reimbursed by Manager to Owner if imposed upon Owner
by reason of the gross negligence on the part of Manager in making the payment
if funds are available therefor. Manager shall notify Owner of all Taxes
assessed against the Facility other than in the normal course of business.

3.10 DEPOSIT AND DISBURSEMENT OF FUNDS. Manager shall deposit in a banking
institution which is a member of the FDIC in accounts in Manager's name, as
agent for Owner, all monies arising from the operation of the Facility or
otherwise received by Manager for and on behalf of Owner (the "Facility Funds"),
and shall disburse and pay the same from said accounts on behalf and in the name
of Owner pursuant to the Budget, in the following order of priority, as and when
required to be made in connection with:

(A) Payment of all costs and expenses arising out of the
administration, maintenance and operation of the Facility, including, without
limitation, Taxes, reimbursable

expenses of Manager, and all accrued and unpaid interest on any unpaid balances
thereon, as set forth in Section 3.16;

(B) Payment of the Facility Rent or debt service on a first mortgage
(if any) on the Facility;

(D) Payment of interest due on the working capital line of credit for
the Facility;

(E) Payment of the letter of credit fee (for the security deposit
under the Lease), if required;

(F) Payment of all administrative and operating costs of Lyric;

(G) Payment of the "Annual Continuing Fee" due under the Franchise
Agreement;

(H) Payment of Manager's Base Management Fee provided for in Article V
hereof (including any accrued and unpaid Base Management Fees, plus all accrued
and unpaid interest thereon, for prior periods);

(I) Payment of subordinated mortgage debt (if any) with respect to the
Facility;

(J) Payment of the monthly installments to any supplemental capital
expense and working capital escrows and reserves described in the Budget;

(K) Payment of Manager's Incentive Management Fee provided for in
Article V hereof (including any accrued and unpaid Incentive Management Fees,
plus all accrued and unpaid interest thereon, for prior periods); and

(L) The balance of such funds shall be distributed to Owner, at
Owner's request, subject to the retention of an appropriate operating reserve,
as determined in Manager's reasonable judgment. In this Agreement, the term
"Facility Rent" means Rent, as defined in the Lease.

3.11 STATEMENTS. Manager shall prepare and deliver (or cause to be prepared
and delivered) to Lyric's Managing Director all monthly, quarterly and annual
financial statements and Compliance Reports (as defined in Lyric's Operating
Agreement) and other reports, in the same form, and within the same periods, as
Lyric prepares or receives under Article 12 of Lyric's Operating Agreement.

3.12 LEGAL ACTIONS. Manager shall institute, in its own name or in the name
of Owner, but in any event at the expense of Owner, any and all legal actions or
proceedings to collect charges, rent, or other sums due the Facility or to
lawfully oust or dispossess tenants or other persons in possession under, or
lawfully cancel, modify, or terminate any lease, license, or concession
agreement for the breach thereof or default thereunder by the tenant, licensee,
or concessionaire. Unless otherwise directed by Owner, Manager may take, at
Owner's expense, appropriate steps to protect and/or litigate to final judgment
in any appropriate court any violation or order affecting the Facility. Any
counsel to be engaged under this Section shall be approved by Owner, which
approval shall not be unreasonably withheld. Manager shall promptly notify Owner
and Lessor of all legal actions.

3.13 MANAGEMENT SERVICES. Without limitation, Manager shall provide the
Facility with all of the customary management services and techniques which it
employs in operating other facilities which it manages which may be applicable
to and beneficial to the Facility.

3.14 DATA PROCESSING. Manager shall, directly or through an affiliate,
provide the data processing required to maintain the financial, payroll, and
accounting records of the Facility; except that Manager agrees that the Facility
payroll will not be moved to Manager's central payroll administration until same
can be accomplished without a material disruption to Facility cash flow.

3.15 BOOKS AND RECORDS. Manager on behalf of Owner shall supervise and
direct the keeping of full and accurate books of account and such other records
reflecting the results of operation of the Facility as required by law.

3.16 PAYMENT OF EXPENSES.

(A) OWNER EXPENDITURES. All expenditures and advances of every kind
required or permitted of Manager under this Agreement are for Owner's account
("Owner Expenditures"), except for Manager's Staff Services (described below).
Manager is authorized to pay all Owner Expenditures from Facility Funds. Owner
shall pay directly (or reimburse Manager promptly if Manager advances funds for)
any Owner Expenditures not paid from Facility Funds. Manager's "Staff Services"
-- not reimbursable by Owner -- means only salaries and benefits of Manager's
officers and home office staff, as well as Manager's home office overhead not
specifically allocable to the Facility.

(B) REIMBURSEMENT OF ADVANCES. Manager may from time to time (but
shall not be obligated to) advance or incur expenses in respect of the operation
or maintenance of the Facility, including, without limitation, the items listed
on Exhibit A hereto. Such expenses shall be immediately reimbursable to Manager
out of Facility Funds in the priority set forth in Section 3.10 hereof. Any such
expenses advanced from Manager and not reimbursed within thirty (30) days shall
bear interest from the date advanced until paid in full at a rate per annum
equal to the prime rate of Citibank, N.A., as then in effect, plus two percent
(2%).

3.17 BUDGETS. Manager shall be responsible for the following budgetary
items:

(A) PREPARING BUDGETS. Manager at its sole cost shall prepare and
submit to Owner for Owner's review and approval a yearly operating budget and a
yearly capital budget in a form reasonably acceptable to Owner. Manager shall
present such budgets on a cash basis also. Manager shall submit each year's
proposed budgets to Owner no later than December 15 of the preceding year. Owner
will consider the proposed budgets and then consult with Manager in order to
finalize an approved budget on or before December 30 of the preceding year. Such
budgets shall:

(i) set forth on a month to month basis all anticipated income,
operating expenses, working capital and other necessary reserves and
capital expenditures for such calendar year in connection with the
operation of the Facility;

(ii) contain all of the items referenced in the approved budget for
1998; and

(iii) include all supporting schedules requested by Owner.

The operating budget and the capital budget, as approved by Owner,
shall be referred to herein as the "Operating Budget" and the "Capital Budget,"
respectively, and shall be referred to collectively as the "Budget."

(B) REVISED BUDGET/UNFORESEEN INCREASES. If Owner or Manager believes
that it is necessary to revise the Budget after it has been approved, Manager
shall prepare and deliver to Owner a revised budget. Any proposed changes to the
Budget shall be addressed in the revised budget and Manager shall explain such
changes. Manager shall not implement the revised budget without Owner's
approval, which may be granted or withheld in Owner's sole discretion. If Owner
approves the revised budget, the terms of such revised budget, as approved,
shall amend the Budget accordingly. During each calendar year, Manager shall
promptly inform Owner of any major increases in costs and expenses that were not
foreseen during the Budget preparation period and thus were not reflected in the
Budget.

(C) OWNER'S APPROVAL REQUIRED. If Owner shall not have approved any
proposed budgets, the Operating Budget then in effect shall continue until an
Operating Budget is agreed upon; provided, however, that until such agreement is
reached, Manager may reasonably exceed the Operating Budget for the previous
fiscal year for taxes, utility charges, costs under existing agreements which
(by the terms of such agreements) automatically increase at the beginning of the
new year, and other items not within Manager's reasonable control. There will be
no Capital Budget for any year until a Capital Budget for such year is approved
by Owner.

3.18 COMPLIANCE WITH FRANCHISE AGREEMENT. Manager shall use commercially
reasonable best efforts to cause Owner to comply with Owner's obligations as the
"Franchisee" under the Franchise Agreement to the extent that such obligations
are capable of (and appropriate

for) performance by Manager on Owner's behalf, subject to the terms and
conditions of this Agreement, and are not personal to Owner.

3.19 COMPLIANCE PROGRAM. Manager shall implement and monitor a compliance
program designed to identify and eradicate fraud and abuse relating to the
Facility and its operation. Such program will include, among other things,
advertising the toll free "fraud and abuse" telephone line operated by
Integrated Health Services Franchising Co., Inc.

ARTICLE IV

RIGHTS AND DUTIES OF OWNER

During the term of this Agreement:

4.1 RIGHT OF INSPECTION. Owner (and Lessor, subject to and in accordance
with the Lease) shall have the right to enter upon any part of the Facility upon
reasonable advance notice to Manager for the purpose of examining or inspecting
same or examining or making extracts of books and records of the Facility, but
the same shall be done with as little disruption to the business of the Facility
as possible. However, the books and records of the Facility shall not be removed
from the Facility without the express written consent of Manager. Owner
acknowledges that some books and records will be maintained at Manager's
principal place of business.

Owner shall direct all inquiries regarding operations, procedures,
policies, employee relations, patient care, and all other matters concerning the
Facility to the Senior Vice President of Manager's Managed Division or other
officer of Manager as it may from time to time designate in a written notice to
Owner.

4.2 COOPERATION WITH MANAGER. Owner will fully cooperate with Manager in
operating and supervising the operations of the Facility and will reimburse
Manager for all funds expended or costs and expenses incurred to which Manager
is entitled to reimbursement hereunder.

4.3 OPERATING CAPITAL. Owner shall provide Manager with such amount of
working capital as may be required from time to time for the operation of the
Facility on a sound financial basis (including the payment of management fees
and reimbursable expenses owed to Manager). If additional working capital is
required, Manager shall notify Owner thereof in writing and Owner shall provide
Manager with such increase in working capital within fifteen (15) days
thereafter. If Owner fails to provide such additional working capital, Manager
may, but is not obligated to, provide the same as a loan to Owner in accordance
with Section 3.16.

4.4 CAPITAL IMPROVEMENTS. Owner shall provide Manager with such amount of
funds as may be required from time to time to make all necessary capital
improvements to the Facility in order to maintain and continue standards of
operation of the Facility as a nursing home. If additional capital improvement
funds are required, Manager shall notify Owner thereof

in writing and Owner shall provide Manager with such additional capital
improvement funds within fifteen (15) days thereafter. If Owner fails to provide
such additional capital improvement funds, Manager may, but is not obligated to,
provide the same as a loan to Owner in accordance with Section 3.16.

ARTICLE V

COMPENSATION AND DISTRIBUTIONS

5.1 As full and exclusive compensation for all of the services to be
rendered by Manager during the Term of this Agreement, Owner shall pay to
Manager at its principal office, or at such other place as Manager may from time
to time designate in writing, and at the times hereinafter specified:

(A) A monthly fee (the "Base Management Fee") equal to three percent
(3%) of Gross Revenues derived for each calendar month of the Term; provided
that if Gross Revenues for any calendar year exceed $350 million, then the Base
Management Fee for such year shall be four percent (4%) of Gross Revenues for
such calendar year and the resulting increase shall be paid in one installment
with the last monthly payment of Base Management Fee for such year. The Base
Management Fee shall be payable five (5) days after delivery to Owner of the
monthly financial statements referred to in Section 3.11 (each such date being
hereinafter referred to as a "Payment Date") and shall be calculated based upon
the Gross Revenues of the Facilities during the preceding month as set forth in
such financial statements. Notwithstanding the foregoing, if Gross Revenues for
any three (3) consecutive month period in any calendar year beginning as of
January 1, 1998, represent annualized Gross Revenues for such calendar year in
excess of $350 million, then the monthly Base Management Fee thenceforth payable
to Manager during such calendar year shall be an amount equal to four percent
(4%) of Gross Revenues derived for each calendar month of the Term; provided,
however, that if the actual Gross Revenues for any calendar year did not exceed
$350 million, then the one percent (1%) overpayment of the Base Management Fee
shall be offset against installments of the Base Management Fee next becoming
due to Manager; and, provided, further, that if an Event of Default exists for
failure to pay Rent under any Facility Sublease, then the amount of any
overpayment of the Base Management Fee shall instead be paid by Manager for and
on behalf of Owner to the owner of the Facility under the specified Facility
Sublease to remedy the Event of Default, with the remainder of such overpayment
(if any) used to offset against installments of the Base Management Fee next
becoming due to Manager. For purposes of determining whether the actual Gross
Revenues for the calendar year ending December 31, 1998 exceeded $350 million,
Gross Revenues for the Facilities shall be calculated using both (i) revenues
and income received by the Owners during the period of such calendar year that
Manager manages the Facilities pursuant to this Agreement and (ii) revenues and
income received by the Owners (or any predecessor in interest to an Owner)
during the prior period of such calendar year.

(B) An annual fee (the "Incentive Management Fee") equal to seventy
percent (70%) of the Net Cash Flow for each calendar year during the Term of
this Agreement. The

Incentive Management Fee shall be: (1) calculated and earned on an annual basis;
and (2) paid to Manager on an estimated basis in advance in equal monthly
installments on each Payment Date. The estimated Incentive Management Fee for
each year (other than the first year) shall be equal to the actual Incentive
Management Fee paid to Manager for the previous year. For the first year, the
estimated Incentive Management Fee shall be determined promptly after the date
hereof by Manager and Owner. Promptly after the annual audited financial
statements have been delivered to Owner's Managing Director, Manager shall give
notice to Owner stating whether the installments of the Incentive Management Fee
paid to Manager for such year were greater or less than the actual Incentive
Management Fee earned. If there is a deficiency, Owner shall pay such amount to
Manager within fifteen (15) days after such notice; and if there is an
overpayment, the amount of such overpayment shall be offset against installments
of the Incentive Management Fee next becoming due to Manager; provided, however,
that if an Event of Default exists for failure to pay Rent under any Facility
Sublease, then the amount of any overpayment of Incentive Management Fees shall
instead be paid by Manager for and on behalf of Owner to the owner of the
Facility under the specified Facility Sublease to remedy the Event of Default,
with the remainder of such overpayment (if any) used to offset against
installments of the Incentive Management Fee next becoming due to Manager.
Manager shall be entitled to a pro-rata portion of the Incentive Management Fee
for any partial calendar year during the Term. If and to the extent that Owner
experiences bad debts or poor collections exceeding the amounts reserved for in
its Budget, and as a result Owner is unable to pay all or any part of the
monthly installment of the Incentive Management Fee for a particular month, the
unpaid portion of such installment shall accrue and be payable (with interest as
calculated pursuant to Section 5.3) as soon as cash flow permits but in no event
later than at the end of the current year. The foregoing sentence shall not
apply for more than one year.

The formula for calculating the Net Cash Flow for the Facilities shall
be as follows:

From: Gross Revenues for the Facilities (calculated according to
GAAP)

Subtract: All amounts described in Sections 3.10(a), (b), (c), (d),
(e), (f), (g), (h), (i), and (j) hereof

5.2 For the purposes of determining such management fees, "Gross Revenues"
means, for any period, all revenues and income of any kind derived directly or
indirectly by the Owners during such period, including rental or other payment
from concessionaires, licensees, tenants, and other users of all Facilities
covered by this Agreement, and from the sale of products and/or the furnishing
of services (including all revenues or receipts derived from or associated with
the Proprietary Materials (as defined in the Franchise Agreement)), but
excluding therefrom all bequests, gifts, or similar donations, whether on a cash
basis or on credit, paid or unpaid, collected or uncollected, as determined in
accordance with GAAP, excluding, however:

(A) federal, state, and municipal excise, sales, and use taxes
collected directly from patients as a part of the sales prices of any goods or
services;

(B) proceeds of any life insurance policies;

(D) any reversal or accrual of any contingency or tax reserve;

(E) interest earned on sinking funds, Special Security Accounts, bonds
funds, etc. originally and specifically formed as a requirement of any bond
issue (if any) utilized to finance the Facility; and

(F) bad debt expense.

The proceeds of business interruption insurance or proceeds as a result of
Medicare and Medicaid audits shall be included in Gross Revenues for the period
in which they are received. However, funds required to be repaid as a result of
Medicare and Medicaid audits shall be deducted from Gross Revenues for the
period in which they are paid.

5.3 Notwithstanding the foregoing, the Base Management Fee and the
Incentive Management Fee (including any amount carried over pursuant to the
succeeding sentence hereof) shall be payable on each Payment Date only to the
extent that the Facility Funds (as defined in Section 3.10) shall be sufficient
as of such date. In the event that any portion of the Base Management Fee and
the Incentive Management Fee is not paid due to the insufficiency of Facility
Funds, interest shall accrue on such unpaid amount at a rate per annum equal to
the prime rate of Citibank, N.A. then in effect, plus two percent (2%), and such
total amount shall be carried over and be payable on the immediately succeeding
Payment Date. When Facility Funds become available to pay past due Base
Management Fees and Incentive Management Fees, the fees shall be deemed to be
paid in the order in which they were earned. Any and all accrued and unpaid Base
Management Fees and Incentive Management Fees shall become immediately and fully
payable by Owner upon the expiration or any termination of this Agreement,
regardless of the availability of Facility Funds.

5.4 (A) In order to secure performance and payment of all obligations and
liabilities of Owner to Manager under this Agreement, whether now existing or
hereafter arising, including, without limiting the generality of the foregoing,
the payment of all Base Management Fees, Incentive Management Fees, and
reimbursable expenses of Manager (collectively, the "Obligations"), Owner hereby
grants to Manager a security interest in all of the assets of the Facility,
including, but not limited to, the following described property (collectively,
the "Collateral"):

(I) Owner's leasehold interest in the Facility and any and all rights
that Owner now has or may hereafter acquire to purchase the Facility;

(II) all accounts receivable now owned or hereafter acquired by Owner
in connection with the Facility;

(III) all equipment, furniture, and fixtures now owned or hereafter
acquired by Owner and located at or used in connection with the Facility;

(IV) all contract rights now owned or hereafter acquired by Owner in
connection with the operation of the Facility;

(V) all inventory, supplies, goods, merchandise, work in progress,
finished goods, and other personal property other than accounts receivable
now owned or hereafter acquired by Owner and located at or used in
connection with the Facility;

(VI) all licenses, permits and other intangible assets; and

(VII) any and all proceeds of any of the foregoing.

(B) Manager shall have, in any jurisdiction where enforcement of this
Agreement is sought, in addition to any and all other rights and remedies it may
have under this Agreement, or at law, in equity, by statute or otherwise, all
the rights and remedies of a secured creditor under the Uniform Commercial Code,
including, but not limited to, the right to any deficiency remaining after
disposition of the Collateral.

(C) This security interest is (and shall at all times be) subordinate
to: (i) any security interests granted (or to be granted) in connection with the
working capital line of credit for the Facility, (ii) any security interests
granted (or to be granted) to Lessor under the Lease, and (iii) any mortgages of
the Facility.

ARTICLE VI

INTENTIONALLY OMITTED

ARTICLE VII

INTENTIONALLY OMITTED

ARTICLE VIII

TERMINATION RIGHTS

8.1 TERMINATION BY OWNER. If at any time or from time to time during the
Term any of the following events shall occur and not be remedied within the
applicable period of time herein specified, namely:

(A) Manager shall apply for or consent to the appointment of a
receiver, trustee, or liquidator of Manager of all or a substantial part of its
assets, file a voluntary petition in bankruptcy, make a general assignment for
the benefit of creditors, file a petition or an answer seeking reorganization or
arrangement with creditors or take advantage of any insolvency law, or if an
order, judgment or decree shall be entered by any court of competent
jurisdiction, on the application of a creditor, adjudicating Manager as bankrupt
or insolvent or approving a petition seeking reorganization of Manager or
appointing a receiver, trustee, or liquidator of Manager or of all or
substantial part of its assets, and such order, judgment or decree shall
continue unstayed and in effect for any period of ninety (90) consecutive days;
or

(B) Manager shall materially fail to keep, observe, or perform any
covenant, agreement, term or provision of this Agreement to be kept, observed,
or performed by Manager, and such default shall continue for a period of sixty
(60) days after written notice thereof by Owner to Manager; or

(C) Manager shall, in the performance of its services hereunder,
engage in self-dealing, commit fraud, or act (or fail to act) in a manner which
constitutes willful misconduct or gross negligence and shall not cure or correct
such matter within sixty (60) days after written notice thereof by Owner to
Manager;

then in case of any such event and upon the expiration of the period of grace
(if any) applicable thereto, the Term of this Agreement shall expire, at Owner's
option and upon ten (10) days written notice to Manager; provided, however, that
in the case of a default as described in subsection (b) above, this Agreement
may be terminated only as to the Facility with respect to which such default has
occurred.

8.2 TERMINATION BY MANAGER. If at any time or from time to time during the
Term any of the following events shall occur and not be remedied within the
applicable period of time herein specified, namely:

(A) Owner shall fail to keep, observe, or perform any covenant,
agreement, term or provision of this Agreement to be kept, observed, or
performed by Owner (except for a payment default described in Section 8.2(b)
below) and such default shall continue for a period of sixty (60) days after
written notice thereof by Owner to Manager;

(B) Owner shall fail to make any payment required hereunder and such
default shall continue for a period of sixty (60) days after written notice from
Owner to Manager;

(C) The Facility or any portion thereof shall be damaged or destroyed
by fire or other casualty and (i) Owner shall fail to undertake to repair,
restore, rebuild, or replace any such damage or destruction within forty-five
(45) days after such fire or other casualty, or shall fail to complete such work
diligently, and (ii) Owner shall fail to permit Manager to undertake to repair,
restore, rebuild, or replace, at Owner's expense, any such damage or destruction
within forty-five (45) days after such fire or other casualty;

(D) Owner shall apply for or consent to the appointment of a receiver,
trustee, or liquidator of Owner or of all or a substantial part of its assets,
file a voluntary petition in bankruptcy or admit in writing its inability to pay
its debts as they become due, make a general assignment for the benefit of
creditors, file a petition or any answer seeking reorganization or arrangement
with creditors or take advantage of any insolvency law, or if an order, judgment
or decree shall be entered by a court of competent jurisdiction, on the
application of a creditor, adjudicating Owner bankrupt or appointing a receiver,
trustee, or liquidator of Owner with respect to all or substantial part of the
assets of Owner, and such order, judgment or decree shall continue unstayed and
in effect for any period of ninety (90) consecutive days;

(E) Any license for the Facility or the Lease is at any time
suspended, terminated, or revoked and such suspension, termination, or
revocation shall continue unstayed and in effect for a period of sixty (60)
consecutive days; or

(F) Facility Funds shall be insufficient for the payment of the Base
Management Fees to Manager pursuant to Article V hereof for a period of at least
two consecutive fiscal quarters (other than as a result of the mismanagement or
other wrongful act or omission of Manager);

then in case of any such event and upon the expiration of the period of grace
(if any) applicable thereto, the term of this Agreement shall expire, at
Manager's option and upon ten (10) days written notice to Owner and Lessor;
provided, however, that in the case of a default as described in subsection (b)
above, this Agreement may be terminated only as to the Facility with respect to
which such default has occurred.

8.3 MATERIAL ADVERSE CHANGE. Manager shall be entitled to terminate this
Agreement as to any Facility in the event that any material adverse change
occurs in the financial or operating condition of such Facility, its business or
prospects. Such termination shall become effective three (3) months after
Manager delivers a termination notice to Owner and Lessor; however, if Owner and
Manager agree that Owner should sell its interest in the Facility, Manager shall
continue to manage the Facility for a period not to exceed six (6) months after
delivery of the termination notice to facilitate the sale of its interest in the
Facility. Notwithstanding the preceding sentence, Manager shall have no right to
terminate this Agreement pursuant to this Section 8.3 if the material adverse
change in the Facility is due to the mismanagement or other act or omission of
Manager.

8.4 SURVIVING RIGHTS UPON TERMINATION. If either party exercises its option
to terminate pursuant to this Article VIII, each party shall account for and pay
to the other all sums due and owing pursuant to the terms of this Agreement
within thirty (30) days after the effective date of termination. Without
limiting the generality of the foregoing, within thirty (30) days after the
effective date of termination of this Agreement, Owner shall be obligated to pay
to Manager all accrued and unpaid Base Management Fees, a pro-rata portion of
the Incentive Management Fees, and reimbursable expenses of Manager, together
with all accrued and unpaid interest thereon, notwithstanding that available
Facility Funds may not be sufficient for such purposes. All other rights and
obligations of the parties under this Agreement shall terminate (except as set

forth in Article IX hereof), except that Manager's security interest in the
Collateral shall not terminate until Manager has been paid in full.

8.5 DISPUTE RESOLUTION.

(A) In the event of any dispute or controversy arising under or in
connection with this Agreement, the parties shall attempt to resolve such
dispute or controversy by mediation as provided in this Section 8.5(a) prior to
exercising any rights under the remaining provisions of Section 8.5. Either
party may commence mediation by notice to the other party (the "Mediation
Notice"), which notice shall name a proposed Mediator (as defined below) to
resolve the dispute. The party receiving the Mediation Notice, within seven days
after receipt, shall send the other party notice accepting the proposed Mediator
(the "Acceptance Notice") or proposing an alternate Mediator (the "Alternate
Notice"). Within seven (7) days after receipt of an Alternate Notice, the
receiving party shall deliver notice accepting or rejecting the alternate
Mediator. Within five (5) days after the Mediator has been selected the dispute
shall be submitted to him or her by both parties, and the Mediator shall decide
the dispute within fourteen (14) days thereafter. The decision of the Mediator
shall not be binding upon the parties, and after the Mediator issues a decision
either party may submit the dispute to arbitration, as provided in Sections
8.5(b) and (c). If the parties fail to agree upon a Mediator within twenty (20)
days after receipt of the Mediation Notice, the dispute may be resolved as
provided in Sections 8.5(b) and (c). "Mediator" means an individual with
experience relevant to the matter in dispute who is not employed by or
affiliated with either party and who does not have (and is not an officer,
employee or director of an entity which has) significant business contacts with
either party. Each party shall pay fifty percent of the costs of the Mediator.

(B) Subject to Section 8.5(a), any dispute between Owner and Manager
regarding a financial, tax, or accounting issue shall be resolved exclusively
through arbitration conducted by a principal of KPMG Peat Marwick (the
"Financial Arbitrator"). Either party may commence arbitration hereunder by
notice to the other party and to the Financial Arbitrator, who shall decide the
dispute. Each party shall pay fifty percent of the costs of the Financial
Arbitrator. The Financial Arbitrator shall conduct the arbitration in any manner
he or she elects; however, the Financial Arbitrator shall issue a final decision
with respect to such dispute within thirty (30) days after the dispute is
referred to him or her. The decision of such Financial Arbitrator shall be final
and binding upon the parties and shall not be subject to appeal. Judgment upon
the award rendered by the Financial Arbitrator may be entered in any court
having in personam and subject matter jurisdiction over the parties.

(C) Subject to Sections 8.5(a) and (b), 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 accordance
with the rules of the American Arbitration Association ("AAA") then in effect,
and judgment may be entered on the arbitrators' award in any court having in
personam and subject matter jurisdiction over the parties. Each party shall pay
fifty percent of the costs of the AAA and the arbitrators. 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 AAA upon application of
either party. In considering any issue under this Agreement, the arbitrators
shall construe and interpret this Agreement strictly in accordance with the
specific terms and provisions hereof and in accordance with the judicial
decisions, statutes, and other indicia of the law of the state of Maryland.

ARTICLE IX

INDEMNIFICATION

9.1 INDEMNIFICATION OF OWNER BY MANAGER. Manager shall indemnify and hold
Owner and its members, officers, directors, shareholders, employees and
affiliates harmless from any and all claims, losses, judgments, damages,
expenses and liabilities whatsoever, (including reasonable attorneys' fees),
incurred by any of them, arising out of Manager's material breach of this
Agreement or any third party claims which are caused in whole or in part by any
grossly negligent act, willful omission, fraud or self-dealing of Manager in
connection with the performance of its duties under this Agreement. However,
Manager's obligation to indemnify Owner shall not extend to any Medicare cost
disallowances, or any Medicare, Medicaid, or other governmental fines or
penalties. Manager's obligations under this Section 9.1 shall survive
termination of this Agreement.

9.2 INDEMNIFICATION OF MANAGER BY OWNER. Owner shall indemnify and hold
Manager and Manager's officers, directors, shareholders, employees and
affiliates harmless from any and all claims, losses, judgments, damages,
expenses and liabilities whatsoever (including reasonable attorneys' fees)
incurred by any of them in connection with, by reason of, or arising out of: (i)
Manager's performance of services, or undertaking of responsibilities under this
Agreement; (ii) Manager's status as manager of the Facility; (iii) any default
by Owner in keeping Owner's obligations under this Agreement; (iv) any damage to
property, or injury or death to persons, occurring in or with respect to the
Facility; and/or (v) any other claim asserted against any of them in connection
with the Facility or any matter relating thereto, excluding, however, any
matters covered by Manager's indemnity under Section 9.1.

9.3 CONTROL OF DEFENSE OF INDEMNIFIABLE CLAIMS. A party seeking
indemnification under this Article IX shall give the other party prompt written
notice of the claim for which it seeks indemnification. Failure of the party
seeking indemnification to give such prompt notice shall not relieve the other
party of its indemnification obligation, provided that such indemnification
obligation shall be reduced by any damages suffered by such other party
resulting from a failure to give prompt notice hereunder. The party receiving
the aforementioned notice shall provide the defense of such claim, including,
without limitation, retention and payment of attorneys.

9.4 LIMITATION OF EXPENDITURE OBLIGATION. Notwithstanding anything to the
contrary in this Agreement, Manager shall have no obligation whatsoever to make
any advance to or for the account of Owner, or to pay any amount contemplated
for, or required of, Manager

under this Agreement, or to incur any expenditure obligation--whether ordinary
or capital--except to the extent that funds are available for such purpose (in
Manager's reasonable judgment), either from working capital or capital funds
provided by Owner or otherwise from the Facility Funds. Moreover, if Manager so
requests, from time to time, Owner shall sign, as principal, any contract or
agreement which Manager is authorized or required to execute pursuant to this
Agreement to evidence that Manager is acting solely as Owner's agent and not as
principal.

ARTICLE X

CONFIDENTIALITY; NON-SOLICITATION

10.1 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Owner acknowledges that
Manager's business involves the development and use of Confidential Information
(defined below) and that Manager will make available such Confidential
Information to Owner and the Facility in connection with Manager's duties under
this Agreement. Manager acknowledges that Owner and the Facility's business
involves the development and use of Confidential Information and that Owner and
the Facility will make available such Confidential Information to Manager in
connection with Manager's duties under this Agreement (subject to Owner's
obligations as Franchisee under the Franchise Agreement). Except as Owner and
Manager may disclose in fulfillment of their duties and responsibilities under
this Agreement (subject to Owner's obligations as Franchisee under the Franchise
Agreement) or as may be required to be disclosed by Owner, the Facility and
Manager by law, the parties and their respective officers, directors, employees
or agents shall not, at any time during or after the term of this Agreement,
divulge, furnish or make accessible Confidential Information to any person or
entity for any purpose whatsoever. "Confidential Information" means any
confidential or proprietary information, including, without limitation, manuals,
forms, policies and procedures, computer programs, system documentation and
related software, patient records and patient information, and any other
information of any kind with respect to the finances, business plans or business
operations of the parties.

10.2 NON-USE AND RETURN OF MATERIALS. Effective upon a termination of this
Agreement for any reason whatsoever, the parties and their respective officers,
directors, employees and agents shall not use any Confidential Information for
any purpose whatsoever, including, but not limited to, use in connection with
the operation and management of Facility.

10.3 NON-SOLICITATION. Owner and Manager agree that, for the entire term of
this Agreement and for twelve (12) months after the date that this Agreement is
terminated, (a) Owner shall not entice or induce, directly or indirectly, any
employee to leave the employ of Manager to work with or for Owner, or to work
with any person or entity with whom Owner becomes affiliated, and (b) Manager
shall not entice or induce, directly or indirectly, any employee to leave the
employ of Owner to work with or for Manager, or to work with any other person or
entity with whom Manager is or becomes affiliated.

10.4 REMEDIES. The parties agree that an aggrieved party who is the
beneficiary of any restriction contained herein may not be adequately
compensated for damages for a breach of the covenants contained in this Article
X, and such aggrieved party shall be entitled to injunctive relief and specific
performance in addition to all other remedies. If a court of competent
jurisdiction shall finally determine that the restraints provided for in this
Article X are too broad as to the activity, geographic area or time covered,
said activity, geographic area or time covered will be reduced to whatever
extent the court deems necessary, and such covenant shall be enforced as to such
reduced activity, geographic area or time period.

ARTICLE XI

CONDEMNATION

If the whole of any Facility shall be taken or condemned in any eminent
domain, condemnation, compulsory acquisition, or like proceeding by a competent
authority for any public or quasi-public use or purpose or if such portion
thereof shall be taken or condemned as to make it unsuitable for its primary
intended use, then the Term shall cease and terminate as to such Facility on the
date on which Owner shall be required to surrender possession of the Facility.
Manager shall continue to supervise and direct the management of the Facility
until such time as Owner shall be required to surrender possession of the
Facility as a consequence of such taking or condemnation.

If only a part of a Facility shall be taken or condemned and the taking or
condemnation of such part does not make it unsuitable for its primary intended
use, this Agreement shall not terminate.

ARTICLE XII

SUCCESSORS AND ASSIGNS

12.1 ASSIGNMENTS BY MANAGER. Manager, without the consent of Owner or
Lessor, shall have the right to assign this Agreement to a wholly or majority
owned subsidiary of Manager or Integrated Health Services, Inc., provided, that
Manager shall not thereby be released from its obligations hereunder. In the
event that all or substantially all the assets of Manager or its capital stock
shall during the term of this Agreement be acquired by another corporation
(hereinafter referred to as the "Acquiring Corporation") as a result of a
merger, consolidation, reorganization, or other transaction, and the Acquiring
Corporation assumes all of the obligations of Manager then accrued hereunder, if
any, then Manager shall be relieved of all such obligations (and such Acquiring
Corporation shall be relieved of liability hereunder if it subsequently is
involved in such an acquisition). Except as otherwise permitted herein, Manager
shall have no right to assign this Agreement.

12.2 SALE, ASSIGNMENT OR SUBLEASE BY OWNER; RELATED MATTERS. Any sale,
sublease, or assignment with respect to any Facility, other than to Manager,
shall be expressly subject to the terms and provisions of this Agreement and
shall not relieve Owner of its liability or obligations hereunder, and Owner
shall cause any purchaser, assignee, or sublessee to deliver to Manager written
acknowledgment of its agreement to perform hereunder including the payment of
the management fees described herein. Owner shall not sublease all or any
portion of any Facility without the prior written consent of Manager, which may
be granted or withheld in Manager's sole and absolute discretion. Except with
respect to matters involving the Lease and Lessor, Owner may not at any time,
without the prior written consent of Manager, incur any additional debt or
subject its interest in any Facility or any part thereof to the lien of one or
more deeds of trust, mortgages, or other security instruments. In the event that
such consent is given, such additional debt or security interest shall be
subordinate to Manager's rights and security interest granted pursuant to this
Agreement.

ARTICLE XIII

MISCELLANEOUS PROVISIONS

13.1 NO PARTNERSHIP OR JOINT VENTURE. Nothing contained in the Agreement
shall constitute or be construed to be or create a partnership or joint venture
between Owner, its successors, or assigns on the one part and Manager, its
successors, or assigns on the other part. Notwithstanding the foregoing, the
parties hereby agree that they shall each have a duty to act in good faith and
to deal fairly with the other party hereto.

13.2 MODIFICATIONS AND CHANGES. This Agreement cannot be changed or
modified except by another agreement in writing signed by Owner and Manager.

13.3 UNDERSTANDING AND AGREEMENTS. This Agreement and the Facilities
Management Agreements constitute the entire understanding and agreement of
whatsoever nature or kind existing between the parties with respect to Manager's
management of the Facility.

13.4 HEADINGS, ETC. The article and paragraph headings contained herein are
for convenience of reference only and are not intended to define, limit, or
describe the scope of intent of any provision of this Agreement. The Exhibits
and Schedules attached hereto form part of this Agreement.

13.5 APPROVAL OR CONSENT. Whenever under any provisions of this Agreement,
the approval or consent of either party is required, the decision thereon shall
be promptly given and such approval or consent shall not be unreasonably
withheld, unless this Agreement expressly provides that a decision shall be made
in a party's sole discretion. It is further understood and agreed that whenever
under any provisions of this Agreement the approval or consent of Owner is
required, such approval or consent may be given by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or such
other person designated in a notification signed by or on behalf of Owner. For
all purposes under this Agreement, Manager shall determine solely from the
latest such notification received by it the

person or persons authorized to give such approval or consent. Manager shall
rely exclusively and conclusively on the designation set forth in such
notification, notwithstanding any notice of knowledge to the contrary.

13.6 GOVERNING LAW. This Agreement shall be deemed to have been made and
shall be construed and interpreted in accordance with the laws of the State of
Maryland.

13.7 ENFORCEABILITY. Should any provision of this Agreement be
unenforceable as between the parties, such unenforceability shall not affect the
enforceability of the other provisions of this Agreement.

13.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

PART II
OTHER TERMS AND CONDITIONS

ARTICLE I

INTENTIONALLY OMITTED

ARTICLE II

REPRESENTATIONS AND WARRANTIES

2.1 ORGANIZATION AND STANDING OF LYRIC. Lyric represents and warrants to
Manager that Lyric is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. Copies of
the Certificate of Formation and Operating Agreement of Lyric, and all
amendments thereof to date, have been, if requested, delivered to Manager and
are complete and correct in all material respects. Lyric has the power and
authority to own the property and assets now owned by it and to conduct the
business presently being conducted by it.

2.2 ABSENCE OF CONFLICTING AGREEMENTS. Lyric represents and warrants to
Manager that neither the execution or delivery of this Agreement, including all
Exhibits and Schedules hereto, or any of the other instruments and documents
required or contemplated hereby and thereby (the "Transaction Documents") by
Lyric, nor the performance by Lyric of the transactions contemplated hereby and
thereby, conflicts with, or constitutes a breach of or a default or requires the
consent of any third party under (i) the Certificate of Formation or the
Operating Agreement of Lyric; or (ii) to the best of its knowledge after due
inquiry, any applicable law, rule, judgment, order, writ, injunction, or decree
of any court, currently in effect; or (iii) to the best of its knowledge after
due inquiry, any applicable rule or regulation of any administrative agency or
other governmental authority currently in effect; or (iv) any agreement,
indenture, contract or instrument to which Lyric is now a party or by which the
assets of Lyric are bound.

2.3 ORGANIZATION AND STANDING OF MANAGER. Manager represents and warrants
to Lyric that Manager is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Copies of the Articles of
Incorporation and By-Laws of Manager, and all amendments thereof to date, have
been, if requested, delivered to Lyric and are complete and correct in all
material respects. Manager has the power and authority to own the property and
assets now owned by it and to conduct the business presently being conducted by
it.

2.4 ABSENCE OF CONFLICTING AGREEMENTS. Manager represents and warrants to
Lyric that neither the execution or delivery of this Agreement, including all
Exhibits and Schedules hereto, or any of the Transaction Documents by Manager,
nor the performance by Manager of the transactions contemplated hereby and
thereby, conflicts with, or constitutes a breach of or a default or requires the
consent of any third party under (i) the Articles of Incorporation or ByLaws of
Manager, or (ii) to the best of its knowledge after due inquiry, any applicable
law, rule,

judgment, order, writ, injunction, or decree of any court, currently in effect;
or (iii) to the best of its knowledge after due inquiry, any applicable rule or
regulation of any administrative agency or other governmental authority
currently in effect; or (iv) any agreement, indenture, contract or instrument to
which Manager is now a party or by which the assets of Manager are bound.

ARTICLE III

TERMINATION RIGHTS

This Agreement may be terminated and, except as to liabilities or claims of
either party hereto which shall have theretofore accrued or arisen, the
obligations of the parties hereto with respect to this Agreement may be
terminated, upon the happening of any of the following events:

3.1 TERMINATION BY LYRIC. If at any time or from time to time during the
term of this Agreement any of the following events shall occur and not be
remedied within the applicable period of time herein specified, namely:

(B) all of the Facility Management Agreements are terminated;

then in case of any such event and upon the expiration of the period of grace
(if any) applicable thereto, the term of this Agreement shall expire, at Lyric's
option and upon ten (10) days written notice to Manager.

3.2 TERMINATION BY MANAGER. If at any time or from time to time during the
term of this Agreement any of the following events shall occur and not be
remedied within the applicable period of time herein specified, namely:

(A) Lyric shall apply for or consent to the appointment of a receiver,
trustee, or liquidator of Lyric or of all or a substantial part of its assets,
file a voluntary petition in bankruptcy or admit in writing its inability to pay
its debts as they become due, make a general assignment for the benefit of
creditors, file a petition or any answer seeking reorganization or arrangement
with creditors or take advantage of any insolvency law, or if an order, judgment
or decree shall be entered by a court of competent jurisdiction, on the
application of a creditor, adjudicating Lyric bankrupt or appointing a receiver,
trustee, or liquidator of Lyric with respect

to all or substantial part of the assets of Lyric, and such order, judgment or
decree shall continue unstayed and in effect for any period of ninety (90)
consecutive days; or

(B) all of the Facility Management Agreements are terminated;

3.3 NO SURVIVING RIGHTS UPON TERMINATION. Upon termination of this
Agreement all rights and obligations of Lyric and Manager in this Agreement
shall terminate.

ARTICLE IV

INSURANCE

4.1 POLICIES. Subject to Section 4.4 of this Part II, Lyric shall apply
for, obtain and maintain on behalf of the Owners and at its own expense at all
times during the Term, all insurance required to be maintained by the Owners
under the Leases, or if the Leases are not in effect, such insurance as Owners
shall direct Lyric to maintain.

4.2 INSURANCE COMPANIES. All insurance provided for under the foregoing
provisions of this Section shall be effected by policies issued by insurance
companies with at least an "A-XI" rating from A.M. Best and Company, of good
reputation, of sound adequate financial responsibility, and properly licensed
and qualified to do business.

4.3 INSURED PARTIES. Each of the polices of insurance required by Part II,
Section 4.1 shall insure each Owner and their respective members, officers,
partners, directors, shareholders, managers and employees, as well as each
Lessor and mortgage lender. Manager, its officers, partners, directors,
shareholders, managers and employees shall, to the extent permissible, be named
as additional insured under all such policies of insurance.

4.4 MASTER POLICY. Notwithstanding the other provisions of Part II, Article
4, Manager is authorized and directed to obtain a master policy of insurance
naming the parties described in Part II, Section 4.3 as additional or named
insureds (as specified therein), in the amounts and for the coverages required
by Part II, Section 4.1, which policy may be obtained by Integrated Health
Services, Inc. or its affiliates and which may be a policy of a so-called
"captive" insurance company.

ARTICLE V

MISCELLANEOUS PROVISIONS

5.1 NOTICES. Any notice or other communication by either party to the other
shall be in writing and shall be given and be deemed to have been duly given,
upon the date delivered if delivered personally (including by commercial express
service) or upon the date received if mailed postage pre-paid, registered,
express, or certified mail, addressed as follows:

To Lyric: LYRIC HEALTH CARE LLC

▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Copy to: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.

To Manager: IHS FACILITY MANAGEMENT, INC.

With a copy to: INTEGRATED HEALTH SERVICES, INC.
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▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Copy to: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.

or to such other address, and to the attention of such other person or officer
as either party may designate in writing by notice.

5.2 NO PARTNERSHIP OR JOINT VENTURE. Nothing contained in the Agreement
shall constitute or be construed to be or create a partnership or joint venture
between Lyric, its successors, or assigns on the one part and Manager, its
successors, or assigns on the other part. Notwithstanding the foregoing, the
parties hereby agree that they shall each have a duty to act in good faith and
to deal fairly with the other party hereto.

5.3 MODIFICATIONS AND CHANGES. This Agreement cannot be changed or modified
except by another agreement in writing signed by Lyric and Manager.

5.4 UNDERSTANDING AND AGREEMENTS. This Agreement and the Master Management
Agreement constitute the entire understanding and agreement of whatsoever nature
or kind existing between the parties with respect to Manager's management of the
Facility.

5.5 HEADINGS, ETC. The article and paragraph headings contained herein are
for convenience of reference only and are not intended to define, limit, or
describe the scope of

intent of any provision of this Agreement. The Exhibits and Schedules attached
hereto form part of this Agreement.

5.6 APPROVAL OR CONSENT. Whenever under any provisions of this Agreement,
the approval or consent of either party is required, the decision thereon shall
be promptly given and such approval or consent shall not be unreasonably
withheld, unless this Agreement expressly provides that a decision shall be made
in a party's sole discretion. It is further understood and agreed that whenever
under any provisions of this Agreement the approval or consent of Lyric is
required, such approval or consent is given by the person or any one of the
persons, as the case may be, designated in a notification signed by or on behalf
of Lyric. For all purposes under this Agreement, Manager shall determine solely
from the latest such notification received by it the person or persons
authorized to give such approval or consent. Manager shall rely exclusively and
conclusively on the designation set forth in such notification, notwithstanding
any notice of knowledge to the contrary.

5.7 GOVERNING LAW. This Agreement shall be deemed to have been made and
shall be construed and interpreted in accordance with the laws of the State of
Maryland.

5.8 ENFORCEABILITY. Should any provision of this Agreement be unenforceable
as between the parties, such unenforceability shall not affect the
enforceability of the other provisions of this Agreement.

5.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

SIGNATURE PAGE FOLLOWS

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amended and Restated Master Management Agreement as of the date first above
written.

MANAGER:

IHS FACILITY MANAGEMENT, INC.

By: (Seal)
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Title: Senior Vice President
-------------------------

LYRIC:

LYRIC HEALTH CARE LLC

By: Integrated Health Services, Inc., its
Member

By: (Seal)
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Title: Senior Vice President
-------------------------

S-1

EXHIBIT A

EXAMPLES OF REIMBURSABLE EXPENSES

The following is a list of expenses not included in the Base Management Fee or
Incentive Management Fee. These Facility-specific expenses are passed directly
to the Facility in connection with which the expense was incurred.

o Administrator wages, benefits and related travel expenses. (This
includes an annual administrator conference).

o Computer hardware and software purchased for the Facility.

o Facility-specific legal and accounting fees.

o Facility-specific fees associated with union organization
attempts, elections, etc.

o Payroll processing fee.

o Outside consultants used for Medicare or Medicaid cost reports
and Medicare exception requests.

o Travel costs for Facility personnel training.

o Other travel costs of Manager specifically allocable to the
Facility.

Ex. A-1

SCHEDULE 1

CURRENT OWNERS AND FACILITIES

--------------------------------------------------------------------------------------------------------
OWNER NAME OF FACILITY
--------------------------------------------------------------------------------------------------------

F. L. C. Sarasota Nursing Pavilion, Inc. Integrated Health Services of Florida at Sarasota
Nursing Pavilion
--------------------------------------------------------------------------------------------------------
Pinellas Park Nursing Home, Inc. Integrated Health Services of Pinellas Park
--------------------------------------------------------------------------------------------------------
Central Park Lodges (Tarpon Springs), Inc. Integrated Health Services of Tarpon Springs
--------------------------------------------------------------------------------------------------------
Integrated Health Services at Waterford Integrated Health of Waterford Commons, Inc.
Commons
--------------------------------------------------------------------------------------------------------
Cambridge Group of Pennsylvania, Inc. Integrated Health Services of Hershey at
Woodlands
--------------------------------------------------------------------------------------------------------
Gainesville Health Care Center, Inc. Integrated Health Services at Gainesville
--------------------------------------------------------------------------------------------------------
Rest Haven Nursing Center (Chestnut Hill), Inc. Integrated Health Services of Chestnut Hill
--------------------------------------------------------------------------------------------------------
Claremont Integrated Health, Inc. Integrated Health Services of New Hampshire at
Claremont
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 123, Inc. Crestwood Care Center
--------------------------------------------------------------------------------------------------------
Integrated Management - Governor's Park, Inc. Governor's Park Nursing and Rehabilitation
Center
--------------------------------------------------------------------------------------------------------
Integrated Health Services of Colorado Springs, Integrated Health Services of Colorado Springs
Inc.
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 103, Inc. Horizon Healthcare & Specialty Center
(HHC- Daytona)
--------------------------------------------------------------------------------------------------------
Integrated Health Services at Central Florida, Integrated Health Services of Vero Beach
Inc.
--------------------------------------------------------------------------------------------------------
Briar Hill, Inc. Integrated Health Services of Florida at
Auburndale
--------------------------------------------------------------------------------------------------------
Bethamy Living Center Limited Partnership Integrated Health Services of Florida at
Clearwater
--------------------------------------------------------------------------------------------------------
Integrated Health Services at Central Florida, Integrated Health Services of Florida at Fort
Inc. ▇▇▇▇▇▇
--------------------------------------------------------------------------------------------------------

Sch. 1-1

Integrated Health Services at Briarcliff Haven, Integrated Health Services of Atlanta at
Inc. Briarcliff Haven
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 114, Inc. ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------------------------------
Cedarcroft Health Services, Inc. Integrated Health Services of St. Louis at Big
Bend ▇▇▇▇▇
--------------------------------------------------------------------------------------------------------
Manchester Integrated Health, Inc. Integrated Health Services of New Hampshire at
Manchester
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 121, Inc. Ruidoso Care Center
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 125, Inc. Meadowview Care Center
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 124, Inc. Washington Square
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 168, Inc. HSH Midwest City
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 127, Inc. Midwest City Nursing
--------------------------------------------------------------------------------------------------------
Rest Haven Nursing Center (Whitemarsh), Inc. Integrated Health Services at Whitemarsh
--------------------------------------------------------------------------------------------------------
Integrated of Amarillo, Inc. Amarillo Specialty Hospital
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 128, Inc. Doctors Healthcare Center
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 140, Inc. Harbor View Care Center
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 134, Inc. Heritage Estates
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 132, Inc. Heritage Gardens
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 138, Inc. Heritage Manor Longview
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 129, Inc. Heritage Manor Plano
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 133, Inc. Heritage Place of Grand Prairie
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 131, Inc. Horizon Healthcare -El Paso
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 170, Inc. HSH- Corpus Christi
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 171, Inc. HSH- El Paso
--------------------------------------------------------------------------------------------------------
Integrated of Amarillo, Inc. Integrated Health Services of Amarillo
--------------------------------------------------------------------------------------------------------
Integrated Health Services at Hanover House, Mountain View Place
Inc.
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 139, Inc. Parkwood Place
--------------------------------------------------------------------------------------------------------
IHS Acquisition No. 174, Inc. Plano Specialty Hospital (HSH- Plano)
--------------------------------------------------------------------------------------------------------

Sch. 1-2

IHS Acquisition No. 136, Inc. Silver Springs Nursing and Rehabilitation Center
--------------------------------------------------------------------------------------------------------

Sch. 1-3

SCHEDULE 2

MASTER LEASES/FACILITY SUBLEASES

A. Master Lease, dated as of January 13, 1998, between Lyric Health Care
Holdings, Inc. and Omega Healthcare Investors, Inc.:

1. Facility Sublease, dated as of January 13, 1998, between Rest Haven
Nursing Center (Chestnut Hill), Inc. and Lyric Health Care Holdings,
Inc.

2. Facility Sublease, dated as of January 13, 1998, between Claremont
Integrated Health, Inc. and Lyric Health Care Holdings, Inc.

3. Facility Sublease, dated as of January 13, 1998, between Gainesville
Healthcare Center, Inc. and Lyric Health Care Holdings, Inc.

4. Facility Sublease, dated as of December __, 1998, between IHS
Acquisition No. 123, Inc. and Lyric Health Care Holdings, Inc.

5. Facility Sublease, dated as of January 13, 1998, between Integrated
Management- Governor's Park, Inc., and Lyric Health Care Holdings,
Inc.

B. Master Lease, dated as of March 31, 1998, between Lyric Health Care
Holdings II, Inc. and Omega Healthcare Investors, Inc.:

1. Facility Sublease, dated as of March 31, 1998, between F. L. C.
Sarasota Nursing Pavilion, Inc. and Lyric Health Care Holdings II,
Inc..

2. Facility Sublease, dated as of March 31, 1998, between Pinellas Park
Nursing Home, Inc. and Lyric Health Care Holdings II, Inc.

3. Facility Sublease, dated as of March 31, 1998, between Central Park
Lodges (Tarpon Springs), Inc. and Lyric Health Care Holdings II, Inc.

4. Facility Sublease, dated as of March 31, 1998, between Integrated
Health of Waterford Commons, Inc. and Lyric Health Care Holdings II,
Inc.

5. Facility Sublease, dated as of March 31, 1998, between Cambridge Group
of Pennsylvania, Inc. and Lyric Health Care Holdings II, Inc.

Sch. 2-1

C. Master Lease, dated as of December 31, 1998, between Lyric Health Care
Holdings III, Inc. and Monarch Properties, LP:

1. Facility Sublease, dated as of December 31, 1998, between Integrated
Health Services at Colorado Springs, Inc. and Lyric Health Care
Holdings III, Inc.

2. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 103, Inc. and Lyric Health Care Holdings III, Inc.

3. Facility Sublease, dated as of December 31, 1998, between Integrated
Health Services at Central Florida, Inc. and Lyric Health Care
Holdings III, Inc.

4. Facility Sublease, dated as of December 31, 1998, between Briar Hill,
Inc. and Lyric Health Care Holdings III, Inc.

5. Facility Sublease, dated as of December 31, 1998, between Bethamy
Living Center Limited Partnership and Lyric Health Care Holdings III,
Inc.

6. Facility Sublease, dated as of December 31, 1998, between Integrated
Health Services at Central Florida, Inc. and Lyric Health Care
Holdings III, Inc.

7. Facility Sublease, dated as of December 31, 1998, between Integrated
Health Services at Briarcliff Haven, Inc. and Lyric Health Care
Holdings III, Inc.

8. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 114, Inc. and Lyric Health Care Holdings III, Inc.

9. Facility Sublease, dated as of December 31, 1998, between Cedarcroft
Health Services, Inc. and Lyric Health Care Holdings III, Inc.

10. Facility Sublease, dated as of December 31, 1998, between Manchester
Integrated Health, Inc. and Lyric Health Care Holdings III, Inc.

11. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 121, Inc. and Lyric Health Care Holdings III, Inc.

12. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 125, Inc. and Lyric Health Care Holdings III, Inc.

13. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 124, Inc. and Lyric Health Care Holdings III, Inc.

14. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 168, Inc. and Lyric Health Care Holdings III, Inc.

Sch. 2-2

15. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 127, Inc. and Lyric Health Care Holdings III, Inc.

16. Facility Sublease, dated as of December 31, 1998, between Rest Haven
Nursing Center (Whitemarsh), Inc. and Lyric Health Care Holdings III,
Inc.

17. Facility Sublease, dated as of December 31, 1998, between Integrated
of Amarillo, Inc. and Lyric Health Care Holdings III, Inc.

18. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 128, Inc. and Lyric Health Care Holdings III, Inc.

19. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 140, Inc. and Lyric Health Care Holdings III, Inc.

20. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 134, Inc. and Lyric Health Care Holdings III, Inc.

21. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 132, Inc. and Lyric Health Care Holdings III, Inc.

22. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 138, Inc. and Lyric Health Care Holdings III, Inc.

23. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 129, Inc. and Lyric Health Care Holdings III, Inc.

24. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 133, Inc. and Lyric Health Care Holdings III, Inc.

25. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 131, Inc. and Lyric Health Care Holdings III, Inc.

26. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 170, Inc. and Lyric Health Care Holdings III, Inc.

27. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 171, Inc. and Lyric Health Care Holdings III, Inc.

28. Facility Sublease, dated as of December 31, 1998, between Integrated
of Amarillo, Inc. and Lyric Health Care Holdings III, Inc.

29. Facility Sublease, dated as of December 31, 1998, between Integrated
Health Services at Hanover House, Inc. and Lyric Health Care Holdings
III, Inc.

Sch. 2-3

30. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 139, Inc. and Lyric Health Care Holdings III, Inc.

31. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 174, Inc. and Lyric Health Care Holdings III, Inc.

32. Facility Sublease, dated as of December 31, 1998, between IHS
Acquisition No. 136, Inc. and Lyric Health Care Holdings III, Inc.

Sch. 2-4

EXHIBIT 10.69 AMENDED AND RESTATED MASTER MANAGEMENT AGREEMENT

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