EXHIBIT 10.1


                                    AGREEMENT

         THIS AGREEMENT is dated as of the 26th day of July,  2000 and is by and
between ROBERT N. ELKINS  ("Elkins"),  an individual with an address of 7583 Bay
Colony Road, Naples, Florida 34108, and INTEGRATED HEALTH SERVICES,  INC. ("IHS"
or the  "Company"),  a Delaware  corporation  with an address of 910  Ridgebrook
Road, Sparks, Maryland 21152, on behalf of itself and its subsidiaries,

         WHEREAS,  IHS and  affiliates  are debtors and debtors in possession in
procedurally  consolidated  Chapter 11 cases (the "Case")  pending in the United
States  Bankruptcy Court for the District of Delaware (the "Court") (IHS and the
other  entities  who are  debtors  and  debtors  in  possession  in the Case are
sometimes collectively referred to as the "Debtors").

         WHEREAS, Elkins and IHS are parties to an Employment Agreement dated as
of January 1, 1994,  which was amended by Amendment No. 1 dated as of January 1,
1995,  which was amended by Amendment  No. 2 dated as of November 18, 1997,  and
which was  supplemented by Supplemental  Agreement dated as of November 18, 1997
and Amendment  No. 1 to  Supplemental  Agreement  dated as of September 30, 1998
(collectively the "Employment Agreement"); and

         WHEREAS,  Elkins is Chairman of the Board, Chief Executive Officer, and
President of IHS and is entitled to indemnity  from the Debtors  pursuant to the
Company's ByLaws, Certificate of Incorporation, and applicable law; and

         WHEREAS,  in  December  1997,  IHS sold an  aircraft to RNE Skyview LLC
("Skyview"), a limited liability company in which Elkins is the sole member, and
simultaneously IHS and Skyview entered into an Aircraft Lease Agreement dated as
of December 12, 1997 (the "Aircraft Lease"),  which remains in force and effect;
and

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         WHEREAS,  IHS from time to time has  advanced  Elkins money to purchase
stock in IHS, exercise stock options in IHS and pay taxes associated with option
exercise,  which  advances  are  memorialized  by the  documents  referred to in
Exhibit A (sometimes collectively referred to as the "Notes"); and

         WHEREAS, the Company maintains a primary policy of Directors,  Officers
and  Corporate  Liability  insurance  with  National  Union  Fire  Ins.  Co.  of
Pittsburgh,  PA ("National  Union") (policy no.  858-35-56) (the "National Union
Primary  Policy"),  and excess policies with Zurich American  Insurance  Company
(policy no.  DOC202729302),  Gulf Insurance Company (policy no. GA0436277),  the
Chubb Group of Insurance  Companies (policy no.  7942-44-24-AKCO),  and National
Union  (policy  no.  858-35-55)  (said  insurance  policies,  together  with all
endorsements  through  the date  hereof,  collectively  referred  to as the "D&O
Policies"),  providing a total of $90 million in insurance coverage on the terms
and subject to the conditions set forth in the D&O Policies; and

         WHEREAS, as of February 1, 1998 IHS caused its wholly-owned  subsidiary
Lyric  Health  Care LLC.  ("Lyric")  to sell a 50%  membership  interest  to TFN
Healthcare Investors, Inc. ("TFN"), an entity controlled by Timothy F. Nicholson
("Nicholson"), and Nicholson became Managing Director of Lyric; and

         WHEREAS,  as of December  31,  1998,  one or more of the  Debtors  sold
twenty-seven (27) long term care facilities and five (5) specialty  hospitals to
Monarch  Properties,  LP  ("Monarch  LP") for  cash,  plus  contingent  earn out
payments.  As of March 25, 1999, the Company sold a nursing  facility to Monarch
Properties at Jacksonville, LLC ("Monarch Jacksonville"). Monarch LP and Monarch
Jacksonville leased those facilities to affiliates of Lyric, and an affiliate of
IHS manages those  facilities for Lyric pursuant to management  agreements  (the
"Management Agreements"); and

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         WHEREAS, the Debtors after careful  consideration,  have concluded that
entry into and performance of this Agreement  represents a sound exercise of the
Debtors' business judgment,  and is in the best interests of the Debtors,  their
estates and their Creditors; and

         WHEREAS,  the parties  intend this  Agreement  to resolve,  among other
things,  all the Claims and causes of action  which  Elkins and the other Elkins
Released  Parties have or may have against the Debtors and all Equity  Interests
which the Elkins Released  Parties have in IHS,  including rights to purchase or
otherwise  acquire  stock in IHS, and to effect a total  termination  of Elkins'
interests in IHS and the other Debtors and their subsidiaries.

         NOW,   THEREFORE,   in  consideration  of  their  mutual  promises  and
covenants,  and intending to be legally  bound,  the parties  hereto  represent,
warrant, covenant and agree as follows:

         1.0  DEFINITIONS. As used in this Agreement,  the following capitalized
terms (not already  defined in the  Recitals  above) shall have the meanings set
forth below:

         1.1  "APPROVAL  ORDER"  means the Order of the  Court  authorizing  the
Debtors to perform the transactions  contemplated by this Agreement, in form and
substance reasonably satisfactory to the parties.

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         1.2  "AVOIDANCE  POWER  CAUSE OF  ACTION"  means  rights  and  remedies
accruing  to or vested in the Debtors  pursuant  to Chapter 5 of the  Bankruptcy
Code, including 11 U.S.C. ss.ss. 544, 547, 548, 549, 550 or 553.

         1.3  "BANKRUPTCY  CODE"  means the  Bankruptcy  Reform Act of 1978,  as
amended, and as codified in title 11 of the United States Code.

         1.4  "BANKRUPTCY   RULES"  means  the   Federal   Rules   of Bankruptcy
Procedure.

         1.5  "BOARD" means the Board of Directors of IHS.

         1.6  "CLAIM" has the meaning set forth in 11 U.S.C.ss.101(5).

         1.7  "CLOSING" means the consummation of the transactions  contemplated
by this Agreement.

         1.8   "CLOSING   DATE"  means  the  date  on  which  the   transactions
contemplated by this Agreement are consummated, and the Closing occurs.

         1.9   "CLOSING  PAYMENT" means  the sum of  $1,494,000  in  immediately
available funds,  plus transfer of good and clear title to the Tangible Personal
Property..

         1.10  "COMMITTEE" means the Official  Committee of Unsecured  Creditors
duly appointed in the Case, as the same may be constituted from time to time.

         1.11  "COBRA" means  the  Comprehensive  Omnibus  Budget Reconciliation
Act.

         1.12  "CONSULTING  AGREEMENT"  means the  Consulting  Agreement,  to be
entered  into  between  IHS and Elkins,  substantially  in the form of Exhibit B
annexed hereto.

         1.13  "CREDITOR"  means  any  entity  with a claim  against  any of the
Debtors,  including  the holder of a Claim  arising from  ownership of an Equity
Security issued by any of the Debtors.

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         1.14  "EFFECTIVE  DATE"  means  the  date  on  which  the  parties have
executed  and  delivered  this  Agreement  and  the  Committee  has executed and
delivered to Elkins the letter agreement annexed hereto as Exhibit C.

         1.15  "ELKINS RELEASED PARTY" means Elkins,  his spouse,  his children,
his parents,  Skyview,  and those  Entities set forth on Schedule 1.15 which are
owned or controlled by Elkins, and their respective, successors, heirs, or legal
representatives.

         1.16  "ENTITY" has the meaning set forth in 11 U.S.C.ss.101(15).

         1.17  "EQUITY  SECURITY"  has  the  meaning  set  forth  in   11 U.S.C.
ss.101(16).

         1.18  "FINAL ORDER"  means an order or judgment of the Court,  or other
court of competent  jurisdiction,  as entered on the docket of such court,  that
has not been  reversed  or  stayed,  and as to which  (a) the time to  appeal or
petition for  certiorari  has expired and no timely filed appeal or petition for
certiorari is pending,  or (b) any appeal taken or petition for certiorari filed
has been  resolved  by the  highest  court to which  the order or  judgment  was
appealed from or from which certiorari was sought.

         1.19  "INSURER" means the insurer under any of the D&O Policies.

         1.20  "LOSS"  has  the  meaning set forth in the National Union Primary
Policy.

         1.21  "MONARCH/LYRIC  RELEASED  CLAIMS" means any Claim of the Debtors,
including any Avoidance Power Cause of Action,  against any of the Monarch/Lyric
Released  Parties seeking to unwind,  modify,  avoid or rescind the transactions
between any of the Debtors and the  Monarch/Lyric  Released Parties described in
the preamble to this Agreement, including any Claim to recover any property from
any Monarch/Lyric Released Party in connection with or related to any such Claim
to unwind, modify, avoid or rescind any such transaction;  provided, however, to
the extent any such Claim is based upon any written  contractual  obligations of
any

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of the  Monarch/Lyric  Released Parties to any of the Debtors,  such Claim shall
not constitute a Monarch/Lyric Released Claim. Additionally, the Debtors' rights
under the Management  Agreements,  and any other agreements between or among the
Debtors  and the  Monarch/Lyric  Released  Parties  and the  Debtors'  rights to
receive any payments from any of the Monarch/Lyric  Released Parties pursuant to
any written  agreements  between the Debtors and any of such parties,  shall not
constitute a  Monarch/Lyric  Released  Claim,  and shall not be affected by this
Agreement.

         1.22  "MONARCH/LYRIC RELEASED PARTIES" means, collectively, Monarch LP,
Monarch Jacksonville,  the affiliates of Monarch LP and Monarch Jacksonville set
forth on Exhibit D hereto(the "Monarch Released Parties" or "Monarch Entities"),
Lyric, the affiliates of Lyric set forth on Exhibit E hereto,  TFN and Nicholson
(the "Lyric Released Parties" or "Lyric Entities").

         1.23  "PLAN" means any plan of reorganization for any of the Debtors.

         1.24  "RELEASED  CLAIMS"  means all  Claims,  rights,  causes of action
(including  Avoidance Power Causes of Action),  notes, debts,  accounts payable,
rights of reimbursement or contribution,  demands, judgments, suits, matters and
issues, known or unknown, whether individual, class, derivative, representative,
legal,  equitable,  or any other type, or in any other capacity, of the Debtors,
in each case against an Elkins  Released  Party.  Released  Claims (i) shall not
include  Claims giving rise to a Loss arising from  Wrongful  Acts, it being the
express intent of the parties to this Agreement that the insurance available, if
any,  pursuant to the D&O Policies  shall be the sole source of recovery for any
Claims  of the  Debtors  which  do not  constitute  Released  Claims;  provided,
however,  a Claim  against  Elkins giving rise to a Loss arising from a Wrongful
Act shall  constitute  a  Released  Claim if the Loss  incurred  by Elkins  with
respect  thereto  exceeds the amount  actually paid by the Insurer under any D&O
Policy  (but  shall

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constitute a Released Claim only for the amount of such excess);  (ii) shall not
include conduct by Elkins which constitutes criminal fraud, for which Elkins has
been  convicted by Final Order of a court of competent  jurisdiction;  and (iii)
shall not include  Elkins'  obligations  under this  Agreement,  including under
sections 8.2 and 8.3 hereof.  Notwithstanding  anything  contained herein to the
contrary,  Released  Claims shall not include  Claims,  if any, held by Entities
other than the  Debtors or their  estates,  including  Claims,  if any,  held by
Creditors.

         1.25  "RELEASEE" means any Entity receiving a Release hereunder.

         1.26  "RELEASOR"  means  any  Entity  granting a Release of  any  other
Entity under this Agreement.

         1.27  "TANGIBLE  PERSONAL  PROPERTY"  means  those  items  of  personal
property set forth on Exhibit F hereto.

         1.28  "WRONGFUL  ACT"  has  the meaning set forth in the National Union
Primary Policy.

         1.29  OTHER DEFINITIONS.  A  term used and not defined herein, but that
is defined in the Bankruptcy Code, shall have the meaning set forth therein. The
words  "herein",  "hereof",  "hereto",  "hereunder" and others of similar import
refer  to  this  Agreement  as a  whole  and  not  to  any  particular  section,
subsection,  or  clause  in this  Agreement.  The word  "including"  shall  mean
"including,  without limitation." The singular shall include the plural and vice
versa, unless the context otherwise requires.

         2.0   REPRESENTATIONS AND WARRANTIES OF ELKINS.

         2.1   Elkins has the legal capacity, power and  authority to enter into
and perform (and to cause Skyview to perform)  this  Agreement.  The  execution,
delivery and  performance  of this  Agreement  will not violate any agreement to
which he or  Skyview  is a party,  nor will it  violate  any  provision  of law,
ordinance or regulation to which he or Skyview is subject.

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         2.2  All of his representations and warranties will be true and correct
as of the Closing Date.

         2.3  Elkins,  Skyview and the other Elkins  Released  Parties  will not
transfer,  sell,  assign  or  convey  any of  their  Claims  against  or  Equity
Securities issued by any of the Debtors prior to the Closing Date, and they will
not acquire any other Claims against or Equity  Securities  issued by any of the
Debtors.

         2.4  No attachment, execution, assignment for the benefit of creditors,
or voluntary or involuntary  proceedings in bankruptcy,  or actions  pursuant to
any other debtor relief laws are pending against Elkins or Skyview.

         2.5  Elkins  has  performed  such  investigation,   and  consulted  his
professional  advisors,  as he deems  necessary to allow him to make an informed
determination  concerning the merits of this Agreement, and has determined it to
be in his best interests.

         2.6  Elkins  represents  and  warrants  that  all agreements between or
among  the  Debtors  and  the  Monarch/Lyric  Released  Parties,  including  the
Management  Agreements,  are in full  force and  effect  (except  to the  extent
enforceability  may be limited by application  of the Bankruptcy  Code) and that
the  transactions  contemplated by this Agreement  (including the termination of
Elkins  employment  and status as an officer or director of any of the  Debtors)
will not adversely impact the Debtors' rights under such agreements, or give any
of the Monarch/Lyric Released Parties the right or ability to terminate,  cancel
or materially amend or modify any such agreements.

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         3.0   REPRESENTATIONS AND WARRANTIES OF DEBTORS.

         3.1   Subject  to  entry of the  Approval  Order;  (a) the Debtors have
the legal capacity, power and authority to perform the transactions contemplated
by this  Agreement,  and (b) the  execution,  delivery and  performance  of this
Agreement  will not violate any agreement to which the Debtors are a party,  nor
will it violate any provision of law,  ordinance or regulation to which they are
subject.

         3.2   All  of their  representations  and  warranties  will be true and
correct as of the Closing Date.

         3.3   The Debtors will not transfer, sell,  assign  or  convey  any  of
their Claims  against any Elkins  Released Party or any  Monarch/Lyric  Released
Party prior to the  Closing  Date,  and they will not  acquire any other  Claims
against any Elkins Released Party or Monarch/Lyric Released Party.

         3.4   The Debtors believe  that  entry  into  and  performance  of this
Agreement represents a sound exercise of their business judgment,  and is in the
best interests of the Debtors, their estates and their Creditors.

         4.0   COVENANTS OF THE DEBTORS, AND ELKINS.

         4.1   Promptly after execution of this Agreement, the Debtors will file
a Motion (the "Motion"),  in form and substance  satisfactory to the Debtors and
Elkins, for entry of the Approval Order.  Notice of the Motion will be served on
Creditors  and other  parties in interest,  in  accordance  with the  Bankruptcy
Rules,  or as otherwise  ordered by the Court.  Concurrently  with filing of the
Motion,  the  Debtors  will  apply to the  Court for an Order  (the  "Scheduling
Order")  fixing the  hearing  date on the  Motion  and the  parties to be served
therewith.  The Debtors will seek to have the Scheduling  Order provide that the
time for any Elkins Released Party to file a proof of claim or interest  against
any of the Debtors will be extended to and including September 30, 2000.

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         4.2 The Debtors will diligently  prosecute the Motion,  the Debtors and
Elkins  will  submit  pleadings  and such other  evidence  as are  necessary  or
appropriate  to support  the  Motion,  and the Debtors and Elkins will use their
best efforts to obtain entry of the Approval Order.

         4.3 If the Approval Order is entered, the Debtors and Elkins will fully
and timely perform their  obligations  under this  Agreement,  and will promptly
close the transactions contemplated by this Agreement.

         4.4 Without Elkins  written  consent,  which shall not be  unreasonably
withheld, the Debtors will not take any action (whether by way of application to
any court, pursuant to a Plan, or otherwise) (a) to vacate, amend or modify this
Agreement or the Approval  Order, or (b) to deprive any Elkins Released Party of
the benefits of this Agreement.

         4.5 The Debtors shall not take any action to redeem, terminate, reduce,
cancel or otherwise  adversely affect the continuation or maintenance of the D&O
Policies,  (including  seeking a premium  refund,  reduction or recovery),  in a
manner that would adversely affect the rights of any Elkins Released Party under
this  Agreement or under the D&O  Policies.  The Debtors  shall take all actions
reasonably necessary to maintain and continue the D&O Policies in full force and
effect,  including  the timely  payment of all  premiums  due or to become  due.
Elkins shall have no liability  for any  Retention  amount (as defined under the
National  Union Primary  Policy).  If and to the extent  National Union contends
that  Elkins or the  Company  are  liable  for any  Retention  amount  under the
National Union Primary Policy,  the Company shall fully discharge and pay all of
such  Retention  amount.  The Debtors  shall pay any and all  Defense  Costs (as
defined in the National  Union  Primary  Policy)  reasonably  incurred by Elkins
within  thirty  (30) days of demand for  payment,  and will be entitled to claim
Elkins'  rights of  reimbursement

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from the Insurer under any D&O Policy for all such Defense Costs  actually paid.
In the event any Insurer  refuses to reimburse  Defense Costs,  which refusal is
sustained as proper by a final judgment of a court of competent  jurisdiction in
an action in which Elkins had adequate  notice and an opportunity to be heard on
the issue,  then Elkins shall  promptly  refund to IHS any Defense Costs paid to
him by the Debtors but not reimbursed to the Debtors by such Insurer.

         4.6 As of the Closing, and for a period of 20 days thereafter,  Elkins'
personal  assistant,  Laura  Stouffer,  shall be entitled to resign her position
with the Company.  If she elects to do so, then within ten days after receipt of
notice of such  election  from Ms.  Stouffer,  (a) the Debtors  will execute and
deliver to Ms. Stouffer a general release of all Claims against her, if any, and
will pay Ms. Stouffer the sum of $35,000 in full settlement and  satisfaction of
all her Claims  against  the  Company,  and (b) Ms.  Stouffer  will  execute and
deliver to the  Company a general  release of all  Claims,  if any,  against the
Debtors held by her.

         4.7 The  Debtors  will not take  any  action  to  affect  the  Tangible
Personal Property prior to Closing, without the prior written consent of Elkins.

         4.8 The  Debtors  and  Elkins  agree  that  the  Approval  Order  shall
authorize the Committee to execute and perform the letter  agreement  annexed as
Exhibit  C and  shall  also  contain  decretal  paragraphs  effective  upon  the
occurrence of the Closing that will provide:

             (a) The Debtors and all Entities are permanently  barred,  enjoined
and  restrained  from  commencing,  prosecuting  or asserting any Released Claim
against  any  of  the  Elkins  Released  Parties,  in  any  court,  arbitration,
administrative  agency or forum,  or in any other manner,  and that all Released
Claims against any of the Elkins Released Parties are extinguished,  discharged,
satisfied and unenforceable. The Elkins Released Parties are permanently barred,
enjoined and  restrained  from  commencing,  prosecuting or asserting any Claims
against the

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Debtors in any court,  arbitration,  administrative  agency or forum,  or in any
other manner, which have been released under this Agreement, and all such Claims
against the Debtors are extinguished, discharged, satisfied and unenforceable.

             (b) The Debtors and all Entities are permanently  barred,  enjoined
and  restrained  from  commencing,  prosecuting  or asserting any  Monarch/Lyric
Released  Claim  against  the  Monarch/Lyric  Released  Parties,  in any  court,
arbitration,  administrative  agency or forum, or in any other manner,  and that
all Monarch/Lyric  Released Claims are extinguished,  discharged,  satisfied and
unenforceable.

             (c) To the extent any Debtor sues an Entity and in connection  with
such  suit  such  Entity  asserts  a claim  for  contribution,  indemnification,
recovery of loss or potential loss, or otherwise,  however denominated,  arising
under state or federal law,  including  claims  based upon tort or contract,  as
direct claims,  crossclaims,  counterclaims  or third party claims in any court,
arbitration,  administrative  agency  or forum or in any  other  manner  (each a
"Contribution Claim" and collectively  "Contribution Claims") against any Elkins
Released Party or Monarch/Lyric  Released Party which  Contribution Claim is not
precluded by the Approval  Order,  then such Debtor,  shall  automatically,  and
without any further act on the part of any party,  credit  against or reduce the
amount of any  judgment it may obtain  against such Entity by an amount equal to
the amount as is  determined  by trial or  otherwise  in a Final Order to be the
amount  due to such  Entity  from such  Elkins  Released  Party in excess of any
amounts  payable  by any  Insurer  under any of the D&O  Policies,  or from such
Monarch/Lyric  Released  Party,  by  reason  of  such  Entity's  assertion  of a
Contribution Claim against such Elkins Released Party or Monarch/Lyric  Released
Party.


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         (d) For  termination  of the  Aircraft  Lease as of the  Closing  Date,
releasing  and  discharging  all  Claims  held  by  Skyview  arising  from  such
termination,  and providing that IHS shall pay Skyview all normal lease payments
due pursuant to the Aircraft Lease through the Closing Date.

         4.9 After the  Closing  Date,  the  Debtors  will not seek,  request or
demand,  with or  without  formal  legal  process,  any  discovery,  records  or
information,  pursuant to the  Bankruptcy  Rules or  otherwise,  from any Elkins
Released Party directly relating to any Released Claim.  After the Closing Date,
Elkins  will  respond  promptly  to  reasonable  requests  by  the  Debtors  for
information with respect to other matters.

         4.10 To the extent the  Debtors  seek to include in a Plan  exoneration
of,  indemnity for, or a release of Claims against any of the debtors'  officers
or  directors,  then the  Debtors  shall use their  reasonable  efforts to cause
Elkins to receive  the  benefits  of such  exoneration,  indemnity  or  release;
provided, however, that any such release shall not include Claims giving rise to
a Loss  arising  from  Wrongful  Acts,  unless the Loss  incurred by Elkins with
respect  thereto  exceeds the amount  actually paid by the Insurer under any D&O
Policy,  but such release shall apply only to the amount of such excess.  To the
extent the Debtors apply to any court for an injunction against the commencement
or  continuation  of any action against any of their  officers or directors,  in
which Elkins is  threatened  to be named or is a named party,  the Debtors shall
use their  reasonable  efforts to cause  Elkins to receive  the  benefits of any
injunction which may be sought or issued.

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         4.11 Elkins and Laura Stouffer (in the event she resigns her employment
with IHS after the Closing  Date) shall be  entitled  to  continuation  of their
existing  health  insurance  benefits for a period of eighteen (18) months after
the Closing  Date,  in accordance  with COBRA,  and the costs of such  continued
benefits will be paid by the Company.

         4.12 Elkins shall vacate his office at the Company's  Sparks,  Maryland
headquarters  no later than the Closing  Date.  The Debtors will provide  Elkins
with  reasonable  access to their business  records and accounting  personnel on
reasonable advance notice for purposes of facilitating his filing of tax returns
and compliance with this Agreement.

         5.0  CLOSING CONDITIONS.

         5.1  Conditions to Obligation of Each Party to Effect the Closing.  The
respective  obligations  of each party to effect the Closing shall be subject to
the  fulfillment  at or  prior  to the  Closing  Date of  each of the  following
conditions:

              (a)   The Approval Order has been entered.
              (b)   No  restraining  order, preliminary or permanent injunction,
or other order issued by any court of  competent  jurisdiction  prohibiting  the
consummation of the transactions contemplated hereby shall be in effect.

         5.2  Additional Conditions to Obligations of Elkins. The obligations of
Elkins to effect the Closing are also subject to the  following  conditions (any
one or more of which may be waived by Elkins in a writing signed by him).

              (a)   Each  of  the  representations and warranties of the Debtors
set  forth  herein shall be true and correct, individually and in the aggregate,
in all material respects.

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              (b)   The  Debtors  shall   have   performed  or  complied  in all
material  respects with all of their agreements and covenants  contained in this
Agreement,  to be  performed  or complied  with by any one or more of them at or
prior to the Closing Date.

              (c)   The Approval Order has become a Final Order.

              (d)   The  Committee  is  not  in default of its obligations under
Exhibit C.

         5.3  Additional Conditions to Obligations of Debtors.  The  obligations
of  the  Debtors  to  effect  the  Closing are  also  subject  to  the following
conditions (any one or more of which may be waived by Debtors and  Committee  in
a writing signed by both of them).

              (a)   Each of the representations  and  warranties  of  Elkins set
forth herein shall be true and correct,  individually  and in the aggregate,  in
all material respects.

              (b)   Elkins  shall  have  performed  or  complied in all material
respects with all of his agreements and covenants  contained in this  Agreement,
to be performed or complied with by him at or prior to the Closing Date.

              (c)   The Approval Order has become a Final Order.

         6.0  THE CLOSING.

         6.1  The  Closing  will  occur  on a date  and at a  location  mutually
agreeable  to the parties,  within three  business  days after  satisfaction  or
waiver of all conditions to Closing.

         6.2  At the Closing, Elkins and/or Skyview shall execute and deliver to
the Debtors the following:

              (a)   Written resignations by Elkins of all of his positions as an
officer or director of any of the Debtors, effective as of the Closing Date.

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<PAGE>

              (b) An  instrument  effective to transfer and convey to IHS all of
Elkins'  common  stock,  and  rights to  acquire  common  stock or other  equity
interests in IHS.

              (c) The Consulting Agreement.

              (d) Documents  executed by the Elkins Released  Parties  providing
for the releases granted by such parties under Section 7.1 of this Agreement.

         6.3  At the Closing, the Debtors shall execute,  deliver or transfer to
Elkins all of the  following,  free and clear of any and all  liens,  claims and
encumbrances:

              (a) The Closing Payment (which shall constitute prepayment in full
by  the  Debtors  of  all   consideration   due  Elkins  under  the   Consulting
Agreement).

              (b) The Notes.

              (c) The Consulting Agreement.

         6.4  At Closing, IHS shall pay directly to the federal, and appropriate
state and local  taxing  authorities  for the  account of Elkins  the  following
amounts:

                  (i)  to the Internal Revenue  Service, an amount equal to: (a)
1.389  multiplied  by (b) twenty eight percent (28%) of the sum of (x) the total
amount of  outstanding  principal  plus interest  accrued on the Notes as of the
Closing Date, (y) all principal and interest forgiven on the Notes since January
1, 2000 (the sum of clauses (x) and (y) in this subsection referred to herein as
the "Released  Amount"),  and (z) amounts payable  pursuant to Sections 6.4 (ii)
and (iii) (to the extent applicable).

                  (ii) to the appropriate state and local taxing authority which
imposes a tax on all or any part of Elkins' income: the amount which is required
under  applicable  state or local law to be withheld by IHS and remitted to such
taxing authority based upon the Released Amount, and any federal, state or local
tax payment, being treated as employee compensation to Elkins as of the Closing,
grossed  up for any  additional  state or  local  withholding  taxes  due on any
amounts payable pursuant to this Section 6.4.

                                       16

<PAGE>


               (iii)  to  the  applicable  taxing  authorities:  all employment,
excise and payroll taxes imposed on Elkins or IHS by any federal, state or local
taxing  authorities on account of Elkins'  constructive  receipt of the Released
Amount or of any of the payments to be made by IHS pursuant to this Section 6.4.

         Both IHS and Elkins shall treat and report the Released  Amount and all
amounts payable under Section 6.4 (i), (ii) and (iii) (to the extent applicable)
as employee compensation to Elkins subject to withholding for all tax purposes.

         7.0   RELEASES; COVENANTS NOT TO SUE; INDEMNITY.

         7.1   As of the conclusion of the Closing, and without the need for any
further act by any party,  and without a separate  release being  executed:  (i)
Elkins,  Skyview and the other Elkins Released  Parties shall be deemed to have,
and shall have, fully, finally and forever released, relinquished and discharged
all  Claims  that  they   individually  or   collectively,   whether   directly,
representatively,  derivatively or in any other capacity, ever had, now have, or
hereafter  can,  shall or may have against the Debtors;  (ii) the Debtors  shall
have,  and  shall  be  deemed  to have  fully,  finally  and  forever  released,
relinquished and discharged all Elkins Released Parties from all Released Claims
that they  individually or  collectively,  whether  directly,  representatively,
derivatively  or in any other  capacity,  ever had, now have, or hereafter  can,
shall or may have ; (iii) the Debtors  shall  have,  and shall be deemed to have
fully,   finally  and  forever   released,   relinquished   and  discharged  all
Monarch/Lyric  Released Parties from all Monarch/Lyric Released Claims; and (iv)
the Elkins  Released  Parties  shall  have,  and shall be

                                       17

<PAGE>

deemed to have fully, finally and forever released,  relinquished and discharged
all present or former  members of the Board of Directors of the Debtors from any
Claims  they may hold  against  such  persons  arising  from the service by such
persons on the Debtors' Boards of Directors.  Nothing  contained herein shall be
deemed to constitute a release, waiver or discharge of any Entity's rights under
this Agreement.

         7.2 Each Releasor hereby  expressly agrees that it waives and releases,
with respect to the Claims to be released by it pursuant to this Agreement,  any
and all provisions,  rights and benefits conferred either (i) by ss. 1542 of the
California Civil Code, which reads: "A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of
executing the release,  which if known by him must have materially  affected his
settlement with the debtor," or (ii) by any law of any state or territory of the
United  States,  or principle  of common law,  which is similar,  comparable  or
equivalent to ss. 1542 of the California Civil Code.

         7.3 Each Releasor hereby covenants and agrees not to bring, commence or
institute  any  action,  proceeding  or claim in any court,  arbitration  panel,
agency or other tribunal  against any Releasee  seeking to recover on the Claims
released pursuant to the provisions of this Agreement.

         7.4 The Debtors shall  indemnify the Elkins  Released  Parties and hold
them harmless from all loss,  cost or expense,  including  reasonable  attorneys
fees,  which any of them may  incur or suffer  arising  from or  related  to the
prosecution by any Entity,  including the Debtors, the Committee,  any Creditor,
any trustee for any of the Debtors who may be  appointed  or elected in the Case
or in any superseding case under Chapter 7 of the Bankruptcy Code for any of the
Debtors, or any successor of the Debtors,  against any one or more of the Elkins
Released Parties of any of the Released Claims.

                                       18

<PAGE>

         8.0 EMPLOYMENT AGREEMENT, NON-COMPETITION, NON-SOLICITATION

         8.1 Elkins'  Employment  Agreement shall be deemed  terminated with the
consent of the parties as of conclusion of the Closing. IHS shall pay Elkins all
amounts  earned by and due to him under his  Employment  Agreement  for  salary,
benefits,  and  reimbursement  of his ordinary and necessary  business  expenses
through the Closing Date . The terms and  conditions  and all  provisions of the
Employment  Agreement  shall be deemed  terminated,  canceled  and of no further
force and effect as of the  conclusion  of the  Closing,  with the  exception of
Article  4.1  thereof.  No  party to the  Employment  Agreement  shall  have any
continuing  rights or  obligations  under  the  Employment  Agreement  after the
Closing, except with respect to Article 4.1 of such agreement.

         8.2 Beginning on the first day after the Closing Date,  and  continuing
for a period of one year  thereafter,  and so long as no  default on the part of
the  Debtors,  or of  the  Committee  under  Exhibit  C,  has  occurred  and  is
continuing,  Elkins agrees that he will not, without the express written consent
of IHS and the Committee (if the Committee is still in  existence),  directly or
indirectly,  for  himself  or on behalf of any other  person,  (i)  solicit  for
employment,  or recommend that any subsequent employer of Elkins seek to employ,
any person who, at the time of such solicitation or recommendation,  is employed
by any of the Debtors;  (ii) solicit,  or endeavor to entice away, or direct any
other Entity to solicit or endeavor to entice away,  any customer of the Debtors
who, at the time of such  solicitation,  diversion  or  enticement,  is known by
Elkins to be a customer of any of the Debtors ; or (iii)  except for Monarch LP,
Monarch


                                       19

<PAGE>

Jacksonville,  and the  affiliates  of Monarch LP and Monarch  Jacksonville  set
forth on  Exhibit  D hereto  (the  "Monarch  Entities"),  be  employed  by, be a
director,  officer or manager of, act as a consultant for, be a partner in, have
a material  proprietary  interest in, or otherwise render material assistance to
any Entity that then derives 5% or more of its consolidated  gross revenues from
(a)  operating or managing  subacute  healthcare  facilities,  or (b)  providing
oxygen or  durable  medical  equipment  in the home in a manner  similar  to the
current business  operations of the Company's Rotech Medical  subsidiaries  (the
"Rotech  Business")  (any  such  Entity  being  hereinafter  referred  to  as  a
"Competitor"). This provision shall not be construed to prohibit Elkins from (a)
acting as an employee, member, manager, officer, director, or consultant for, or
owning more than 10% of, the outstanding  voting shares of the equity securities
of the  Monarch  Entities;  or (b)  owning up to 10% of the  outstanding  voting
shares of the equity  securities of any company whose  securities are listed for
trading on any national securities exchange, or (c) serving as a director of any
company  which is not  directly in the  business of  operating  or managing  any
subacute  healthcare  facility or in the Rotech Business,  or (d) being employed
by, acting as an officer or director of, investing in or rendering  services to,
any  subsidiary  or division of a Competitor  so long as (A) such  subsidiary or
division does not itself  compete  directly with the Debtors in the operation or
management of any subacute healthcare facilities, or in the Rotech Business, and
(B) Elkins  has no  duties,  responsibilities  or  investment  in respect of any
portion of the business of the  Competitor  that does compete  directly with the
Debtors in any  subacute  healthcare  market or in the Rotech  Business;  or (e)
investing in, owning shares or interests in, or acting as an officer,  director,
employee,  member, manager or consultant for any Entity which acquires assets or
properties  from any of the Debtors and which  after such  acquisition  is not a
Competitor;  or (f)  acting  as an  investor,  consultant,  employee,  director,


                                       20

<PAGE>

member,  manager, or in any other capacity in a company which provides advice to
Entities (other than a Competitor)  undergoing the restructuring of their assets
and liabilities; or (g) acting as in investor,  consultant,  employee, director,
member, manager or in any other capacity in respect of any Entity which is not a
Competitor  of the Debtors  and sells,  leases,  or  otherwise  provides  goods,
services, personnel,  equipment or products of any kind to any of the Debtors or
to any other Entity in the ordinary  course of business on arms length terms and
conditions.

         8.3  Elkins  agrees  to hold  all  Trade  Secrets  (as  defined  in his
Employment Agreement) in confidence and to not discuss,  communicate or transmit
to others,  or make any  unauthorized  use of the Trade Secrets in any capacity,
position or business;  provided, however, nothing contained herein or in Article
4.1 of the Employment  Agreement  shall preclude Elkins from using Trade Secrets
in connection  with the  acquisition by Elkins or his affiliate of any assets or
properties from any of the Debtors.

         9.0  DEFAULT, REMEDIES

         9.1  A default hereunder shall include any of the following:

              (a) Any promise, covenant, representation or warranty by any party
hereto contained herein shall prove to be materially false,  untrue or incorrect
when made,  or shall contain a material  omission,  the absence of which renders
said representation, warranty, promise or covenant materially misleading.

              (b) Any party  shall fail to timely and fully  perform  any of its
obligations,  promises,  representations,  warranties  or  covenants  set  forth
herein.  If the  Committee  defaults on its  obligations  under  Exhibit C, such
default shall constitute a default hereunder by the Debtors.

         9.2  If a default  shall  occur  and if  such  default  shall  continue
unremedied  for a period of ten (10) days after notice thereof has been provided
to the defaulting  party and to the Committee,  the  non-defaulting  party shall
have and may exercise all rights available to it at law or equity.

                                       21

<PAGE>

         9.3 Because  of the difficulty in ascertaining the damages which may be
suffered by the Debtors if Elkins  breaches  the  provisions  of sections 8.2 or
8.3,  Elkins agrees that  equitable  relief,  including a temporary or permanent
injunction, is proper to redress his actual or threatened breach of sections 8.2
or 8.3 of this Agreement.

         9.4 In any action to enforce  the  provisions  of this  Agreement,  the
prevailing  party  shall be entitled to recover  from the  defaulting  party the
prevailing  party's  actual costs of enforcement  of this  Agreement,  including
attorneys fees and other costs of suit.

         9.5 If the Approval  Order has not been entered by August 25, 2000,  or
if the Closing Date has not  occurred by  September  30, 2000 (or, in each case,
such later date or dates as may be agreed  upon by the  Debtors,  Elkins and the
Committee),  then either the  Debtors,  Elkins or the  Committee  shall have the
right to terminate this Agreement (and the letter agreement substantially in the
form of Exhibit C) which termination shall occur  automatically  upon the giving
of notice of such termination to the other parties in accordance with the notice
provisions  hereof. A party that is in default shall not be entitled to elect to
terminate  this  Agreement  or Exhibit C based upon the failure of the  Approval
Order to be entered or the Closing Date to occur by the dates set forth above in
this  Section  9.5 (or such later  dates as may be agreed  upon by the  Debtors,
Elkins and the Committee).

         10. EFFECTIVE  DATE.  This Agreement  shall take effect,  and shall  be
binding  and  enforceable,   on  and  after  the  Effective  Date.

         11. FURTHER  ASSURANCES.  The  obligations of the parties  require that
they employ their good faith and best efforts in effectuating and fulfilling the
obligations contemplated hereunder. In furtherance thereof, the parties agree at
any time from time to time to execute any and all documents reasonably requested
by the other parties to carry out and further the intent of this Agreement.

                                       22

<PAGE>

         12. ACTIONS AT CLOSING TO BE CONCURRENT All proceedings to be taken and
all documents to be executed and delivered in connection  with the  consummation
of the transactions  contemplated  hereby shall be deemed to have been taken and
executed  simultaneously,  and  no  proceeding  shall  be  deemed  taken  or any
documents delivered until all have been taken and delivered.

         13. GOVERNING LAW;  CONSENT TO  JURISDICTION  This Agreement  shall  be
construed and enforced in accordance with the laws of the State of Delaware. The
parties consent to the  jurisdiction of the Court in all actions to enforce this
Agreement  until  the Case is  closed or  dismissed;  thereafter,  the state and
federal courts of Delaware shall have jurisdiction to enforce this Agreement.

         14. COUNTERPART EXECUTION This Agreement may be executed in one or more
counterparts,  each of which  shall  be  deemed  an  original.  It shall  not be
necessary in making proof of this  Agreement to produce or account for more than
one such counterpart.

         15. INTEGRATION   This is the  entire  agreement  of the  parties  with
respect  to the  subject  matter  hereof.  There  are no other  oral or  written
understandings,  terms or  conditions  not contained in this  Agreement,  and no
party has relied upon any  representation  or  warranty  not  contained  in this
Agreement. Exhibits are an integral part of this Agreement.

         16. CONSTRUCTION  OF AGREEMENT AND DOCUMENTS  The parties  hereto agree
that the terms and language of this  Agreement  were the result of  negotiations
between  the  parties  and,  as a result,  there  shall be no  presumption  that
ambiguities,  if any, in this Agreement shall be resolved  against either party;
further,  any  controversy  over the  construction  of this  Agreement  shall be
decided without regard to events of authorship or negotiation.

                                       23

<PAGE>

         17. AMENDMENT,  WAIVER No consent or waiver, express or implied, by any
party to any  breach  hereof  shall be deemed or  construed  to be a consent  or
waiver to a breach hereof at any other time. No failure or delay of any party in
enforcing  any remedy for default  hereunder  shall  constitute a waiver of that
party's  right to enforce  such  remedy.  This  Agreement  may not be changed or
modified  except by a writing  signed by all  parties  and  consented  to by the
Committee.

         18.  SUCCESSORS BOUND This Agreement is binding upon and shall inure to
the benefit of the parties hereto and their  respective  heirs,  administrators,
legal representatives, successors and assigns.

         19.  CONSIDERATION  This  Agreement is entered  into  without  force or
duress,  in the free will of the  parties,  and on  account  of the  receipt  of
consideration.  All parties  acknowledge  that they have not  entered  into this
Agreement in reliance upon any  inducement  or promise not  otherwise  contained
herein.  The parties have consulted  extensively with their  respective  counsel
regarding the terms of this Agreement and the Exhibits  hereto.  The decision of
the parties to execute  this  Agreement  and the  Exhibits  is a fully  informed
decision, and the parties are aware of all legal and other ramifications of such
decision.

         20.  HEADINGS  Headings,  titles and  captions  preceding  the sections
hereof  are  provided  for  convenience  of  reference  and shall not be used to
explain or to restrict the meaning,  purpose or effect of any provision to which
they refer.

                                       24

<PAGE>


         21.  ADMISSIBILITY OF THE AGREEMENT After the Effective Date, the terms
of this  Agreement  shall be fully  admissible in any court.  The parties hereto
waive any objection  that may be interposed  under any state or federal rules of
evidence as to the admissibility of this document.

         22. NO THIRD  PARTY  RIGHTS  Except for rights  accruing  to the Elkins
Released Parties and Monarch/Lyric Released Parties, it is not the intent of the
parties who are signatories to this Agreement to grant any rights  whatsoever to
parties who are not  signatories  to this  Agreement,  and no  provision of this
Agreement  should be  construed  to grant  any  rights to any party who is not a
signatory hereto.

         23. NO ADMISSION Nothing contained in this Agreement,  or in any of the
negotiations  leading up to the making of this Agreement,  shall be construed as
an admission of any sort whatsoever by any party to this Agreement.

         24. NOTICES   Notice of any event as to which  notice  may be  required
hereunder  shall be given in writing by certified  mail,  by  overnight  courier
service, or by hand delivery, to each of the parties at the following addresses,
and shall be effective  three days after mailing or one day after delivery to an
overnight courier service, or upon receipt if delivered by hand:

             25.1     If to Robert N. Elkins
                      7583 Bay Colony Road
                      Naples, Florida 34108

             25.2     If to the Debtors:
                      Integrated Health Services, Inc.
                      910 Ridgebrook Road
                      Sparks, Maryland 21152
                      Attention:  General Counsel

                      With a copy (until the effective date of a Plan) to:

                      Kaye Scholer Fierman Hays & Handler LLP
                      425 Park Avenue
                      New York, New York 10022
                      Attention: Michael J.Crames

                                       25

<PAGE>


         Any  notice  to be given to or by the  Debtors  shall  also be given to
counsel to the Committee at the address set forth on Exhibit C hereto.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and the year first above written.

WITNESS OR ATTEST:

 /s/ Laura Stouffer                          /s/ Robert N. Elkins
-----------------------------             ---------------------------------
                                                 ROBERT N. ELKINS


                                          RNE SKYVIEW, LLC


                                          By:  /s/ Robert N. Elkins
                                             ------------------------------

                                          INTEGRATED HEALTH SERVICES, INC.


/s/ Laura Stouffer                        By: /s/ C. Taylor Pickett
-----------------------------                ------------------------------








                                       26


<PAGE>

                                                                       EXHIBIT A



                                 PROMISSORY NOTE

Dated:  April 8, 1999                                             $11,500,000.00

FOR VALUE RECEIVED, the undersigned, ROBERT N. ELKINS (the "Maker"), promises to
pay to the order of INTEGRATED  HEALTH  SERVICES,  INC., a Delaware  corporation
("IHS"),  in lawful money of the United States of America,  the principal sum of
ELEVEN MILLION FIVE HUNDRED  THOUSAND AND 00/100 DOLLARS  ($11,500,000.00)  (the
ADebt@),  plus all  accrued  and  unpaid  interest  thereon at the rate of seven
percent (7%) per annum,  on the date (the  "Maturity  Date") which is five years
from the date hereof.

Notwithstanding the foregoing,  on the second anniversary,  and each anniversary
thereafter,  of the date of this Note,  provided  that Maker is then a full-time
active employee of IHS, there shall be automatically forgiven hereunder (i) that
portion of the then unpaid  principal  balance of this Note as shall be equal to
twenty (20%)  percent of the Debt,  and (ii) all accrued and unpaid  interest on
the  principal  amount.  On the  fifth  anniversary  of the  date of this  Note,
provided that Maker is then a full-time  active  employee of IHS, there shall be
automatically  forgiven  hereunder (i) that portion of the then unpaid principal
balance of this Note as shall be equal to forty (40%)  percent of the Debt,  and
(ii) all  accrued  and unpaid  interest  on the  principal  amount so  forgiven.
Accordingly,  if Maker  shall  have  remained  in the  continuous  employ of the
Company for a period of five (5) years following the date hereof,  all principal
and accrued interest under this Note shall be  automatically  forgiven as of the
Maturity Date. In addition, the entire unpaid principal balance of this Note and
all accrued and unpaid interest thereon automatically shall be forgiven upon (i)
the  occurrence  of a  "change  of  control"  as  defined  in the  then  current
employment  agreement  between Maker and IHS ("Maker's  Employment  Agreement"),
(ii)  the  effective  date  of any  termination  by IHS  of  Maker's  Employment
Agreement  other  than for cause as defined  in  Maker's  Employment  Agreement,
including,  but not limited to, a rejection of Maker's Employment Agreement in a
reorganization proceeding, or (iii) the effective date of any termination by IHS
of Maker's  employment  other  than for cause as  defined in Maker's  Employment
Agreement.

All payments on this Note shall be applied first to accrued and unpaid  interest
and costs of collection  and then to any unpaid  principal.  At his/her  option,
Maker may at any time and from time to time pre-pay all or part of the principal
amount of this Note, without premium, penalty or notice.

Maker waives presentment for payment,  demand, notice of non-payment,  notice of
protest,  and protest of this Note, and all other notices in connection with the
delivery,  acceptance,  performance,  default,  dishonor,  or enforcement of the
payment  of this Note.  Maker  shall pay all costs of  collection  of this Note,
including  reasonable  attorneys'  fees.  All rights and remedies  given by this
Note,  are cumulative and not exclusive of any thereof or of any other rights or
remedies  available to IHS, and no course of dealing  between  Maker and IHS, or
any delay or  omission  in  exercising  any right or remedy  shall  operate as a
waiver of any right or remedy,  and every right and remedy may be exercised from
time to time and as often as shall be deemed appropriate by IHS.

This Note shall be governed, interpreted, and enforceable in accordance with the
laws of the State of Maryland.

THIS NOTE  SUPERCEDES AND REPLACES IN ITS ENTIRETY THE NOTE DATED MARCH 24, 1999
IN THE PRINCIPAL  AMOUNT OF ELEVEN MILLION SEVEN HUNDRED FIFTY THOUSAND  DOLLARS
($11,750,000.00),  WHICH HAD  SUPERCEDED  AND  REPLACED IN ITS ENTIRETY THE NOTE
DATED MARCH 4, 1999 IN THE PRINCIPAL AMOUNT OF SIX MILLION DOLLARS ($6,000,000).

IN WITNESS  WHEREOF,  the  undersigned  has executed this Note on the date first
above written.


                                                  /s/ Robert N. Elkins [SEAL]
                                                  --------------------
                                                  Robert N. Elkins
<PAGE>

                             AMENDED PROMISSORY NOTE


Dated:  July 8, 1999                                               $8,750,000.00


FOR VALUE RECEIVED, the undersigned, ROBERT N. ELKINS (the "Maker"), promises to
pay to the order of INTEGRATED  HEALTH  SERVICES,  INC., a Delaware  corporation
("IHS"),  on July 8, 2004 in lawful money of the United  States of America,  the
principal sum of EIGHT MILLION SEVEN HUNDRED FIFTY  THOUSAND AND 00/100  DOLLARS
($8,750,000.00), plus all accrued and unpaid interest thereon.

This Note  replaces  in its  entirety  the Note dated  November  13, 1998 in the
principal  amount of FOUR  MILLION  FIVE  HUNDRED  THOUSAND  AND 00/100  DOLLARS
($4,500,000) and the Note dated October 12, 1998 in the principal amount of FOUR
MILLION TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($4,250,000).

The aggregate unpaid principal amount of this Note outstanding from time to time
shall bear  interest  from the date hereof to  maturity at six and eight  tenths
percent (6.8%) per annum.

Notwithstanding the foregoing,  on the second anniversary,  and each anniversary
thereafter,  of the date of this Note,  provided  that Maker is then a full-time
active employee of IHS, there shall be automatically forgiven hereunder (i) that
portion of the then unpaid  principal  balance of this Note as shall be equal to
twenty (20%)  percent of the Debt,  and (ii) all accrued and unpaid  interest on
the  principal  amount.  On the  fifth  anniversary  of the  date of this  Note,
provided that Maker is then a full-time  active  employee of IHS, there shall be
automatically  forgiven  hereunder (i) that portion of the then unpaid principal
balance of this Note as shall be equal to forty (40%)  percent of the Debt,  and
(ii) all  accrued  and unpaid  interest  on the  principal  amount so  forgiven.
Accordingly,  if Maker  shall  have  remained  in the  continuous  employ of the
Company for a period of five (5) years following the date hereof,  all principal
and accrued interest under this Note shall be  automatically  forgiven as of the
Maturity Date. In addition, the entire unpaid principal balance of this Note and
all accrued and unpaid interest thereon automatically shall be forgiven upon (i)
the  occurrence  of a  "change  of  control"  as  defined  in the  then  current
employment  agreement  between Maker and IHS ("Maker's  Employment  Agreement"),
(ii)  the  effective  date  of any  termination  by IHS  of  Maker's  Employment
Agreement  other  than for cause as defined  in  Maker's  Employment  Agreement,
including,  but not limited to, a rejection of Maker's Employment Agreement in a
reorganization proceeding, or (iii) the effective date of any termination by IHS
of Maker's  employment  other  than for cause as  defined in Maker's  Employment
Agreement.

At his option,  Maker may at any time and from time to time  pre-pay all or part
of the principal amount of this Note, without premium, penalty or notice.

Maker  shall pay all costs of  collection  of this  Note,  including  reasonable
attorneys' fees.

                                       2

<PAGE>

Maker waives presentment for payment,  demand, notice of non-payment,  notice of
protest,  and protest of this Note, and all other notices in connection with the
delivery,  acceptance,  performance,  default,  dishonor,  or enforcement of the
payment of this Note.  All rights and remedies given by this Note are cumulative
and not exclusive of any thereof or of any other rights or remedies available to
IHS, and no course of dealing between Maker and IHS, or any delay or omission in
exercising any right or remedy shall operate as a waiver of any right or remedy.
Every right and remedy may be exercised  from time to time and as often as shall
be deemed appropriate by IHS.

This Note shall be governed, interpreted, and enforceable in accordance with the
Laws of Maryland.

IN WITNESS  WHEREOF,  the  undersigned  has executed this Note on the date first
above written.


                                          /s/ Robert N. Elkins
                                         ---------------------------------------
                                          Robert N. Elkins                [SEAL]


                                       3

<PAGE>


                                PROMISSORY NOTE
Dated: July 8, 1999                                                 4,409,095.00


FOR VALUE RECEIVED, the undersigned, ROBERT N. ELKINS (the "Maker"), promises to
pay to the order of INTEGRATED  HEALTH  SERVICES,  INC., a Delaware  corporation
("IHS"),  in lawful money of the United States of America,  the principal sum of
FOUR  MILLION  FOUR  HUNDRED  NINE  THOUSAND   NINETY-FIVE  AND  00/100  DOLLARS
($4,409,095.00)  (the "Debt"),  plus all accrued and unpaid interest  thereon at
the rate of the  higher of (i) IHS'  cost of  borrowing  under  its bank  credit
facility or (ii) seven and one-half  percent (7.5%) per annum,  on the date (the
"Maturity Date") which is five years from the date hereof.


Notwithstanding the foregoing,  on the second anniversary,  and each anniversary
thereafter,  of the date of this Note,  provided  that Maker is then a full-time
active employee of IHS, there shall be automatically forgiven hereunder (i) that
portion of the then unpaid  principal  balance of this Note as shall be equal to
twenty (20%)  percent of the Debt,  and (ii) all accrued and unpaid  interest on
the  principal  amount.  On the  fifth  anniversary  of the  date of this  Note,
provided that Maker is then a full-time  active  employee of IHS, there shall be
automatically  forgiven  hereunder (i) that portion of the then unpaid principal
balance of this Note as shall be equal to forty (40%)  percent of the Debt,  and
(ii) all  accrued  and unpaid  interest  on the  principal  amount so  forgiven.
Accordingly,  if Maker  shall  have  remained  in the  continuous  employ of the
Company for a period of five (5) years following the date hereof,  all principal
and accrued interest under this Note shall be  automatically  forgiven as of the
Maturity Date. In addition, the entire unpaid principal balance of this Note and
all accrued and unpaid interest thereon automatically shall be forgiven upon (i)
the  occurrence  of a  "charge  of  control"  as  defined  in the  then  current
employment  agreement  between Maker and IHS ("Maker's  Employment  Agreement"),
(ii) the effective date of any termination by IHS Maker's  Employment  Agreement
other than for cause as defined in Maker's Employment Agreement,  including, but
not limited to, a rejection of Maker's Employment  Agreement in a reorganization
proceeding,  or (iii) the effective  date of any  termination  by IHS of Maker's
employment other than for cause as defined in Maker's Employment Agreement.


All payments on this Note shall be applied first to accrued and unpaid  interest
and costs of collection and then to any unpaid principal.  At his option,  Maker
may at any time  and  from  time to time  pre-pay  all or part of the  principal
amount of this Note, without premium, penalty or notice.

Maker waives presentment for payment,  demand, notice of non-payment,  notice of
protest,  and protest of this Note, and all other notices in connection with the
delivery,  acceptance,  performance,  default,  dishonor,  or enforcement of the
payment  of this Note.  Maker  shall pay all costs of  collection  of this Note,
including  reasonable  attorney's  fees.  All rights and remedies  given by this
Note,  are cumulative and not exclusive of any thereof or of any other rights or
remedies  available to IHS, and no course of dealing  between  Maker and IHS, or
any delay or  omission  in  exercising  any right or remedy  shall  operate as a
waiver of any right or remedy,  and every right and remedy may be exercised from
time to time and as often as shall be deemed appropriate by IHS.

This Note shall be governed, interpreted, and enforceable in accordance with the
laws of the State of Maryland.

This Note  replaces in its entirety the Note  originally  issued on December 19,
1996 in the principal amount of $4,690.527.

IN WITNESS  WHEREOF,  the  undersigned  has executed this Note on the date first
above written.

                                             /s/ Robert N. Elkins
                                             -----------------------------[SEAL]
                                             ROBERT N. ELKINS

                              4
<PAGE>
                                PROMISSORY NOTE


Dated: July 8, 1999                                               $11,780,210.00

FOR VALUE RECEIVED, the undersigned, ROBERT N. ELKINS. ("Maker") promises to pay
to the order of INTEGRATED HEALTH SERVICES, INC. a Delaware corporation ("IHS"),
in lawful money of the United States of America,  on July 8, 2003 (the "Maturity
Date"),  the principal sum of ELEVEN MILLION SEVEN HUNDRED  EIGHTY  THOUSAND TWO
HUNDRED TEN AND 00/100  DOLLARS  ($11,780,210.00)  (the "Debt"),  or such lesser
amount of the Debt as shall then be outstanding and unpaid, plus all accrued and
unpaid  interest on the Debt.  Maker also promises to pay interest on the unpaid
principal amount of the Debt from time to time outstanding,  and on any interest
that has from time to time become due but has not yet been paid,  at the rate of
Six and Eight-tenths  Percent (6.8%) per annum,  compounded annually and payable
annually in arrears on July 8 of each year, commencing on July 8, 2000, from the
date hereof until all such unpaid  principal and unpaid interest shall have been
paid in full or forgiven.

Notwithstanding  the foregoing,  on the first anniversary,  and each anniversary
thereafter,  of the date of this Note,  provided  that Maker is then a full-time
active employee of IHS, there shall be automatically forgiven hereunder (i) that
portion of the then unpaid  principal  balance of this Note as shall be equal to
twenty-five  (25%) percent of the Debt, and (ii) all accrued and unpaid interest
on the principal  amount.  On the fourth  anniversary  of the date of this Note,
provided that Maker is then a full-time  active  employee of IHS, there shall be
automatically  forgiven  hereunder (i) that portion of the then unpaid principal
balance of this Note as shall be equal to twenty-five (25%) percent of the Debt,
and (ii) all accrued and unpaid  interest on the  principal  amount so forgiven.
Accordingly,  if Maker  shall  have  remained  in the  continuous  employ of the
Company for a period of four (4) years following the date hereof,  all principal
and accrued interest under this Note shall be  automatically  forgiven as of the
Maturity Date.

                                       5
<PAGE>

All payments on this Note shall be applied first to accrued and unpaid  interest
and costs of collection and then to any unpaid principal.  At his option,  Maker
may at any time  and  from  time to time  pre-pay  all or part of the  principal
amount of this Note, without premium, penalty or notice.

By its acceptance of this Note, IHS  acknowledges  and agrees that: (i) Maker is
authorized  at any time and from  time to time to set off and  apply any and all
indebtedness  at any time  owing by Maker  under this Note  against  any and all
indebtedness  or other  obligations  of IHS then due and owing to Maker and (ii)
any and all payments in respect of indebtedness or other  obligations  from time
to time due and  owing  from IHS to Maker  shall be made  without  deduction  or
set-off for any indebtedness at any time owing by Maker under this Note.

By accepting  this Note,  IHS agrees that,  upon the occurrence of any Change of
Control  or any  termination  of  Maker's  employment  with  IHS by  death,  for
Permanent Disability, by Maker for Good Reason, or by IHS without Cause, (a) the
Debt and all other amounts and obligations of Maker under this Note that are not
then due shall be automatically and immediately  discharged and forgiven and (b)
this  Note  shall be marked  "canceled"  and  promptly  returned  to Maker.  For
purposes  of this  Note,  (x) the term  "Employment  Agreement"  shall  mean the
Employment  Agreement  between IHS and Maker effective as of January 1, 1994, as
from  time to time  amended,  (y) the  terms  "Change  of  Control",  "Permanent
Disability",  "Good Reason" and "Cause" shall have the meanings set forth in the
Employment  Agreement and (z) whether Maker's employment has been terminated for
Permanent  Disability,  by Maker for Good  Reason,  or by IHS for Cause shall be
determined  in  accordance  with the  procedures  set  forth  in the  Employment
Agreement. In addition, the entire unpaid principal balance of this Note and all
accrued and unpaid interest thereon automatically shall be forgiven upon (i) the
effective date of any termination by IHS of Maker's  Employment  Agreement other
than for cause as defined in Maker's Employment  Agreement,  including,  but not
limited to, a rejection  of Maker's  Employment  Agreement  in a  reorganization
proceeding,  or (ii) the  effective  date of any  termination  by IHS of Maker's
employment other than for cause as defined in Maker's Employment Agreement.

                                       6

<PAGE>
In the  event  that IHS  purports  to  terminate  Maker's  employment  for Cause
pursuant to the  provisions of Section 3.4 of the  Employment  Agreement (or any
successor  provisions),  and Maker disputes that he was properly  terminated for
Cause  pursuant to such  provisions,  neither  the Debt nor any other  amount or
obligation  of the  Maker  under  this Note that is not then due shall be due or
payable  until a final,  unappealable  judgment  has been  entered by a court of
competent jurisdiction affirming that Maker was properly terminated for Cause in
accordance with such provisions.

Maker waives presentment for payment,  demand, notice of non-payment,  notice of
protest,  and protest of this Note, and all other notices in connection with the
delivery,  acceptance,  performance,  default,  dishonor,  or enforcement of the
payment  of this Note.  Maker  shall pay all costs of  collection  of this Note,
including reasonable attorney's fees. All rights and remedies given by this Note
are  cumulative  and not  exclusive  of any  thereof  or of any other  rights or
remedies  available to IHS, and no course of dealing  between  Maker and IHS, or
any delay or  omission  in  exercising  any right or remedy  shall  operate as a
waiver of any right or remedy,  and every right and remedy may be exercised from
time to time and as often as shall be deemed appropriate by IHS.

Neither this Note, nor the Debt or any amounts evidenced  hereby,  nor any other
rights or obligations of Maker of IHS under or in connection with this Note, may
be sold, assigned,  pledged or otherwise transferred or encumbered,  any attempt
to do so shall be null and void.  This Note,  and the rights and  obligations of
Maker and IHS  hereunder,  shall  inure to the  benefit of and be  binding  upon
Maker, IHS and their respective successors,  permitted assigns, heirs, executors
and personal representatives.

This Note shall be governed,  interpreted,  and enforced in accordance  with the
laws of the State of Delaware, without regard to principles of conflict of laws.

This Note replaces in its entirety the Note  originally  issued on September 30,
1998 which was a replacement of the Note originally issued on September 29, 1997
and the Note originally issued on January 28, 1998.

IN WITNESS  WHEREOF,  the  undersigned  has executed this Note on the date first
above written.

                                             /s/ Robert N. Elkins
                                             -----------------------------[SEAL]
                                             ROBERT N. ELKINS


                                        7





<PAGE>


                                                                       EXHIBIT B


                              CONSULTING AGREEMENT

         CONSULTING AGREEMENT, dated as of _______________, 2000, by and between
INTEGRATED HEALTH SERVICES,  INC., a Delaware  corporation (the "Company"),  and
ROBERT N. ELKINS (the "Consultant").

         WHEREAS,  the  Company  desires  to  utilize  and  avail  itself of the
experience and expertise of the Consultant,  as an independent contractor,  in a
consulting  capacity and the  Consultant  desires to provide its services to the
Company in accordance with the terms and conditions of this Agreement.

         NOW THEREFORE,  in  consideration of the mutual promises and agreements
herein  contained,  and other good and valuable  consideration,  the receipt and
adequacy of which is hereby acknowledged,  the parties,  intending to be legally
bound, hereby agree as follows:

         1.   DEFINITIONS.   For purposes of this Agreement:

              1.1 "Board" means the Board of Directors of the Company, as it may
be constituted from time to time.

              1.2   "Person"   means  any   individual,   sole   proprietorship,
partnership,  joint venture, trust,  unincorporated  organization,  association,
corporation, or entity.

              1.3 "Agreement" means the Agreement between the Company and Elkins
dated as of ________, 2000.

         Capitalized  terms used herein which are not  otherwise  defined  shall
have the  meanings  set forth in the  Agreement,  unless the  context  otherwise
requires.

         2.  TERM OF CONSULTING  PERIOD.  Subject to Section 6 hereof,  the term
of this Agreement  shall  commence on the Closing Date and continue  through the
close of business on the  day  prior  to the  first  anniversary  of the Closing
Closing Date (the "Term")

         3.  DUTIES.   The  Consultant  hereby  agrees during the Term to render
consulting  services  when and if  reasonably  requested by the Chief  Executive
Officer  of  the  Company,  subject  to  the  availability  of  the  Consultant.
Consultant  shall be entitled  to not less than  twenty-four  (24) hours  actual
advance  notice  of any  request  to  perform  services  under  this  Agreement;
provided,   however,  that  Consultant  shall  be  entitled  to  not  less  than
forty-eight  (48) hours actual advance notice of any request to perform services
under this Agreement  which require travel in excess of a fifty (50) mile radius
of  Consultant's  residence  in Naples,  Florida.  The  Consultant  shall not be
required to perform  services in any  consecutive  thirty (30) day period  which
consume more than ten (10) hours of the Consultant's  time. The Consultant shall
not be  required to spend more than one  hundred  (100)  hours in the  aggregate
performing services during the Term of this Agreement.

<PAGE>


              COMPENSATION AND REIMBURSABLE EXPENSES.

              4.1  COMPENSATION.  As full  compensation  for all  obligations of
Consultant  and services to be rendered by the  Consultant  during the Term, the
Company  shall pay to the  Consultant  the Closing  Payment on the Closing Date,
which shall be deemed fully earned and nonrefundable  when paid (the "Consulting
Compensation").  The Company shall not withhold or cause to be withheld from the
Consulting  Compensation  any taxes or other  amounts and  Consultant  shall pay
directly any taxes with respect thereto.

              4.2 EXPENSES.  The Company shall  reimburse the Consultant  during
the Term for all of his reasonable  out-of-pocket  expenses incurred pursuant to
this Agreement and in connection  with the  performance of his duties under this
Agreement,  upon  submission  of  satisfactory   documentation  evidencing  such
expenditures,  within thirty (30) days of request for such reimbursement.  It is
understood and agreed that the foregoing expenses shall not include any expenses
related to any non-commercial air travel.

         5.   RELATIONSHIP  BETWEEN PARTIES.  The relationship of the Consultant
to the Company shall be that of an independent contractor. Consequently, neither
party shall have the  authority  to act for or on behalf of the other or to bind
the other without its express  approval in writing.  The Consultant shall not be
considered  as having  employee  status for the purpose of any employee  benefit
plan applicable to the Company's employees generally, payroll withholding taxes,
or for any other purpose.

         6.   TERMINATION.

              6.1 Subject to the provisions of this  Agreement,  the Company may
terminate this  Agreement  without cause at any time on thirty (30) days written
notice to the other party.

              6.2 Subject to the  provisions of this  Agreement,  the Consultant
may terminate this  Agreement on thirty (30) days notice upon  occurrence of any
of the  following:  (i) default by the Company under this Agreement or under the
Agreement,  or (ii) if  Consultant  permanently  retires  from  active  business
operations.  In addition,  this  Agreement will  automatically  terminate on the
death or disability of the Consultant.

              6.3 If the Company or the Consultant  terminates this Agreement in
the  manner  permitted  by  this  section,   or  upon  expiration  of  the  Term
("Termination of this  Agreement"),  the Company shall pay to the Consultant any
unreimbursed  expenses required to be paid to the Consultant pursuant to section
4.2 hereof.

              6.4  On  Termination  of  this  Agreement,  the  Consultant  shall
promptly  return  to  the  Company  all  documents,   materials,  papers,  data,
statements  and any other  written  material  (including  but not limited to all
copies  thereof)  and other  property  of the Company in the  possession  of the
Consultant.

                                       2

<PAGE>


         7.  NON-ASSIGNMENT.  This Agreement and all of the Consultant's rights
and  obligations  hereunder  are  personal  to the  Consultant  and shall not be
assignable.  No person,  firm or  corporation  succeeding to the business of the
Company  by a merger,  purchase,  consolidation  or  otherwise  shall  assume by
contract or operation of law the rights of the Company hereunder.

         8.  NON COMPETE;  CONFIDENTIALITY  The  provisions of Section 8.2, 8.3
and 9.3 of the Agreement are incorporated herein by reference.

         9.  OTHER PROVISIONS.

             9.1  NOTICES.  Any  notice  or  other  communication   required  or
permitted  hereunder  shall be in  writing  and shall be  delivered  personally,
telegraphed,  telex,  sent by  facsimile  transmission  or  sent  by  certified,
registered or express  mail,  postage  prepaid.  Any such notice shall be deemed
given when so delivered  personally,  telegraphed,  telexed or sent by facsimile
transmission  or, if  mailed,  five (5) days  after the date of  deposit  in the
United States mail, as follows:

             (i)  if to the Company, to:

                  Integrated Health Services, Inc.
                  910 Ridgebrook Road
                  Sparks, Maryland 21152
                  Attention: Chief Executive Officer

             (ii) if to the Consultant, to:

                  Robert N. Elkins
                  7583 Bay Colony Road
                  Naples, Florida 34108

Any party may change its  address  for notice  hereunto by notice to other party
hereto.

             9.2  ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior representations,  warranties and agreements, written or oral, with respect
thereto, between the Company and the Consultant.

             9.3  WAIVERS  AND  AGREEMENTS.   This  Agreement  may  be  amended,
modified,  superseded,   canceled,  renewed  or  extended,  and  the  terms  and
conditions  hereof may be  waived,  only by a written  instrument  signed by the
parties or, in the case of a waiver, by the party waiving  compliance.  No delay
on the part of any party in exercising any right,  power or privilege  hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any right, power or privilege  hereunder,  nor any single or partial exercise
of any  right,  power or  privilege  hereunder  preclude  any  other or  further
exercise  thereof  or the  exercise  of any  other  right,  power  or  privilege
hereunder.

                                       3

<PAGE>


             9.4  GOVERNING  LAW.  This  Agreement  shall  be  governed  by  and
construed in accordance  with the laws of the State of Delaware,  without regard
to its principles of conflicts of law.

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

             9.6  HEADINGS.  The headings of this  Agreement  are for  reference
purposes only and shall not in any way affect the meaning or  interpretation  of
this Agreement.

         10. ARBITRATION.  In the event of a dispute between the Company and the
Consultant over the terms of this Agreement which is not settled by the parties,
the Company and the Consultant  agree to settle any and all such disputed issues
by  arbitration  in  accordance  with the  then-existing  rules of the  American
Arbitration  Association.  The Company and the Consultant  shall jointly appoint
one person to act as the  arbitrator.  The decision of the  arbitrator  shall be
binding upon the parties and there shall be no appeal  therefrom  other than for
bias, fraud or misconduct. The costs of the arbitration,  including the fees and
expenses of the arbitrator, shall be borne fifty per cent by the Company, on the
one hand,  and fifty per cent by the  Consultant,  on the other,  but each party
shall pay its own  attorney's  fees and other  professional  costs and expenses;
provided,  however,  that if the arbitrator  shall rule for the Consultant,  the
Company shall pay or reimburse the Consultant's  reasonable  attorneys' fees and
other  professional  costs  and  expenses  and  the  Consultant's  share  of the
arbitration  costs incurred in connection  with such  arbitration.  Any decision
rendered  by the  arbitrator,  except  as  provided  above,  shall be final  and
binding.

         11. SEVERABILITY.  Whenever possible,  each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law,  but if any  provision of the  Agreement is held to be invalid,  illegal or
unenforceable   in  any  respect  under  any  applicable  law  or  rule  in  any
jurisdiction,  such invalidity,  illegality or unenforceability  will not affect
any  other  provision  or any other  jurisdiction,  but this  Agreement  will be
reformed,



                                       4

<PAGE>

construed  and  enforced in such  jurisdiction  as if such  invalid,  illegal or
unenforceable provision had never been contained herein.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date first above written.

                                      INTEGRATED HEALTH SERVICES, INC.

                                      By:  /s/ C. Taylor Pickett
                                         ---------------------------------------
                                      Name: C. Taylor Pickett
                                           -------------------------------------
                                      Title: EVP and CFO
                                            ------------------------------------


                                       /s/ Robert N. Elkins
                                      -----------------------------------
                                      Robert N. Elkins






                                       5


<PAGE>


                                                                       EXHIBIT C


                  Official Committee of Unsecured Creditors of
           Integrated Health Services, Inc. and Subsidiaries, Debtors
                  Otterbourg, Steindler, Houston & Rosen, P.C.
                    230 Park Avenue, New York, New York 10169

                                  July 26, 2000
Robert N. Elkins
7583 Bay Colony Road
Naples, Florida 34108

Dear Dr. Elkins:

         This letter is delivered to you in connection  with the Agreement dated
as of  July  26,  2000  (the  "Agreement")  between  you and  Integrated  Health
Services, Inc. and subsidiaries ("IHS" or the "Debtors").  All capitalized terms
not otherwise defined herein shall have the meanings set forth in the Agreement.
Paragraphs 1 and 2 of this letter will constitute the binding  obligation of the
Committee,  enforceable in accordance with its terms, immediately upon execution
and  delivery  of the  Agreement.  The  balance of this  letter  will become the
binding  obligation of the Committee,  enforceable in accordance with its terms,
upon entry of the  Approval  Order.  This letter  applies in favor of any Elkins
Released Party and  Monarch/Lyric  Released Party.  The Committee's  obligations
under this letter will  terminate  upon the occurrence of an Event of Default by
Elkins under the Agreement, or in the event the Agreement is terminated pursuant
to Section 9.5 thereof.

         1. The  Committee  has  performed  such  analysis,  and  consulted  its
professional  advisors, as it deems necessary or appropriate with respect to the
Agreement. The Committee believes that consummation of the transactions provided
for in the Agreement is in the best interests of the Debtors,  their estates and
their creditors.

         2. The  Committee  will support the relief  requested in the Motion and
entry of the Approval Order, and will submit pleadings in support of the Motion.

         3.  Without   Elkins'  prior  written   consent,   which  will  not  be
unreasonably withheld, the Committee will not take any action (whether by way of
application  to any court,  pursuant to a Plan,  or  otherwise),  (a) to vacate,
amend or modify, the Agreement or Approval Order, or (b) to deprive any party of
any of the benefits of the Agreement.

         4. The  Committee  will take no action to cause the  Debtors to redeem,
terminate,  reduce,  cancel or otherwise  adversely  affect the  continuation or
maintenance  of the D&O  Policies  in a manner that would  adversely  affect the
rights  of any  Elkins  Released  Party  under  the  Agreement  or under the D&O
Policies.

         5. The Committee will not  unreasonably  oppose the inclusion of Elkins
as a  beneficiary  of any release of officers or directors of the Debtors  which
may be  included  in any Plan to the  extent  provided  in  Section  4.10 of the
Agreement,  and will not oppose  reasonable  efforts  by the  Debtors to include
Elkins as a party covered by any  injunction  which the Debtors may seek against
the continuation of any third party action.

                       Very truly yours,


                       Otterbourg Steindler Houston & Rosen
                       Counsel for the Official Committee of Unsecured Creditors


                        By:  /s/ Glenn Rice
                            ----------------------------------------------------
                                           Glenn Rice, Esq.


<PAGE>

                                                                       EXHIBIT D

                               MONARCH PROPERTIES

<TABLE>
<S>                                                 <C>
         Monarch Properties, LLC                        Monarch Advisory Group, LLC
          |          |                                                |
          |          |                                                |
MP Operating, Inc.   |                                                |
          |          |                                   Monarch Properties II, LLC
          |          |                                                |
MP Operating, LLC    |                                                |
          |          |                                                |
          |          |                                Monarch Properties at Jacksonville, LLC
  Monarch Properties, LP
</TABLE>

<PAGE>

                                                                       EXHIBIT E

                             LYRIC HEALTHCARE LLC

<TABLE>
<S>                                 <C>                               <C>                                 <C>
                Integrated Health Services, Inc.                                     TFN Healthcare Investors, LLC
                           (50%)                                                                (50%)
                 \                                                                                              /
                    \                                                                                        /
                       \                                                                                  /
                          \                                                                            /
                             \                                                                      /
                                \                                                                /
                                   \                                                          /
                                      \                                                    /
                                         \                                              /
                                            \                                        /
                                               \                                  /
                                                  \                            /
                                                     \                      /
                                                       Lyric Health Care LLC
                                                                  |
                                                                  |
  ------------------------------------------------------------------------------------------------------------------------------
             |                                  |                                 |                                 |
             |                                  |                                 |                                 |
     Lyric Health Care                  Lyric Health Care                 Lyric Health Care                 IHS of Florida at
        Holdings Inc.                   Holdings II, Inc.                 Holdings III, Inc.                Jacksonville, Inc.
             |                                  |                                 |                                 |
             |                                  |                                 |                                 |
  5 Facilities leased from          5 Facilities leased from          32 Facilities leased from           1 Facility leased from
      Omega Healthcare                  Omega Healthcare                 Monarch Properties                  Monarch Properties
       Investors, Inc.                   Investors, Inc.                   by Subsidiaries                           at
      by Subsidiaries                    by Subsidiaries                   (See Exhibit C)                   Jacksonville, LLC
      (See Exhibit A)                    (See Exhibit B)
</TABLE>

<PAGE>

LYRIC HEALTH CARE HOLDINGS, INC.

<TABLE>
<S>                         <C>                 <C>                         <C>                        <C>
                                                   Lyric Health Care Holdings, Inc.
                                                                  |
                                                                  |
 --------------------------------------------------------------------------------------------------------------------------------
             |                      |                     |                          |                            |
             |                      |                     |                          |                            |
   Claremont Integrated     IHS Acquisition     Gainesville Healthcare           Rest Haven             Integrated Management -
       Health, Inc.           No. 123, Inc.         Center, Inc.               Nursing Center           Governor's Park, Inc.
                                                                            (Chestnut Hill), Inc.
</TABLE>


LYRIC HEALTH CARE HOLDINGS II, INC.

<TABLE>
<S>                          <C>                     <C>                          <C>                          <C>
                                               Lyric Health Care Holdings II, Inc.
                                                                  |
                                                                  |
 --------------------------------------------------------------------------------------------------------------------------------
         |                          |                          |                          |                            |
         |                          |                          |                          |                            |
  F.L.C. Sarasota             Pinellas Park           Central Park Lodges          Integrated Health of          Cambridge Group
Nursing Pavilion, Inc.       Nursing Home, Inc.      (Tarpon Springs), Inc.       Waterford Commons, Inc.      of Pennsylvania, Inc.
</TABLE>

                                       2

<PAGE>

                      LYRIC HEALTH CARE HOLDINGS III, INC.

<TABLE>
<CAPTION>
                                                    Lyric Health Care Holdings III, Inc.
                                                                      |
                                                                      |
<S>              <C>              <C>             <C>             <C>             <C>               <C>             <C>
----------------------------------------------------------------------------------------------------------------------------------
      |      |        |        |       |       |      |        |       |        |      |         |       |       |       |
      |      |        |        |       |       |      |        |       |        |      |         |       |       |       |
    IHS at   |       IHS       |  Integrated   |  Briar Hill,  |  Integrated    |     IHS        |  Cedarcroft   |  Manchester
   Colorado  |   Acquisition   |    Health     |     Inc.      |    Health      |  Acquisition   |    Health     |  Integrated
   Springs,  |   No. 103, Inc. |  Services at  |               |  Services at   |  No. 114, Inc. |   Services,   |  Health, Inc.
     Inc.    |                 |    Central    |               |   Briarcliff   |                |      Inc.     |
             |                 |               |               |   Haven, Inc.  |                |               |
             |                 |               |               |                |                |               |
            IHS               IHS             IHS             IHS              IHS               IHS            IHS
        Acquisition       Acquisition      Acquisition     Acquisition      Acquisition       Acquisition     Acquisition
        No. 129, Inc.     No. 140, Inc.    No. 134, Inc.   No. 132, Inc.    No. 138, Inc.     No. 128, Inc.   No. 133, Inc.




<CAPTION>
                                                    Lyric Health Care Holdings III, Inc.
                                                                      |
                                                                      |
<S>                   <C>               <C>                <C>               <C>                  <C>               <C>
-----------------------------------------------------------------------------------------------------------------------------------
 |       |         |       |        |       |        |         |        |        |        |           |        |        |       |
 |       |         |       |        |       |        |         |        |        |        |           |        |        |       |
 |      IHS        |      IHS       |      IHS       |        IHS       |       IHS       |       Rest Haven   |   Integrated   |
 |  Acquisition    |  Acquisition   |  Acquisition   |    Acquisition   |   Acquisition   |        Nursing     |       of       |
 |  No. 121, Inc.  |  No. 125, Inc. |  No. 124, Inc. |    No. 168, Inc. |   No. 127, Inc. |        Center      |    Amarillo,   |
 |                 |                |                |                  |                 |      (Whitemarsh)  |       Inc.     |
 |                 |                |                |                  |                 |          Inc.      |                |
 |                 |                |                |                  |                 |                    |                |
 |                 |                |                |                  |                 |                    |                |
  IHS              IHS             IHS               |                  IHS              IHS                  IHS          IHS at
Acquisition     Acquisition     Acquisition          |                Acquisition      Acquisition        Acquisition     Hanover
No. 131, Inc.   No. 170, Inc.   No. 171, Inc.        |                No. 136, Inc.    No. 174, Inc.      No. 139, Inc.  House, Inc.
                                                     |
                                                     |
                                           ---------------------
                                           |                    |
                                           |                    |
                                    Bethamy Living         LPC Bethamy
                                   Center Management         Health
                                        Company            Corporation
                                              |            |
                                              |            |
                                           Bethamy Living Center
                                            Limited Partnership
</TABLE>

                                       3

<PAGE>

                                                                       EXHIBIT F


                           Tangible Personal Property

Ridolfo di Domenico Bigordi,  called del Ghirlandaio "The Madonna and Child with
Adoring Angels", oil on tempura on panel-a tondo, 35" diameter

Nicholas   Largilliere   "Portrait   of   Seigneur  de   Landreville,   Standing
Three-quarter Length by a Chair", oil on canvas, 54.1/4"x 41.3/4"

Hendrick  de Clerk "The  Gathering  of Manna by the  Israelites",  oil on panel,
octagonal made up to a square, 34" x 34"